PAGENO="0001" FOREIGN TRADE AND TARIFF PROPOSALS HEARINGS BEFORE THE COMMITTEE ON TS~AYS AND MEANS HOUSE OF REPRESENTATIVES NINETIETH CONGRESS SECOND SESSION ON TARIFF AND TRADE PROPOSALS JUNE 4, 5, 10, 11, 12, 13, 14, 17, 18, 19, 21, 24, 25, 26, 27, 28; JULY 1 AND 2, 1968 PART 6 Contains June 19, 1968 Printed for the use of the Committee on Ways and Means 0 Q L1' 1 U.S. GOVERNMENT PRINTING OFFICE 95-119 0 WASHINGTON 1968 For sale by the Superintendent of Documents, U.S. Government Printing Office Washington, D.C. 20402 - Price $1.50 PAGENO="0002" COMMITTEE ON WAYS AND MEANS WILBUR D. MILLS, Arkansas, Chairman CECIL R. KING, California HALE BOGGS, Louisiana FRANK M. KARSTEN, Missouri A. S. HERLONG, JR., Florida JOHN C. WATTS, Kentucky AL ULLMAN, Oregon JAMES A. BURKE, Massachusetts MARTHA W. GRIFFITHS, Michigan GEORGE M. RHODES, Pennsylvania DAN ROSTENKOWSKI, Illinois PHIL M. LANDRUM, Georgia CHARLES A. VANIK, Ohio RICHARD H. FULTON, Tennessee JACOB H. GILBERT, New York JOHN W. BYRNES, Wisconsin THOMAS B. CURTIS, Missouri JAMES B. UTT, California JACKSON E. BETTS, Ohio HERMAN T. SCHNEEBELI, Pennsylvania HAROLD R. COLLIER, Illinois JOEL T. BROYHILL, Virginia JAMES F. BATTIN, Montana BARBER B. CONABLE, JR., New York GEORGE BUSH, Texas WILLIAM H. QUdALY, Jlinority Counsei (II) JOHN M. MARTIN, Jr., Chief Counsel J. P. BAKER, Assistant Chief Counsel PAGENO="0003" CONTENTS Part 1 1968: Page Tuesday, June 4 1 Part 2 Wednesday, June 5 439 Monday, June 10 649 Part 3 Tuesday, June 11 - 741 Wednesday, June 12 877 Thursday, June 13 - _ 1081 Part 4 Friday, June 14 1313 Monday, June 17 1475 Part 5 Tuesday, June 18 1829 Part 6 Wednesday, June 19 2349 Part 7 Friday, June 21 2749 Monday, June 24 - 3173 Part 8 Tuesday, June25 3479 Part 9 Wednesday, June 26 3865 Thursday, June 27 4201 Part 10 Friday, June28 4483 Monday, July 1~. 4669 Tuesday, July 2 - 4909 Part 11 Summaries 5601 (III) PAGENO="0004" Iv SUBJECT HEADINGS Aircraft- Aluminum- Athletic goods- Barber and beauty shop equipment Bicycle parts and accessories Ceramic tile, glass, pottery, etc Chemicals Coal Dairy products Distilling industry Electronics and cameras Fish Fruits and vegetables Fur General Government witnesses-. Honey Industrial rubber products Iron and steel Leadandzinc Leather goods Machine tools Meat Miscellaneous Oil and gas Optics Paper and publishing Pins, fasterners, etc Plastics, buttons, etc Rubber footwear Stainless steel Textiles Umbrellas Watches Windowshades Wood and wood products Date June 21. June 24. June 21. June 21. June 24. June 25. June 28 & July 1. July 1. July 2. June 21. June 25. June 24. July 2. June 26. June 11, 12, 13, 14, 17. June 4, 5, 10. June 24. June 26. June 18. June 18. June 26. June 21. June 24. July 2. June 27. June 21. June 27. June 21. June 21. June 25. June 21. June 19. June 21. June 25. June 25. June 27. Press release dated Thursday, May 9, 1968, announcing public hearings on tariff and trade proposals Proposed "Trade Expansion Act of 1968," committee print Message of the President Draft bill (H.R. 17551, introduced by Chairman Mills on May 28, 1968, at the request of the administration) Section-by-section analysis WRITTEN COMMUNICATION SUBMITTED BY GOVERNMENT OFFICIAL Fowler, Hon. Henry H., Secretary of the Treasury, letter dated June 6, 1968, to Chairman Mills 666 ORAL STATEMENTS BY GOVERNMENT OFFICIALS Agriculture, Depaktment of: Freeman, Hon. Orville L., Secretary 649, 654 Toanes, Raymond A., Administrator, Foreign Agriculture Service_ 439, 649 Labor, Department of: Wirtz, Hon. W. Willard, Secretary 28, 37 Blackman, Herbert N., Administrator, Bu~eau of International Labor Affairs Page 2 5 8 13 19 PAGENO="0005" Commerce, Department of: Page Smith, Hon. Cyrus R., Secretary 28 Garland, Allen H., Director, Trade and Commercial Policy Division._ 439 McQuade, Hon. Lawrence C., Assistant Secretary 28, 439 Consumer Affairs, Special Assistant to the President for, Miss Betty Furness 649, 662 Interior, Department of, Hon. Stewart L. Udall, Secretary 28, 33 State, Department of: Rusk, Hon. Dean, Secretary 649 Solomon, Hon. Anthony M., Assistant Secretary for Economic Affairs, Bureau of Inter-American Affairs 649 Trade Negotiations, Office of Special Representative for: Roth, Ambassador William M., special representative for trade negotiations 28, 42, 439, 446, 649 Gates, Theodore R., assistant special representative 439 Malmgren, Harald B., assistant special representative 28, 439 Rehm, John B., general counsel 28, 439 Treasury, Department of: Petty, Hon. John, Deputy Assistant Secretary, Office of International Affairs 439 Smith, Fred B., general counsel 28 STATEMENTS OF PUBLIC WITNESSES Abbitt, Hon. W. M., a Representative in Congress from the State of Virginia 4819 Abel, I. W., president, United Steelworkers of America 1845, 1895 Abernethy, Hon. Thomas G., a Representative in Congress from the State of Mississippi 3173 Aekert, James D., Domestic Producers Association of New England 3386 Ad Hoc Committee of Galvanized Electrical Transmission Tower Fabri- cators: Gannaway, Charles B., chairman 2211 Scans, David T., counsel.. 2211 Adair, Hon. E. Ross, a Representative in Congress from the State of Indiana 894 Adams, Charles F., chairman of the board, Raytheon Co 3640 Adams, John Quincy, chairman, coordinating committee, Food Industries of New York, Inc 3297 Adams, Dr. Walter, professor of economics, and director of program on industrial structures in the Atlantic community, Michigan State Uni- versity 1430 Aerospace Industries Association of America, Karl G. Harr, Jr., president_ 1391 AFL-CIO: Biemiller, Andrew J., director, department of legislation 1091 Goldfinger, Nathaniel, director, department of research 1091 Alcan Aluminum Corp., Eric A. Trigg, president 3370 Aluminum Association, John M. Mitchell 3345 American Aniline Products, Inc.: Marshall, James J., president, and in behalf of Ad Hoc Committee of U.S. Dyestuff Products 4724 Stewart, Eugene L., counsel 4724 American Apparel Manufacturers Association, Lawrence S. Phillips 2538 American Association of Oilwell Drilling Contractors, Robert A. Busch- man, president 4314 American Association of Port Authorities, Roger H. Gilman, first vice president. 861 American Association of University Women, Dr. Lois Torrence 869 American Association of Woolen Importers, Inc.: Bissinger, Fred, president 2553 Daniels, Michael P., counsel 2553 Smith, David 2553 American Beekeeping Federation, Glenn Gibson, executive secretary 3453 American Cyanamid Co., John M. Fasoli, director of public relations. - - - 4651 PAGENO="0006" VI American Farm Bureau Federation: Page Harris, Herbert E., II, legislative counsel 1215 Lynn, John C., legislative director 1215 American Fur Merchants Associations, Inc., Eugene Dreisin, president_ - - 4039 American Importers Association: O'Brien, Gerald, executive vice president 829 Floor covering group: Herzstein, Robert E., counsel 2599 Imported footwear group: Hemmendinger, Noel, counsel 4109, 4155 Lipkowitz, Edward, chairman 4155, 4174 Non-rubber-footwear group: Donohue, Joseph F, and Noel Hemmendinger, counsel, imported footwear group 4109 Organic chemicals group: Graubard, Seymour, counsel 4673 Haines, Walter W 4673, 4706 Hochschwender, Karl 4673, 4704 Stobaugh, Robert B., Jr 4673, 4675 Textile and apparel group: Daniels, Michael P., counsel 2415, 2417 Hohenberg, Bernard L., chairman 2415 American Iron & Steel Institute, Thomas F. Patton 1845 American Institute for Imported Steel, Inc., Kurt Orban, president 2088 American Loudspeaker Manufacturers Association, Eugene L. Stewart, counsel 3518 American National Cattlemen's Association: Carrothers, R. B 3196 House, Bill, president 3196 American Petroleum Refiners Association, Walter Famariss, Jr., president 4308 American Producers of Italian-T pe Cheeses Association, and Stella cheese division, Universal Foods Corp., Stephen F. Owen, Jr., counsel 4866 American Retail Federation: Savona, Vincent 1404, 1409 Selonick, Edward H 1404 American Soybean Association: Lodwick, Seeley G., vice president 950 Ranciolph, Chet, executive vice president 950 American Textile Manufacturers Institute: Dent, Frederick B., president 2360 Jackson, Robert C., executive vice president 2360 American W atch Association, Bertram Lowe, chairman, customs com- mittee 3705 Anti-Friction-Bearing Manufacturers Association, Bernard J. Shallow, chairman 2974 Ashbrook, Hon. John M., a Representative in Congress from the State of Ohio 4829 Ashley, James M., chairman of the board, Trade Relations Council of the United States, Inc 1109 Ashton, Prof. David J., director, International Center of New Englan& - 1572, 1573 Association on Japanese Textile Imports, Inc., Mike M. Masaoka, Washing- ton representative 2490 Athletic Goods Manufacturers Association, William P. Holmes 3071 Atlanta Artificial Kidney Center, John H. Sadler, M.D., director - 1324, 1333 Baird Chemical Industries, Joseph M. Baird, chairman of the board - - - 4764 Balgóoyen, H. W., New York Chamber of Commerce 1271 Barbaree, George, international secretary-treasurer, and Robert Lord, vice president, International Brotherhood of Operative Potters~ 3756, 3801 Barnard, Robert C., counsel, Synthetic Organic Chemical Manufacturers Association, and Dry Colors Manufacturers Association 4483, 4512 Bates, Hon. William H., a Representative in Congress from the State of Massachusetts 3378, 3865 Beard, Charles H., chairman of the board, National Committee on Inter- national Trade Documentation 1015 Beckman, Luke F., president, Minster Canning Co 5036 Beckmann, R. J., Domestic Wood Louvered Products Industry 4437 PAGENO="0007" VII Beicher, Hon. Page, a Representative in Congress from the State of Page Oklahoma 3178 Belgian-American Chamber of Commerce in the United States, Inc., Robert M. Gottschalk, counsel 1597 Bender, Mark G., Ph. D., assistant professor of economics, Holy Cross College, Worcester, Mass 1659 Bendix International, W. Michael Blumenthal, president 1238 Berry, Hon. E. Y., a Representative in Congress from the State of South Dakota 1085, 3996 Bevill, Hon. Tom, a Representative in Congress from the State of Alabama_ 1839 Bicycle Manufacturers Association, Wi]liam M. Hannon, chairman, Wash- ington affairs committee 4902 Biemiller, Andrew J., di~rector, department of legislation, AFL-CIO 1091 Bissinger, Fred, president, American Association of Woolen Importers, Inc_ 2553 Blackburn, Hon. Benjamin B., a Representative in Congress from the State of Georgia 1324 Blackie, William, chairman, Caterpillar Tractor Co 1348 Blumenthal, W. Michael, president, Bendix International 1238 B'nai B'rith, Herman Edelsberg, director, International Council 1026 Boeing Aircraft, T. A. Wilson, president 1343, 1347 Boland, Hon. Edward P., a Representative in Congress from the State of Massachusetts 895 Bonomo, Ralph, Italy-American Chamber of Commerce 1619, 1622 Boot & Shoemakth~s Union, John E. Mara, president, and George 0. Fecteau, general president, United Shoeworkers of America, AFL-CIO. - 4102 Bradford District, Pennsylvania Oil Producers Association, Pennsylvania Grade Crude Oil Association, and New York State Oil Producers As- sociation, J. Paul Jones 4212, 4251 Bradley, Mrs. David G., foreign policy chairman, League of Women Voters of the United States 982 British-American Chamber of Commerce of New York, Earl W. Kintner 1579 Broun, E. Fontaine, president, Manmade Fiber Producers Association 2464 Broyhill, Hon. James T., a Representative in Congress from the State of North Carolina 1475 Buchanan, Hon. John, a Representative in Congress from the State of Alabama 1319 Burch, Robert, Rocky Mountain Oil & Gas Association 4346 Burleson, Hon. Omar, a Representative in Congress from the State of Texas 4205 Burrows, Fred W., executive vice president, International Apple Associa- tion 5007 Burton, Hon. Laurence J., a Representative in Congress from the State of Utah 1478 Buschman, Robert A., president, American Association of Oilwell Drilling Contractors 4314 Business Builders International, Inc., J. Theodore Wolfson, president 857 Cal-Compack Foods, Gentry Corp., Santa Maria Chili, Inc., and Universal Foods Corp., W. Ed Crane, in behalfof 5001 California Council for International Trade, Gerald B. Levine, director and member, U.S. trade policy committee 1280 California Independent Producers & Royalty Owners Association, Joseph C. Shell, executive director 4212, 4270~ Calif ornia Olive Growers & Canners Industry Committee, G. K. Patterson 4991 California Strawberry Advisory Board, Northwest Canners & Freezers Association, and Oregon Strawberry COuncil, Robert E. Ward 3743 Camero, Sergio, administrator, PuertO Rico Economic Development Administration 4348 Campbell, William C., secretary, industrial rubber products division, Rubber Manufacturers Association 4190 Carmody, Edward T., vice chairman and director, Timex, the U.S. Time Corp 3720 Carrothers, R. B., American National Cattlemen's Association 3196 Cast Iron Soil Pipe Institute: Hunt, Frederick D., foreign trade consultant 2234 Perry, J. Wiley, Jr., chairman, import study committee 2234 Caterpillar Tractor Co.: Blackie, William, chairman 1343, 1348 Eckley, Robert S., assistant to the president 1035 PAGENO="0008" VIII Page Cement Industry Antidumping Committee, John C. Mundt, vice chairman 1369 Cerf, Jay H., manager, international group, Chamber of Commerce of the United States 1710 Chamber of Commerce of the United States, Jay H. Cerf, manager, inter- national group 1710 Cheese Importers Association of America, Martin A. Fromer, counsel 4873 Chester, Howard P., executive secretary, Stone, Glass, and Clay Coordi- nating Committee 3756 Chesterton, A. Devereaux, director, International Center of New Eng- land 1572, 1576 Christopher, William F., chairman, tariff committee, Society of the Plastics Industry, Inc~ 3098 Clay, Henry J., Netherlands Chamber of Commerce in the United States, Inc 1589 Cleveland Greenhouse Growers Cooperative Association, Jerry Nowinski, chairman 5027 Clothespin & Veneer Products Association, and Slide Fastener Association, Richard A. Tilden 2752 Coerper, Milo G., German-American Chamber of Commerce. 1594 Colmer, Hon. William M., a Representative in Congress from the State of Mississippi 4819 Committee for a National Trade Policy, Carl J. Gilbert, chairman 741 Committee for Economic Development, Howard C. Petersen, vice chair- man, international economic studies, research, and policy committee~__ 1225 Committee of Producers of Ferroalloys & Related Products, Ronald L. Cunningham 2170 Conneaut Port Authority, Mayor Edward'J. Griswold, of Conneaut, Ohio~ 1424 Control Data Corp., Hugh P. Donaghue, assistant to the president 1416 Cooper, Mitchell J., counsel, footwear division, Rubber Manufacturers Association 4148 Cooperating Oil & Gas Association, Clinton Engstrand, vice chairman, liaison committee, & president and chairman, Kansas Independent Oil & Gas Association 4212, 4238 Cornett, Hollan, executive board member, United Stone & Allied Products Workers of America 3756, 3792 Council, Buford W., chairman, tomato committee, Florida Fruit & Vege- table Association 4951, 4964 Cowherd, Edwin R., vice president, dyestuff and chemical division, GAF Corp 4640 Cox, J. Abney, past president and chairman, competition and marketing agreements committee, Florida Fruit & Vegetable Association 4951 Crane, W. Ed, in behalf of Cal-Compack Foods, Gentry Corp., Santa Maria Chili, Inc., and Universal Foods Corp 5001 Culbertson, J. Steele, director, National Fish Meal & Oil Association 3429 Cunningham, Ronald L., Committee of Producers of Ferroalloys & Related Products 2170 Daniels, Michael P.: American Association of Woolen Importers, Inc., counsel 2553 American Importers Association, textile and apparel group, counsel 2415, 2417 Danish-American Trade Council, Inc.: Hessel, B. H 1626 Wedell, Gustav, chairman, business practices committee 1626 Darman, Morton H., chairman of the board, National Association of Wool Manufacturers and in behalf of National Wool Growers Association - - - 2376 Davidson, Paul H., president, International Importers, Inc., H. William Tanaka, attorney, in behalf of 3634 Davies, Richard, consultant, Synthetic Organic Chemical Manufacturers Association 4483, 4590 Davis, Roy B., president, National Cotton Council of America 2562 Dawson, David H., vice president, E. I. DuPont de Nemours & Co 4596 DeBlois, Robert, New England Fuel Institute 4302 Dellenback, Hon. John, a Representative in Congress from the State of Oregon 4006 Denney, Hon. Robert V., a Representative in Congress from the State of Nebraska 3191, 4007, 4843 PAGENO="0009" Ix Page Dent, Frederick B., president, American Textile Manufacturers Institute_ - 2360 Dent, Hon. John, a Representative in Congress from the State of Penn- sylvania 3873 Derwinski, Hon. Edward J., a Representative in Congress from the State of Illinois 1836 De Santis, Arthur A., executive secretary, Italy-American Chamber of Commerce 1619 Dirlam, Dr. Joel B., professor of economics, University of Rhode Island - 1430 Dlouhy, John, executive vice president, Emil J. Paidar Co 3136 Donaghue, Hugh P., assistant to the president, Control Data Corp 1416 Donehower, William L., Jr., Rolled Zinc Manufacturers Association 2306 Donohue, Hon. Harold D., a Representative in Congress from the State of Massachusetts 1083 Donohue, Joseph F., Nonrubber Footwear Group, and Noel Hemmend- inger, Imported Footwear Group, American Importers Association 4109 Domestic bicycle tire and tube industry, C. J. Warrell 3450 Domestic Producers Association of New England, James D. Ackert 3386 Domestic Wood Louvered Products Industry: Beckmann, R. J 4437 Golden, David A., counsel 4437 Dorn, Hon. William Jennings Bryan, a Representative in Congress from the State of South Carolina 2407 Douglas, Donald W., Jr., vice president, McDonnell Douglas Corp 2783 Dreisin, Eugene, president, American Fur Merchants Association, Inc~ - - - 4039 Dry Colors Manufacturers Association, Robert C. Barnard, counsel 4483 DuPont, E. I., de Nemours & Co., David H. Dawson, vice president 4596 Dymsza, Dr. William A., research director, International Business Institute, Graduate School of Business Administration, Rutgers University 1637 Eastern Meat Packers Association, Inc., and Meat Trade Institute of New York, George Kern 3287 Eberlein, John G., chairman, drawback committee, National Customs Brokers & Forwarders Association of America, Inc 1021 Eckhardt, Hon. Bob, a Representative in Congress from the State of Texas 1480 Eckley, Robert S., assistant to the président, Caterpillar Tractor Co. - - - 1035 Edelsberg, Herman, director, International Council, B'nai B'rith 1026 Electronic Industries Association: Consumer products division: Fezell, George H., vice president 3479 Hoffman, Charles N., chairman 3479 International trade matters division: McCauley, Alfred R., special counsel 3479 Parts and distributor products divisions: Stewart, Eugene L., counsel 3518 EMBA Mink Breeders Association, Richard Westwood, president 4012 Emergency Committee for American Trade: Blackie, William, chairman, Caterpillar Tractor Co 1343, 1348 Purcell, Robert, finance committee chairman, International Basic Economic Corp 1343, 1350 Watson, Arthur K., chairman 1343 Wilson, T. A., president, Boeing Aircraft 1343, 1347 Engstrand, Clinton, vice chairman, liaison committee, Cooperating Oil & Gas Association, and president and chairman, Kansas Independent Oil & Gas Association 4212, 4238 Epstein, Lawrence D., vice president, Perry Products, Co 2243 Eshleman, Hon. Edwin D., a Representative in Congress from the State of Pennsylvania 2751 Everett, Hon. Robert A., a Representative in Congress from the State of Tennessee 3196 Fairchild Camera & Instrument Corp., Richard Hodgson, vice chairman, board of directors 3644 Fallon, Hon. George H., a Representative in Congress from the State of Maryland 1832 Famariss, Walter, Jr., president, American Petroleum Refiners Associa- tion 4308 Fasoli, John M., director of public relations, American Cyanamid Co_ - - - 4651 PAGENO="0010" x Fecteau, George 0., general president, United Shoeworkers of America, Page AFL-CIO, and John E. Mara, president, Boot & Shoemakers Union 4102 Fezell, George H., vice president, Consumer Products Division, Electronic Industries Association 3479 Finkel, Leonard E., president, Umbrella Frame Association of America~ 3140 Fisher, Hon. 0. C., a Representative in Congress from the State of Texas 877 Flavor Pict Cooperative, Louis F. Rauth 5023 Fletcher, Aubrey, executive vice president, C. Tennant Sons & Co 2311 Florida Citrus Mutual, Robert W. Rutledge, executive vice president~.~ 4981 Florida Fruit & Vegetable Association: Council, Buford W., chairman, tomato committee 4951, 4964 Cox, J. Abney, past president and chairman, competition and market- ing agreements committee 4951 Peters, John S., manager, membership and industry relations division 4951, 4966 Food Industries of New York, Inc., John Quincy Adams, chairman, coordinating committee -_~ 3297 Fox, Stark, executive vice president, Independent Oil & Gas Producers of California 4212,4266 French, Charles W., vice president, Pfister Chemical, Inc 4648 Fromer, Martin A., counsel, Cheese Importers Association of America___ 4873 Fuller, Robert P., chairman, government affairs committee, National Shoeboard Conference, Inc 4124 GAF Corp., Edwin R. Cowherd, vice president, dyestuff and chemical division 4640 Galifianakis, Hon. Nick, a Representative in Congress from the State of North Carolina 4008 Gallagher, Daniel R., director, Green Olive Trade Association 4991 Galvanized Electrical Transmission Tower Fabricators, ad hoc Committee of (See Ad Hoc Committee, etc.) Gannaway, Charles B., chairman, ad hoc Committee of Galvanized Electrical Transmission Tower Fabricators 2211 Geier, Philip 0., Jr., National Machine Tool Builders' Association 2845 Geiler, Norman, director, Independent Wire Drawers Association~__ 2194, 2196 Gentry Corp., Cal-Compack Foods, Santa Maria Chili, Inc., and Universal Foods Corp., E. Ed Crane, in behalf of 5001 German American Chamber of Commerce, Milo G. Coerper 1594 Gerstack er, Carl, chairman of the board, Manufacturing Chemists Association 4483, 4484 Gibson, Glenn, executive secretary, American Beekeeping Federation. - - - 3453 Gilbert, Carl J., chairman, Committee for a National Trade Policy 741 Gilbert, Robert A., vice president, Investors League, Inc 1031 Gillis, John, vice president, and member, board of directors, Monsanto Co~ 4618 Gilman, Roger H., first vice president, American Association of Port Authorities 861 Glass, Irving R., executive vice president, Tanners' Council of America, Inc 4064, 4082 Golden, David A.: Domestic Wood Louvered Products Industry, counsel 4437 United States Potters Association, customs and tariff counsel 3803 Goldfinger, Nathaniel, director, Department of Research, AFL-CIO - - - 1091 Goldstein, Alan, chairman, national affairs committee, National Footwear Manufacturers Association 4064 Golson, Charles E., International Engineering & Construction Industries Council 805 Gottschalk, Robert M., counsel, Belgian-American Chamber of Commerce in the United States, Inc 1597 Graham, Harry L., legislative representative, National Grange 756 Graubard, Seymour, counsel, organic chemicals group, American Im- porters Association 4673 Greater Detroit Board of Commerce, Frederick C. Nash, world affairs committee 1260 Greater Minneapolis Chamber of Commerce, J. Patrick Kittler, chairman, world trade committee 1290 Green Olive Trade Association, Daniel R. Gallagher, director 4991 Griswold, Mayor Edward J., city of Conneaut, Ohio, behalf of Conneaut Port Authority 1424 PAGENO="0011" XI Guenther, Dr. Harry P., dean, School of Business Administration, George- Page town University 1662 Hagan, Hon. G. Elliott, a Representative in Congress from the State of Georgia 3179 Haines, Walter W., organic chemicals group, American Importers Asso- ciation 4673, 4706 Hall, Hon. Durward G., a Representative in Congress from the State of Missouri 1081 Hamilton, Hon. Lee H., a Representative in Congress from the State of Indiana - 4006 Ha~non, William M., chairman, Washington affairs committee, Bicycle Manufacturers Association 4902 Hansen, Hon. Clifford P., a U.S. Senator from the State of Wyoming - - - 3192 Hardboard Manufacturers, James R. Sharp, attorney 4447 Harr, Karl G., Jr., president, Aerospace Industries Association of America 1391 Harris, Herbert E., II, legislative counsel, American Farm Bureau Federa- tion .- 1215 Harrison, Hon. William H., a Representative in Congress from the State of Wyoming 4933 Harsha, Hon. William H., a Representative in Congress from the State of Ohio - 1838, 4831 Hartke, Hon. Vance, a U.S. Senator from the State of Indiana 1931 Harvey, Hon. James, a Representative in Congress from the State of Michigan 4833 Hemingway, Stuart C., Jr., Stainless Steel Flatware Manufacturing Asso- ciation - 3091 Hemmendinger, Noel, counsel: Imported footwear group, American Importers Association 4109, 4155 Imported footwear group, and Joseph F. Donohue, nonrubber footwear group, American Importers Association 4109 Henderson, Hon. David N., a Representative in Congress from the State of North Carolina 3384 Henderson, David W., executive secretary, National Board of Fur Farm Organizations 4012, 4019 Herkner, George W., executive vice president, Warner & Swasey Co 2845, 2971 Herzstein, Robert E., counsel, floor covering group, American Import Association, and Wilton and Velvet Carpet & Rug Importers 2599 Hessel, B. H., Danish-American Trade Council, Inc 1637 Hicks, W. B., Jr., executive secretary, Liberty Lobby 1256 Hiliman, Jimmye S., head, Department of Agricultural Economics, TJni- versity of Arizona 1039 Hobbs, Claude E., chairman, foreign trade committee, National Electrical Manufacturers Association 3507 Hochschwender, Karl, organic chemicals group, American Importers Asso- ciation 4673, 4704 Hodgson, Richard, vice chairman, board of directors, Fairchild Camera & Instrument Corp 3644 Hoffman, Charles N., chairman, Consumer Products Division, Electronic Industries Association 3479 Hohenberg, Bernard L., chairman, textile and apparel group, American Importers Association 2415 Holmes, William P., Athletic Goods Manufacturers Association 3071 Home, Dr. M. K., Jr., chief economist, National Cotton Council of America 2562 Horton, Hon. Frank, a Representative in Congress from the State of New York 4835 House, Bill, president, American National Cattlemen's Association 3196 Hull, Rear Adm. Harry, executive director, International Center of New England 1572 Hunt, Frederick D., foreign trade consultant, Cast Iron Soil Pipe Institute. 2234 Imported Hardwood Products Association, Myron Solter, counsel 4428 Independent Oil & Gas Producers of California, Stark Fox, executive vice president 4212, 4266 Independent Petroleum Association of America, Harold M. McClure, Jr., president 4212, 4266, 4293 PAGENO="0012" XII Independent Wire Drawers Association: Page Geller, Norman, director 2194, 2196 Muntwyler, F. C., president 2194 Intemann, Herman K., vice president, Union Carbide Corp 4322 International Apple Association, Fred W. Burrows, executive vice presi- dent 5007 International Basic Economic Corp., Robert Purcell, finance committee chairman 1343, 1350 International Brotherhood of Operative Potters, George Barbaree, interna- tional secretary-treasurer, and Robert Lord, vice president 3756, 3801 International Center of New England: Ashton, Prof. DavidJ., director 1572, 1573 Chesterton, A. Devereaux,director 1572, 1576 Hull, Rear Adm. Harry, executive director 1572 International Engineering & Construction Industries Council, Charles E. Golson 805 International Importers, Inc., H. William Tanaka, attorney in behalf of Paul H. Davidson, president 3634 International Leather Goods, Plastics & Novelty Workers Union, AFL- CIO, Norman Zukowsky, international president 4130 International Longshoremen's & Warehousemen's Union, Albert Lannon, Jr., Washington representative 864 International Trade Development Board: Parker, Joseph 0., chairman 960 Pringle, Vjc 960 Investors League, Inc., Robert A. Gilbert, vice president 1031 Italy-American Chamber of Commerce: Bonomo, Ralph 1619, 1622 Dc Santis, Arthur A., executive secretary 1619 Jackson, Robert C., executive vice president, American Textile Manu- facturers Institute 2360 Javits, Hon. Jacob K., a U.S. Senatorfromthe State of New York 3986 Johnson, Lindsay, F., Lead-Zinc Producers Committee 2279 Johnson, Reuben L., director, legislative services, National Farmers Union 786 Jones, J. Paul, Pennsylvania Grade Crude Oil Association, Bradford district, Pennsylvania Oil Producers Association, and New York State Oil Producers Association 4212, 4251 Kansas Independent Oil & Gas Association, Clinton Engstrand, president and chairman, and vice chairman, liaison committee, Cooperating Oil & Gas Association 4212, 4238 Kaplan, Richard, counsel, Division of Imports, Rubber Manufacturers As- sociation 4190 Kastenmeier, Hon. Robert W., a Representative in Congress from the State of Wisconsin 4001 Keith, Hon. Hastings, a Representative in Congress from the State of Massachusetts 3385 Kentucky, Commonwealth of, Hon. Louie B. Nunn, Governor, statement read into the record by Hon. M. Gene Snyder, a Representative in Congress from the State of Kentucky 4930 Kern, George, Meat Trade Institute of New York, and Eastern Meat Packers Association, Inc 3287 Kindleberger, Charles P., professor of economics, Massachusetts Institute of Technology 1652 Kintner, Earl W., British-American Chamber of Commerce of New York - 1579 Kittler, J. Patrick, chairman, world trade committee, Greater Minneapolis Chamber of Commerce 1290 Kleppe, Hon. Thomas S., a Representative in Congress from the State of North Dakota 3195, 4009 Kohnstamm, H., & Co., Inc., Yale Meltzer, manager, commercial develop- ment and market research, patents, and trademarks 4628 Korzenik, Sidney S., executive director and counsel, National Knitted Outerwear Association 2577 Kyros, Hon. Peter N., a Representative ~in Congress from the State of Maine 3995 Laird, Hon. Melvin R., a Representative in Congress from the State of Wisconsin 886 Lakeway Chemicals, Inc., Normand Phaneuf, president 4642 PAGENO="0013" XIII Page Langdon, Jim C., chairman, Railroad Commission of Texas 4285 Langen, Hon. Odin, a Representative in Congress from the State of Min- nesota 4943 Lannon, Albert, Jr., Washington representative, International Longshore- men's & Warehousemen's Union 864 Latta, Hon. Delbert L., a Representative in Congress from the State of Ohio 3999 Lead-Zinc Producers Committee, Lindsay F. Johnson 2279 League of Women Voters of the United States, Mrs. David G. Bradley, foreign policy chairman 982 LeBlond, R. K., Machine Tool Co., Daniel W. LeBlond, president_~. 2845, 2969 Levine, Gerald B., director and member, U.S. trade po]icy committee, California Council fqr International Trade 1280 Liberty Lobby, W. B., Hicks, Jr., executive secretary 1256 Lipkowitz, Edward, chairman, imported footwear group, American Im- porters Association 4155, 4174 Lloyd, Hon. Sherman P., a Representative in Congress from the State of Utah 902 Lobred, Leonard K., director, International Trade Division, National Canners Association 1009 Lodwick, Seeley G., vice president, American Soybean Association 950 Long, Hon. Clarence D., a Representative in Congress from, the State of Maryland 4927 Long, Hon. Speedy 0., a Representative in Congress from the State of Louisiana - 3189 Lord, Robert, vice president, and George Barbaree, international secretary- treasurer, International Brotherhood of Operative Potters 3756, 3801 Lovre, Harold 0., in behalf of domestió mink ranchers 4012 Lowe, Bertram, chairman, customs committee, American Watch Associa- tion 3705 Lundquist, James H., counsel, Meat Importers' Council, Inc 3212 Lynn, John C., legislative director, American Farm Bureau Federation~ - 1215 McCauley, Alfred R., special counsel, Division on International Trade Matters, Electronic Industries Association 3479 McClure Harold M., Jr. president Independent Petroleum Association of America 4212, 4266, 4293 McClure, Hon. James A., a Representative in Congress from the State of Idaho 1339 McDonnell Douglas Corp., Donald W. Douglas, Jr., vice president 2783 McEwen, Hon. Robert C., a Representative in Congress from the State of New York 3991 MeVay, M.D., chairman, Government Relations Committee, National Soybean Processors Association 1234 Mack, James K., counsel, National Confectioners Association of the United States 3470 Magdanz, Don F., executive secretary, National Livestock Feeders Association 3266 Mahon, Hon. George H., a Representative in Congress from the State of Texas 4279 Manmade Fiber Producers Association, E. Fontaine Broun, president - - - 2464 Manufacturing Chemists Association, Carl Gerstacker chairman of the board 4483, 4484 Mara, John E., president, Boot & Shoemakers Union, and George 0. Fccteau, general president, United Shoeworkers of America, AFL-CIO_ 4102 Marsh, Edwin E., executive secretary, National Wool Growers Association 3288 Marsh, Hon. John 0. Jr. a Representative in Congress from the State of Virginia 881, 959 Marshall, James J. president American Aniline Products, Inc., and in behalf of ad hoc committee of U.S. Dyestuff Producers 4724 Martin, Hon. Dave a Representative in Congress from the State of Nebraska 3180, 4834 Masaoka, Mike M., Washington representative, Association on Japanese Textile Imports, Inc 2490 Massachusetts Committee for the Preservation of the Groundfish In- dustry, Howard W. Nickerson, chairman-coordinator 3420 PAGENO="0014" XIV Matsunaga, Hon. Spark M., a Representative in Congress from the State Page of Hawail_ 2352, 3183, 4290 May, Otto B., Inc., Ernest M. May 4616 Meat Importers' Council, Inc., James H. Lundquist, counsel 3212 Meat Trade Institute of New York, and Eastern Meat Packers Associa- tion, Inc., George Kern 3287 Meltzer, Yale, manager, commercial development and market research, patents and trademarks, H. Kohnstamm & Co., Inc 4628 Meyer, A., Jr., president, Tanners' Council of America, Inc 4064, 4079 Miller, Henry E., National Retail Merchants Association 802 Minshall, Hon. William E., a Representative in Congress from the State of Ohio 1834 Minster Canning Co., Luke F. Beckman, president 5036 Mitchell, John M., Aluminum Association 3345 Monagan, Hon. John S., a Representative in Congress from the State of Connecticut 891 Monsanto Co., John Giffis, vice president, and member board of directors~. 4618 Montgomery, Hon. G. V. (Sonny), a Representative in Congress from the State of Mississippi 4844 Moody, Joseph E., president, National Coal Policy Conference, Inc 4810 Morris, Hon. Thomas G., a Representative in Congress from the State of New Mexico 899 Moss, Hon. Frank B., a Representative in Congress from the State of Utah 4000 Mundt, John C., vice chairman, Cement Industry Antidumping Com- mittee 1369 Muntwyler, F. C., president, Independent Wire Drawers Association - - - 2194 Muskie, Hon. Edmund S., a U.S. Senator from the State of Maine 3868 Nash, Frederick C., wOrld affairs committee, Greater Detroit Board of Commerce 1260 Nation-Wide Committee on Import-Export Policy, 0. R. Strackbein, chairman 905 National Association of Wool Manufacturers, Morton H. Darman, chair- man of the board 2376 National Board of Fur Farm Organizations, David W. Henderaon,~ execu- tivesecretary 4012,4019 National Canners Association, Leonard K. Lobred, director, international trade division 1009 National Coal Policy Conference, Inc., Joseph E. Moody, president 4810 National Committee on International Trade Documentation, Charles H. Beard, chairman of the board 1015 National Confectioners Association of the United States: Mack, James K., counsel 3470 Sifers, Burr, chairman, board of directors 3470 National Cotton Council of America: Davis, Roy B., president 2562 Home, Dr. M. K., Jr., chief economist 2562 Sayre, Dr. Charles R 2562 National Customs Brokers & Forwarders Association of America, Inc., John G. Eberlein, chairman, Drawback Committee 1021 National Electrical Manufacturers Association, Claude E. Hobbs, chair- man, Foreign Trade Committee 3507 National Farmers Union, Reuben L. Johnson, director, legislative services- 786 National Fish Meal & Oil Association, J. Steele Culbertson, director 3429 National Footwear Manufacturers Association: Goldstein, Alan, chairman, National Affairs Committee 4064 Shannon, Thomas F., counsel 4064 National Foreign Trade Council, Inc., Robert M. Norris, president 1495 National Grange: Graham, Harry L., legislative representative 756 Newsom, Herschel D., master 756 National Knitted Outerwear Association, Sidney S. Korzenik, executive director and counsel 2577 National Livestock Feeders Association, Don F. Magdanz, executive secretary 3266 National Machine Tool Builders Association, Philip 0. Geier, Jr 2845 National Milk Producers Federation, Otie M. Reed 4845 PAGENO="0015" ~xv Page National Retail Merchants Association, Henry E. Miller 802 National Shoeboard Conference, Inc., Robert P. Fuller, chairman, Gov- ernment Affairs Committee 4124 National Soybean Processors Association, M. D. McVay, chairman, Gov- ernment Relations Committee 1234 National Wool Growers Association: Darman, Morton H 2376 Marsh, Edwin E., executive secretary 3288 Nelsen, Hon. Ancher, a Representative in Congress from the State of Minnesota 4003, 4823 Netherlands Chamber of Commerce in the United States, Inc., Henry J. Clay 1589 Neu, Hugo, chairman, Scrap Industry Trade Policy Council 2202 New England Fuel Institute, Robert DeBlois 4302 New York Chamber of Commerce, H. W. Balgooyen 1271 New York State Oil Producers Association, Bradford district, Pennsyl- vania Oil Producers Association, and Pennsylvania Grade Crude Oil Association, J. Paul Jones 4212, 4251 Newsom, Herschel D., master, National Grange 756 Nickerson, Howard W., chairman-coordinator, Massachusetts Committee for the Preservation of the Groundfish Industry 3420 Norris, Robert M., president, National Foreign Trade Council, Inc 1495 Northern Textile Association, Fulton Rindge, Jr., chairman 2379 Northwest Canners & Freezers Association, Oregon Strawberry Council, and California Strawberry Advisory Board, Robert E. Ward 3743 Northwest Independent Steel Mills, Robert L. Phelps, in behalf of 2118 Nowinski, Jerry, chairman, Cleveland Greenhouse Growers Cooperative Association 5027 Nunn, Hon. Louie B., Governor of the Commonwealth of Kentucky, state- ment read into the record by Hon. M. Gene Snyder, a Representative in Congressfromthe5tateofKentucky 4930 O'Brien, Gerald, executive vice president, American Importers Association 829 O'Hara, Clifford, director, port commerce, Port of New York Authority. - 873 Orban, Kurt, president, American Institute for Imported Steel, Inc 2088 Oregon Strawberry Council, Northwest Canners & Freezers Association, and California Strawberry Advisory Board, Robert E. Ward 3743 Owen, Stephen F., Jr., counsel, American Producers of Italian-Type Cheeses Association, and Stella cheese division, Universal Foods Corp 4866 Paidar, Emil J., Co., John Dlouhy, exedutive vice president 3136 Palmby, Clarence, executive vice president, U.S. Feed Grains CounciL~. 795 Palmer, John D., president, Tobacco Associates, Inc 1425 Panhandile Producers & Royalty Owners Association, Don Watson, president 4212, 4248 Parker, Joseph 0., chairman, International Trade Development Board~. 960 Patterson, G. K., California Olive Growers & Canners Industry Committee 4991 Patton, Thomas F., American Iron & Steel Institute 1845 Pelly, Hon. Thomas M., a Representative in Congress from the State of Washington 3381 Pennsylvania Grade Crude Oil Association, Bradford district, Pennsylva- nia Oil Producers Association, and New York State Oil Producers Association, J. Paul Jones 4212, 4251 Pennsylvania Oil Producers Association, Bradford district, Pennsylvania Grade Crude Oil Association, and New York State Oil Producers Association, J. Paul Jones 4212, 4251 Pepper, I-Ion. Claude, a Representative in Congress from the State of Florida 4822 Perry, J. Wiley, Jr., chairman, import study committee, Cast Iron Soil Pipe Institute 2234 Perry Products Co., Lawrence D. Epstein, vice president 2243 Peters John S. manager membership and industry relations division, Florida Fruit&Vegetable Association~ 4951, 4966 Petersen, Howard C., vice chairman, international economic studies, research and policy committee, Committee for Economic Development 1225 Pettis Hon. Jerry L. a Representative in Congress from the State of California 1840 PAGENO="0016" XVI Page Pfister Chemical, Inc., Charles W. French, vice president 4648 Phaneuf, Normand, president, Lakeway Chemicals, Inc 4642 Phelps, Robert L., in behalf of Northwest Independent Steel Mills 2118 Philbin, Hon. Philip J., a Representative in Congress from the State of Massachusetts 2349 Phfflips, Lawrence S., American Apparel Manufacturers Association 2538 Pin, Clip & Fastener Association, Myron Solter, safety pin and straight pin division 2774 Pogeler, Glenn H., president, Soybean Council of America, Inc 1411 Polanco-Abreu, Hon. Santiago, Resident Commissioner, Puerto Rico 4941 Port of New York Authority, Clifford O'Hara, director, port commerce. - - 873 Price, Hon. Bob, a Representative in Congress from the State of Texas. - - 4202 Pringle, Vie, International Trade Development Board 960 Purcell, Hon. Graham, a Representative in Congress from the State of Texas 4201 Purcell, Robert, finance committee chairman, International Basic Eco- nomic Corp 1343, 1350 Puerto Rico, Hon. Santiago Polanco-Abreu, Resident Commissioner 4941 Puerto Rico Economic Development Administration, Sergio Camero, administrator 4348 Quie, Hon. Albert H., a Representative in Congress from the State of Minnesota 4822 Quillen, Hon. James H., a Representative in Congress from the State of Tennessee 1336 Quimby, John, past director, West Coast Metal Importers Association - - 2228 Railroad Commission of Texas, Jim C. Langdon, chairman 4285 Randolph, Chet, executive vice president, American Soybean Association 950 Rauth, Louis F., Flavor Pict Cooperative 5023 Raytheon Co., Charles F. Adams, chairman of the board 3640 Reed, Otie M., National Milk Producers Federation 4845 Reifel, Hon. Ben, a Representative in Congress from the State of South Dakota 4005 Reiser, Ralph, international president, United Glass & Ceramic Workers of North America 3756, 3767 Rhode Island Textile Association, Fulton Rindge, Jr 2379 Rhodes, Hon. John J., a Representative in Congress from the State of Arizona 4821 Richman, Gilbert C., button division, Society of the Plastics Industry, Inc 3131 Rindge, Fulton, Jr., chairman, Northern Textile Association, and in behalf of Rhode Island Textile Association 2379 Rivers, Hon. L. Mendel, a Representative in Congress from the State of South Carolina 4922 Robinson, Dana I., Sudbury, Mass 1297 Robison, Hon. Howard W., a Representative in Congress from the State of New York 4820 Rocky Mountain Oil & Gas Association, Robert Burch 4346 Rodino, Hon. Peter W., a Representative in Congress from the State of New Jersey 4669 Rogers, Hon. Paul G., a Representative in Congress from the State of Florida 4951 Rolled Zinc Manufacturers Association, William L. Donehower, Jr 2306 Rubber Manufacturers Association: Campbell, William C., secretary, industrial rubber products division 4190 Cooper, MitchellJ., footwear division 4148 Kaplan, Richard, counsel, division on imports 4190 Ruppe, Hon. Philip E., a Representative in Congress from the State of Michigan 1842, 4009 Rutledge, Robert W., executive vice president, Florida Citrus MutuaL - - 4981 St. Germain, Hon. Fernand J., a Representative in Congress from the State of Rhode Island 1087 St. Onge Hon. William L., a Representative in Congress from the State of Connecticut 2353, 4842 Sadler John H., M.D., director, Atlanta Artificial Kidney Center~.~. 1324, 1333 Santa Maria Chili, Inc., Cal-Compack Foods, Gentry Corp., and Uni- versal Foods Corp., W. Ed Crane, in behalf of 5001 PAGENO="0017" XVII Page Savona, Vincent, and Edward H. Selonick, American Retail Federation - 1404, 1409 Saylor, Hon. John P., a Representative in Congress from the State of Pennsylvania 883 Sayre, Dr. Charles R., National Cotton Council of America 2562 Scandinavian Fur Agency, Inc., James R. Sharp, counsel 4050 Schadeberg, Hon. Henry C., a Representative in Congress from the State of Wisconsin 1485 Scherle, Hon. William J., a Representative in Congress from the State of Iowa 1492 Schwenger, Robert B., Kensington, Md 1678 Scrap ludustry Trade Policy Council, Hugo Neu, chairman 2202 Scans, David T., counsel, Ad Hoc Committee of Galvanized Electrical Transmission Tower Fabricators 2211 Selonick, Edward H., and Vincent Savona, American Retail Federation - 1404 Shallow, Bernard J., chairman Anti-Friction Bearing `Manufacturers Association 2974 Shannon, Thomas F., counsel, National Footwear Manufacturers Associa- tion, and Tanners Council of America, Inc 4064 Sharp, James R., counsel: Hardboard Manufacturers 4447 Scandinavian Fur Agency, Inc 4050 Shell, Joseph C., executive director, California Independent Producers & Royalty Owners Association 4212, 4270 Shriver, Hon. Garner E., a Representative in Congress from the State of Kansas 4210 Sifers, Burr, chairman, board of directors, National Confectioners Associa- tion of the United States 3470 Slide Fastener Association, and Clothespin & Veneer Products Association, Richard A. Tilden 2752 Smith, David, American Association of Woolen Importers, Inc 2553 Smith, Hon. James V., a Representative in Congress from the State of Oklahoma 1313 Snyder, Hon. M. Gene a Representative in Congress from the State of Kentucky 4843, 4930 Society of the Plastics Industry, Inc.: Christopher, William F., chairman, tariff committee 3098 Richman, Gilbert C., button division 3131 Solter, Myron, counsel: Imported Hardwood Products Association 4428 Pin, Clip & Fastener Association, safety pin and straight pin division~ 2774 Soybean Council of America, Inc., Glenn H. Pogeler, president 1411 Stainless Steel Flatware Manufacturing Association, Stuart C. Hemingway, Jr 3091 Steed, Netum A., president, Texas Independent Producers & Royalty Owners Association 4212, 4253 Steed, Hon. Tom, a Representative in Congress from the State of Oklahoma 3176 Steele, Hoyt P., chairman, commercial policy committee, U.S. Council of the International Chamber of Commerce 1002 Steiger, Hon. William A., a Representative in Congress from the State of Wisconsin 1486 Stewart, Eugene L., counsel: American Loudspeaker Manufacturers Association 3518 American Aniline Products, Inc 4724 Electronic Industries Association, parts and distributor products divisions 3518 Trade Relations Council of the United States, Inc 1109 U.S. Producers of Flat Glass 1504 Stitt, Nelson A., director, United States-Japan Trade Council 2126 Stobawrh Robert B. Jr., organic chemicals group, American Importers Association 4673, 4675 Stone, Glass, and Clay Coordinating Committee, Howard P. Chester, executive secretary 3756 Strackbein, 0. R., chairman, Nation-Wide Committee on Import-Export Policy 905 95-159 0 - 68 - pt. 6 - 2 PAGENO="0018" XVIII Stratton, Hon. Samuel S., a Representative in Congress from the State of Page New York 2405, 4004, 4825 Synthetic Organic Chemical Manufacturers Association: Barnard, Robert C., counsel 4483, 4512 Davies, Richard, counsultant 4483, 4590 Turchan, Thomas P., president 4483, 4504 Talcott, Hon. Burt L., a Representative in Congress from the State of California 3181 Tanaka, H. William, attorney, in behalf of Paul H. Davidson, president, International Importers, Inc 3634 Tanners' Council of America, Inc.: Glass, Irving R., executive vice president 4064, 4082 Meyer, A., Jr., president 4064, 4079 Shannon, Thomas F., counsel 4064 Taylor, Hon. Roy A., a Representative in Congress from the State of North Carolina 2350, 4826 Teague, Hon. Olin E., a Representative in Congress from the State of Texas 3174 Tennant, C., Sons & Co., Aubrey Fletcher, executive vice president 2311 Texas Independent Producers & Royalty Owners Association, Netum A. Steed, president 4212, 4253 Thomas, Victor, general vice president, United Cement, Lime & Gypsum Workers 3756, 3786 Thomson, Hon. Vernon, a Representative in Congress from the State of Wisconsin Thorn, Prof. Richard S., Department of Economics, University of Pitts- burgh 1691 Thorpe, A. E., vice president and secretary-treasurer, U.S. National Fruit Export Council 853 Tilden, Richard A., Clothespin & Veneer Products Association, and Slide Fastener Association 2752 Timex, the U.S. Time Corp., Edward T. Carmody, vice chairman and director 3720 Tobacco Associates, Inc., John D. Palmer, president 1425 Torrence, Dr. Lois, American Association of University Women 869 Tower, Hon. John G., a U.S. Senator from the State of Texas 4264 Trade Relations Council of the United States, Inc.: Ashley, James M., chairman of the board 1109 Stewart, Eugene L., counsel 1109 Tranoco, Inc., Charles F. Travis, president 4455 Travis, Charles F., president, Tranoco, Inc 4455 Trigg, Eric A., president, Alcan Aluminum Corp 3370 Turchan, Thomas P., president, Synthetic Organic Chemical Manufacturers Association 4483, 4504 Uecker, William F., Window Shade Manufacturers Association 3857 Umbrella Frame Association of America, Leonard E. Finkel, president - - 3140 Union Carbide Corp., Herman K. Intemann, vice president 4322 Universal Foods Corp., Cal-Compack Foods, Gentry Corp., and Santa Maria Chili, Inc., W. Ed Crane, in behalf of 5001 Universal Foods Corp., Stella cheese division, and American producers of Italian-Type Cheeses Association, Stephen F. Owen, Jr., counsel 4866 United Cement, Lime & Gypsum Workers, Victor Thomas, general vice president 3756, 3786 United Glass & Ceramic Workers of North America, Ralph Reiser, international president 3756, 3767 United Shoeworkers of America, AFL-CIO, George 0. Fecteau, general president, and John E. Mara, president, Boots & Shoemakers Union - 4102 United States-Japan Trade Council, Nelson A. Stitt, director 2126 United States Potters Association, David A. Golden, customs and tariff counsel 3803 United Steelworkers of America, I. W. Able, president 1845, 1895 United Stone & Allied Products Workers of America, Hollan Cornett, executive board member 3756, 3792 U.S. Council of the International Chamber of Commerce, Hoyt P. Steele, chairman, commercial policy committee 1002 U.S. Dyestuff Producers, ad hoc committee of, James J. Marshall, in behalf of, and president, American Aniline Products, Inc- 4724 PAGENO="0019" XIX Page U.S. Feed Grains Council, Clarence Paimby, executive vice president_ - - - 795 U.S. National Fruit Export Council, A. E. Thorpe, vice president and secretary-treasurer 853 U.S. Producers of Flat Glass, Eugene L. Stewart, counsel 1504 U.S. Time Corp., Timex, Edward T. Carmody, vice chairman and director 3720 Walker, Hon. E. S. Johnny, a Representative in Congress from the State of New Mexico 1337 Ward, Robert E., Northwest Canners & Freezers Association, Oregon Strawberry Council, and California Strawberry Advisory Board 3743 Warner & Swasey Co., George W. Herkner, executive vice president 2845, 2971 Warrell, C. J., domestic bicycle tire and tube industry 3450 Watkins, Hon. G. Robert, a Representative in Congress from the State of Pennsylvania 1829 Watson, Arthur K., chairman, Emergency Committee for American Trade 1343 Watson, Don, president, Panhandle Producers & Royalty Owners Asso- ciation 4212, 4248 Wedell, Gustav, chairman, business practices committee, Danish-American Trade Council, Inc 1626 West Coast Metal Importers Association, John Quimby, past director - - 2228 Westwood, Richard, president, EMBA Mink Breeders Association~~ 4012 Whalley, Hon. J. Irving, a Representative in Congress from the State of Pennsylvania 4827 White, Hon. Richard C., a Representative in Congress from the State of Texas 2749, 4211 Whitener, Hon. Basil L,, a Representative in Congress from the State of North Carolina 1499 Willis, Hon. Edwin E., a Representative in Congress from the State of Louisiana 4206 Willson, R. B., Co., Inc., Robert B. Willson, president 3462 Wilson, T. A., president, Boeing Aircraft 1343, 1347 Wilton & Velvet Carpet and Rug Importers, Robert E. Herzstein, counseL 2599 Window Shade Manufacturers Association, William F. Uecker 3857 W olfson, J. Theodore, president, Business Builders International, Inc - - - 857 Wyatt, Hon. Wendell, a Representative in Congress from the State of Oregon 1089 Wyman, Hon. Louis C., a Representative in Congress from the State of New Hampshire 2355 Zukowsky, Norman, international president, International Leather Goods, Plastics & Novelty Workers Union, AFL-CIO 4130 Zablocki, Hon. Clement J., a Representative in Congress from the State of Wisconsin 1335 MATERIAL SUBMITTED FOR THE RECORD GOVERNMENT OFFICIALS Clubb, Bruce E., Commissioner, Tariff Commission, statement before the Senate Finance Committee hearings on the International Antidumping Code, June 27, 1968 1942 Freeman, Hon. Orville L., Secretary of Agriculture, Department of Agricul- ture inspection /of meat exports from foreign countries to the United States 696 Furness, Miss Betty, Special Assistant to the President for Consumer Affairs, letter dated June 10, 1968, to Chairman Mills 64 Roth, Ambassador William M., Special Representative for Trade Negotia- tions: Absolute increase in imports of principal commodities 1960-67 107 Agricultural concessions received by United States in Kennedy round 710 Comparison of watch prices 699 Dye export.s financed by AID 574 Establishment of STR and TIC 560 European tax systems (including exhibits A through E) 53 Experience to date with the 1968 investments under the mandatory investments restraint program and relationship of this program to exports 386 International Grains Arrangement, 1967 394 PAGENO="0020" xx Roth, Ambassador Wffliam M.-Continued Justification for adjustment assistance program related to increased Page imports 559 Nonrubberfootwear 701 Outline of trade policy study and supporting computer program 442 Preliminary inventories of nontariff barriers 122 Preliminary inventory of nontariff barriers affecting U.S. trade in agricultural products 123 Preliminary inventory of nontariff barriers affecting U.S. trade in industrial products 220 Inventory of alleged U.S. nontariff barriers 308 Nontariff barriers, by William B. Kelly, Jr 313 Production of ASP chemicals by one, two, or three firms 599 Progress in the elimination of foreign nontariff barriers 609 Recent changes in the use of nontariff barriers by other countries - - 721 Retaliatory action by United States 645 Selected industries with tariff reduction greater than the overall aver- age reduction of 35 percent 580 Selectivity of the German added value tax 115 STR consideration of the representations of interested groups 566 Table 1-Chemicals and allied products 521 Table 2-Benezenoid chemicals 522 Table 3-Intermediates 523 Table 4-Dyes and azoics 524 Table 5-Pigments 525 Table 6-Medicinals 526 Table 7-Other benzenoid products 527 Table 8-Comparison of U.S. and EEC tariff rates for large-volume benzenoid intermediates 528 Table 9-U.S. chemical exports, imports, and trade balance by prin- cipal destination and source, 1961-67 529 Table 10-Benzenoid chemical rates of duty, ad valorem equivalents, and 1964 imports 531 Table 11-Chemicals and allied products; new capital expenditures by selected industries and industry groups, 1958-67 547 Table 12-Annual plant and equipment expenditures abroad by U.S. manufacturing companies: all manufacturing and chemicals and allied products 547 Table 13-Estimates of plant and equipment expenditures by foreign affiliates of U.S. companies, by area and industry, 1965-68 547 Table 14-Chemicals and allied products: sales by American-owned enterprises abroad and exports from the United States 548 Table 15-Research and development expenditures, by industry, 1958-66 548 Table 16-Selected employment data for chemicals and allied prod- ucts, industry, intermediate coal tar products industry, and all manu- facturing industries, 1958-68 549 Table 17-Selected economic indicators for the intermediate coal-tar products industry, 1958-66 550 Table 18-Index of industrial production (1957-59 equals 100) 550 Table 19-Selected economic data: comparisons of chemicals and allied products industry with all manufacturing industries, 1958-67 551 U.S. exports, excluding military grant aid, in current and constant dollars, 1960-67 587 U.S. exports financed under the Public Law 480 and AID programs, 1960-67 575 U.S. imports and exports by major industries 100 Rusk, Hon. Dean, Secretary of State: Analysis of U.S. exports to Europe, 1957-1967 725 Allied efforts in Europe 674 Letter dated June 13, 1968, from H. G. Torbert, Jr., Acting Assistant Secretary for Congressional Relations, to Chairman Mills re plac- ing before the Federal Maritime Commission the views of the United Kingdom Government 689 PAGENO="0021" XXI Smith, Hon. Cyrus R., Secretary, Department of Commerce: Page Annual value of U.S. exports, imports, and merchandise balance 83 Commerce export promotion activities-relation to private efforts and measurement of results 380 Major commodity increases in U.S. domestic exports from 1960 to 1967 98 Major commodity increases in U.S. imports from 1960 to 1967 97 Selected data on foreign transactions of the United States in the first quarter of 1968 available as of the middle of May 1968 88 Trends in U.S. foreign trade, 1960-67 and January-April 1968 95 U.S. balance of payments in the first quarter 1968 84 U.S. trade by end-use categories, 1960_67 93 Wirtz, Hon. W. Willard, Secretary, Department of Labor: Automotive Products Trade Act of 1965 (APTA) 554 International Labour Organisation (ILO) and working conditions~ - 377 PUBLIC A. & A. Trading Co., et al., H. William Tanaka, counsel, in behalf of certain importers of electronic products, statement 3654 Adams, Charles F., chairman of the board, Raytheon Co., telegram dated July 12, 1968, to Chairman Mills 3634 Addonizio, Mayor Hugh J., Newark, N.J., statement 1473 Ad Hoc Committee of Galvanized Electrical Transmission Tower Fabri- cators: Letter dated May 31, 1967, from David T. Searls, counsel, Charles B. Gannaway, Jr., chairman, re imposition of countervailing duties on imports of Italian galvanized electrical transmission towers 2220 Letter dated July 11, 1968, from David T. Scans, counsel, to Chairman Mills, re strengthening of countervailing duty statute 2226 Judicial interpretation as to what, is a bounty under countervailing duty law 2216 Adler, Kurt S., Inc., Kurt S. Adler, president, letter dated May 29, 1968, to Chairman Mills 3170 AFL-CIO, Nathaniel Goldfinger, diiector, department of research, addi- tional views on ad~ustment assistance provisions of the Trade Expansion Act of 1968 1107 Aircraft Locknut Manufacturers Association, et al, George P. Byrne, Jr., secretary and legal counsel, statement 3027 Air Transport Association of America, statement 4414 Akin, Paul B., president, Laclede Steel Co., statement 2255 Alabama Garment Manufacturers Association, James Utsey, president, letter dated June 18, 1968, to Chairman Mills, with resolution attached and with covering letter from Hon. Bill Nichols, a Representative in Congress from the State of Alabama 2626 Alabama, State of, Hon. Albert P. Brewer, Governor, telegram dated July 8, 1968, to Chairman Mills 4362 Alaska Fishermen's Union, George Johansen, secretary-treasurer, state- ment Allen, John R., vice president, eastern region, McDonnell Douglas Corp., letter dated July 16, 1968, to Chairman Mills 2798 Allerhand, Irving W., vice president, Consolidated International Trading Corp., statement 4186 Allied Chemical Corp., Chester M. Brown, chairman of the board, state- ment 4785 All-State Welding Alloys Co., Inc., ThOmas D. Nast,. president, letter dated July 3, 1968, to Chairman Mills 3374 Amalgamated Clothing Workers of America, AFL-CIO, Milton Fried, director of research, and International Ladies' Garment Workers' Union, AFL-CIO, Lazare Teper, director of research, letter dated June 14, 1968, to Chairman Mills 2641 Amalgamated Meat Cutters & Butcher Workmen of North America, AFL-CIO, Abe Feinglass, international ~ice president, director, fur and leather department, statement 4182 American Bankers Association, Charls E. Walker, executive vice president, letter dated June 17, 1968, to Chairman Mills 1809 PAGENO="0022" XXII American Hand-Made Glassware Industry, J. Raymond Price, executive Page secretary of Glass Crafts of America, statement in behalf of 3819 American Hardboard Association, J. Mason Meyer, executive secretary, statement 4468 American Importers Association: O'Brien, Gerald, executive vice president, statement on U.S. foreign trade policy before Trade Information Committee of Office of President's Special Representative for Trade Negotiations, May 20, 1968 841 Floor covering group: Rostov, Charles I., statement 2603 Additional statement 2618 Textile and apparel group: Daniels, Michael P., counsel, report to the President on investigation No. 332-55 under section 332 of the Tariff Act of 1930 by U.S. Traiff Commission 2433 American Institute for Imported Steel, Inc.: Continuous casting; taking over 10 percent of semifinished steel pro- duction, article from 33/The Magazine of Metal Producing 2103 Deliveries of rolled steel products in countries of the European coal and steel community 2103 U.S. balance of trade-Steelmaking raw material, 1967 2102 American-International Charolais Association, J. Scott Henderson, execu- tive secretary, letter dated June 5, 1968, to Chairman Mills 3332 American Iron & Steel Institute, Thomas F. Patton: Discussions of steel imports with OEP-response to questions by Congressman Curtis 1917 Steel and the National Security, April 1968 1857 Steel import controls of other countries-response to question by Congressman Schneebeli 1910 "Uniqueness" of steel-response to question by Congressman Ullman 1908 American Koyo Corp., J. B. Gray, corporate services manager, letter dated July 9, 1968, to Chairman Mills 2268 American Loudspeaker Manufacturers Association, Eugene L. Stewart, counsel, letter dated July 3, 1968, to Hon. Jackson E. Betts, a Repre- sentative in Congress from the State of Ohio, re Far East comparative wages 3630 American Metal Importers Association, Inc., Aubrey L. Moss, president, letter dated July 1, 1968, to Committee on Ways and Means 3377 American Mining Congress, J. Allen Overton, Jr., executive vice president, letter dated May 29, 1968, to Chairman Mills, with attachments 1946 Declaration of Policy-1967-68 1947 Summary of issues discussed in AMC staff study 1948 Staff study and comparative analysis by the AMC of the International Antidumping Code 1949 American Mushroom Institute, Ronald B. Hunte, executive director, letter dated June 26, 1968, to Chairman Mills 5088 American National Cattlemen's Association, C. W. McMillan, executive vice president, letter dated July 9, 1968, to Chairman Mills, re explana- tion of the proposed amendments to the Meat Import Act of 1964 3211 American Newspaper Publishers Association, Stanford Smith, general manager, statement 4465 American Paper Institute, Inc., Edwin A. Locke, Jr., president, statement~. 4460 American Pipe Fittings Association, T. William C. Smith, president, letter datedJune20, 1968, to Chairman Mills 2259 American Scotch Highland Breeders' Association, Margaret Manke, secretary, letter dated June 29, 1968, to Chairman Mills 3331 American Sprocket Chain Manufacturers Association, J. E. Cooper, presi- dent, R. E. Lambert, chairman, Committee on Government Relations, andL.E. Stybr, executive director, statement 3039 American Textile Manufacturers Institute, Frederick B. Dent, president, letter dated July 9, 1968, to Hon. Thomas B. Curtis, a Representative in Congress from the State of Missouri, re statement of position on H.R. 17551 2388 Amperex Electronic Corp., Frank L. Randall, Jr., president, statement 3505 Anderson, M. Allen, president, Premier Santa Gertrudis Association, resolution, dated May 26, 1968, with covering letter from Hon. Roman L. Hruska, a U.S. Senatorfromthe State of Nebraska 3333 PAGENO="0023" XXIII Angevine, Erma, executive director, Consumer Federation of America, Page letter dated July 12, 1968, to Chairman Mills 1739 Arizona Cattle Feeders' Association, D. C. Entz, chairman, board of directors, statement 3306 Arizona Cattle Growers' Association, statement 3306 Armco Steel Corp., C. William Verity, Jr., president, statement 2253 Ashland Oil & Refining Co.: Atkins, Orin E., president, letter dated July 5, 1968, to Chairman Mills Whealy, Roland A., vice president,statement 4393 Atkins, Orin E., president, Ashland Oil,& Refining Co., letter dated July 5, 1968, to Chairman Mills 4397 Australian Meat Board, W. W. Stenning, North American representative, statement, with forwarding letter from the State Department 3301 Australian Mining Industry Council, statement, with forwarding letter from Department of State 2322 Australian Wool Tops Exporters, statement, with forwarding letter from Department of State 2734 Automobile Manufacturers Association, statement 1759 Baldanzi, George, international president, United Textile Workers of America, AFL-CIO, statement 2628 Barsy, Solbert J., Chicago, Ill., letter dated July 8, 1968, to Chairman Mills 2274 Bartel, Andrew, president, Great Lakes Mink Association, statement. - -- 4017 Bass, V. J., vice president, J. E. Barnard & Co., Inc., letter dated June 27, 1968, to Chairman Mills 1806 Battenfeld Grease & Oil Corp. of New York, G. W. Miller, chairman of the board, statement, with forwarding letter from Hon. Henry P. Smith III, a Representative in Congress from the State of New York 4422 Battin, Hon. James F., a Representative in Congress from the State of Montana: Economic "abyss" seen by Martin; Reserve chief asks rise in taxes and spending cut, article from June 12, 1968, New York Times 989 U.S. trade surplus goal unattainable, official says, article from June 6, 1968, Wall Street Journal 988 Bauer, Richard J., president, Independent Zinc Alloyers Association, statement 2304 Baughman, Harry W., Jr., national president, Window Glass Cutters League of America, statement 3824 Beeghly, Charles M., Jones & Laughlin Steel Corp., telegram dated June 20, 1968, to Chairman Mills 1926 Bell, David H., president, Ohio Oil & Gas Association, letter dated May 27, 1968, to Committee on Ways and Means 4392 Belridge Oil Co., R. W. Trueblood, president, statement 4269 Bendix Corp., Michael Blumenthal, president, Bendix International, telegram dated July 12, 1968, to Chairman Mills 3632 Bendix International, W. Michael Blumenthal, president, industry repre- sentations during Kennedy round 1251 Bennett, William E., president, Kentuckiana World Commerce Council, Inc., letter dated June 25, 1968, to Chairman Mills, with resolution attached 1775 Bernard, J. E., & Co., Inc., V. J. Bass, vice president, letter dated June 27, 1968, to Chairman Mills 1806 Beskind, Claire, president, League of Women Voters of the Princeton Com- munity (N.J.), letter dated June 20, 1968, to Chairman Mills 997 Bethlehem Steel Corp., Edmund F. Martin, chairman, letter dated June 17, 1968, to Chairman Mills 1926 Black & Decker Manufacturing Co., Alonzo G. Decker, Jr., chairman of the board and president, letter dated June 20, 1968, to Chairman Mills 2268 Blake, Grant, president, Idaho Beekeepers Association, Inc., statement - - 3469 Blincoe, Richard D., president, Idaho Cattle Feeders Association, Inc., statement 3316 Blood, Mrs. Lawrence, president, League of Women Voters of Reading (Mass.), letter dated June 25, 1968, to Chairman Mills 994 Blumenthal, Harry & Sons, Inc., Harry Blumenthal, president, letter dated July 8, 1968, to Chairman Mills 3378 Blumenthal, W. Michael, president, Bendix International: Industry representations during Kennedy round 1251 Telegram dated July 12, 1968, to Chairman Mills 3632 PAGENO="0024" XXIV Page B'nai B'rith, Dr. William A. Wexier, president, statement 1028 Bommarito, Peter, president, United Rubber, Cork, Linoleum, & Plastic Workers of America, AFL-CIO, statement 4180 Bourbon Institute, Vice Adm. William J. Marshall, USN (retired), president 2799 Branch, C. B., executive vice president, Dow Chemical Co., statement - - - 4793 Brewer, Hon. Albert P., Governor of the State of Alabama, telegram dated July 8, 1968, to Chairman Mills 4362 Bright Wire Goods Manufacturers Service Bureau, et al., George P. Byrne, Jr., secretary and legal counsel, statement 3027 Brook, John G., chairman, Lear Siegler, Inc., telegram dated July 12, 1968, to Chairman Mills 3633 Brown, Chester M., chairman of the board, Allied Chemical Corp., state- ment 4785 Brown, Hon. Clarence J., Jr., a Representative in Congress from the State of Ohio, statement 3300, 4887 Brown, L. G., president, Precision Drawn Steel Co., letter dated June 4, 1968, to Chairman Mills, with attachement 2273 Buckner, Emil H., secretary-treasurer, United States Extrusions Corp., letter dated June 27, 1968, to Chairman Mifis 3377 Bucy, J. Fred, group vice president, Texas Instruments Inc., telegram dated July 11, 1968, to Chairman Mills 3634 Bullen, George S., legislative director, National Federation of Independent Business, statement 1730 Burke, Hon. James A., a Representative in Congress from the State of Massachusetts: Importation of footwear from foreign countries, material relatiug to - 727 Strawberries, statistical tables and comments 3749 Burns, Hon. John A., Governor of the State of Hawaii, statement 2353 Business Builders International, Inc., J. Theodore Wolfson, president, article from Wall Street Journal entitled "Steel Firms' Profits Are Expected To Spurt as Outlays Begin To Pay Off, Analysts Say" 859 Byrne, George P., Jr., secretary and legal counsel: Service Tools Institute, statement 3046 U.S. Cap Screw Service Bureau, U.S. Wood Screw Bureau, U.S. Machine Screw Service Bureau, Tapping Screw Service Bureau, Socket Screw Products Bureau, Tubular and Split Rivet Council, Aircraft Locknut Manufacturers Association, and Bright Wire Goods Manufacturers Service Bureau, statement 3027 Caggiano, G. Robert, director, Bureau of International Trade, Department of Commerce and Development, Commonwealth of Massachusetts, statement 1065 California-Arizona Citrus Industry, statement 5041 California Cattlemen's Association, Will Gill, Jr., president, statement. - 3308 California Dried Fig Advisory Board, Ron Klamm, manager, and managing director, California Fig Institute, statement 3308 California Fig Institute, Ron Klamm, managing director, and manager, California Dried Fig Advisory Board, statement 3308 Campbell, Dr. Persia, National Consumers League, statement 870 Campbell, R. A., chairman, liaison committee, Cooperating Oil and Gas Association, statement 4238 Candle Manufacturers Association, H. R. Parker, secretary, letter dated June 25, 1968, to Chairman Mills~ 3170 Canned Meat Importers Association, Ronald Wright, president, statement 3338 Carlip, Mrs. Alfred B., chairman, foreign policy committee League of Women Voters of Broome County (N.Y.), letter dated June 28, 1968, to Chairman Mills 998 Carnation Co., Jule N. Kvamme, corporate department, statement 4792 Carson, Mrs. Robert M., president, League of Women Voters of Winter Park-Orlando, Fla., letter dated June 26, 1968, to Chairman Mills 992 Cast Iron Soil Pipe Institute, Frederick D. Hunt, foreign trade consultant, letter dated July 22, 1968, to Representative Curtis, re authority in negotiating International Antidumping Code 2241 PAGENO="0025" xxv Cement Industry Antidumping Committee, John C. Mundt, vice chair- man: Memorandum on the legal authority of the executive branch to Page negotiate the International Antidumping Code 1388 Supplementary statement 1384 Certified Livestock Markets Association, C. T. "Tad" Sanders, general manager, letter dated July 3, 1968, to Chairman Mills 3332 Chamber of Commerce of the New Orleans area, Murray C. Fincher, president, letter to Chairman Mills, with statement attacheth 1785 Chernoff, Mrs. Max, president, League of Women Voters of Great Neck, N.Y., letter dated June 21, 1968, to Chairman Mills 998 Citizens State Bank & Trust Co., Wayne R. Starr, president, letter dated June20, 1968, to Chairman Mills 1824 Citronbaum, Jack, executive vice president, Luggage & Leather Goods Manufacturers of America, Inc., statement 4131 Clay, Henry J., Netherlands Chamber of Commerce in the United States, Inc., letter dated June 25, to Hon. John W. Byrnes, re quantitative restrictions 1594 Clothing Manufacturers' Federation of Great Britain, and the Shirt, Collar & Tie Manufacturers' Federation, statement, with forwarding letter from the Department of State, 2736 Committee of Producers of Ferroalloys and Related Products, Ronald L. Cunningham, letter dated July 12, 1968, from Lloyd Symington, counsel, to Chairman Mills, re questions addressed by Congressman Curtis - - - 2191 Conneaut, Ohio, city of, Arvo E. Sundberg, statement 2248 Conner, Commissioner Doyle, Florida Department of Agriculture, state- ment 5069 Conrad, A. B., secretary-manager, West Mexico Vegetable Distributors Association, statement, with forwarding letter from Hon. Morris K. Udall, a Representative in Congress from the State of Arizona 5088 Consolidated International Trading Corp., Irving W. Allerhand, vice president, statement 4186 Consumer Federation of America, Erma Angevine, executive director, let- ter dated July 12, 1968, to Chairman Mills 1739 Continental Oil Co., statement 4398 Continental Baking Co. George R. Vail vice president and director, and president, Morton Frozen Foods Division, statement 3342 Cooper, J. E., president, R. E. Lambert, chairman, Committee on Govern- ment relations and L. E. Stybr, executive director, American Sprocket Chain Manufacturers Association, statement 3039 Cooperating Oil & Gas Association, R. A. Campbell, chairman liaison committee, statement 4238 Coors Porcelain Co., Clinton M. Hester, attorney, statement 3827 Copper & Brass Fabricators Council, Inc. ,Y. E. Veltfort, managing director, letter dated June 19, 1968, to Chairman Mills, with statement attached_ 2325 Cordage Institute, Merle S. Robie, chairman, executive committee, state- ment 2372 Corn Refiners Association, Inc., Robert C. Liebenow, president, statement- 5093 Courtright, C. A., president, Washington Cattle Feeders Association, letter dated June 5, 1968, to Chairman Mills 3329 Coyne, Robert W., president, Distilled Spirits Institute, Inc., statement - 2811 Crawford, G. R., executive vice president, Smithfield Packing Co., Inc., letter dated June 10, 1968, to John M. Martin, Jr., chief counsel, Com- mittee on Ways and Means 3343 Crompton & Knowles, Corp., James W. L. Monkman, vice president, statement 4798 Culbertson, W. 0., Jr., president, New Mexico Cattle Growers' Association, statement 3322 Cunningham, Ronald L., Committee of Producers of Ferro-alloys & Related Products, letter dated July 12, 1968, from Lloyd Symington, counsel, to Chairman Mills, re questions addressed by Congressman Curtis 2191 Curl, William W., president, Texas Citrus Mutual, statement 5083 Curtis, Thomas B., a Representative in Congress from the State of Mis- souri: Memorandum to the American Iron & Steel Institute and their reply-Indirect imports and exports 1921 Memorandum to the Emergency Committee for American Trade and their reply-Problems of measuring steel export-import trade 1364 PAGENO="0026" XXVI Daniel, Mrs. T. Emory, president, League of Women Voters of De Kalb Page County (Ga.), letter dated July 8, 1968, to Chairman Mills 992 Daniels, Michael P., counsel: American Importers Association, textile and apparel group, report to the President on investigation No. 332-55 under section 332 of the Tariff Act of 1930 by U.S. Tariff Commission 2433 Japan Chemical Fibers Association, statement with forwarding letter from Department of State 2728 Japanese Chamber of Commerce, woolens division, statement 2743 Swiss Union of Commerce and Industry, statement, with covering letter from State Department 4771 Danish American Trade Council, Inc., Finish American Chamber of Com- merce, Inc., Norwegian-American Chamber of Commerce, Inc., and Swedish Chamber of Commerce of the United States, Inc., statement_ - - 1775 Davis, Warren B. director, planning and economics, Gulf Oil Corp., state- ment 4401 Davis Wire Corp., James L. Walker, president, letter dated July 9, 1968, to Chairman Mills, with attachments 2269 Decker, Alonzo G., Jr., chairman of the board and president, Black & Decker Manufacturing Co., letter dated June 20, 1968, to Chairman Mills 2268 Del Signore, M., president, et al., Local Union No. 14256, District 50, United Mine Workers of America, letter dated July 5, 1968, to John M. Martin, Jr., chief counsel, Committee on Ways and Means 4808 Demeter, Mrs. James, Koib-Lena Cheese Co., letter dated May 23, 1968, to Chairman Mills 4901 Dent, Frederick B., president, American Textile Manufacturers Institute, letter dated July 9, 1968, to Hon. Thomas B. Curtis, a Representative in Congress from the State of Missouri, re statement of position on H.R. 17551 2388 Dent, Hon. John, a Representative in Congress from the State of Pennsyl- vania, nontariff trade barrier inventory by country 3878 Derby, Roland E., Jr., president, Nyanza, Inc., letter dated June 17, 1968, to Chairman Mills 4802 Dc Santis, Arthur A., executive secretary, Italy-American Chamber of Commerce, letter dated June 20, 1968, to Chairman Mills, re oil exports to Italy 1625 Detmers, Mrs. Bruce, president, League of Women Voters of Hamden (Conn.), letter dated June 24, 1968, to Chairman Mills 991 Deuschle, B. C., president, Shears, Scissors, and Manicure Implement Manufacturers Association, statement 3063 Distilled Spirits Institute, Inc., Robert W. Coyne, president, statement - 2811 Diversified Wire & Steel Corp., David P. Piering, president, telegram, dated June 14, 1968, to Chairman Mills 2202 Docking, Hon. Robert B., Governor, State of Kansas, statement 4363 Doherty, Mrs. George, president, League of Women Voters of Anderson (Ind.), letter dated July 12, 1968, to Chairman Mills 993 Dole, Hon. Bob, a Representative in Congress from the State of Kansas, statement 4365, 4888 Domestic Litharge Industry, statement 2301 Dorn, Hon. William Jennings Bryan, a Representative in Congress from the State of South Carolina: Additional statement 2412 Joint statement of over 100 Members of the House presented by Mr. Dorn, secretary, Informal House Textile Committee Group 2414 Dow Chemical Co., C. B. Branch, executive vice president, statement~_ 4793 Dray, Margaret B., economist, Chicago, Ill., letter dated May 19, 1968, to Ways and Means Committee 2275 Dryer, Edwin Jason, counsel, Independent Refiners Association of America, statement Duncan, Hon. John J., a Representative in Congress from the State of Tennessee, letter dated June 13, 1968, to Chairman Mills 4890 Dunn, Stephen F., president, National Coal Association, statement 4423 Eberlein, John G., chairman, drawback committee, National Customs Brokers & Forwarders Association of America, Ine., pamphlet entitled "What Is Customs Drawback?" 1024 PAGENO="0027" XXVII Edelman, L., vice president, Gafco, Inc., letter dated July 15, 1968, to Page Chairman Mills 4062 Edgerton, William B., Friends Committee on National Legislation, statement 1807 Electronic Industries Association: Jaumot, F. E., Jr., chairman, semi-conductor division, letter dated July 10, 1968, to Chairman Mills 3507 McCauley, Alfred R., special counsel to consumer products division, letter dated June 27, 1968, to John M. Martin, Esq., chief counsel, Committee on Ways and Means, forwarding memorandum of the Magnavox Co. on color television pricture tubes 3496 Moore, William H., staff vice president, Government products division, letter dated July 12, 1968, to Chairman Mills 3507 Stewart, Eugene L. counsel, letter dated July 3, 1968, to Hon. Jackson E. Betts, a Representative in Congress from the State of Ohio, re Far East comparative wages 3630 Ellis, Don A., treasurer, Tektronix, Inc., statement 3704 EBMA Mink Breeders Association: Westwood, Richard E., president, statement 4014 Wittig, Harley, past president, statement 4013 Emergency Committee for American Trade: A critique of the Trade Relations Council's analysis of certain 1958/ 60-1964 declines in employment 1352 Memorandum from Representative Thomas B. Curtis of Missouri, and reply thereto-Problems of measuring steel export-import trade 1364 Entz, D. C., chairman, board of directors, Arizona Cattle Feeders' Asso- ciation, statement 3306 Erie Technical Products, Inc., George P. Fryling, president, telegram dated July 11, 1968, to Chairman Mills 3633 Evans, Hon. Daniel J., Governor of the State of Washington, letter dated June 7, 1968, to Chairman Mills, with position paper attached 1719 Evaporated Milk Association, Fred J. Greiner, executive vice president, statement 4897 Expanded Shale, Clay & Slate Institute, the Lightweight Aggregate Pro- ducers Association, and the National Slag Association, statement 3813 Farrell Lines, `no., statement 1791 Feighan, Hon. Michael A., a Representative in Congre~s from the State of Ohio, statement 2087 Feinglass, Abe, international vice president, director, Fur and Leather Department, Amalgamated Meat Cutters & Butcher Workmen of North America, AFL-CIO, statement~~ 4182 Fezell, George H., president, Magnavox Consumer Electronics Co., tele- gram dated July 10, 1968, to Chairman Mills 3633 Fincher, Murray C., president, Chamber of Commerce of the New Orleans Area, letter to Chairman Mills, with statement attached 1785 Fine & Specialty Wire Manufacturers' Association, J. A. Mogle, chairman, foreign trade committee, statement 2275 Finish American Chamber of Commerce, Inc., Danish American Trade Council, Inc., Norwegian-American Chamber of Commerce, Inc., and Swedish Chamber of Commerce of the tnited States, Inc., statement_ - 1775 Finney, Wray, president, Oklahoma Cattlemen's Association, letter dated May 28, 1968, to Chairman Mills 3327 First National City Bank, Walter B. Wriston, president, letter dated July 12, 1968, to Chairman Mills, with attachment 1810 First Washington Net Factory, Inc., Carl Koring, president, letter dated May 22, 1968, to John Martin, Jr., chief counsel, Committee on Ways and Means 2727 Fifth Cleveland Steels, Inc., Peter H. Garfunkel, executive vice president, letter dated May 23, 1968, to Chairman Mills 2272 Fishman, Morris, & Sons, Clinton M. Hester, attorney, statement 2747 Fitch, T. S., president, Washington Steel Corp., letter dated June 28, 1968, to Chairman Mills 1928 Fletcher, Aubrey, executive vice president, C. Tennant, Sons & Co., letter dated June 21, 1968, to Chairman Mills, re statistics on lead and zinc~ 2318 Florida Department of Agriculture, Commissioner Doyle Conner, state- ment 5069 PAGENO="0028" XXVIII Florida Fruit and Vegetable Association, J. S. Peters, manager, member- ship and industry relations, letter dated July 29, 1968, to Congressman Page Thomas B. Curtis, re domestic market for fruits and vegetables 4978 Ford, Hon. Gerald R., a Representative in Congress from the State of Michigan, letter dated May 27, 1968, to Chairman Mills, with petition re mink industry attached 4061 Foerch, Mrs. Margaret, president, League of Women Voters of Michigan, letter dated June 28, 1968, to Chairman Mills 996 Forsythe, Russell, president, and James H. Warner, secretary, Ohio Cattle Feeders Association, letter dated June 17, 1968, to Chairman Mills, with attachment 3326 Forward America, Inc., Ed Wimmer, president, radio talk 1733 Foskett, John D., president, Homeshield Industries, letter dated July 3, 1968, to Chairman Mills 3369 Franko, Joseph J., treasurer, B. L. Lemke & Co., Inc., statement 4626 French Chamber of Commerce in the United States, Inc., Raymond J. Picard, president, statement 1773 Fried, Milton, director of research, Amalgamated Clothing Workers of America, AFL-CIO, and Lazare Teper, director of research, Interna- tional Ladies' Garment Workers' Union, AFL-CIO, letter dated June 14, 1968, to Chairman Mifis 2641 Friedson, N., Meat-U-Mat, Inc., letter dated June 12, 1968, to John M. Martin, Jr., chief counsel, Ways and Means, Committee 3344 Friends Committee on National Legislation, William B. Edgerton, state- ment 1807 Frost, M. F., vice president, Texas Farm Bureau, statement 5081 Fryling, George P., president, Erie Technical Products, Inc., telegram dated July 11, 1968, to Chairman Mills 3633 Fuel Oil Council of Maryland, Jay D. Kline, president, and Independent Oil Heat Dealers Association of Maryland, John M. Myers, president, letter dated July 5, 1968, to Chairman Mills 4420 Gal co, Inc., L. Edelman, vice president, letter dated July 15, 1968, to ChairmanMills 4062 Galvanized Electrical Transmission Tower Fabricators. (See Ad Hoe ~J~om- mittee of Galvanized, etc.) Galvin, Robert W., Motorola, Inc., telegram dated July 12, 1968, to Chairman Mifis 3634 Gannaway, Charles B. (See Ad Hoc Committee of Galvanized Transmis- sion Tower Fabricators.) Garfunkel, Peter H., executive vice president, Firth Cleveland Steels, Inc., letter dated May 23, 1968, to Chairman Mills 2272 Gehl's Guernsey Farms, Inc., John P. Gehl, statement 4894 General Dynamics Corp., John J. Graham, group vice president, telegram dated July 11, 1968, to Chairman Mills 3633 General Electric Co., statement 3657 Gerst, Leon W., president, Tenneco colors division, Tenneco Chemicals, Inc., statement 4780 Gill, Will, Jr., president, California Cattlemen's Association, statement_ - - 3308 Glass Crafts of America, J. Raymond Price, executive secretary, on behalf of the American Hand-Made Glassware Industry, statement 3819 Glass Workers' Protective Leagues of West Virginia, Pennsylvania, Ohio, and Indiana, Huberta M. Patterson, secretary, West Virginia League, statement 3826 Glenndenning, Howard A., president, Local Union No. 13896, District 50, United Mine Workers of America, letter dated July 3, 1968, to John Martin, Mr., chief counsel, Committee on Ways and Means 4809 Goldfinger, Nathaniel, director, department of research, AFL-CIO, addi- tional views on adjustment assistance provisions of the Trade Expansion Act of 1968 1107 Golson, Charles E. (See International Engineering & Construction In- dustries Council.) Gorton Corp., E. Robert Kinney, president, statement 3442 Graham, Harry L. (See National Grange.) Graham, John J., group vice president, General Dynamics Corp., telegram dated July 11, 1968, to Chairman Mills 3633 Granite City Steel Co., Nicholas P. Veeder, chairman of the board and president, statement 2254 PAGENO="0029" XXIX Page Gray, Charles M., manager, Insulation Board Institute, statement 4478 Gray, J. B., corporate services manager, American Koyo Corp., letter dated July 9, 1968, to Chairman Mills 2268 Great Lakes Mink Association, Andrew Bartel, president, statement 4017 Greater Fort Lauderdale (Fla.) Chamber of Commerce, Marshall M. Smith, letter dated July 3, 1968, to Committee on Ways and Means 1785 Green, Ronald W., commissioner, Department of Sea and Shore Fisheries, State of Maine, statement 3445 Greenaway, E., secretary, National Association of Glove Manufacturers, letter dated May 28, 1968, to Chairman Mills, with forwarding letter from the Department of State 2742 Greiner, Fred J., executive vice president, Evaporated Milk Association, statement 4897 Grube, Mrs. Alfred, president, League of Women Voters of Sheboygan (Wis.), letter dated June 27, 1968, to Chairman Mills 1001 Guam, Territory of, Hon. Antonio B. Won Pat, Representative in Wash- ington, statement 3740 Gulf Oil Corp., Warren B. Davis, director, planning and economies, statement 4401 Haber, Fred S., president, Ocean Freight Consultants, Inc., statement 1801 Hahn, Dorothy Parshley, chairman, foreign economic policy, League of Women Voters of Falmouth (Mass.), letter dated July 1, 1968, to Chair- man Mills 994 Hall, Wilfred H., executive vice president, National Oil Jobbers Council, statement 4366 Hamilton Watch Co., Arthur B. Sinkler, chairman of the board, letter dated July 12, 1968, to Chairman Mills 3741 Hampton, Robert N., director of marketing and international trade, National Council of Farmer Cooperatives, letter dated July 12, 1968, to Chairman Mills 1735 Hansen, Hon. George V., a Representative in Congress from the State of Idaho 4060 Hansen, Mrs. Howard, president, League of Women Voters of Glen Ellyn (Ill.), letter dated June 19, 1968, to Chairman Mills 992 Hardwood Plywood Manufacturers Association, statement 4475 Harnischfeger, Walter, Milwaukee, Wis, statement 5098 Harshaw Chemical Co., R. A. Lucht, president, letter dated May 31, 1968, to Chairman Mills 4800 Hartke, Hon. Vance, a U.S. Senator from the State of Indiana, statement re International Antidumping Act 1939 Harvey, Dr. E. W., administrator, Otter Trawl Commission of Oregon, statement 3450 Hathaway, Hon. William D., a Representative in Congress from the State of Maine, statement 4010 Haughton, D. J., chairman of the board, Lockheed Aircraft Corp., telegram dated July 11, 1968, to Chairman Mills 3633 Hawaii Cattlemen's Council, Robert L. Hind, Jr., president, letters (with attachments) dated June 1, and June 14, 1968, to Hon. Patsy T. Mink, a Representative in Congress from the State of Hawaii, with covering letter 3308 Hawaii, State of, Hon. John A. Burns, Governor, statement 2353 Hawley Fuel Corp., Mark R. Joseph, vice president, letter dated June 11, 1968. to Chairman Mills 4427 Hays, George L., Mission Creek Angus Ranch, statement, and Mrs. George L. Hays, president, Idaho Cow Belles, letter dated May 22, 1968, to Hon. James A. McClure, a Representative in Congress from the State of Idaho, with covering letter 3335 Heinkel, Fred V., president, Midcontinent Farmers Association & Missouri Farmers Association, Inc., statement 1310 Henderson, J. Scott, executive secretary, American-International Charolais Association, letter dated June 5, 1968, to Chairman Mills 3332 Hester, Clinton M. attorney: Coors Porcelain Co., statement 3827 Fishman, Morris & Sons, statement 2747 Hilton-Davis Chemical Co., R. L. Marienthal, manager of chemical sales, letter dated June 21, 1968, to Committee on Ways and Means - 4801 PAGENO="0030" xxx Hind, Robert L., Jr., president, Hawaii Cattlemen's Council, Inc., letters (with attachments) dated June 1, and June 14, 1968, to Hon. Patsy T. Mink, a Representative in Congress from the State of Hawaii, with Page covering letter 3308 Homeshield Industries, John D. Foskett, president, letter dated July 3, 1968, to Chairman Mifis 3369 Howard, John A., vice president and general manager, Magruder Color Co., Inc., letter dated June 24, 1968, to John M. Martin, Jr., chief counsel, Committee on Ways and Means 4801 Hunt, Frederick D., foreign trade consultant, Cast Iron Soil Pipe Institute, letter dated July 22, 1968, to Representative Curtis, re authority in ne- gotiating International Anti-dumping Code 2241 Hunte, Ronald B., executive director, American Mushroom Institute, letter dated June 26, 1968, to Chairman Mills 5088 Huston, Charles Lukens, Jr., president, Lukens Steel Co., letter dated June 24, 1968, to Chairman Mills 2257 Idaho Beekeepers Association, Inc., Grant Blake, president, statement - - 3469 Idaho Cattle Feeders Association, Inc., Richard D. Blincoe, president, statement 3316 Idaho Cow Belles, Mrs. George L. Hays, president, letter dated May 22, 1968, to Hon. James A. McClure, a Representative in Congress from the State of Idaho, with covering letter 3335 Independent Oil Heat Dealers Association of Maryland, John M. Myers, president, and Fuel Oil Council of Maryland, Jay D. Kline, president, letter dated July 5, 1968, to Chairman Mills 4420 Independent Petroleum Association of America, Dan L. Jones, general counsel, letter dated July 3, 1968, to Chairman Mills, re selected data on oils' balance of payments 4276 Independent Refiners Association of America, Edwin Jason Dryer, counsel, statement Independent Zinc Alloyers Association, Richard J. Bauer, president, statement 2304 Insulation Board Institute, Charles M. Gray, manager, statement 4478 Inter-American Committee on the Alliance for Progress (ClAP), Carlos Sanz de Santamaria, chairman, statement, with covering letter from State Department to Chairman Mills 1713 International Chemical Workers Union, Walter L. Mitchell, president, statement 4804 International Economic Policy Association, statement - 1727 International Engineering & Construction Industries Council, Charles E. Golson: Article from September-October 1967 issue Worldwide P. & I. Plan- ning entitled "~Senor, qué es una `U.S. Firm' segün la AID?" 822 Letter dated June 17, 1968, to Chairman Mills, re clarification of two points in the council's oral statement 828 Position paper entitled "The competitive position of United States engineering and construction firms in the international market"~ 809 International House, E. M. Rowley, president, letter dated July 10, 1968, to Chairman Mills, with resolution attached 1786 International Ladies' Garment Workers' Union, AFL-CIO, Lazare Teper, director of research, and Amalgamated Clothing Workers of America, AFIr-CIO, Milton Fried, director of research, letter dated June 14, 1968, to Chairman Mills 2641 International Trade Club of Chicago, statement 1787 International Union of Electrical, Radio & Machine Workers, AFL-CIO- CLC, Paul Jennings, president, statement 1740 Iowa Beef Producers Association, Orville Kalsem, president, statement~. 3318 Italy-American Chamber of Commerce: Dc Santis, Arthur A., executive secretary, letter dated June 20, 1968, to Chairman Mills, re oil exports to Italy 1625 Laraja, Edward, chairman, Dairy Products Importers Group, statement 1621 Jackson, Mrs. Robert F., president, League of Women Voters of Greater Toledo (Ohio), letter dated June 27, 1968, to Chairman Mills 999 Japan Chemical Fibres Association, Michael P. Daniels, counsel, statement with forwarding letter from Department of State 2728 PAGENO="0031" xxxi: Japanese Chamber of Commerce, Woblens Division, Michael P. Daniels, Page counsel, statement 2743 Jardox Fur Co., Arthur Rapaport, letter dated July 10, 1968, to Chairman Mills 4063 Jaumot, F. E., Jr., chairman, Semiconductor Division, Electronic Indus- tries Association, letter dated July 10, 1968, to Chairman Mills 3507 Jennings, Paul, president, International Union of Electrical, Radio, & Machine Workers, AFL-CIO--CLC, statement 1740 Johansen, George, secretary-treasurer, Alaska Fishermen's Union, state- ment 3444 Johnson, Howard, sales manager, Linen Thread Co., statement 2620 Johnson, Lindsay F. (See Lead-Zinc Producers Committee.) Johnson, Reuben L. (See National Farmers Union.) Jones, Mrs. Dewitt C., III, president, League of Women Voters of Fal- mouth (Mass.), letter dated July 1, 1968, to Chairman Mills 994 Jones & Laughlin Steel Corp., Charles M. Beeghly, telegram dated June 20, 1968, to Chairman Mills 1926 Jones, L. Dan, general counsel, Independent Petroleum Association of America, letter dated July 3, 1968, to Chairman Mills, re selected data on oils' balance of payments 4276 Joseph, Mark R., vice president, Hawley Fuel Corp. letter dated June 11, 1968, to Chairman Mills 4427 Kalsem, Orville, president, Iowa Beef Producers Association, statement_ - 3318 Kaminski, Jerome, president, International Union of District 50, United Mine Workers of America, letter dated July 11, 1968, to John M. Martin, Jr. chief counsel, Committee on Ways and Means 4809 Kansas, State of, Hon. Robert B. Docking, Governor, statement 4363 Katz Lawrence R. Polan, Katz & Co., Inc., letter dated July 9 1968, to Chairman Mills 3157 Kennedy, Edward E., research direetor,~ International Union of District 50, United Mine Workers of America, statement 1752 Kentuckiana World Commerce Council, Inc., William E. Bennett, presi- dent, letter dated June 25, 1968, to Chairman Mills, with resolution attached 1775 Kerr, Robert M., attorney, Specialty CrOps Conference, statement 5049 Keystone Steel & Wire Company, Walton B. Sommer, president and chairman of the board, letter dated June 10, 1968, to Chairman Mills, with statement attached 1927 King, Hon. Cecil R., a Representative in Congress from the State of California, letter dated February 13, 1968, to John M. Martin, Jr., chief counsel, Committee on Ways and Means, re trade ties between the United States and Canada with replies of the various Federal Depart- ments 2785 Kinkead Industries Inc., E. R. Meyer, letter dated July 1, 1968, to Chair- man Mills 3376 Kinney, E. Robert, president, Gorton Corp., statement 3442 Klamm, Ron, managing director, California Fig Institute, and manager, California Dried Fig Advisory Board, statement 3308 Kline, Jay D., president, Fuel Oil Council of Maryland, and Independent Oil Heat Dealers Association of Maryland, John M. Myers, president, letter dated July 5, 1968, to Chairman Mills 4420 Koring, Carl, president, First Washington Net Factory, Inc., letter dated May 22, 1968, to John Martin, Jr., chief counsel, Committee on Ways and Means 2727 Kolb-Lena Cheese Co., Mrs. James Demeter, letter dated May 23, 1968, to Chairman Mills 4901 Kummer, Mrs. Joseph, first vice president, League of Women Voters of Ann Arbor (Mich.), letter dated June 20, 1968, to Chairman Mills.~ 995 Kurtin, Harold, president, National Association of Secondary Material Industries, Inc., letter dated July 10, 1968, to Chairman Mills 2627 Kvamme, Jule N., corporate department, Carnation Co., statement 4792 Laclede Steel Co., Paul B. Akin, president, statement 2255 Lambert, R. E., chairman, committee on Government relations, J. E. Cooper, president, and L. E. Stybr, executive director, American Sprock- et Chain Manufacturers Association statement 3039 Lang, Ernest U., chief engineer, National-Standard Co., statement 1824 PAGENO="0032" XXXII Laraja, Edward, chairman, Dairy Products Importers Group, Italy- Page American Chamber of Commerce, Inc., statement 1621 Latella, John T., associate counsel, and Allan A. Rubin, vice president and counsel, U.S. Brewers Association, statement 2826 Lead-Zinc Producers Committee, Lindsay F. Johnson: Average E. & M. J. price per pound 2300 Factors preceding Presidential Proclamation No. 3257-September 22, 1958 2287 Leaf Tobacco Exporters Association, Inc., Malcolm B. Seawell, executive secretary and general counsel, statement 1429 League of Women Voters: Anderson (md.), Mrs. George Doherty, president, letter dated July 12, 1968, to Chairman Mills 993 Ann Arbor (Mich.), Mrs. Joseph Kummer, first vice president, letter dated June 20, 1968, to Chairman Mills 995 Beverly Hills (Calif.), ~vIrs. Bruce Rabin, president, letter dated June 18, 1968, to Chairman Mills 990 Broome County (N.Y.), Mrs. Alfred B. Carlip, chairmaii, foreign policy committee, letter dated June 28, 1968, to Chairman Mil1s~ 998 Cincinnati (Ohio), telegram dated June 1, 1968, to Chairman Mills~_ 999 Columbia-Boone County (Mo.), Mrs. James W~ Mackenzie, president, letter dated June 24, 1968, to Chairman Mills 997 De Kaib County (Ga.), Mrs. T. Emory Daniel, president, letter dated July 8, 1968, to Chairman Mills 992 Falmouth (Mass.), Dorothy Parshiey Hahn, chairman, foreign eco- nomic policy, and Mrs. Dewitt C. Jones III, president, letter dated July 1, 1968, to Chairman Mills 994 Glen Ellyn (Ill.), Mrs. Howard Hansen, president, letter dated June 19, 1968, to Chairman Mills 992 Great Neck (N.Y.), Mrs. Max Chernoff, president, letter dated June 24, 1968, to Chairman Mills 998 Greater Lafayette (md.), Mrs. Ralph Webb, president, letter dated June 27, 1968, to Chairman Mills 994 Greater Toledo (Ohio), Mrs. Robert F. Jackson, president, letter dated June 27, 1968, to Chairman Mills 999 Hamden (Conn.), Mrs. Bruce Detmers, president, letter dated June 24, 1968, to Chairman Mills 991 Indiana, Mrs. Robert S. Richey, president, letter dated July 1, 1968, to Chairman Mills 993 Long Beach (Calif.), Mrs. Marvin Tincher, president, letter dated June 24, 1968, to Chairman Mills 990 Los Gatos-Saratoga (Calif.), Mrs. Harold Martin, president, letter dated June 20, 1968, to Chairman Mills 991 Metropolitan Dade County (Fla.), Mrs. Robert T. Phillips, president, letter dated June 24, 1968, to Chairman Mills 991 Michigan, Mrs. Margaret Foerch, president, letter dated June 28, 1968, to Chairman Mills 996 Midland County (Tex.), Mrs. J. R. Sheeler, president, and Mrs. W. M. Raimer, foreign policy committee, letter dated June 26, 1968, to Chairman Mills 1000 New Berlin (Wis.), Mrs. Jack Prochnow, president, letter dated June 22, 1968, to Chairman Mills 1000 New Brighton (Minn.), Mrs. Paul A. Moore, Jr., president, letter dated June 20, 1968, to Chairmim Mills 996 Oklahoma, Jean Thomas, State president, letter dated June 20, 1968, to Chairman Mills 999 Princeton Community (N.J.), Claire Beskind, president, letter dated June 20, 1968, to Chairman Mills 997 Reading (Mass.), Mrs. Lawrence Blood, president, letter dated June 25, 1968, to Chairman Mills 994 Sheboygan (Wis.), Mrs. Alfred Grube, president, letter dated June 27, 1968, to Chairman Mills 1001 Williamstown (Mass.), Anne F. Skinner, foreign policy chairman, letter dated June 27, 1968, to Chairman Mills 995 Winter Park-Orlando (Fin.), ~\`1rs. Robert M. Carson, president, letter dated June 26, 1968, to Chairman Mills 992 PAGENO="0033" XXXIII Lear Siegler, Inc., John G. Brook, chairman, telegram dated July 12, 1968, Page to Chairman Mills 3633 Leboeuf, Leonard E., treasurer and general counsel, Stevens Linen Asso- ciates, Inc., statement 2726 Lemke, B. L., & Co., Inc., Joseph J. Franko, treasurer, statement 4626 Levi, Archie B., president, et al., Oil, Chemical & Atomic Workers Inter- national Union, letter dated June 27, 1968, to Chairman Mills 4764 Levy, M. Barry, counsel, Toy Manufacturers of America, Inc., statement 3168 Lewis, Joseph H., president, local 12457, District 50, United Mine Workers of America, letter dated July 5, 1968, to J. W. Martin, Jr., chief counsel, Committee on Ways and Means 4808 Lichtblau, John H., director of research, Petroleum Industry Research Foundation, Inc., letter dated July 2, 1968, to Ways and Means Committee, with attachment 4388 Liebenow, Robert C., president, Corn Refiners Association, Inc., state- ment 5093 Lightweight Aggregate Producers Association, the Expanded Shale, Clay & Slate Institute, and the National Slag Association, statement 3813 Lindholm, Richard W., professor of finance and dean of the Graduate School of Management and Business, University of Oregon 1706 Linen Thread Co., Howard Johnson, sales manager, statement 2620 Locke, Edwin A., Jr., president, American Paper Institute, Inc., statement 4460 Lockheed Aircraft Corp., D. J. Houghton, chairman of the board, telegram dated July 11, 1968, to Chairman Mills 3633 Long Island Association of Commerce & Industry, and World Trade Club of Long Island, Fred E. Merrell, secretary, letter dated June 26, 1968, to Committee on Ways and Means, with position paper attached 1789 Louisiana, State of, Hon. John J. McKeithen, Governor, statement 4207 Loxcreen Co., J. W. Parrish, president, telegram dated July 8, 1968, to Chairman Mills 3376 Lucht, R. A., president, Harshaw Chemical Co., letter dated May 31, 1968, to Chairman Mills 4800 Luggage & Leather Goods Manufacturers of America, Inc., Jack Citron- baum, executive vice president, statement 4131 Lukens Steel Co., Charles Lukens Huston, Jr., president, letter dated June 24, 1968, to Chairman Mills~_ 2257 McCauley, Alfred R., special counsel to consumer products division, Electronic Industries Association, letter dated June 27, 1968, to John M. Martin, Esq., chief counsel, Committee on Ways and Means, forwarding memorandum of the Magnavox Co. on color television picture tubes - - 3496 McClory, Hon. Robert, a Representative in Congress from the State of Illinois, statement 4011 McClure, Hon. James A., a Representative in Congress from the State of Idaho, letter dated June 3, 1968, to Chairman Mills, forwarding letter from Mrs. George L. Hays, president, Idaho Cow Belles, and statement from George L. Hays, Mission CreekAngus Ranch 3335 McColly, Don W., president, and Jefferson E. Peyser, general counsel, Wine Institute, statement 2803 McDonald, D. L., president, West Central Texas Oil & Gas Association, statement 4205 McDonnell Douglas Corp., John R. Allen, vice president, eastern region, letter dated July 16, 1968, to Chairman Mills 2798 McKeithen, Hon. John J., Governor, State of Louisiana, statement 4207 McMillan, C. W., executive vice president, American National Cattle- men's Association, letter dated July 9, 1968, to Chairman Mills, re explanation of the proposed amendments to the Meat Import Act of 1964 3211 Mackenzie, Mrs. James W., president, League of Women Voters of Co- lumbia-Boone County (Mo.), letter dated June 24, 1968, to Chairman Mills 7 MacRae, John S., & Co., John S. MacRae, letter dated June 6, 1968, to Chairman Mills 2728 M. & R. Refractory Metals, Inc., R. S. Wood, vice president, telegram dated July 11, 1968, to Hon. Florence P. Dwyer, a Representative in Congress from the State of New Jersey, with covering letter 2347 95-159 0 -68 - pt.6 - 3 PAGENO="0034" XXXIV Magnavox Co., memorandum of the, on color television picture tubes, letter dated June 27, 1968, to John M. Martin, Esq., chief counsel, Committee on Ways and Means, from Alfred R. McCauley, special counsel to consumer products division, Electronic Industries Associa- Page tion, forwarding memorandum 3496 Magnavox Consumer Electronics Co., George H. Fezell, president, tele- gram dated July 10, 1968, to Chairman Mills 3633 Magruder Color Co., Inc., John A. Howard, vice president and general manager, letter dated June 24, 1968, to John M. Martin, Jr., chief counsel, Committee on Ways and Means 4801 Maine, State of, Department of Sea and Shore Fisheries, Ronald W. Green, commissioner, statement 3445 Manke, Margaret, secretary, American Scotch Highland Breeders' Asso- ciation, letter dated June 29, 1968, to Chairman Mills 3331 Mantle & Costume Manufacturers' Export Group of London, England, statement, with forwarding letter from Department of State 2739 Marienthal, R. L., manager of chemical sales, Hilton-Davis Chemical Co., letter dated June 21, 1968, to Committee on Ways and Means. - - - 4801 Marks Specialties, Inc., Harry L. Marks, president, statement 3069 Marshall, Vice Adm. WTm. J., U.S. Navy (retired), president, Bourbon Institute, statement 2799 Martin, Edmund F., chairman, Bethlehem Steel Corp., letter dated June 17, 1968, to Chairman Mills 1926 Martin, Mrs. Harold, president, League of Women Voters of Los Gatos- Saratoga (Calif.), letter dated June 20, 1968, to Chairman Mills 991 Massachusetts, Commonwealth of: Caggiano, G. Robert, director, Bureau of International Trade, Department of Commerce and Development, statement 1065 Governor's Advisory Committee for the Shoe and Leather Industry, resolution 4063 Mathias, Hon. Charles McC., Jr., a Representative in Congress from the State of Maryland, letter dated June 20, 1968, to Chairman Mills 4889 May, Hon. R. J., secretary, Rubber and Plastics Footwear Manufacturers Association, Liverpool, England, with forwarding letter from the U.S. State Department 4174 Meat-O-Mat, Inc., N. Friedson, letter dated June 12, 1968, to John M. Martin, Jr., chief counsel, Ways and Means Committee 3344 Mendocino County (Calif.) Farm Bureau, Mayme Williams, secretary, letter dated June 19, 1968, to Chairman Mills 3334 Mercker, Albert E., executive secretary, Vegetable Growers Association of America, statement 5086 Merrell, Fred E., secretary, Long Island Association of Commerce & Industry, and World Trade Club of Long Island, letter dated June 26, 1968, to Committee on Ways and Means, with position paper attached_ 1789 Meyer, E. R., Kinkead Industries, Inc., letter dated July 1, 1968, to Chairman Mills 3376 Meyer, J. Mason, executive secretary, American Hardboard Association, statement 4468 Midcontinent Farmers Association and Missouri Farmers Association, Inc., Fred V. Heinkel, president, statement 1310 Miller, G. W., chairman of the board, Battenfeld Grease & Oil Corp. of New York, statement, with forwarding letter from Hon. Henry P. Smith III, a Representative in Congress from the State of New York 4422 Miller, Henry E., National Retail Merchants Association, letter dated July 12, 1968, to John M. Martin, Jr., from John C. Hazen, vice presi- dent-Government, re exports of textiles and textile products 805 Mink, Hon. Patsy T., a Representative in Congress from the State of Hawaii, letter dated June 20, 1968, to Chairman Mills forwarding material from the Hawaii Cattlemen's Council 3308 Miracle, Ralph, secretary, Montana Stockgrowers Association, Inc., letter dated June 5, 1968, to Chairman Mills 3320 Mission Creek Angus Ranch, George L. Hays, statement, with covering letter from Hon. James A. McClure, a Representative in Congress from the State of Idaho 3335 Missouri Farmers Association, Inc., and Midcontinent Farmers Association, Fred V. Heinkel, president 1310 PAGENO="0035" XXXV Page Mississippi Cattlemen's Association, statement 3318 Mitchell, 0. J., Jr., vice president, Union Steel Chest Corp., letter dated June 4, 1968, to Chairman Mills 2258 Mitchell, Walter L., president, International Chemical Workers Union, statement 4804 Modesto, Octavio A., general manager, Seafood Producers Association, letter dated May 31, 1968, to Chairman Mills 3443 Mogle, J. A., chairman, foreign trade committee, Fine and Specialty Wire Manufacturers' Association, statement 2275 Moiola Bros., Lawrence Moiola, partner, letter dated May 22, 1968, to Chairman Mills 3336 Monkman, James W. L., vice president, Crompton & Knowles Corp., statement 4798 Montana Stockgrowers Association, Inc., Ralph Miracle, secretary, letter dated June 5, 1968, to Chairman Mills 3320 Moore, Hon. Dan K., Governor of North Carolina, statement 2624 Moore, Mrs. Paul A., Jr., president, League of Women Voters of New Brighton (Minn.), letter dated June 20, 1968, to Chairman Mills - -- 996 Moore, Wm. H., staff vice president, Government products division, Elec- tronic Industries Association, letter dated July 12, 1968, to Chairman Mills 3507 Moran, C. C., president, Cupples Products Division, H. H. Robertson Co., telegram dated July 3, 1968, to Chairman Mills 3376 Moss, Aubrey L., president, American Metal Importers Association, Inc., letter dated July 1, 1968, to Committee on Ways and Means 3377 Motorola, Inc., Robert W. Galvin, telegram dated July 12, 1968, to Chairman Mills 3634 Mundt, John C. (See Cement Industry Antidumping Committee.) Murphy Oil Corp., C. H. Murphy, Jr., president, statement 4405 Murray, John E., Jr., vice president, Nicholson & Co., Inc., letter dated June 24, 1968, to John M. Martin, Jr., chief counsel, Committee on Ways and Means 5095 Myers, A. Nelson, vice president, marketing, Texas Gulf Sulphur, Co., letter dated July 9, 1968, to Chairman Mills 2348 Myers, John M., president, Independent Oil Heat Dealers Association of Maryland, and Fuel Oil Council of Maryland, Jay D. Kline, president, letter dated July 5, 1968, to Chairman Mills 4420 Nast, Thomas D., president, All-State Welding Alloys Co., Inc., letter dated July 3, 1968, to Chairman Mills. 3374 Nation-Wide Committee on Import-Export Policy, 0. R. Strackbein, chairman: Cost of becoming competitive in ocean shipping 933 Countervailing duty provision, information on 919 Letter dated June 18, 1968, to Hon. Herman T. Schneebeli re U.S. treatment of imports 926 Nontariff trade barriers 929 Price of becoming competitive in steel 947 Trends in prices on commodities subject to import quotas 918 National Association of Alcoholic Beverage Importers, Inc., John F. O'Connell, president, statement 2814 National Association of Glove Manufacturers, E. Greenaway, secretary, letter dated May 28, 1968, to Chairman Mills, with forwarding letter from the Department of State 2742 National Association of Manufacturers, statement 1723 National Association of Secondary Material Industries, Inc., Harold Kurtin, president, letter dated July 10, 1968, to Chairman Mills. - - - 2627 National Coal Association, Stephen F. Dunn, president, statement 4423 National Consumers League, Dr. Persia Campbell, statement 870 National Council of Farmer Cooperatives, Robert N. Hampton, director of marketing and international trade, letter dated July 12, 1968, to Chairman Mills 1735 National Council of Jewish Women, Inc., statement 1826 National Customs Brokers & Forwarders Association of America, Inc., John G. Eberlein, chairman, drawback committee, pamphlet entitled "What Is Customs Drawback?" 1024 PAGENO="0036" xxxv' National Farmers Union, Reuben L. Johnson, director, legislative services: Statement of Farmers Union adopted by delegates at the convention Page in Minneapolis 790 Statement by Reuben L. Johnson to the conference on trade policy sponsored by the coordinating council of organizations on inter- national trade policy at the Sheraton Park Hotel, Washington, D.C. 790 National Federation of Independent Business, George S. Bullen, legislative director, statement 1730 National Footwear Manufacturers Association: Nonrubber footwear: Tariff and trade regulations (U.S. Department of Commerce, Business and Defense Services Administration) - - - - 4093 Richardson, Mark E., president, telegram dated June 13, 1968, to Hon. Dean Rusk, Secretary of State 2624 National Grange: Graham, Harry L., legislative representative, excerpt from European Economic Commission report on the economic situation of the milk and milk products sector in the Community 782 Newson, Herschel D., master, U.S. agriculttiral exports to the Euro- pean Economic Community: value by commodity 781 National Handbag Association, Steven J. Weiss, counsel, statement 4134 National Oil Jobbers Council, Wilfred H. Hall, executive vice president, statement 4366 National Piano Manufacturers Association, Perry S. Patterson, counsel, statement 3159 National Restaurant Association, Ira H. Nunn, counsel, statement 3337 National Retail Merchants Association, Henry E. Miller, letter dated July 12, 1968, to John M. Martin, Jr., from John C. Hazen, vice president, government, re exports of textiles and textile products 805 National Slag Association, the Expanded Shale, Clay & Slate Institute, and the Lightweight Aggregate Producers Association, statement 3813 National-Standard Co., Ernest U. Lang, chief engineer, statement 1824 Nebraska Stock Growers Association, E. H. Shoemaker, Jr., president, letter dated May25, 1968, to Chairman Mills 3320 Netherlands Chamber of Commerce in the United States, Inc., Henry J. Clay, letter dated June 25, to Hon. John W. Byrnes, re quantitative restrictions_ 1594 Nevada State Cattle Association, Leslie J. Stewart, president, letter to Chairman Mifis 3321 New Mexico Cattle Growers' Association, W. 0. Culbertson, Jr., president, statement 3322 New Zealand Dairy Board, statement, with forwarding letter from the State Department 4890 New Zealand Meat Producers Board, statement, with forwarding letter fromtheStateDepartment 3304 Newark, N. J., Mayor Hugh J. Addonizio, statement 1473 Newsom, Herschel D. (See National Grange.) Nicholson & Co., Inc., John E. Murray, Jr., vice president, letter dated June 24, 1968, to John M. Martin, Jr., chief counsel, Committee on Ways and Means 5095 North Carolina, Governor of, Hon. Dan K. Moore, statement 2624 North Dakota Stockmen's Association, Raymond Schnell, president, statement 3325 Norwegian-American Chamber of Commerce, Inc., Danish American Trade Council, Inc., Finnish American Chamber of Commerce, Inc., and Swedish Chamber of Commerce of the United States, Inc., statement_ - - - 1775 Nunn, Ira H., counsel, National Restaurant Association, statement 3337 Nyanza, Inc., Roland E. Derby, Jr., president, letter dated June 17, 1968, to Chairman Mills 48fl2 O'Brien, Gerald, executive vice president, American Importers Association, statement on U.S. foreign trade policy before Trade Information Com- mittee of Office of President's Special Representative for Trade Negotia- tions-May 20, 1968 841 Ocean Freight Consultants, Inc., Fred S. Haber, president, statement 1801 Ocoma Foods Co., Harold J. Wendt, vice president, production, letter dated May 31, 1968, to Chairman Mills 3344 O'Connell, John F., president, National Association of Alcoholic Beverage Importers, Inc., statement 2814 PAGENO="0037" XXXVII O'Connor, J. M., executive vice president, Peerless of America, Inc., letter Page dated July 1, 1968, to Chairman Mills 3376 Odian, Bedros, attorney, Buffalo, N.Y., letter dated May 15, 1968, to John M. Martin, Jr., chief counsel, Committee on Ways and Means 5098 Oesterle, Father John, Church of St. Teresa, Munhall, Pa., letter dated June 3, 1968, to Ways and Means Committee 5096 Ohio Cattle Feeders Association, Russell Forsythe, president, and James H. Warner, secretary, letter dated June 17, 1968, to Chairman Mills, with attachment 3326 Ohio Oil & Gas Association, David H. Bell, president, letter dated May 27, 1968, to Committee on Ways and Means 4392 Oil, Chemical & Atomic Workers International Union: Levi, Archie B., president, et al., letter dated June 27, 1968, to Chairman Mills 4764 Riker, Raymond, president, local 8-95, letter dated July 3, 1968, to John M. Martin, Jr., chief counsel 4807 Oklahoma Cattlemen's Association, Wray Finney, president, letter dated May 28, 1968, to Chairman Mills 3327 Optical Importers Association of the United States, Inc., Julius Simon, president, statement 3135 Orban, Kurt. (See American Institute for Imported Steel, Inc.) Oregon, Otter Trawl Commission of; Dr. E. W. Harvey, administrator, statement 3450 Ornitz, Martin N., president, Roblin Steel Co., letter dated June 24, 1968, to Chairman Mills, with covering letter from Hon. Henry P. Smith, a Representative in Congress from the State of New York 2257 Orr, Robert M., president, and Ed Thompson, executive vice president, Permian Basin Petroleum Association, statement 4281 Otter Trawl Commission of Oregon, Dr. E. W. Harvey, administrator, statement 3450 Overton~ J. Allen, Jr. (See American Mining Congress.) Pacific American Steamship Association, statement 1790 Parker, H. R., secretary, Candle Manufacturers Association, letter dated June 25, 1968, to Chairman Mills 3170 Parrish, J. W., president, Loxcreen Co., telegram dated July 8, 1968, to Chairman Mills 3376 Patterson, Huberta M., secretary, West Virginia League, in behalf of West Virginia, Pennsylvania, Ohio, and Indiana Glass Workers' Protective Leagues, statement 3826 Patterson, Perry S., counsel, National Piano Manufacturers Association, statement 3159 Patton, Thomas F. (See American Iron & Steel Institute.) Peerless of America, Inc., J. M. O'Connor, executive vice president, letter dated July 1, 1968, to Chairman Mills 3376 Perkel, George, director of research, Textile Workers Union of America, AFL-CIO, statement 2630 Perkins, Hon. Carl D., a Representative in Congress from the State of Kentucky, letter dated June 17, 1968, to Chairman Mills 4889 Permian Basin Petroleum Association, Robert M. Orr, president, and Ed Thompson, executive vice president, statement 4281 Peters, J. S., manager, membership & industry relations, Florida Fruit & Vegetable Association, letter dated July 29, 1968, to Congressman Thomas B. Curtis, re domestic market for fruits and vegetables 4978 Petroleum Industry Research Foundation, Inc., John H. Lichtblau, director of research, letter dated July 2, 1968, to Ways and Means Committee, with attachment 4388 Peyser, Jefferson E., general counsel, and Don W. McColly, president, Wine Institute, statement 2803 Phillips, Mrs. Robert T., president, League of Women Voters of Metro- politan Dade County (Fla.), letter dated June 24, 1968, to Chairman Mills 991 Picard, Raymond J., president, French Chamber of Commerce in the United States, Inc., statement 1773 Piering, David P., president, Diversified Wire & Steel Corp., telegram, *dated June 14, 1968, to Chairman Mills 2202 Polan, Katz & Co., Inc., Lawrence R. Katz, letter dated July 9, 1968, to Chairman Mills 3157 PAGENO="0038" xxxvm Precision Drawn Steel Co., L. G. Brown, president, letter dated June 4, Page 1968, to Chairman Mills, with attachment 2273 Premier Santa Gertrudis Association, M. Allen Anderson, president, reso- lution, dated May 26, 1968, with covering letter from Hon. Roman L. Hruska, a U.S. Senator from the State of Nebraska 3333 Price, J. Raymond, executive secretary of Glass Crafts of America, on behalf of the American Hand-Made Glassware Industry, statement. - - 3819 Prochnow, Mrs. Jack, president, League of Women Voters of New Berlin (Wis.), letter dated June 22, 1968, to Chairman Mills 1000 Public Lands Council, Joseph H. Tudor, general counsel, letter dated May 27, 1968, to Chairman Mills 3333 Purcell, Robert, Emergency Committee for American Trade, a critique of the Trade Relations Council's analysis of certain 1958/1960-1964 declines in employment~ 1352 Rabin, Mrs. Bruce, president, League of Women Voters of Beverly Hills (Calif.), letter dated June 18, 1968, to Chairman Mills 990 Raimer, Mrs. W. M., foreign policy committee, League of Women Voters of Midland County, Tex., letter dated June 26, 1968, to Chairman Mills 1000 Rampton, Hon. Calvin L., Governor of the State of Utah, statement - - - 4059 Randall, Frank L., Jr., president, Amperex Electronic Corp., statement_ - 3505 Rapaport, Arthur, Jardox Fur Co., letter dated July 10, 1968, to Chairman Mills 4063 Raytheon Co., Charles F. Adams, chairman of the board, telegram dated July 12, 1968, to Chairman Mills 3634 Reuther, Walter P., president, United Automobile, Aerospace and Agri- cultural Implement Workers of America (UAW), statement 1755 Richardson, Mark E., president, National Footwear Manufacturers Assoc- iation, telegram dated June 13, 1968, to Hon. Dean Rusk, Secretary of State 2624 Richey, Mrs. Robert S., president, League of Women Voters of Indiana, letter dated July 1, 1968, to Chairman Mills 993 Riker, Raymond, president local 8-95, Oil, Chemical and Atomic Workers International Union, letter dated July 3, 1968, to John M. Martin, Jr., chief counsel 4807 Roach, T. L., Jr., president, Texas and Southwestern Cattle Raisers Association, letter dated May 28, 1968, to Chairman Mills, with at- tachment 3327 Rogers, Hon. Paul G., a Representative in Congress from the State of Florida, statement 4980 Robertson, H. H., Co., C. C. Moran, president, Cupples Products Division, telegram dated July 3, 1968, to Chairman Mills 3376 Robie, Merle S., chairman, executive committee, Cordage Institute, statement 2372 Roblin Steel Co., Martin N. Ornitz, president, letter dated June 24, 1968, to Chairman Mills, with covering letter from Hon. Henry P. Smith, a Representative in Congress from the State of New York 2257 Rostov, Charles I., floor covering group, American Import Association, statement 2603, 2618 Rott, Dr. Ernst, executive secretary, United States Austrian Chamber of Commerce, Inc., letter dated May 29, 1968, to John M. Martin, Jr., chief counsel, Committee on Ways and Means, with memorandum attached 1771 Rowley, E. M., president, International House, letter dated July 10, 1968, to Chairman Mills, with resolution attached 1786 Rubber & Plastics Footwear Manufacturers Association, Liverpool, England, R. J. May, Hon. secretary, with forwarding letter from the U.S. State Department 4174 Rubin, Allan A., vice president and counsel, and John T. Latella, asso- ciate counsel, United States Brewers Association, statement 2826 Rusmisell, Deane E., president, Work Glove Manufacturers Association, Inc., statement 2723 Sanders, C. T. "Tad," general manager, Certified Livestock Markets Association, letter dated July 3, 1968, to Chairman Mills 3332 Sanz de Santamaria, Carlos, chairman, Inter-American Committee on the Alliance for Progress (ClAP), statement, with covering letter from State Department to Chairman Mills 1713 PAGENO="0039" mix Schmidt, Donald R., president, SOuth Dakota Beekeepers Association, Page telegram dated June 22, 1968, to Chairman Mills 3470 Schnell, Raymond, president, North Dakota Stockmen's Association, statement 3325 Schwenger, Robert B., supplemental statement 1680 Scott, Hon. William Lloyd, a Representative in Congress from the State of Virginia, letter dated July 1, 1968, to Chairman Mills 4888 Seafood Producers Association, Octavio A. Modesto, general manager, letter dated May 31, 1968, to Chairman Mills 3443 Seawell, Malcolm B., executive secretary and general counsel, Leaf To- bacco Exporters Association, Inc., statement 1429 Sebastinas, A., president, International Union of District 50, United Mine Workers of America, Local 15143, letter dated June 14, 1968, to John M. Martin, Jr., chief counsel, Committee on Ways and Means - - 4807 Segall, Irving, New York, N.Y., letter dated July 11, 1968, to Chairman Mills 4062 Service Tools Institute, George P. Byrne, Jr., secretary and legal counsel, statement 3046 Sharp, W. Parker, Pittsburgh, Pa., letter dated June 18, 1968, to Chair- man Mills 2265 Shaw, Arnold H., counsel, Warehousemen's Association of the Port of New York, Inc., letter dated.June iS 1968, to Chairman Mills 1801 Shearer, Wendell B., president, Vinyl Maid, Inc., letter dated June 17, 1968, to Chairman Mills 5092 Sheeler, Mrs. J. R., president, League of Women Voters of Midland County (Tex.), letter dated June 26, 1968, to Chairman Mills 1000 Shears, Scissors & Manicure Implement Manufacturers Association, B. C. Deusehie, president, statement 3063 Sherwin-Williams Co., G. L. Tickner, eastern manager, pigment, color and chemical department, statement 4667 Shirt, Collar & Tie Manufacturers' Federation, and Clothing Manu- facturers' Federation of Great Britain, statement, with forwarding letter from the Department of State 2736 Shoemaker, E. H., Jr., president, Nebraska Stock Growers Association, letter dated May 25, 1968, to Chairman Mills 3320 Simon, Julius, president, Optical Importers Association of the United States, Inc., statement 3135 Sinkler, Arthur B., chairman of the board, Hamilton Watch Co., letter dated July 12, 1968, to Chairman Mills 3741 Skinner, Anne F., foreign policy chairman, League of Women Voters of Williamstown (Mass.), letter dated June 27, 1968, to Chairman Mills - 995 Slesinger, Reuben E., associate dean, professor of economics, division of the social sciences, University of Pittsburgh, letter dated June 25, 1968, to Chairman Mills, with article attached entitled "Steel Imports and Vertical Oligopoly Power: Comment" 2265 Smith, Marshall M., Greater Fort Lauderdale (Fla.) Chamber of Com- merce, letter dated July 3, 1968, to Committee on Ways and Means - - 1785 Smith, Stanford, general manager, American Newspaper Publishers Asso- ciation, statement 4465 Smith, T. William C., president, American Pipe Fittings Association, letter dated June 20, 1968, to Chairman Mills 2259 Smithfield Packing Co., Inc., G. R. Crawford, executive vice president, letter dated June 10, 1968, to John M. Martin, Jr., chief counsel, Com- mittee on Ways and Means 3343 Snow & Co., H. R. Snow, letter dated June 6, 1968, to Chairman Mills~ 3334 Socket Screw Products Bureau, et al., George P. Byrne, Jr., secretary and legal counsel, statement 3027 Sommer, Walton B., president and chairman of the board, Keystone Steel & Wire Co., letter dated June 10, 1968, to Chairman Mills, with statement attached 1927 South Dakota Beekeepers Association, Donald R. Schmidt, president, telegram dated June 22, 1968, to Chairman Mills - 3470 Southern California Edison Co., statement 4417 Specialty Crops Conference, Robert M. Kerr, attorney, statement 5049 Sporting Arms & Ammunition Manufacturers' Institute, Robert C. Zimmer, counsel, statement 3081 PAGENO="0040" XL Starr, Wayne R., president, Citizens State Bank & Trust Co., letter dated Page June 20, 1968, to Chairman Mills 1824 Standard Oil Company of California, statement 4408 Steelworkers of America, Local No. 3256, Arvo E. Sundberg, statement - 2248 Stenning, W. W., North American representative, Australian Meat Board, statement, with forwarding letter from the State Department 3301 Stephens, Hon. Robert G., Jr., a Representative in Congress from the State of Georgia 4886 Stevens Linen Associates, Inc., Leonard E. Leboeuf, treasurer and general counsel, statement 2726 Stewart, Eugene L., counsel, Parts and Distributor Products Divisions, Electronic Industries Association and American Loudspeaker Manu- facturers Association, letter dated July 3, 1968, to Hon. Jackson E. Betts, a Representative in Congress from the State of Ohio, re Far East comparative wages_ 3630 Stewart, Leslie J., president, Nevada State Cattle Association, letter to Chairman Mills 3321 Strackbein, 0. R. (See Nation-Wide Committee on Import-Export Policy.) Strate, Martin F., executive secretary, Virginia Beef Cattle Association, letter dated May 24, 1968, to Chairman Mills 3329 Stybr, L. E., executive director, J. E. Cooper, president, and R. E. Lam- bert, chairman, committee on Government relations, American Sprocket Chair Manufacturers Association, statement 3039 Sundberg, Arvo E., representing the city of Conneaut, Ohio and Local No. 3256, AFL-CIO, Steelworkers of America, statement 2248 Swedish Chamber of Commerce of the United States, Inc., Danish Ameri- can Trade Council Inc., Finnish American Chamber of Commerce, Inc., and Norwegian-American Chamber of Commerce, Inc., statement 1775 Swiss Union of Commerce and Industry, Michael P. Daniels, counsel, statement, with covering letter from State Department 4771 Synthetic Organic Chemical Manufacturers Association (SOCMA), memorandum concerning testimony given in support of the "separate" package agreement 4760 Tanaka, H. William, counsel, on behalf of certain importers of electronic products, A. & A. Trading Co., et al, statement 3654 Tapping Screw Service Bureau, et al., George P. Byrne, Jr., secretary and legal counsel, statement 3027 Tatem Manufacturing Co., Inc., Stewart M. Tatem, statement 4481 Teague, Randal Cornell, director of regional and State activities, Young Americans for Freedom, Inc., statement 4909 Tektronix, Inc., Don A. Effis, treasurer, statement 3704 Tennant, C., Sons & Co., Aubrey Fletcher, executive vice president, letter dated June 21, 1968, to Chairman Mills, re statistics on lead and zinc~ 2318 Tenneco Chemicals, Inc., Leon W. Gerst, president, Tenneco colors divi- sion, statement 4780 Teper, Lazare, director of research, International Ladies' Garment Work- ers' Union, AFL-CIO, and Milton Fried, director of research, Amalga- mated Clothing Workers of America, AFL-CIO, letter dated June 14, 1968, to Chairman Mills 2641 Texaco Inc., statement 4409 Texas Citrus Mutual, Wiffiam W. Curl, president, statement 5083 Texas Farm Bureau, M. F. Frost, vice president, statement 5081 Texas Gulf Sulphur Co., A. Nelson Myers, vice president, marketing, letter dated July 9, 1968, to Chairman Mifis 2348 Texas Instruments Inc., J. Fred Bucy, group vice president, telegram dated July 11, 1968, to Chairman Mills 3634 Texas and Southwestern Cattle Raisers Association, T. L. Roach, Jr., president, letter dated May 28, 1968, to Chairman Mills, with attach- ment 3327 Textile Workers Union of America, AFL-CIO, George Perkel, director of research, statement 2630 Thomas, Jean, State president, League of Women Voters of Oklahoma, letter dated June 20, 1968, to Chairman Mills 999 Thompson, Ed., executive vice president, and Robert M. Orr, president, Permian Basin Petroleum Association, statement 4281 PAGENO="0041" XLI Tickner, G. L., eastern manager, pigment, color and chemical department, Page Sherwin-Williams Co., statement 4667 Tincher, Mrs. Marvin, president, League of Women Voters of Long Beach (Calif.), letter dated June 24, 1968, to Chairman Mills 990 Tool and Stainless Steel Industry Committee, statement - 1929 Toy Manufacturers of America, Inc., M. Barry Levy, counsel, statement - 3168 Trueblood, R. W., president, Beiridge Oil Co., statement 4269 Trugman-Nash, Inc., Bernard A. Trugman, statement - 4894 Tubular and Split Rivet Council, et ál., George P. Byrne, Jr., secretary and legal counsel, statement - 3027 Tudor, Joseph H., general counsel,. Public Lands Council, letter dated May 27, 1968, to Chairman Mills 3333 United Automobile, Aerospace, and Agricultural Implement Workers of America (UAW), Walter P. Reuther, president, statement 1755 Union Steel Chest Corp., 0. J. Mitchell, Jr., vice president, letter dated June 4, 1968, to Chairman Mills 2258 United Mine Workers of America, District 50. (See Glenndenning, Howard A.; Kaminski, Jerome; Kennedy, Edward E.; Lewis, Joseph H.; Se- bastinas, A.; and Del Signore, M.). United Rubber, Cork, Linoleum, and Plastic Workers of America, AFL- CIO, Peter Bommarito, president, statement 4180 United Textile Workers of America, AFL-CIO, George Baldanzi, inter- national president, statement 2628 U.S. Austrian Chamber of CommerOe, Inc., Dr. Ernst Rott, executive secretary., letter dated May 29, 1968, to John M. Martin, Jr., chief counsel, Committee on Ways and Means, with memorandum attached - 1771 U.S. Brewers Association, Allan A. Rubin, vice president and counsel, and John T. Latella, associate counsel, statement 2826 U.S. Cap Screw Service Bureau, et al., George P. Byriie, Jr., secretary and legal counsel, statement 3027 U.S. Dry Pea and Lentil Industry, statement 5087 U.S. Extrusions Corp., Emil H. Buckner, secretary-treasurer, letter dated June 27, 1968, to Chairman Mills 3377 U.S. Machine Screw Service Bureau, et al., George P. Byrne, Jr., secretary and legal counsel, statement 3027 U.S. Wood Screw Service Bureau, et al., George P. Byrne, Jr., secretary and legal counsel, statement 3027 Utah, State of, Hon. Calvin L. Rampton, Governor, statement 4059 Utsey, James, president, Alabama Garment Manufacturers Association, letter dated June 18, 1968, to Chairman Mills, with resolution attached and with covering letter from Hon. Bill Nichols, a Representative in Congress from the State of Alabama~ 2626 Vail, George R., vice president and director, Continental Baking Co., and president, Morton Frozen Foods Division, statement 3342 Vander Ende, Gerrit P., San Francisco, Calif., letter dated May 22, 1968, to Chairman Mills 5096 Veeder, Nicholas P., chairman of the board and president, Granite City Steel Co., statement 2254 Vegetable Growers Association of America, Albert E. Mercker, executive secretary, statement 5086 Veltfort, T. E., managing director, Copper & Brass Fabricators Council, Inc., letter dated June 19, 1968, to Chairman Mills, with statement attached 2325 Verity, C. William, Jr., president, Armco Steel Corp., statement 2253 Vinyl Maid, Inc., Wendell B. Shearer, président, letter dated June 17, 1968, to Chairman Mills 5092 Virginia Beef Cattle Association, Martin F. Strate, executive secretary, let- ter dated May 24, 1968, to Chairman Mills 3329 Walker, Charls E., executive vice president, American Bankers Associa- tion, letter dated June 17, 1968, to Chairman Mills 1809 Walker, James L., president, Davis Wire Corp., letter dated July 9, 1968, to Chairman Mills, with attachments 2269 Warehousemen's Association of the Port of New York, Inc., Arnold H. Shaw, counsel, letter dated June 18, 168, to Chairman Mills 1801 PAGENO="0042" XLII Warner, James H. secretary and Russell Forsythe, president, Ohio Cattle Feeders Association, letter dated June 17, 1968, to Chairman Mills, Page with attachment 3326 Washington, State of, Hon. Daniel J. Evans, Governor, letter dated June 7, 1968, to Chairman Mills with position paper attached 1719 WTashington Cattle Feeders Association, C. A. Courtright, president, letter dated June 5, 1968, to Chairman Mills 3329 Washington Cattlemen's Association, Inc., John Woodard, president, letter dated June 14, 1968, to Ways and Means Committee 3330 Washington Steel Corp., T. S. Fitch, president, letter dated June 28, 1968, to Chairman Mills 1928 Webb, Mrs. Ralph, president, League of Women Voters of Greater Lafay- ette (md.), letter dated June 27, 1968, to Chairman Mills 994 l,~\Tejss, Steven J., counsel, National Handbag Association, statement 4134 Wendt, Harold J., vice president, production, Ocoma Foods Co., letter dated May 31, 1968, to Chairman Mills 3344 West Central Texas Oil & Gas Association, D. L. McDonald, president, statement 4205 West Mexico Vegetable Distributors Association, A. B. Conrad, secretary- manager, statement, with forwarding letter from Hon. Morris K. Udall, a Representative in Congress from the State of Arizona 5088 Western Dairy Products, Inc., statement 4892 Westwood, Richard E., president, EMBA Mink Breeders, Association, statement 4014 Wexler, Dr. William A., president, B'nai B'rith, statement 1028 \~Thealy, Roland A., vice president, Ashland Oil & Rehning Co., statement~ 4393 Williams, Mayme, secretary, Mendocino County (Calif.) Farm Bureau, letter dated June 19, 1968, to Chairman Mills 3334 Williams, Oliver, New York, N.Y., statement 5096 Wimmer, Ed, president, Forward America, Inc., radio talk 1733 Window Glass Cutters League of America, Harry W. Baughman, Jr., national president, statement 3824 Wine Institute, Don W. McColly, president, and Jefferson E. Peyser, general counsel, statement 2803 Winn, Hon. Larry, Jr., a Representative in Congress from the State of Kansas, letter dated July 12, 1968, to Chairman Mifis 3168 Wittig, Harley, past president, EMBA Mink Breeders Association, statement 4013 Wolison, J. Theodore, president, Business Builders International, Inc., article from Wall Street Journal entitled "Steel firms' profits are cx- pected to spurt as outlays begin to pay off, analysts say" 859 Won Pat, Hon. Antonio B., Territory of Guam, Representative in Wash- ington, statement 3740 Wood, R. S., vice president, M. & R. Refractory Metals, Inc., telegram dated July 11, 1968, to Hon. Florence P. Dwyer, a Representative in Congress from the State of New Jersey, with covering letter 2347 \~roodard, John, president, Washington Cattlemen's Association, Inc., letter dated June 14, 1968, to Ways and Means Committee 3330 World Trade Club of Long Island, and Long Island Association of Com- merce & Industry, Fred E. Merrell, secretary, letter dated June 26, 1968, to Committee on Ways and Means, with position paper attached 1789 Work Glove Manufacturers Association, Inc., Deane E. Rusmiseil, president, statement 2723 Wright, Ronald, president, Canned Meat Importers Association, state- ment 3338 Wriston, Walter B., president, First National City Bank, letter dated July 12, 1968, to Chairman Mifis, with attachment 1810 Young Americans for Freedom, Inc., Randal Cornell Teague, director of regional and State activities, statement 4909 Zimmer, Robert C., Sporting Arms & Ammunition Manufacturers' Institute, statement 3081 Zwach, Hon. John M., a Representative in Congress from the State of Minnesota, statement 1494 PAGENO="0043" FOREIGN TRADE AND TARIFF PROPOSALS WEDNESDAY, JUNE 19, 1968 HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, Washington, D.C. The committee met at 10 a.m., pursuant to notice, in the committee room, Longworth House Office Building, Hon. Wilbur D. Mills (chair- man of the committee) presiding. The CHAIRMAN. The committee will please be in order. Our first witness this morningis our colleague from South Carolina, the }1onor~ble William Jennings Bryan Dorn. Mr. Dorn. Do you want to wait and appear after, Mr. Dent of the American Textile Manufacturers Institute? Mr. DORN. Mr. Chairman, if I may I would like to. The CHAIRMAN. I had a note that Mr. Stratton is chairing his own committee and will be a little late. Our first witness then will be the Honorable Philip J. Philbin, our colleague from Massachusetts. Mr. Philbin, we appreciate your being with us this morning and you are recognized. STATEMENT OF HON. PHILIP J. PHILBIN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MASSACHUSETTS Mr. PHILBIN. Mr. Chairman, I am very glad to join my distin- guished colleagues in support of legislation to bring about needed con- trols on imports affecting the livelihood of American workers. In fact, I have companion bills pending before the committee, including H.R. 10596, the orderly marketing bill; H.R. 11877, to protect our domes- tic industries; and H.R. 17216, which seeks to limit import expansion to prescribed shares of the U.S. market. Indeed, it is long past the time that Congress should move effec- tively to adjust our trade position with other nations. Failure to have done so is one of the principal, contributing causes to the present vexatious, grave dollar trade imbalance which is causing all of us and other nations such deep concern. The rate of imports coming into this country is staggering and has already sparked our first unfavorthle trade balance hi many years. If continued, it could result in great injury and harm, and perhaps irreparable damage to prosperous American industries and result in the loss of full employment and prosperity for many faithful working people and bring depressed conditions to many communities throughout the country. (2349) PAGENO="0044" 2350 Some fine statements hav~ been made in support of the legislation, which I deeply appreciate, and I do not want to be repetitious or to beh~bor what has been so well said during these hearings. However, I want to make it clear that I strongly stand with those who have spoken so impressively on this very important matter, affect- ing the well-being of our country, the value of the dollar, our trade relations with other nations, the general prosperity of our country, and the prosperity of its people. We all sincerely seek amicable, friendly relations with other nations of good faith, good will, and honest purpose and we desire to maintain maximum, mutually beneficial trade relations with them. However, any worthwhile `profitable trade must be for mutual and reciprocal `benefit. Let us reinstate that kind of trade with other na- tions. Trade such as we have all too often at present is nothing more than a one-way street. We cannot afford any more unfavorable trade balances. Let us move to produce favorable balances that will close the dollar gap and promote prosperity here and abroad. I urge you to take favorable action on this legislation. The CHAIRMAN. We appreciate your bringing to us your thoughts, Mr. Philbin. Are there any questions? If not then our next witness is the Honorable Roy A. Taylor. from tihe State of North `Caa~olina. You are recognized, sir. STATEMENT OF RON. ROY A. TAYLOR, A REPRESENTATIVE IN CONGRESS FROM T1~ STATE OF NORTH CAROLI1~A Mr. TAYLOR. Mr. Chairman, during the course of these broad trade hearings, your committee has heard extensive testimony regarding the complex problems our country faces in the area of international com- merce. It is well that your committee is taking a long, hard look at our trade policies at this point in time, because our trade position is changing and, unfortunately, it is changing for the worst. The United States can no longer afford to remain on the course it is following. In the period since the end of World War II, this coun- try has looked upon trade as a means of strengthening the economies of friendly nations throughout the world. We have been more than generous in our efforts to help the underdeveloped nations of the world. The time has come, however, to reappraise our trade posture, and to take a careful look at the needs of our own people as well as those overseas. No one is suggesting that our foreign trade should be sharply re- duced or curtailed. What is needed is an orderly trade policy which will encourage trade with other nations and at the same time prevent serious disruption of domestic industries. The question of trade in textiles is of particular interest to me as the representative of the 11th District of North Carolina.. Text.iles play a vital role in the economy of my district and of the entire State of North Carolina. Textiles provide the first and only billion-dollar payroll in the State o~ North Carolina. In 1966 there were 262,834 persons employed in 1,167 textile plants in my State. Textile em- ployee.s account for better than 40 percent of the State's entire indus- PAGENO="0045" 2351 trial work force, and the value of North Carolina-produced textiles is estimated at $5 billion. In addition to providing a livelihood for more than a quarter of a million people, these textile payrolls bring $32 million to our State treasury in corporate and individual income taxes. Because the textile industry is so important to North Carolina, I am g~reatly alarmed by the continuing rise in imports which is under- cutting the very future of this basic American industry. Since 1960, the dollar value of imports entering this country has nearly doubled, from $866 million in 1960 to $1,461 million in 1967. This is potential income which is being taken out of a large section of the country simply because other countries pay wages which would not be legal in this country. Every year, the American textile industry becomes a better place to work. There have been five wage increases in the last 5 years, and the industry nationally is investing better than $800 million each year in new plant and equipment in order to try to stay competitive. But how can this industry be expected to compete with countries such as Japan, Hong Kong, and South Korea, which pay wages of 36 cents, 25 cents, and 8 cents an hour, respectively? The American textile industry, where increases during the past year, amounted to more than the entire hourly wage paid in most of the countries with which the Untied States is expected to compete. Mr. Chairman, your committee is investigating the opportunities for greater exports as a means of overcoming some of this Nation's trade problems. When it comes to textiles, there is little hope for sig- nificant expansion of exports. In addition to competing with starva- tion wages, our products are faced with a whole series of quotas, 11- censing agreements, subsidies, and other nontariff barriers which have virtually closed many of the markets throughout the world to Ameri- can goods. As a result, we have not had a textile trade surplus since 1957, and last year our deficit amounted to $766 million. In spite of the serious nature of the textile import problem, our trade negotiators agreed last year to reduce even further the tariffs on textile imports. They are so low now that they have virtually no re- straining effect on imports. During the past few months, I have joined with many of my colleagues in urging the administration to take note of the serious nature of the textile import problem and try to negotiate agreements on levels of imports which would be fair and equitable to all concerned. These appeals have fallen on deaf ears. The solution to this problem, involving the future of hundreds of thousands of textile workers, lies in approval of my bill H.R. 11880, introduced on July 27, 1967, which currently is pending before your committee. This bill is identical tO the one introduced by the distin- guished chairman of this committee. This legislation is infinitely fair and equitable. It will not cut off `all imports. It will not result in any serious rollbacks. It will not invite retaliation of pleas for compensation from exporting countries. This legislation provides for the President to enter into negotiations w-ith exporting countries to work out levels of imports which will pre- vent further disruption of the domestic textile industry. When market conditions permit, it allows exportOrs to increase the amount of mer- chandise they sell in this country in reasonable amounts. PAGENO="0046" 2352 Mr. Chairman, we cannot afford to wait. any longer. The futtire of one of our basic and most essential industries is in jeopardy. I urge. this committee to report out the textile import legislation pending be- fore you as soon as possible. The CHAIRMAN. Thank you, Mr. Taylor, for sharing your views with us. Are there any questions? Our next witness is the Honorable Spark M. Matsunaga., of Hawaii. You are recognized, sir. STATEMENT OP HON. SPARK M. MATSUNAGA, A REPRESENTATIVE IN CONGRESS PROM THE STATE OP HAWAII Mr. MATSUNAGA. Mr. Chairman a.nd members of the committee, I thank you for this opportunity of appearing before you and express- ing my views with respect t.o one of the most troublesome items in recent times in the field of tariff and t.rad~ textile imports. I applaud the members of this committee who effected the deletion in conference of the Senate amenchnent. to t.he Tax Adjustment Act of 1968 which w-ould have established mandatory import quotas on textiles. I com- mend the distinguished chairman of this committee, Mr. Mills, for his position statement of May 9, 1968, relative to the textile amend- ment as printed in the document entitled "Summary of the Decisions of the Conferees on H.R.. 15414," and for holding these hearings to "provide us an informed basis for any subsequent legislation in this vitally important field." Asid~ from the consideration that an import quota, `applied and limited to one industry, textiles, would be demonstrably insupport- able at a time when the United St.a.tes is making serious efforts to expand world trade to reduce our balance-of-payments deficit, it is clear that such a quota would be the forerunner of similar quotas in other areas. Retaliatory trade restrictions by other nations w-ould inevitably follow, and adverse effects upon our own national economy would be the predictable final result. This Nation, a.s the world's la.rg-. est exporter, can ill afford to follow such a course. My interest in t.he quest.ion of the advisability of adopting a textile import quota arises also from the fact that the garment manufacturing industry in Hawaii, although of comparatively recent origin, is a vitally important one in the 50th State. Because of t.he limitations which Hawaii's insular position and volcanic beginnings have imposed on our ability to produce needed raw materials, Hawaii's garment manufacturers have come to rely heavily on overseas sources of sup- ply of textiles-principally Japan. It is apparent that any restrictions on these textile imports would sound the death knell of this young and growing island industry. We would, of course, like to prevent such an occurrence because the garment industry offers the greatest promise of continuing to add to Hawaii's economic diversification and growth. Mr. Chairman, Hawaii's Governor, the Honorable John A. Burns, has stated the case for the State's garment. industry in an excellent written statement addressed to this committee. I submit it in his behalf, and respectfully request that it be printed in the hearing record immediately following my statement. Thank you very much. (The statement referred to follows:) PAGENO="0047" 2353 STATEMENT OF HON. JOHN A. BURNS, GOVERNOR, STATE OF HAwAII Mr. Chairman, I am in full support of the Administration's recommendation for extending the Trade Expansion Act and its various amendments thereto. Conversely, it would seem to me very unwise for the United States to adopt new import quotas and other restrictions on trade. In view of mankind's several thousand years commercial experience, it hardly seems necessary to argue for liberal trade policies among nations. Liberal trade not only increases the economic well-being of all concerned, it increases human freedom and leads to a more secure world. Conversely, restrictions on trade lead to narrow nationalism, misunderstand- ing, and military solutions. America must continue to lead the way toward a freer and more secure world. To accomplish this, we must do all we can to free ourselves and our world neighbors from existing restrictions. Of more direct concern to Hawaii is the Senate proposal to impose restrictions on textile imports. As you may know, Hawaii has very few of the material resources on which industrial economies are based. One of our industries, garment making, is now becoming fully established after a long uphill struggle; and it promises to con- tinue to add to Hawaii's economic diversification and employment. We are most anxious that trade restrictions ~vi1l not challenge the existence of this industry or inhibit its expansion. Garment manufacturing is a highly competitive industry, and Hawaii's gar- inent manufacturers are already handicapped by distant markets, discriminatory ocean freight rates, high capital costs,, and high power costs. Most of the cloth used in Hawaii's industry is imported-principally from Japan. For the most part, the cloth is printed in the distinctive designs of Hawaii designers, either abroad or in Hawaii. In terms of the national market, the volume of imported cloth used in Hawaii is infinitesimal; but in terms of our local economy, our ability to import this cloth is important indeed. We would not wish to penalize the industry with arbitrary import restric- tion on textile imports. Should such restrictions me imposed, we would like to see an exemption for the State of Hawaii, or some other allowance made to protect the continued growth of this industry. Furthermore, Hawaii is attempting to expand exports to nations in the Pacific and Asia. We are also endeavoring to establish Hawaii as an international center for commerce and trade. These efforts, which show increasing signs of success, will be severely jeopardized should the U.S. impose restrictions on imports in general, and on textile in particular. The CHAIRMAN. Thank you, Mr. Matsunaga, for your statement and for bringing to us Governor Burns' statement. We will certainly consider them in our deliberations. Mr. MATSUNAGA. Thank you, Mr. Chairman, for your kind words. The CHAIRMAN. The Honorable William L. St. Onge, of Connecti- cut, is our next witness. Welcome thr, you are recognized. STATEMENT OP HON. WILLIAM L. ST. ONGE, A REPRESENTATIVE IN CONGR~SS PROM THE STATE OF CON1~cTIOUT Mr. ST. ONGE. Mr. Chairman and members of the committee, I appreciate this opportunity to present my views on H.R. 11626, known as the Textile Trade Act. For the first time in 6 years, we have before us proposed legislation for the institution of a comprehensive program of import regulation. Although this Nation has been moving toward the goal of free trade- and this trend was certainly obvious in the Kennedy round negotia- tions-recent foreign trade practices have placed our textile industry in an untenable situation. PAGENO="0048" 2354 A 3-year, short-term agreement, which was concluded during the Kennedy round talks and which extended the preceding 5-year, long- term agreement, provides only a moderate protection for domestic cotton. The areas that are particularly suffering from foreign compe- tition, however, are those which are protected by nothing more than limited tariffs. These include the woolen industry and the manmade fiber and apparel industry. Until the present, tariffs have been sufficient to shield these indus- tries and to stimulate trade simultaneously. But, through export sub- sidies, `border taxes, cartels in restraint of trade, dumping, import quotas, and a number of administrative procedures designed to thwart imported products, foreign textile producers have taken advantage of our liberal trade `barriers. To cite a specific instance, manmade fiber and woolen imports have increased 256 percent in the last 6 years, and there is no indication that this volume will slacken in the future. Complementing this situation is the fact that textile exports are not increasing. Two implications of the present balance of trade in the tex'tile are (1) that tariffs are no longer operable because means have been found to neutralize or to circumvent them, and (2) that the present trend in textile imports can be identified as being based upon a competitive advantage possessed by foreign industries. The advantage may he considered an un'fair one, since it is a result of the su'bstitution of nontariff restrictions *for the cuts in tariffs that have been attained in reciprocal `trade agreements. The most equitable solution to the problem would be to provide the basis for an orderly internationa.l trade. Legislation should ideally provide protection for the domestic industry, while it should not stifle trade. EL1R. 11626 provides a certain flexibility that is directed toward the establishment of these two conditions. It authorizes the President to negotiate "with other governrneiits for the purpose of consummat- ing agreements to provide orderly trade in textile articles into the United States * * * based on the share of the U.S. consumption of such category supplied by imported textile articles during a repre- sentative period of not less than 1 calendar year prior to the year 1967, as determined by the President." The President would also have the power to consider other factors that would affect trade such as historical patterns and the interests of developing countries. Those countries that. do not choose to nego- tiate would have their import trade restricted for any calendar year to the average annual quantity of textile articles which entered this coun- try for consumption during the years 1961-66. Such agreements of a bilateral and a collective nature already exist for cQtton and several other textiles. The danger that faces the textile industry is very real and should not be considered as a hoax which is being used to benefit that industry. Textile imports have increased two and one-half times since 1961. Foreign trade regulations and low-cost production are supporting this trend. It has been estimated that the effect of the imports has been'to deprive approximately 200,000 textile workers of employment. Senator Ernest F. Hollings, of South Carolina, has stated that the present handling of the situation will determine whether our textile industries move abroad in the future or remain in the United States. Further- PAGENO="0049" `2355 more, the production of textiles seriously affeets areas which have been designated as low income or poverty level. In 373 counties in Appwla- chia, approximately 75 percent of the jobs are affiliated with some seg- ment of the textile industry. I am sure the committee will consider what I have said judiciously. Thank you for extending this privilege to me. The CHAIRMAN. Thank you, Mr. St. Onge, for taking time from your busy schedule to share your views with us. Mr. ST. ONcE. Thank you, Mr. Chairman, it has been a pleasure. The CHAIRMAN. Our next witness is the Honorable Louis C. Wyman, our colleague from New Hampshire. Welcome, sir.. STATEMENT OF HON. LOUIS C. WYMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW HAMPSHIRE Mr. WYMAN. My name is Louis C. Wyman. I represent the First Congressional District of New Hampshire. I was pleased to introduce a bill, H.R. 11813, which is identical to that introduced by the chair- man, H.R. 11578, and by a substantial number of my colleagues not only from New England but throughout the country. In New Hamp- shire, the textile-apparel industry provides 13,000 jobs, ranks third in size among our industries, and accounts for 131/2 percent of our manu- facturing employment. In addition to this, we have over 2,000 people producing textile machinery and supplies. In my district alone there are 8,000 textile-apparel jobs located in 24 cities and towns. Similarly, the shoe industry in my district employs thousands of workers and it, too, accounts for a substantial percentage of our manu- facturing employment and its continuation as a healthy industry is a matter of urgent importance to the welfare of these thousands of jobholders. Many of the textile and apparel~ cQncerns in my district are small with 25 to 50 employees, and others employ from 100 to 800 workers. These plants frequently provide the principal source of employment in the communities where they are located. It is essential, therefore, that we do what we can to prevent these mills from being destroyed by imports from low-wage countries. In many countries, wages are as low as 15 to 25 cents an hour, compared to our textile wages of about $2.20 an hour. You will note that even in the relatively high-wage country like France it is only now that the minimum wage is about to be brought up to 60 cents an hour, com- pared to our statutory level of $1.60 which is exceeded by most textile and apparel producers. The legislation which I have introduced on textiles may be labeled by some as "protectionist," but in my mind this is untrue. In 1960, President Kennedy made it clear when speaking in Manchester, N.H., that he intended to solve the textile import problem, and in early 1961 announced a program for this purpose. I am glad to say that this was carried out for cotton textiles and that an international agreement now exists which permits us to exercise some measure of restraint on imports of these products. It should be noted, however, that this could hardly be called restrictive, as imports of cotton textiles have risen from $199 million in 1960 to $417 million last year. 95-159 0-68--pt. 6-4 PAGENO="0050" 2356 In 1964, President Johnson, when visiting New England, pledged in Providence and in Portland to carry out this program. It. is critical that this be done because wool textile imports have continued to rise and manmade fiber textile ithports have jumped from $60 million in 1960 to close to ?\Ter.$300 million currently. Wool and maiimade fiber textiles are of vital interest to the workers and to the welfare of the cities and towns in my district. I'm fully conscious that this also a problem for many other districts and States. It is a national problem when one realizes t.hat 2 million jobs in the Tjnited States in textile and apparel are at stake. The bill which I have introduced would enable the President to carry out the pledges which he has made to the Nation. it gives him the authority and direction to make international agreements covering wool and manmade fiber textiles as well as cotton. It provides guide- lines for these negotiations which would permit him to, first, select the highest level of import.s in recent years and, second, to assure to ex- porting countries their proportionate share of the U.S. ma.rket. This means that if our markets grow, imports will grow. When one con- siders that imports of these products last year exceeded a billion dollars in foreign value, one realizes that this is indeed generous. If, however, these foreign governments who themselves participate in many restrictive import practices, international agreements, and other devices to protect their own markets, refuse to make reasonable, sensible, and liberal agreements with us, then my bill would restrain imports to the average level which prevailed during the years 1961-66. The committee ma.y feel that a. somewhat different historical period such as 1962 through 1967 is more appropriate. I realize that such a historical period would involve some decrease in the level of imports. This should provide an incentive to these governments and the foreign exporters to work out. with us a mutually satisfactory arrangement based on the higher level of more recent years. This is eminently reasonable and is the least that we can do to be fair to textile and apparel workers in my district and throughout the country. I might note that, even if foreign governments were unwilling to make such agreements, they are still assured their historical share of our market which again means that if our market grows, their exports to this country will also grow. I feel strongly that a. viable international trade policy must meet these realities-jobs for those currently employed and jobs for those disadvantaged groups which exist. not only in city ghettos but in other communities as well. In Manchester, the largest city in my State, we are about to begin a concentrated employment program at the cost of many hundreds of thousands of dollars to train the hardcore unem- ployed for jobs. It makes no sense to me nor to the voters in my dis- trict to make these expenditures of time, effort, a.nd money while at the same time we pursue a. foreign policy which destroys the jobs which the unemployed can perform and can secure. Twenty years ago I served as the first counsel to the first Joint House-Senate watchdog committee set up to monitor the European recovery program. The name of this committee was the Joint Com- mittee on Foreign Economic Cooperation and its staff kept a cTose watch on billions of dollars then being spent in the process of rebuild- ing European nations ravaged by war. PAGENO="0051" 2357 It was apparent then, and I so reported to the committee's member- ship, that we were spending altogether too much in not only restoring these foreign friends-and some former enemies-production poten- tial, but in many cases demonstrably exceeding the prewar levels. We not only rebuilt factories-we bought and paid for new machinery, in- stalled it, and then sent teams of experts to teach the latest improved techniques from textiles to watches. All this was coupled with a free- trade policy, reciprocal trade programs and a general lowering of tariffs. The net result has been to encourage floods of imports into the United States and its primary market areas of goods comparable to- and in some cases even better than-our own, all made with labor that was paid but a fraction of that paid in the United States. When labor cost is a high component of finished products this predictably meant that in instance after instance we would be priced out of the market and American workers oñt of jobs. This has happened. It is continuing. It is now time that some quota limitations be imposed- not to eliminate our foreign competition but to reasonably regulate it 1 n our primary market areas to afford a measure of protection for American industry an d American workers. This will not invoke a tariff war, nor will it cost us friendships abroad. It is a needed change in business practice for a nation that for far too long has determined its foreign policy-particularly in the foreign aid field-from motivations of heart rather than head. I strongly urge this committee to report textile quota legislation along the lines of that proposed by the chairman. These bills are the result of over 10 years of intensive effort by many of us in the House and the Senate and of industry and labor. This is no time to back out. We must have a foreign trade policy which takes into account our own interests and the interests of the people who work in America and those who need jobs in America. I respectfully ask the committee to act favorably on reasonable quota limitations in respect to foreign imports of textile products, shoes, steel, and such other products as have established to the satis- faction of the committee that they are unreasonably harmed by such imports. It is not necessary to eliminate these imports, nor even to sharply reduce them. But it is truly necessary, in fact even urgently necessary, to give to American industry in these fields the legislative assurance that the disproportionate increases of these imports will not continue and that they will be regulated. Such self-interest is en- lightened, forward looking, and deserved by those hundreds of thousands of American citizens who depend fo~ their livelihood on the continued production of these American products. Mr. Chairman, I have certain tables of an informative nature that related to seriously affected industries within the First Congressional District of New Hampshire tha.t I would like to have included in the record at this point. ... The ChAIRMAN. Without objection, it is so ordered. (The materia' referred to follows:) PAGENO="0052" 2358 Xc w Hampshire teat/ic-a ppa ret fact s/i cet Employment 12,900 Rank in manufacturing industries 3d Percent of total manufacturing employment 13. 5 Number of establishments 137 Communities in which located 50 Annual payroll $48, 488, 000 Annual value added by manufacture $89, 220, 000 Textile machinery and supplies employment 2, 089 Number of establishments 11 Communities in which located . 6 Sources: U.S. Departments of Commerce and Labor and New Hampshire Department for Economic Development. TEXTILE AND APPAREL EMPLOYMENT IN THE 1ST NEW HAMPSHIRE CONGRESSIONAL DISTRICT Cities and lowns Number of Estimated mills number of employees Alton Barnstead Belmont 1 15 1 30 1 45 Danville 1 12 Derry Dover Exeter Goffstown Laconia Londonderry Manchester Meredith Newington Newmarket Newton Pittsfield Plaistow Portsmouth Rochester 2 55 1 7 1 435 1 2 532 1 3 38 5,112 1 100 1 10 1 80 1 60 2 118 2 328 1 65 3 -800 Rollinsiord Somersworth Suncook Tilton 1 150 1 100 4 217 2 493 Wolfeboro 24 cities and towns 1 125 78 8,894 Note: The above mill and employee figures arc not comparable to the employment figures shown in the accompanying New Hampshire Texlile-Apparel Fact Sheet. The above information is taken from available directories, while the Fact Sheet employment is taken from U.S. Government figures. CURRENT LIsTING OF NEw HAMPSHIRE TEXTILE MILLS AND APPAREL PLANTS IN THE 1ST NEW HAMPSHIRE CONGRESSIONAL DISTRICT Estimated Mills 2 employment Alton: Timber Lake Manufacturing Corp. (A), N. Tolman, President.~.~ 15 Barnstead: New Hampshire Artistic Web Co. (S), F. Zecha, President_ 30 Belmont: Fenwick Hosiery Mills, Inc. (S), Samuel Kay, President 45 Danville: Danville Chenille Co., Inc. (5), R. F. Dutton, Proprietor 12 Derry: Derry Textile Fibre Mills, Inc. (M), Selby B. Groff, President 20 Totsy Manufacturing Co., Inc. (A), Mrs. B. Hoitt, Manager 35 Dover: McCabe, B. P. (C), B. P. McCabe, Proprietor 7 Exeter: Mllhiken Industrials, Inc-Exeter Div. (D.&F.), Horace L. Pratt, General Manager 435 Goffstow'n: Hall, L. M. & Co. (A), L. D. Hall, Proprietor 2 Laconia: Belknap-Sulloway Mills Corp. (5), Richard W. Whiting, President-- 140 Central New Hampshire Dye, Inc. (D.&F.), Frank Piche, PresidenL. 25 Barberry Knitting Mills, Inc. (5), B. Greenfield, President 100 Cormier Hosiery Mills, Inc. (S), Samuel Kay, President 100 See footnotes at end of table. PAGENO="0053" 2359 CURRENT LISTING OF NEW HAMPSHIRE TEXTILE MILLS AND APPAREL PLANTS1 IN THE 1ST NEW HAMPSHIRE CONGRESSIONAL DIsTRIcT-Continued Mills 2 Estimated Laconia-Continued Employment Guild Mills Corp. (W), Lawrence W. Guild, Sr., President 25 Laconia Manufacturing Corp. (A), K. W. Wakefield, President 50 Old Colony Knitting Mills, Inc. (5), B. Greenfield, President 25 Pitman-Tricnit, Inc.-Pitman Hosiery Mills Division (5), C. J. Pitman, President 25 Winconia Corp. (A), J. K. Schramm, General Manager 24 Londonderry: Manchester Woven Label Co. (5), Edward McAndrew, Owner 3 Manchester: Acro Textile Co., Inc. (5), J. Kraus, President 60 American Velcro, Inc. (5), Clark ,Hartweil, President 45 Arms Textile Manufacturing Co., subsidiary of Colonial Corp. of America, S. I. Sheerr, President 350 Atkinson Spinning Co., Inc. (5), May B. Sidore, President 55 B. & C. Mills, Inc. (5), May B. Sidore, President 110 Brody Clothing Co., Inc. (A), S. Brody, President 20 Brookshire Knitting Mills, Inc. (S), 1~Iay B. Sidore, President 425 Chicopee Manufacturing Company (C), D. A. Watson, Plant Manager 840 Colman, Kate, Inc. (A) 10 Concord Mfg. Corp. (5), Sidney Ackerman, President 92 Cone Canvas Co. (M), Donald Cone, Jr., Proprietor 20 Darlene Knitwear, Inc. (S), B. D. Gordon, President 100 Feiters Co., Fibre Processing Div. (M), W. Wronosky, Plant Manager 20 Granite Weaving Corp. (5), P. Cherry, General Manager 14 Greenfield Carpet Co. (5), J. T. Garvin, Jr., President 50 Groval Knitted Fabrics, Inc. (5), M. Higgins, Plant Manager 25 Hamilton Co., The (A), J. Rovner, Proprietor 48 Hampshire Carpet Mills, Inc. (5), Alfred Fruchtman, President 25 Hampshire Mills, Inc. (A), H. Brenner, President 125 Holton Process Co. (M), E. H. Russell, President 12 Imperial Awning & Decorating Co. (M), L. C. Powers, Proprietor~_ 1 Langley, J. R. Co., Inc. (A), J. R. Langley, President 40 MKM Knitting Mills, Inc. (5), B. D. Gordon, President 500 Manchester Hosiery Mills (5), S. Z., M. J. & N. G. Gordon, Pro- prietors 150 Manchester Knitted Fashions Division', ECM Corporation (5), F. C. Prince, President 350 Martell, P. & W., Inc. (A), W. E. Martell, President 75 New Hampshire Bedding Co. (M), It H; Cohen, Proprietor 25 P & M 1~Ifg. Co., Inc. (A), .E. H. Mueskes, Plant Manager 150 Profile Mfg. Co., Inc. (C), Harry Rudnick, President 10 Rudnick, J. & Sons, Inc. (C), Harry Rudnick, President 45 Russell Thread Co. (C), N. H. Russell, President 10 Stephen Spinning Co. (5), F. Kelly, Superintendent 300 Tam O'Shanter, Inc. (5), 5. Rosenberg 175 Wau-Ke-Wan Thread Co., Inc. (C), W. L. O'Connor, President 10 Waumbec 1\'Iills, Inc. (5), Saul Greenspan, President 400 Waumbec Dyeing & Finishing Co., Inc., Saul Greenspan, President_~ 225 Westfield Knitting Mills, Inc. (5), E.' J. Rahn, President 100 Winw'ood Sportswear, Inc. (A), R. Winneg, President iQO Meredith: American Asbestos Textile Corporation (M) 100 Newington: Thairwall, W. C. & Co., Inc. (S) 10 Newmarket: Gallant Mfg. Co., Inc. (5), H. Gallant, President 80 Newton: Huskee Knitwear Mill, Division' of Keezer Manufacturing `Co., Plaistow (A) Pittsfield: Catamount Woven Label Co., Inc. (5) II. A. Beres, President 14 Globe Manufacturing Co. (A), L. Gilman 104 Plaistow: American Knitwear & Emblem Manufacturers (M), C. D. Keezer, Sales Manager Keezer Manufacturing Co. (C), C. D. Keezer, President 168 Portsmouth: Morley Co., The (M), J. A. Taylor, President 65 See footnotes at end of table. PAGENO="0054" 2360 CURRENT LISTING OF NEW HAMPSHIRE TEXTILE MILLS AND APPAREL PLANTS1 IN THE 1ST NEW HAMPSHIRE CONGRESSIONAL Dismicv-Continued Estimated Mills 2 Employment Rochester: Baxter Woolen Co., Inc. (W), C. E. Baxter, President & Treasurer____ 200 Rindge Industries, Inc., Gonic Division (W), Fulton Rindge, Jr., President 300 Wyandotte Worsted Co., Branch of Waterville, Maine (W) 300 Rollinsford: American Twine & Fabric Corporation (C), T. Nelson, Presi- ~lent 150 Somersworth: Great Falls Bleachery & Dye Works, Inc. (D&F), R. C. Jackson, President 100 Suncook: Dole-Suncook, Inc. (W), M. C. Dole, President 150 Furus, T. & Sons, Inc. (5), T. H. Furus, President 10 0. & P. Label Finishing (5), E. Ober & Mrs. H. 0. Cressy, Partners_ 11 Suncook Woven Label Co., Inc. (5), E. Ober, President 40 Tilton: Brown, Arthur S., Manufacturing Co. (C), R. H. Sedgley 143 Stevens, J. P. & Co., Inc., Division of North Andover, Mass. (W) 350 Wolfeboro: Malone Knitting Co. (S), P. P. Malone, Vice President 125 1 This listing represents the most comprehensive and up-to-date listing that could be compiled from Government sources, available directories, and other sources of information. 2 Key: (A) Apparel or other finished textile products; (C) cotton; (D.&F.) dyeing and finishing; (S) synthetic; (W) woolen and worsted; 01) miscellaneous. The CHAIRMAN. Thank you, Mr. Wyman, for sharing your views with us today. Mr. WYMAN. Thank you, Mr. Chairman, it has been a pleasure. The CHAIRMAN. Come forward please, sir. We are glad to have you with us this morning, Mr. Dent. For purposes of this record we will ask you to please identify yourself and those with you. STATEMEWI OF FREDERICK B. DENT, PRESIDENT, AMERICAN TEXTILE MANUFACTURERS INSTITUTE; ACCOMPANIEI) BY ROBERT C. ~rACKSON, EXECUTIVE VICE PRESIDENT, 000RDINAT- ING WITH ALAN T. DICKSON, PRESIDENT, AMERICAN YAP~N SPINI~ERS ASSOCIATION; MERLE S. ROBIE., CHAIRMAN OF THE EXECUTIVE COMMITTEE, CORDAGE INSTITUTE; MORTON H. DARMAN, CHAIRMAN OF THE BOARD, NATIONAL ASSOCIATION OF WOOL MANUFACTURERS; ROBERT D. McCABE, MANAGING DIRECTOR, NATIONAL KNITWEAR MANUFACTURERS ASSOCIA- TION; PULTON RINDGE, FR., CEAIRMAN, AND WILLIAM F. SULLIVAN, PRESIDENT, NORTBERN TEXTILE ASSOCIATION Mr. DENT. Yes, sir. Mr. Chairman and members of the committee, I am Frederick B. Dent, of Arcadia., S.C., where I am president of Mayfair Mills. I appear before you today in my capacity as president of the American Textile Manufacturers Institute, whose Washington office is located at 1120 Connecticut Avenue N\\T. The institute is the central trade association for t.he American textile manufacturing in- dustry, representing about 85 percent of the spinning, weaving, and finishing capacity in the cotton, silk, and mainnade fiber industry, with member companies located from Maine through Texas. In response to the chairman's request in the announcement of these hearings, this testimony is a joint, presentation of ATMI, the American Yarn Spinners Association, the Cordage Institute, the National As- PAGENO="0055" 2361 sociation of Wool Manufacturers, the National Knitwear Manufac- turers Associatio~i, and the Northern Textile Association. The Amer- ican Yarn Spinners Association, of Gastonia, N.C., is the central trade association for combed and carded cotton, mamnad~ fiber, and blended sales yarn producers with 200 member mills in several States. The Cordage Institute represents virtually all U.S. rope and twine produc- tion, and is located at 350 MadisOn Avenue, New York City. The Na- tional Association of Wool Manufacturers, located at 1200 17th Street NW., here in Washington is the national trade organization of the wool textile industry in the United States, having member companies in 32 States. The National Knitwear Manufacturers Association, of 350 Fifth Avenue, New York City, represents manufacturers of under- wear, nightwear, and allied products in 22 States. The Northern Tex- tile Association, which is headquartered at 211 Congress Street, Boston, Mass., represents manmade fiber, wool, and cotton textile mills located principally in the Northeast. I would like to introduce at. this time those men who are appearing with me at the witness table. On my left is Mr. Fulton Rindge, presi- dent of Rindge Industries, of Ware, Mass., who is also chairman of the Northern Textile Association. On my right is Mr. Alan T. Dickson, president of American & Efird Mills, Mount Holly, N.C., and president of the American Yarn Spin- ners Association. And Mr. Merle S. Robie, chairman of the executive committee of the Cordage Institute. In addition to these gentlemen, the other witnesses listed are available in the room for subsequent testimony. The CHAIRMAN. We appreciate having you gentlemen with us, too. Mr. Dent, you are recognized, sir. If you have additional material that you would like to have included in the record other than that you orally present, you are given that permission and it will appear at the conclusion of your remarks. Mr. DENT. Thank you very much. Let me just indicate for the rec- ord, however, that the term "textile industry" in reality, as in the legis- lation pending before you in the Mills bil'l-H.R. 11578-and similar bills sponsored by some 200 Members of the House, includes all estab- lishinents engaged in the production in the United States of textile articles, wool tops; cotton, wool, and manmade fiber spun yarn; man- made staple fiber, filaments aiid filament yarn; and fabric, apparel, and all other textile manufactures whether of cotton, wool, or man- made fiber, or a combination or blend of these fibers with each other or in combination with other fibers. THE BALANCE-OF-TEXTILE TRADE These hearings have been called "on the general subject of the bal- ance of trade between the United States and foreign nations and vari- ous matters relating to tariff and trade policy." The balance-of-textile trade, Mr. Chairman, is in serious deficit. In- deed, the textile trade deficit has been growing rapidly, and in 1967 was $766 million, as chart. I indicates. Why is the textile trade balance in such great deficit? Is it because the U.S. textile industry is inefficient ~ No. Is it because the U.S. textile industry does not make substantial export sales efforts? No. PAGENO="0056" 2362 It is because, Mr. Chairman, the U.S. textile industry operates in the United States where the average hourly textile wage is now $2.14; it will reach $2.27 an hour within a month based on wage increase an- nouncements already made in the past 2 weeks. The figure for Japan is 36 cents; Hong Kong, 25 cents; Pakistan, 14 cents; India, 13 cents; Taiwan and South Korea, 8 cents. It is because certain foreign governments subsidize their textile exports to this market. It is because the GATT protocol apparently is interpreted differ- ently in Brussels than in Washington, with respect to what can be done in the area of quota controls on imports from low-wage countries. It is because in valuing textile imports for customs purposes the United States uses free on boa.rd wholesale prices in the exporting country; while in valuing textile imports from the United States, those same countries use the higher cost, insurance, and freight valua- tions. It is because the U.S. trade negotiators snap to attention whenever another G-ATT member whispers the word "retaliation", but have no stomach for exercising our rights of retaliation. We contend that. the proponents of free trade in the United States have practiced one-sided idealism while forcing many American in- dustries to compete on the basis of unfair trade. THE IT.S. TEXTILE INDUSTRY IS EFFICIENT The U.S. industry is not. suffering from import competition be.ca~ise of inefficiency or obsolescence. Quite the contrary. No textile industry in the world is spending so much on reequipment, modernization, and research. No industry has offered the consumer such an array of new products at noninflationary price levels. But the new technology is known and available worldwide. Last fall at Basel, Switzerland's In- ternational Textile Machinery Exposition, there were 881 exhibitors of whom only 48 were American companies. New American textile developments quickly become available to overseas competitors because if the U.S. patent holder fails to license the new technology for use abroad, the foreign governm~nt will license it for him. With no offsetting, long-range productivity advantages, the U.S. textile industry is naturally vulnerable to the competition of modern pro4uction facilities located in chea.per labor areas of the world. Dif- ferentials in wages are so sharp they in most instances more than offset any short-range productivity advantages which certain portions of the U.S. industry may have. THE IMPORT BURDEN IS INDUSTRYWIDE The United States consumes more textile imports by far than any other country. Excepting for very lenient import controls on cotton textile, and quite modest tariff rates which were reduced again last. January 1 as a result of the Kennedy round, we maintain no impedi- ment to textile imports. U.S. imports of cotton textiles-including yarn, fabrics, made-up goods, and apparel-doubled over the last 6 years despite the existence PAGENO="0057" 2363 of import restraints. Uncontrolled wool textile imports went up by 50 percent and manmade fiber textile imports rocketed up from 164 to 934 million square yards, or 470 percent, over the same period. In the first quarter of 1968, total textile imports of cotton, manmade fiber, wool, and blends thereof reached an ailtime high annual rate of 3.1 billion square yards, a 14-percent increase over the previous record. The most rapid rate of increase continues to be in the manmade fiber division of the industry. Manmade fiber textile imports jumped 22 per- cent from first quarter 1967 to first quarter 1968. Chart II gives a quick overall view of the import pattern, which is steeply upward at all stages of manufacture. The present alltime high level of imports will double by 1974, if recent trends continue. The rapidity with which imports of particular product groups grow is well illustrated by cotton yarn developments of the past year. Raw cotton represents over half the cost of manufacturing grey yarn. Raw cotton costs in the United States advanced from July to December 1967 by about one-third. The equivalent yarn marketing period would be approximately August to February. Cotton yarn prices rose during this period by 15 percent. Yarn importers booked heavy orders in the fall, and these imports began arriving in U.S. ports in December 1967. The average monthly cotton yarn import level from July to November 1967 was 2.7 million pounds per month; the level during the December 1967 to March 1968 period averaged well above 6.0 million pounds. Incidentally, the six countries which have, for the past 30 months, represented more than 83 percent of all cotton yarn imported either grow the major part of their cotton requirements or have captive sources. None of these countries buys any important quantity of Ameri- can cotton. Of course, the rigid U.S. import quota on raw cotton-less than a day's requirements of upland types-is in effect being bypassed by this business. The impact of imports is not a single force equally distributed over all sectors at the same time. The numerous, random concentrations disrupt some segments of the market and then others. The repetition of the pattern is so consistent and widespread that no segment of the industry and no mill, no matter how specialized in its product, is im-~ mune from the direct and indirect impact of such `conceiltrated attack. Each foreign supplier is free to strike at random-and does. American woven label producers have lost virtually the entire ladies' dress industry market to import competition, chiefly Japanese. The imported labels are being sold at less than half of the U.S. price. Let me introduce Mr. Morton H. Darman, president of the Top Co., Boston, Mass., and chairman of the board of the National Association of Wool Manufacturers.' In recent weeks, member mills have reported to us curtailed opera- tions over a wide range of production, including corduroy, drapery and upholstery fabrics, buffing fabrics, enameling duck fabrics, sheet- ings, jeans, drills, twills, sailcloth, *and shirtings. A major adverse factor in the present market for each of these products is import com- petition from the low-wage countries. PAGENO="0058" 2364 THE REMEDY MUST BE INDUSTRYWIDE The rise of fiber blends and the fact that the products of various. fibers compete for the same end-use markets mean that an effective im- port remedy must be an industrywide remedy. The history of U.S. Government efforts to develop a. viable textile trade policy validates this conclusion. The Gdvernment's seven point, textile program enunciated on May 2, 1961, dealt with textile industry problems as a whole, and without regard to fiber distinction insofar as international trade matters were concerned. An internationally approved mechanism for dealing with market-disruptive cotton textile imports was negotiated in 1961- 62 at GATT headquarters in Geneva. Several abortive international conferences on wool textile imports have been held since that time. In its administration of the GATT cotton textile controls, the U.S. Government over the past 6 years has developed the statistical and administrative experience and techniques needed to carry out an all- fiber program. Because cotton textile import limitation actions have been mutually agreed on in the GATT Cotton Textiles Committee, no compensation or retaliation is involved, as would be required under escape clause action, for example. For mutual ease of administration and market stability, there has been increasing reliance upon bilateral agreements. Article IV of the GATT cotton textile agreement specifically authorizes such bilaterais. We now have them with 22 countries. In virtually every instance they cover 100 percent of the import trade, that is to say, all categories of cotton textile products. As a matter of fact, a so-called voluntary undertaking on the part of Japan some years ago to control its exports of cotton textile prod- ucts to the United States was in many respects a forenmner of the existing GATT-approved bilaterals. This earlier Japanese arrange- ment had many of the earmarks of a bilateral agreement, including joint announcement by the two governments, and it was in fact ham- mered out in months of hard and detailed negotiations during the latter part of 1956. The Japanese export control arrangements covered all cotton textile trade with the U.S.A. for the 5 years 1957-61. The agreed level of limitation was somewhat higher than the then existing level-an all-time high up to that point-and there were some sub- sequent upward adjustments during t.he 5-year period. This early Japanese-United States experience also pointed up the importance of establishing an over-all country quota and then sub- dividing it by product lines. Import impact, when total shipments are ~own and when spread over many product lines, is much less disnlpt.i\~e of markets than a smaller volume of shipments highly con- centrated in a few product lines. There was developed in the GATT cotton textile negotiations in 1961, therefore, a system of 64 categories of products covering between them all cotton items, which the United States has used in administering its responsibilities under the arrangement. PAGENO="0059" 2365 THE SOLUTION IS THE MILLS BILL Mr. Chairman, your bill, H.R. 11578, and the similar bills intro- duced by some 200 of your colleagues, provide the industrywide remedy the textile import situation demands. Your bill gives to the President the tools needed to dO the job: the negotiating tools that have been lacking. H.R. 11578 authorizes and directs the President to negotiate agree- inents providing orderly trade in textile articles, including quanti- tative limitations on U.S. imports. The agreements would limit im- ports by categories of textile articles and would be based on a representative period of at least, one calendar year. The historical period and each country's share of imports would be determined by the PresidentS, considering the interests of developing nations and such other factors as he deems appropriate. When a significant portion of U.S. textile imports are covered by agreements, the President would limit imports from any country not participating in such agreements on the same basis as the agree- ments. Changes in import levels would be geare.d to a category basis so as to provide flexibility in the most favorable markets. If, but only if, within 6 months of the bill's enactment, international agreements providing for orderly trade have not been concluded, textile imports would be automatically limited to their average annual quantity for the period 1961-66. This provision is the exporting country's incentive to negotiate promptly and in good faith. The bill recognizes existing cottOn textile, bilaterals and restraints. It provides for a substantial volume of imports and permits their future growth as the U.S. market grOws. RETALIATION IS A TWO-WAY STREET U.S. textile import policies have been, and under H.R. 11578 would remain, so generous relative to those of other GATT members that "retaliation" and "compensation" could be avoided by vigorous pres- entation of the American case to our trading partners. In view of the subsidies being paid on textile exports to the United States, the non- tariff trade barriers raised against U.S. textile exports around the world, and the bilateral agreements between foreign nations which force additional export.s onto the U.S. market, the real questions, Mr. Chairman, are these: Why does not the U.S. Government invoke our right of retaliation? `Why does not free trade mean fair trade? In any event, there is a distinction, in practice, between violating t;lie rules of the GATT and invoking its provisions with respect to retaliation and compensation. Retaliation and compensation enter when the value of the concessions granted a party has been nullified or impaired by the `illegal action taken. That is to say, the GATT has not authorized retaliation or called for compensation unless the action in question has had an adverse effect on the trade of the complaining country, since, as a practical matter, it would be impossible to assess the amount of compensation or retaliation in the absence of trade effects. Thus, while the imposition of quotas might be construed as a viola- tion of article XI of the GATT, this' by itself would not necessarily PAGENO="0060" 2366 provoke action on the part of the contracting parties. For example, in the case of the meat import quota, legislation of 1964 no complaint. arose in the GATT, presumably because the prescribed quot.as did not have the effect of reducing imports. It is only if the import quota has the effect of impairing the value of a tariff concession-if t.he trade flows involved were affected-that there would be a basis for a material grievance. Since what is contemplated is the negotiation of agreements under which the total level of textile imports would not be rolled back, and, under which some growth in imports would be allowed, the U.S. Gov- ernment would have a strong basis, both in GATT law and practice, to defend against any action by the contracting parties calling for compensation and retaliation. The only argument that could be advanced to the contrary would be that the existence of the. quotas prevented sales of textiles to the United States from growing as much as they might otherwise grow. It. would be very difficult to quantify such a concept.. Moreover, one is reminded of what President Truman once observed in vetoing a. Tariff Commission escape. clause recom- mendation, to the effect. that injury does not exist when one has failed to achieve what one never had. Subsidies paid by foreign governments on sales of textiles to the United States are creating conditions of unfair competition and market disruption. The Italian Government, for example, rebates to wool textile exporters the integrated rate of the general turnover tax. In addition, of course. Italian exports including all textiles, receive a rebate of the transactions t.ax in the amount of 6 percent of the export value together with a refund of certain manufacturing taxes. Italy and the other member states of the European Economic Com- munity have agreed to adopt a value-added tax system by 1970. Pre- liminary appraisals indicate that., for the EEC as a whole, the new system will further increase their export rebates on textile sales to the United States. While this is not a violation of GATT rules, it is cer- tainly an unfair trade situation. Taiwan has surpassed Italy in imaginative export subsidization. Cotton textile exports receive rebates of import duties, defense surtax, harbor dues, and commodity taxes. In Mexico, the government provides subsidies, sales tax rebates, and special finance facilities for textile exporters. Brazil not. only exempts exports from the Federal consumption tax but also from certain State and consignment taxes while. allowing the exporter to retain up to 100 percent of foreign exchange proceeds for his import requirements. The Japanese Government provides many special forms of export insurance, including investment., pric.e, loan, and overseas aclvertismg risks. Further, exporters are permitted to rese.rve up to 5 percent of their export proceeds for foreign market. development. This is a. tax deductible expense even if not spent. This, too, applies if the exporter is also the manufacturer except. that in this case 1.5 percent of export contracts' income may be placed in reserve to be written off 5 years after their establishment. Similar aids and benefits accrue to small or medium enterprise under the Small and Medium Enterprise Reserve for Foreign Market. Development.. MITT (Ministry for International Trade and Industry) authorizes firms in this category to effect a tax PAGENO="0061" 2367 dedu~ti'ble expense up to 1.5 percent of foreign trade income if match- ing funds are contributed to the association's foreign market develop- ment. Special depreciation rates for plant and equipment are granted by MITT to enterprises concerned with export promotion. In `West Europe, the chief nontariff trade barrier facing American textile exports is the border tax. The range of rates from country to country and among textile products is wide-2.4 percent to 20 percent- however, in each case the tax is levied on the c.i.f. duty-paid value- thereby greatly increasing the effective tax barrier. The use of textile import quotas is widespread among our trading partners-and they are not limited to cotton textiles as are ours. As a byproduct of their realistic policy, a disproportionate share of wool and manmade fiber textile exports from the low-wage countries is being directed `to the U.S. market. In summarizing these quotas I can do no better than to quote Deputy Assistant. Secretary of Commerce Nehmer, who said in a recent speech: The United Kingdom sets quotas on various wool and manmade fiber products from Japan. Italy restricts imports of various wool and man-made fiber products from Japan. France has similar restrictions on Japanese imports, but restricts imports from Hong Kong as well. West Germany has restrictions against Japan, Hong Kong, India and Pakistan. Austria has restrictions on Japanese textiles but also has an "anti-dumping and market disruption law" which permits automatic action when prices of specified textiles are considered too' low. The Benelux countries have a bilateral agreement setting quotas on Japanese textiles and apparel, while `the Japanese-Canadian agreement imposes quotas on some synthetics. Canada has similar agreements with Korea and Hong Kong. Den- mark uses licenses to regulate textile imports from Japan, Korea and Taiwan. Switzerland employs a "price certificate system" for textile imports under which textile imports are kept out if prices are too low. This is administered through a system of import licenses for all textiles at the fabric stage and `beyond, regard- less of origin. However, the licenses have been granted automatically to high- cost countries. Norway and Sweden have restrictions on imports `from several Asian countries. Even Japan `has a global quota on imports of woven woolen fabrics under which Japan sets quotas for France, Italy and the U.K. The plight of the less developed countries is real, and textile trade is important to `them. The United States has taken much more than its fair share of their exports. The facts and figures demonstrate the generosity of U.S. textile trade policy; the cries of "restrictionism" heard from Europe and the Orient `are simply designed to hide overt action and to appeal to the self-consciousness of the unknowledgable. The U.N. in its latest avail- able data~, for 1966, has reported the trade in textiles as follows and I also call your attention to chart III: LDC TEXTILE TRADE, 1966 [Dollar amounts inthousands] Imports from LDC's Exports to LDC's Balance Area for LDC's Amount Percent Amount Percent European Economic Community $92,093 17.1 $132,986 30.2 -$40,893 Japan ,. 6,158 1.2 202,293 45.9 -196,135 United States 439,747 81.7 104,972 23.9 +334,775 Total 537,998 100 440,251 100 +97, 747 Note: SITC codes 65 and 84 for Mexico, El Salvador, Jamaica, DominIcan Republic, Columbia, Brazil, Spain, Portugal, Greece, Israel, India. Pakistan, Malaysia, Singapore, Philippines, South Korea, Taiwan, Rykukyus, Egypt. Source: United Nations. PAGENO="0062" 2368 The United States absorbed 82 percent of the total textile exports of 19 less-developed countries to the EEC, Japan and the United States. Japan let in 1 percent and the EEC, with about the same pop- ulation as the United States took 17 percent of the total. These lesser developed countries together had large textile trade deficits with Japan and with the European Common Market.. The lesser developed countries ran a. surplus with us of a third of a billion dollars. We are already serving as an important textile market for many developed countries as well, as shown on chart IV. THE NATIONAL INTEREST DEMANDS A GROWING TEXTILE INDUSTRY The textile industry was described by the World War II Army Quartermaster General as second only to steel in essentiality. In 1959 the Office of Civil and Defense Mobilization made the following state- ment to the Senate Textile Subcommittee: The OCDM regards the textile industry as an essential industry and considers it an essential part of the Nation's mobilization base. The textile industry is presently supplying an average of 200 yards of cloth for every man and woman in uniform. In all, some 25,000 tex- tile items from socks to bulletproof vests are used by the military. The textile industry is essential to the economic and social frame- work of the United States as welles to its military security. The virtually unrestricted flow of textile imports into this country is working to nullify our strong commitment to provide more jobs for t.he unskilled in underdeveloped areas of our own country. When we have such critical needs at home the United States no longer can afford to use textile trade as a means of creating jobs and prosperity overseas. A growing textile industry can be the vehicle for putting some of our underdeveloped areas on their feet economically by providing the needed jobs. There is no area of the United States where the importance of the textile industry, and its hundreds of thousands of jobs for diverse skills, is better illustrated tha.n in t.he Appalachia Development region. In the 373 counties which const.ituted the original Appalachia program area, some 453,000 people are employed by the textile industry. In many of these counties, textile employment accounts for as much as 75 percent or more of the manufacturing jobs. The national average for employment in the textile industry is 13 percent of all manufactur- ing jobs. In the Appalachian region 26 percent-thetter than one out of every four manufacturing jobs-are in the textile industry. There are 118 counties contiguous to Appalachia and 85 of these have substantial textile employment-another 224,000 jobs directly in the textile industry. If one were to draw a line 50 miles outside the boundaries of Appalachia, this line would include an area with an ad- ditional 345,000 textile jobs. In short, there are more than 1 million textile jobs in Appalachia and a 50-mile area surrounding it. The jobs the textile industry is providing in Appalachia have spe- cial significance. In many cases they spell the difference between self- support and welfare. Jobs in the textile industry have helped thou- PAGENO="0063" 2369 sands of people make the transition from farmwork to manufacturing employment. In addition to providing individuals with productive employment, textile jobs in many cases provide the major payroll and tax income in the communities in which the mills are located. Textile jobs are the foundation upon which an economically sound Appalachia of the f u- ture can be built. Yet, the Government is appropriating millions of dollars to create needed jobs in poverty areas while at the same time conducting its textile tra4e policy in a job-destroying manner. New York's mayor calls it fun city and many think of it in terms of the executive suite, but it is also the largest manufacturing city in the Nation and more than one-third of those employed in manufacturing there work in the textile industry-298,000 people with an annual pay- roll of $1.3 billion. By coincidence, this is exactly the figure reported as New York City's welfare budget for fiscal 1969. Every State except Hawaii produces wool for the textile industry. Nineteen States grow cotton and 22 States have manmade fiber-produc- ing plants. Forty-two States have basic textile mills and there are ap- parel plants in all 50 States. Negro employment in the textile mill industry has grown rapidly in recent years. The textile mill industry in 1967 provided employment for more than 82,000 Negroes. While overall textile employment has in- creased by only 2.8 percent since 1960, employment of Negroes has increased by 270 percent. This has meant more than 52,000 new jobs for Negroes in the textile mill industry, primarily in Southern States. In Alabama, for example, about 20 percent of the textile work force is Negro and current hirings are running about 35 percent Negro. In South Carolina, 40 perce.nt of the new hirings in the textile mills over the past year were Negro and between 1965 and 1967 the number of Negro employees more than doubled. RECOMMENDATIONS Textile tariffs are already too low, as the size and rapidly rising trend of imports indicates-~and further cuts are already scheduled for each of the next four Januarys. However, we recognize that the Government may need "house- keeping" negotiating authority. The administration is proposing that the unused portion of the 50 percent tariff-cutting authority of the Trade Ex~ansion Act, which expired a year ago, be restored until July 1, 19(0. Textiles were recognized in the Kennedy round as par- ticularly sensitive to import competition, and hence most textile tariff reductions were substantially less than 50 percent. We do not think textile tariff-cutting authority of more than 5 percent should be granted in the pending legislation. The Special Trade Representative told the committee on June 4 that "it is not our intention to engage in any major negotiations . . The 5 percent authority should, therefore, be more than ample. There is no reason to expose sensitive products like textiles to the possibility of larger tariff reductions. PAGENO="0064" 2370 Our major recommendation is that the concept of the Mills bill (H.R.. 11578) be enacted into law promptly. Certain changes in the bill may be desirable. For example, we would favor the addition of provisions stating clearly that coverage of the legislation extends to rope and twine as well as *to the products of silk and blends of silk with man-made fiber, cotton, or wool. Most textile imports are produced under wage rates and working conditions illegal in this country. Should a textile article which could not be shipped legally across State lines were it manufactured in the United States, be allowed open access in unlimited volume to this market provided only that the sweatshop is located 12 miles offshore? Our recommendations come from a job-furnishing, taxpaying in- clustry daily confronted with the harmful effects of our "unfair" trade policy. We deal in reality, not theory, when we urge your favorable consideration of these recommendations. Mr. Chairman, I have for the confidential review of the committee reports from mills outlining the harmful effect of imports which I would like to submit to the secretary for your further consideration. The CHAIRMAN. That which is confidential submit. to the secretary. Do you have additional material for the record? Mr. DENT. Thank you, Mr. Chairman, we would Jike to continue our testimony with Mr. Morton H. Darman, chairman of the board of the National Wool Manufacturers Association. (The charts referred to in Mr. Dent's statement follow:) U.S. TEXTILE TRADE Millions of dollars - CALENDAR YEAR TOTALS 1400 1200 IMPORTS 1000 DEFICIT 800 1959 1960 1961 1962 1963 1964 *Annual Rate Based on 1st Quarter 1968 Source: us. Department of Commerce PAGENO="0065" 2371 U.S. IMPORTS OF TEXTILE MANUFACTURES BY PRODUCT GROUP Millions of sq. yds. H uuv "U', I Imports t~om LDC'SJ 250 92.093 oa:T~ 132.986 250 JAPAN EEC USA ~ Selection of LDC'S based on random sample of 19 less developed countries, excluding Hong Kong, and the African Nations. 63 64 65 66 67, 68* 69 10 71 72 73 74 15 *Annual Rate Based on 1st Quarter 1968 Source: U.S. Department ot Commerce 1962-1968 1966 COMPARATIVE TEXTILE TRADE BALANCES FOR SELECTED LESS DEVELOPED COUNTRIES * Millions of U.S. Dollars CAA 92.741 TOTAL NET BALANCE FOR LDC'S I Exports to LDC'S I Source: United Nations 95-159 0-68--pt. 6-5 PAGENO="0066" 2372 Mr. DENT. Mr. Chairman, at this time I would like to submit for the record the statement of Merle S. Robie, chairman, executive com- mittee, Cordage Institute. The CHAIRMAN. Without objection that will be done at this pomt.. STATEMENT OF MERLE S. ROBIE, CHAIRMAN, EXECUTIVE COMMITTEE, CORDAGE INSTITUTE The Cordage Institute, which is composed of practically all of the rope and twine producers of America, welcomes the opportunity to submit this statement to the Committee. Our position was included in the presentation of the American Textile Manufacturers Institute. As the Committee is aware, cordage `products have traditionally `been included with other textile fibers and textile products for duty and customs purposes. The Tariff Commission also recognizes this fact and among other evidence on this point is the reference made to cordage in the recent report to the President on Textiles and Apparel. However, since certain of the problems of the Cordage Industry are unique, we feel it important that the Committee recognize the cumulative effects of growing imports of textile products and the ultimate effect on the ability of the Cordage Industry to produce rope and farm twines in the event of a national emergency. We are familiar with various bills that have been introduced in the House of Representatives to effect relief to the Textile Industry as a whole. We support the purposes of these bills and believe they are essential `to the continuation of one of our country's basic industries. `The bi'll, H.R. 11578, introduced `by Mr. Mills, is typical of those presently pending before this Body. However, we would earnestly recommend to the Com- mittee that the definition of "textiles" used in H.R. 13256, introduced by Mr. Utt, and the identical bill, H.R. 13755, introduced by Mr. Stratton, be used in lieu of the definition in H.R. 11578. These two bills are the same as `the bill introduced by Mr. Mills with the exception that their definition specifically in- cludes cordage products. We believe that the Congress will continue to apply the same treatment to cordage products as it does to other textile products. However, in administering such legislation it would be possible, even though inaccurate, for the Federal Agencies to exclude the cordage products if the definition does not specifically include them. To repeat, cordage products are now These 20 countries represent the majority of U.S. Textile Imports. PAGENO="0067" 2373 included within textile products for duty and customs treatment and as this Commiteee has heard, the sponsors of legislation dealing with textiles are in complete support of our suggested amendment. Cordage products from both natural and man-made fibers are essential to various segments of our American industry. Ropes and cables for domestic maritime use, farm twine and industrial twines are vital to our business and industry. The natural fibers used in the production of these commodities are imported. In the field of man-made fibers nearly all of the raw materials for cordage products are made and produced domestically. The end products made from these raw materials are so important to our country in time of national emergency that the Government has in the past maintained and still continues to n]aintain a stockpile of natural fibers for the making of ropes and twines. During World War II the United, States and Canadian Cordage Industries were producing, of necessity, the tremendous quantity of rope and twine needed for the war effort. In 1945 there were 22 members of the United States Cordage Industry operating 23 mills. As the effects of the War in Europe were overcome imports of cordage products from Eñrope began to come into the United States in significant quantities. Due in part to the continuing cheapness of labor in the European producing countries and, in the case of farm twines, the absence of duty of any kind, such imports grew- at an alarming rate. The net effect has been that of these 22 companies with 23 mills in 1945 there are now only 10 companies operating 14 mills. There is no question but that the number of mills being operated will be further reduced if the usurping of United States markets by imports is allowed to continue. One way to show the effects on the domestic production is to look at the record on hard fiber rope. We start w-ith 1955 by which time the foreign industries were again producing at what should have been their normal productive rate and bring the statistics to 1967. During this period the growth in the use of synthetic ropes in the U.S. market reduced the market for hard fiber rope from 105,000,000 pounds per year in 1955 to approximately 72,000,000 pounds in 1967. This total figure for 1967 is not truly representative because in 1966 and 1967 there were large increases in demand for rope due entirely to an increase in demand for hard fiber cordage by the United States Goveràment to meet the needs of the war in Vietnam. However, the commercial market for hard fiber rope has declined over 53% since 1955. Yet, during that same period imports of hard fiber rope into the United States went from 7.6% to approximately 25%. Obviously, the United States manufacturers are now selling about 45% less than what they were selling in 1955. The trend continues downward. In the case of synthetic ropes the trend is exactly the same, but since the use of such ropes* is still in its infancy the figures are not presented since there is no historical base for accurate comparison. The facts are that the American Industry pioneered the research in the use of synthetics in the production of rope and twine and were hopeful that this new development would restore its position in the American market. However, the foreign manufacturers are now producing and selling synthetic ropes at a price level which will make it impossible for United States manufacturers to compete once the Kennedy Round rates are in force. The only way that we can hope to continue supplying our part of the American market is if Oongress assures us of a reasonable portion of that market. The effects of such continued decline in American production is bringing about a corresponding decrease in the availability of spinning capacity to produce rope and twine not only to meet the requirements of industry but more importantly it will make it impossible for the United States to produce its requirements in event of national emergency. As we pointed out above, in World War II the United States was able to increase its production almost three-fold in order to meet our requirements. This, with support from contiguous foreign nations, enabled us to meet our emergency needs. We wish that we could say that is the case today. Due to the reduced number of cordage coin- panies and the decline in spinning capacity, we seriously doubt that today we could repeat our efforts of World War II. Certainly if the industry continues to decline our country will be faced with an unacceptable risk of shortage in the event of war. This applies with equal force to contiguous nations producing cordage products. Our country spends considerable sums and energy to assure that we will have an adequate mobilization base to meet our emergency requirements. In some areas preference is given for the purchase of American products. In PAGENO="0068" 2374 others, outright subsidies and grants are used to keep a sufficient domestic base available. Unfortunately this has never been true in the cordage field. Yet, without cordage products, much of the essential support for products and equipment made from protected mobilization base facilities will not be available within our country. Yet, all our industry is asking in the way of help is the opportunity to coatinue in production. Unfortunately, information on military requirements for cordage products in wars of various sizes is classified and, therefore, is not available to us. We are certam that they could be made available to your Committee. Certain facts that are apparent as to the effect of the decrease in production capacity are revealed from the relatively modest increase in domand for cordage required for the Vietnam war. The requirements have indeed increased but in relation to those of World War II are not significant. Yet, this somewhat modest increase has caused problems for the domestic producers of rope in supplying promptly their commercial users such as the shipping industry and others indirectly involved in war-supporting activities whose demand has also increased. The development of a demand sucii as was known in World War II would certainly force the country into overall industrial mobilization. Unfortunately, there is not sufficient capacity of trained manpower or productive machinery within the Cordage Industry to meet such an increased demand. It will be argued by some that with our modern facilities some of the "twine" spinning plants have the capacity to be converted to the making of rope. Mechanically this may be true, but practically it is untrue. The same pressures that would require the increased production of rope would result in a marked increase in the demand for farm twines to meet our new emergency requirements. Over the years, the Cordage Institute has endeavored, on national security grounds, to obtain the relief established in the Reciprocal Trade Act to bring about the establishment of quotas to help maintain its production capacity. The predictions made by the industry as to the decline in capacity which would occur if something was not done to control imports have unfortunately proven to be true. The Agency within the Administration which administers this section has been so impressed by the never changing opposition of the foreign countries expressed through our State Department and by the theories advanced by the exponents of "free-trade" that these petitions have always been rejected. Since the present law has not met the needs it is reasonable that the Congress re-evaluate the security implications of increased imports in general and on the textiles and cordage imports in particular. The Congress has in the past established a workable format in controlling imports by ratifying the Laurel-Langley Treaty with the Philippines. This was done in 1954 and the Congress assisted the Philippines by assuring them a seg- ment of the United States market and at the same time limited the amount of such imports by establishing a fixed quantitative quota on several products of the Philippines including hard fiber ropes. Unfortunately, the decline in demand for hard fiber ropes, due to the advent of synthetics in the market, has made the quantitative quota much too large in relation to the remaining domestic market and it must be re-evaluated during the discussions presently being conducted between the United States and the Philippines in reference to a possible extension of the Treaty. The point is that those who object to quanti- tative limitations overlook the fact that they are both a help to the foreign producer and importer and at the same time a protection to the United States producer. We are aware of the Administration's desire that no restrictions be placed on imports into the United States in any fieldS However, we believe that such a broad position which any normal businessman w-ould be inclined to support must be examined in the light of special situations. We in the Cordage Industry of the United States are doing all that we can through research and improved efficiency to remain competitive. If our efforts on which much energy and considerable funds have been spent were effective, certainly we would not be asking for protection. Since the record shows that our continuing efforts are not sufficient to meet the price levels at which foreign rope manufacturers are selling then other relief must be found. To us it only makes sense that this relief take the form of Congressional assurance that the major portion of the United States market is kept available for domestic producers. Much has been made by the Administration and by those interested in promoting foreign trade that for the United States to impose any restrictions PAGENO="0069" 2375 would be to invite retaliation. While the genesis of these arguments is under- stood, they leave the impression that such actions would be unique to the United States, and that the only result would be for the foreign governments to imme- diately retaliate and that chaos would result in our exports and in our foreign trade. The facts are that many foreign nations presently have various types of restraints on imports. Sometimes arrangements have been worked out bi-later- ally with specific nations and sometimes they have been established through other devices. The best evidence on this point is a memorandum prepared on December 27, 1967 by the Office of the President's Special Representative for Trade Negotiations. This memorandum dealt with the quantitative import restrictions on wool and man-made textiles. It did not discuss all of the textile items nor did it discuss the many import restrictions established by foreign countries on other products. Without endeavoring to quote out of context from this memorandum a few quotations make it clear that on the items covered in that memorandum and as this Committee well knows on many other items import restrictions have already been established by many foreign countries. We are not aware of any resulting retaliation caused by such measures which has adversely affected the trade between such countries nor has chaos resulted. The paper started out by saying: "This paper identifies quantitative import restrictions that have been applied in the calendar year 1~67 against wool and man-made textiles by 12 foreign countries-Austria, Belgium, Netherlands-Luxembourge (Benelux), Canada, Denmark, France, Italy, Japan, Norway, Sweden, Switzerland, United Kingdom and West Germany." The paper also by its definition shows that there are devices other than quotas and it refers to "licenses, `voluntary' export controls and minimum import prices." The countries mentioned are significant importers into the United States. They are obviously accustomed to import restrictions on materials coming into their countries and presumably adjust their exports to meet the restrictions established by other nations. Therefore, we cannot see how it can be argued that action by the United States to protect its essential industries would adversely affect its foreign trade. To the contrary, we believe it can reasonably be argued that if percentage quotas of the United States market are made available to various nations they will, permit a more orderly development of their production. They thereby would avoid the dangers of overproduction and reliance on a market which might no longer be available to them due to imports into the United States from other competing nations. We recognize the pressures that will be on this Committee and the Con- gress as a whole on the important question of trade policy. We believe that the Committee members recognize that any trade policy will be meaningless if our industries generally decline and that we cannot properly compete in world markets. We do not believe that either the Congress or the Administration wishes our national security to become dependent on sources that might not be available to us in the event of war. The intransigence of the political struc- ture in some competing nations and their vulnerability to attack constitute an unacceptable risk to our national security and this is not limited to Textiles, including Cordage. We do believe that the record in the Cordage field supports the concern of others in the Textile Industry as to the need for recognition of these essential facts. In conclusion, we note that the study by this Committee will cover all facets of the foreign trade problem. We recognize that our suggestions are not a panacea for all products and that the deCisions that must be taken will be com- plex and difficult. We believe that the Textile Industry clearly must be given .r~lief if it is to reverse its decline and this relief must be its ability to supply a major segment of our domestic markets. We believe that such action will result in an improved balance-of-payments situation and we know that our mobilization base will be stronger. We trust that the Committee will enact legislation deal- ing with the Textile problem during this session of the Congress. The CHAIRMAN. Mr. Darman, you a~re recognized. PAGENO="0070" 2376 STATEM~ENT OF MORTON H. DARMAN, CHAIRJ~'IAN OF THE BOARD, NATIONAL ASSOCIATION OF WOOL MANUFACTURERS, AND IN BEHALF OF NATIONAL WOOL GROWERS ASSOCIATION Mr. DARM~AN. Thank you, Mr. Chairman. Mr. Chairman and mem- bers of the committee, my name is Morton H. Darman. I appear here today as chairman of the board of the National Association of Wool Manufacturers, 1200 17th Street NW., this city. I am president of The Top Conipany, 470 Atlantic Avenue, Boston, Mass., a manufac- turer of wool tops. The association is the national trade organization of the wool textile industry. Its members manufacture more than 70 percent of the textiles made in the United States on the woolen and worsted systems, except carpets and rugs. The Boston Wool Trade Association, representing almost all the wool dealers of this country, is an affiliate of our association. I am also speaking on behalf of the National Wrool Growers Associ- ation, which represents the quarter million producers of raw wool in the United States. The wool textile industry is situated principally in the southeastern, New England, and Middle Atlantic States, although there are mills in 32 of the 50 States. Wool is grown in all 50 States of the Union, principally in the Rocky Mountain States, Texas, California, and cer- tain of the Midwestern States. The wool manufacturing industry of the United States provides the only market for domestically produced raw wool. Therefore, the welfare of the wool growing industry is directly related to the health of the domestic wool textile industry. In this connection, I should point out that Congress in enacting and extending the National Wool Act of 1954 has declared that pro- duction of raw wool in the United States is essential to the national security; but wool has no security value unless the capacity exists within this country to manufacture it into usable textile products. Mr. Chairman, we concur in the statement of Mr. Frederick B. Dent, *president of the American Textile Manufacturers Institute, Inc. To conserve the t.hne of the committee, I shall limit my testimony to a discussion of the impact of wool textile imports upon the domestic industry, and the necessity for reasonable lunitations upon these im- ports such as would be provided by your bill, H.R. 11578, which is cosponsored by nearly half your colleagues in the House. At the outset, I wish to emphasize that the U.S. market for wool textiles has been penetrated far more deeply by imports than has the market of any other segment. of the domestic textile industry. At the same time, however, I stress that the wool textile import problem will not be solved absent an industrywide all-fiber remedy as contemplated by the pending legislation. Within the past 10 years the ratio of wool textile imports to do- mnestic consmnptioii has grown from 9.3 percent to an all time record high of 22.2 percent, according to the most recent Commerce Depart- meiit statistics. Quantitatively, such imports in the first quarter of this year exceeded those of the corresponding period in 1967 by 20 percent. PAGENO="0071" 2377 While on an overall basis wool textile imports have now taken in excess of one-fifth of the U.S. market, in some areas the penetration has progressed much further. In~the case of worsted cloth, for example, imports have grown to the point where they now exceed 50 percent of U.S. production, and one of every two regular weight men's suits produced in this country is made of imported cloth. One women's lmit sweater is imported for each one made in the United States. I shall not belabor the severe dislocation which these imports have brought about in our industry, nor the disruption they continue to cause in the U.S. market. We look to the future, not to the past; and given enactment of your bill, Mr. Chairman, the future holds promise for us. In the years ahead there is reasonable prospect for expansion of the U.S. market for wool textiles. Population is growing, research on t.he wool fiber and in wool manufacturing is increasing, and promo- tion of wool to the consuming public is not only increasing but becom- ing more effective. The question confronting this committee and the Congress is, purely and simply, whether the wool manufacturers and woolgrowers of the United States are to be permitted to share equitably in this growth or become mere residual suppliers of the U.S. market. If the ratio of imports to domestic consumption of wool textiles continues to grow at the rate of the last 10 years, by 1975 it will have reached 31 percent. In other words, whereas these imports now supply over a fifth of the U.S. market, they would in 1975, given no action, supply nearby one-third of this market. The chart appended to my statement shows that despite periodic "leveling off" periods usually related to cyclical downturns in con- sumer demand for wool textiles, the trend of import penetration is inexorably upward. Absent enactment or your corrective legislation, Mr. Chairman, there is every reason to expect that this upward trend will continue, despite the fact that we in the United States are the most efficient producers of wool textiles in the world. Advances in technology, in managerial expertise, and the like are the monopoly of no country and let me assure you that those of us remaining in the U.S. wool textile industry have long since learned that to survive we must stay abreast and, in fact, ahead of every advance, made anywhere, in machinery and technique. Mr. Dent has cited to you the prevailing textile wage levels in the principal exporting nations. We do not pay our employees at these wage rates; we could not under the Fair Labor Standards Act, and we would not want to do so. It is worth noting that wages in U.S. wool textile mills. will increase this year by an average of about 6 percent. This increase alone is more than a third of the average wages paid in Japan, and exceeds wages-total wages this is-paid in South Korea which, starting from zero in 1964, is now the third largest foreign supplier of worsted cloth to the U.S. market. The unmatched efficiency of the U.S. industry does not offset this wage differential, nor is there reasonable prospect in the foreseeable future of any technological or economic development that would substantially lessen this differential. PAGENO="0072" 2378 The outlook for our industry, unless the pending legislation is enacted, is, therefore, not encouraging. Imports have risen steadily and. now supply over 22 percent of the U.S. market for wool manu- factures. The emergence of Japan, and other oriental countries with even lower wage rates, as principal suppliers of wool textiles to the U.S. market assures continuation of this trend. And duty reductions made in the Kennedy round may be expected to enhance the growth of certain categories of imports. As businessmen we must realistically assess the facts. I have out- lined to you the situation as we see it. Members of our industry are worried. They foresee the prospect of having to make decisions which they sincerely wish to avoid. Capital is mobile, labor is not. Manage- ment has a responsibility to shareholders, as well as to employees. Will the Congress permit development of a situation which forces capital and technical expertise to go abroad to manufacture textiles for the U.S. market? Would such a development be in the national interest? We think not. We wish merely to have order brought into the present chaotic situation characterized by the relentless trend toward an ever larger share for imports in the domestic market and an ever-decreasing share for U.S. producers. We therefore see enactment of H.R. 11578 and its companion bills now pending in your committee as a reasonable solution. Reason- able, in tha.t it would permit foreign suppliers to share in an equi- table and orderly manner in any growth in the U.S. market. Reason- able, in that it would not give rise to any justifiable claims for com- pensation by exporting nations. And reasonable, we feel, because it would permit our industry not only to survive but to grow as the Nation grows; with confidence restored, to provide increased em- ployment opportunities not only for skilled American workers but for those Americans presently lacking in skill yet seeking their first opportunity for industrial employment; and to continue to provide the consumer with the finest wool textiles at reasonable prices. Before closing, Mr. Chairman, I wish to express our association's strong endorsement of H.R.. 9931, introduced by Mr. Burke of Massa- chusetts. This bill, and a companion bill sponsored in the Senate by Senators Talmadge, Bennett, and Muskie (S. 1866) would close the latest in a. series of tariff loopholes through which what are essen- tially wool fabrics have been imported into the United States at rates of duty far below those regularly applicable. These inexpensive fabrics, mainly from Italy and containing a small quantity of non- wool fiber alleged to be the fiber of chief value, have severely dis- rupted the market for similar fabrics produced in the United States. The Burke bill adopts one of the recommendations for closing these loopholes contained in a Tariff Commission study of the prob- lem made at the direction of this committee. Although enactment of the Burke bill would in no sense meet the overall wool textile import problem, it would correct a serious inequity facing the several U.S. mills which produce fabrics competitive with those entering through these tariff loopholes. Thank you, Mr. Chairman and members of the committee, for this opportunity of presenting our views to you. (The chart referred to follows:) PAGENO="0073" 2379 SHARE OF U.S. MARKET SUPPLIED BY IMPORTS MANUFACTURES OF APPAREL WOOL s-Year .ndlnQ March. Search U.S. O.par?m.nt of Commerce - Offic. of iietHss. N.A.W.W. 6/CS The CHAIRMAN. We thank you, Mr. Darman. Does that complete your presentation? Mr. DENT. Mr. Chairman, we would like to have one more witness as the concluding portion of our testimony and I introduce Mr. Fulton iRindge, Jr., president of iRindge Industries, who is testifying on behalf of the Northern Textile Association of Boston, Mass. The CHAIRMAN. All right, Mr. Rindge. STATEI~IENT OF FULTON RINDGE, JR., CHAIRMAN, NORTHERN TEXTILE ASSOCIATION, ACCOMPANIED BY WILLIAM P. SULLI- VAN, PRESIDENT; ALSO IN BEHALF OP RHODE ISLAI~D TEXTILE ASSOCIATION Mr. RINDGE. My name is Fulton Rindge, Jr. I am president of Rindge Industries of Ware, Mass., and chairman of the Northern Textile Association, 211 Congress Street, Boston, Mass. Also in the room today is Mr. William F. Sullivan, who is presi- dent of the association. The association represents cotton, wool, and manmade fiber textile mills located primarily in the Northeast as well as its affiliated or- ganization, the Elastic Fabric Manufacturers Institute. I am also speaking on behalf of the Rhode, Island Textile Association with headquarters in Providence. I wish to associate myself with the testimony of Mr. Dent and Mr. Darman, who spoke for all of us in the textile industry. Those for whom I speak support and endorse the Mills bill, H.R. 11578, which has also been introduced by a number of other Members of the Congress. We support the Mills bill because we consider it a practical and reasonable means of solving the serious import problem affecting all branches of the textile industry in all areas of the country. It will PAGENO="0074" 2380 give to the President and the administration the authority and tools with which to carry out the textile program which the `administration adopted in 1961, and which has been reaffirmed many times since. That program, in its simplest terms, was for the purposes of controlling imports of all textiles by quantitative limitations on a country and category basis. Because. the ~program was implemented in part, and because we understood that it would be carried out in full, many of us supported the Trade Expansion Act of 1962. Subsequent efforts by the administration to secure international agreements controlling im- ports of wool textiles encouraged us. `We were also mindful of Presi- dent Kennedy's statement that "should further authority be necessary to enable the President to carry out these objectives, I shall request such authorization from the Congress." Now, however, we find that our tariffs have been significantly cut in the Kennedy round; that the administration takes no action and utters no word to carry out the program, and, finally, we are castigated for supporting the program itself. `We can hardly be expected to view the act's extension with anything less than anger and resentment. The dismal story of the effect of imports on the textile industry has been investigated, studied, and reexamined for the past decade, and I shall not start another recitation. In the interests of brevity, I should like to stress only a few points: 1. The real issue before this committee is whether or not the U.S. textile industry is expendable. Obviously, our costs of production are higher and will remain higher than foreign proch~cers whose wages are a fraction of ours. No amount of theorizing will change this. In a free market, the low-wage producer and the sweatshop will drive the decent employer out of business. Our proposal-the Mills bill, which we heartily endorse-will prevent this while at the same time permit- ting a. large and growing volume of imports of textiles to continue. Unless the prmciples of the Mills bill are included in the administra- tion bill, it offers us liquidation in return for adjustment assistance- burial expenses instead of vitality, doom instead of hope. 2. In making your decision, I respectfully suggest that the size and distribution of the fiber-textile-apparel complex and its 4 million jobs is of major significance to the national economy, as well as the regions where the industry is concentrated. In New England and the middle Atlantic area alone, 880,000 people work in over 23,000 textile and apparel plants. New York employs 347,000, more than any other State. Pennsylvania ranks third with 248,000, and in New England, one out if every eight workers is em- ployed in the textile-apparel industry. 3. Lastly, I urge that you reject a. policy which would destroy jobs at a time when the creation of productive employment is essential in the war against poverty. Hard-core unemployment exists in many places such as Lowell and New Bedford in Massachusetts; Manchester, N.H.; and Lewiston, Maine. In each of these communities there are at least 2,000 ha.rd-core unemployed, and concentrated employment programs exist for the purpose of putting these people to work. In these communities, textiles and apparel provide substantial job opportunities. PAGENO="0075" 2381 These choices are yours. We feel that the solution contained in the Mills bill is a sensible compromise between the extremes of protec- tionism and free trade. Mr. Chairman, I would like to thank you and turn the microphone back to Mr. Dent in case you have any questions. The CHAIRMAN. We thank you. Mr. Dent, does that complete the presentation? Mr. DENT. Yes; it does. The CHAIRMAN. We thank all of you for being with us this morn- ing and for your very fine statements. Are there any questions? Mr. Bi~iu~. Mr. Chairman. The CHAIRMAN. Mr. Burke. `Mr. BURKE. I wish to compliment those who testified here this morn- ing. You have indicated complete fairness on the part of your industry as to what you want. You are not asking for a rollback of imports. You merely are requesting a reasonable import policy. Mr. Darman, I would like to ask you this question. What percentage of Japan's exports of wool fabrics come to the United States and what percentage goes to Europe? Mr. DARMAN. In round figures, Mr. Burke, slightly in excess of 60 percent of the Japanese exports of wool fabrics come to the U.S. market, while between 2 and 3 percent go to all of Europe, which has a population roughly equal to our own. This market is, therefore, tak- ing 20 to 30 times the volume of Japanese exports of wool fabrics that is taken by all Europe. Mr. Bu1u~E. Why is this so? Mr. DARMAN. If you will recall Mr. Dent's testimony and his quota- tion of Mr. Nehmer, you will readily see that the reason for this is not that the European market is any less attractive to the Japanese than the U.S. market, but purely and simply because the Europeans have constructed a series of arrangements to regulate the flow of Japanese goods into their market. Mr. BUnKE. To your knowledge, have the Japanese retaliated against these European countries? Mr. DARMAN. To my knowledge, they have not, and in fact many of the arrangements between Japan~ and the United Kingdom and the EEC countries have been described as voluntary arrangements in that they were negotiated out. Mr. Buiuu~. In your judgment, would Japan retaliate if the bills which the chairman and myself, and many others, are sponsoring for an orderly trade in textiles would become law? Do you believe that they would retaliate? Mr. DARMAN. I would answer that question, categorically, no. In fact, I should like to speak for a moment on the general question of retaliation. Your record is replete with references to the possible retali- ation that might occur. In our judgment, this is spreading a go~pe1 which we think the facts belie. There is precedent all over the world for what your legislation would do. As Mr. Dent testified, quite correctly, we are not rolling back. We are not even saying that growth in the future will not be shared. PAGENO="0076" 2382 On this basis, it would seem to me that it would be very easy to defend the U.S. position and to take the point of view that, inasmuch as nothing is being taken away and future growth is being shared, there is neither basis for retaliation nor basis for compensation. Mr. BURKE. Would enactment of this legislation increase the prices of wool textiles in the American market? Mr. D~rAN. I am glad you asked that question, because I believe it was Miss Furness who addressed herself to the possible implica- tions from the consumer's standpoint. Again here I would say it seems logical to expect that this would not be the case. If the chairman's bill is adopted the supply-demand relationship in the U.S. market for textile products of all fibers will not be dis- turbed. The present penetration of the imported product will continue and as growth occurs it will expand in the same percentage as exists today. We will not be disturbing the supply-demand relationship and under these circumstances there should be no inflationary import. Mr. BURKE. In your opinion, could the wool textile industry's import problem be solved by tariff increases? Mr. DARMAN. No, sir. This, again, may sound like a departure from our previously held position and, in fact, it is. We are not omniscient and in the past we have come before this committee, and before the Tariff Commission, and before several administrations and suggested that the answer to our problem lay in higher tariffs. As recently as General Eisenhower's administration we had a choice-at least it was ours to make in terms of a recommendation-and I think we chose unwisely; but the fact of the matter is that tariff, given today's pattern of trade, is not the protection tha.t it was in the years past because international trade t.oday is far more sophisticated and there are many ways o.f circumventing tariffs. Subsidies, as Mr. Dent mentioned, and a whole host of other devices are almost impossible to get at from the U.S. point of view because our Government lacks the power to subpena the foreign mill or country that may be guilty of the subsidy. Mr. BURKE. I would like to ask Mr. Dent, is the textile industry ready and willing to offer their services in a voluntary way in these highly unemployed areas, these distressed areas, for the training of the untrained and the unemployable to help them gain skills in the textile industry so that they can be self-supporting? Mr. DENT. I think tha.t the record will indicate that virtually every textile mill in existence today has a training program and is ready and willing to help people develop new skills so that they can obtain gainful employment. Our associates in the apparel industry located in many of the metropolitan centers are doing the same. Mr. BURKE. I was greatly impressed by the figures of the people who are employed in New York City in the textile industry where the figure almost equals the amount of people who are on welfare there, *and surely I think that some people should start looking at these fi~-ures to realize that the textile industry, along with many others like the shoe industry, offers the opportunity to many of our unskilled people to be trained so that they can be in self-supporting jobs and be able to earn a living and support their families. I think this is one point that you brought forward here that should be impressed upon this committee today, particularly today where in Washington, D.C., they expect 40,000 to 50,000 people in the poverty PAGENO="0077" 2383 march to take place, and here we have American industries which are ready and willing and have shown an indication of their willingness to offer their services and jobs for these people, and I can't for the life of me understand why it is not being taken advantage of. Mr. Chairman, thank you very! much, that is all. The CHAIRMAN. Any further questions? Mr. Curtis, Mr. Landrum? Mr. LANDRUM. I am perfectly willing to defer. The CHAIRMAN. He says it is all right. He wants to take a little more time than he thinks you will take. Mr. LANDRUM. Mr. Dent, first with regard to the same subject that Mr. Burke was pursuing with Mr. Darman on retaliation, you treated this subject of retaliation and compensation in your statement, I thought, very well; but you didn't touch upon a question that is con- tinually thrown at us about retaliation in regard to our agricultural exports. I would like to pursue with you just a moment this question of whether or not in your judgment our agricultural exports would be seriously affected if we should enact legislation along the lines of H.R. 1157:8 or the Mills bill? Mr. DENT. Mr. Chairman, we, of course, are interested in the strength and the future of American agrièulture. It is as much a part of our interest as it is yours. I think the record is clear that !foreign nations who are purchasers of bulk agricultural commodities: seek out `those areas of the world where they can be purchased most advantageously. Our own Nation is a very large purchaser of raw jute from India and Pakistan, but we do not tie our purchases in with the export of burlap bags to India and Pakistan. We buy it for our own advantage. If we look at the record for the year ending March 1967, Japan purchased $95 million worth of raw cotton from Mexico. Mexico has very stringent import restrictions and, as a result, Japan exported to them $5 million worth of textile products. We, on the other hand, do a sizable business with Japan. The Jap- anese purchased approximately $144 million worth of cotton from the TJnited States in return for which we purchased $403 million worth of cotton products from them. The patterns of trade do not seem to be related and crossed with respect to these types of purchases, in our opinion. Mr. LANDRUM. So, in your judgment, our agricultural exports would not be adversely affected by enactment of any concept of H.R. 11758? Mr. DENT. That is correct. I think if you look at the record with respect to cotton in the 10 years 1956 through 1966, our imports of cotton textiles increased over 808,00Q bales of cotton equivalent, while at the same time our exports of raw cotton declined 1,200,000 bales, so that this great advantage of exports to our farmers would soon choke them to death if permitted to continue. Mr. LANDRUM. Now, Mr. Dent, in! a very general and broad~based version of the bills that are proposed here, and I am one who intro- duced one of them, we have had the !statemen,ts made that the impact of those bills would limit `the growth of imports and we have been told of the effect that it would have on the American consumer and his choice. PAGENO="0078" 2384 I would like to ask you two specific questions. First, we are told that if we enacted this legislation it. would mean higher prices for textiles. \Voulcl you comment on that? Mr. DENT. Yes, sir. Mr. Landrum, as Mr. Da.rman previously mdi- cateci, the recommendation would not change the makeup of the American market inasmuch as a rollback of imports is not contem- plated and therefore those factors, including imports and domestic production, which through competitive forces, have established a market level in the T.Jnitecl States today, would still be in effect to the same degree so that it is hard to visualize prices accelerating. Mr. LANDRU3I. WTould the enactment. of this legislation in any way reduce the consumer's range of choice of textile products? Mr. DENT. There, again, sir, there is no rollback involved and it is hard to see how it would affect the choice of the consumer. Apropos of your price question, I might observe the fact that the latest Whole- sale Price Index for all industrial commodities is 108. For cotton products it is 105. On manmade fiber textiles, the Whole- sale Price Index is 89. The one area in the textile field which is almost completely dominated by imports and which is controlled by foreign sources is that of silk products and the Wholesale Price Index today on silk products is 197, so that you can see that control of supply t.o this market. in the hands of foreigners has led to a great acceleration of price levels, whereas the domestic competition has not only main- tained the price level below the average but even reduced it. Mr. LANDRUM. Mr. Dent., your overall statement indicated that the textile industry is a vast economic complex. I wonder if you could tell us in a little more detail just what contribution this textile industry makes to our economy and what other business activities are affected or depend upon it? Mr. DENT. Yes, sir. There are approximately 7,000 textile mills scat- tered throughout the conntry. There are in the neighborhood of 29,000 apparel plants. Including fiber production these are the largest em- ployers of labor in the country today. Our textile industry consumes 300 million pounds of cornstarch each year. WTe utilize for our production processes 16 billion kilowatt-hours of electricity. In 1966, we purchased 640 million dollars' worth of textile machinery f or our plants. In the same yea.r, we spent $500 million with the con- struction industries of this country for renovation and expansion of our plants. The trucking industry moves 90 percent of our finished products. Of course, the railroads handle bulk deliveries of raw cotton. The banking, insurance, and many other service industries are deeply in- volved with our industry. I think this gives you a sense of perspective as to our involvement in the American economy as a whole. Mr. LANDRUM. So, actually, it is interwoven with our entire economy. Mr. DENT. Absolutely. Mr. LANDRUM. Now, I want to refer particularly to the statement that was made by one witness last week. Here is essentially what he said. Textiles, oil, steel, and chemicals are noncoinpetitive and high- cost industries. You made the point this morning that the textile in- PAGENO="0079" 2385 dustry is a model of efficiency, and my own experience compels me to agree with that statement, but with the statement having been made by a previous witness to the effect that the textile people and these others are not efficient, despite the efficiency that we have, and these textile imports continue to grow, I wonder if you could elaborate just a little more fully on what you consider the reasons for these imports. Mr. DENT. First of all, let me emphatically disagree with the previ- ous witness. The American textile industry is the most efficient. We have visitors every year from every part of the world to see our textile- producing complex. I think that the rising trend of imports is due to a combination of factors, one of which is that our industry is labor intensive, and ad- vantages can be gained elsewhere on the globe in that respect. Textile machinery is available worldwide from many sources. The raw material in the form of textile fibers is also available worldwide. Technology is available worldwide, and these factors coupled with our wide-open market condition as compared with the attitude of other governments toward their, own domestic markets and indus- tries, is forcing much of the expanding production overseas to come to these shores. Mr. LANDRUM. Mr. Dent, you have dealt in some considerable de- tail on the job picture of the textile industry in the American econ- omy. Could you give us some estimate of the effect of textile imports on textile jobs specifically? Mr. DENT. Yes, sir. Our organization during the recent record year of 1966 had two consulting firms calculate the impact of textile imports on jobs in this country, and they estimated that the equiva- lent manufacture in this country would involve approximately 200,000 additional American jobs. Mr. LANDRUM. I am reluctant always to try to reduce eloquence to bluntness, but I thought your treatment of the question of subsidy by other governments of their exporters to this country was accurate and well described the whole picture. However, I wonder if we could just reduce that to about this sort of bluntness and say that other governments are saying to their ex- porters, "Go after the U.S. market and whatever it costs you to get it we will reimburse you." Is that about the extent of it? Mr. DENT. Unquestionably correct, Mr. Landrum. Mr. LANDRUM. Now, if this committee and this Congress should fail to impose some semblance of quantitative~ limitations on the growth of these textile imports, and your industry is forced to con- tinue to absorb this competition, what alternative do you see avail- able to the industry to cope with this problem other than the legisla- tion that is being proposed? Mr. DENT. Unquestionably we wOuld have to face up to the fact as to whether the U.S. Government wishes us to operate on these shores or, whether in order to preserve our businessess, we would first have to begin importing yarn and fabric from abroad. Then, ulti- mately, the question would arise as to whether we should make in- vestments offshore and develop manufacturing facilities there in order to produce for the U.S. market. I might mention that at this very moment in Atlantic City, N.J., the American Apparel Manu- PAGENO="0080" 2386 facturers Association at its annual meeting is having a panel dis- cussion of the question of operating offshore. In other words, they are considering whether they should manu- facture apparel offshore for the U.S. market, and if many of their members decide affirmatively, then the American textile manufac- turers will be forced to decide whether they are going to supply these customers with foreign production because there certainly would be no reasonable chance that they would pay for American goods to be exported to the Orient to be manufactured into apparel and subsequently exported to the United States. Mr. LANDRUM. It occurs to me, then, that in the face of these known facts about the impact of the textile imports on American jobs, and those in the departments of our Government that have the job of administering these trade agreements, tariff limitations, and so forth, continue to look upon the increased efficiency, ability of the textile industry, up to the present at least, to meet this unfair competition, and say that we can just continue to go on and on and on absorbing these, and that nothing can ever stop, there comes to my mind-I have forgotten its source-what is known as the Prometheus myth and I am afraid some of us, particularly those who administer the import laws, are looking at the efficiency of this industry and its ability up to this point to meet this unfair competition in somewhat the same light that this myth expresses: "we are eating our own livers and congratulating ourselves on a good meal." Would that be a good description of it? Mr. DE~r. I think that is quite accurate. Mr. LANDRUM. I want to thank you and the gentlemen associated with you for your most detailed and complete statements. More- over, I thank my friend from Missouri for deferring to me. The CHAIRMAN. Mr. Curtis. Mr. Cinrns. Thank you, Mr. Chairman. First, I would like to get your testimony in a little better context. Is your association supporting the administration bill? I know that there is one aspect of it tha.t you recommend against on page 16. You "do not think the textile tariff-cutting authority of more than 5 percent should be granted in the pending legislation." Has your association taken a position on the overall administra- tion bill? Do you support it or oppose it or what? Mr. DENT. No official position has been taken on the trade bill as submitted by the administration but within the recommendations we see a continuation of the trade which we are protesting. Mr. CURTIS. I appreciate that you are essentially testifying on behalf of the Mills bill; but the subject before the committee, as you know, is a broad one and certainly we are anxious, or at least I am anxious, to receive testimony on the administration proposals from the various associations and industries and labor unions who are testifying. The administration proposals are not necessarily in conflict with the Mills bill; although you pointed out, from what I understand, that you felt that the trend of the administration bill was perhaps against the theories of the Mills bill. Am I correct in that interpreta- tion? PAGENO="0081" 2387 Mr. DENT. Absolutely, and it is a further continuation of the trend which we have detailed as being unfair trade as opposed to free trade. Mr. Cuirns. I am going to get into that because that is an area that I am very interested in and have been for many many years as long as I have been on this committee. I wish the various associati6ns would come prepared to testify on the administration bill because a great deal of it has to d~ with the machinery of how we move forward in the trade field more than it does with the substantive decisions on what is done. The Congress, I think, has to be primarily concerned with what kind of machinery we establish or maintain which the Executive department is going to have to implement or utilize. I will get into that a little bit more, but other than this one specific, I guess the industry has not taken a position on the administration bill oneway or another. Mr. DENT. As a whole, we are pleading here for the opportunity to maintain, to create additional American jobs. Mr. CURTIS. Would you like to see something done along the lines of improving that machinery? Mr. DENT. We would like to see the Mills bill or that concept enacted which would enable us to continue the jobs and if possible, with our growing population, to expand employment. Mr. Cuirns. We are all interested in that, believe me. I would hope it wouldn't be necessary to stress this point but maybe it is and I can't blame you for coming in and pointing out the im- portance to our society of a strong viable textile industry. I hope everyone agrees on that. I would add further that I think by and large the textile industry has done a magnificent job and I can say that for most of our industries. Surely you can make constructive criticism here and there but essentially the industry has done a good job. The problems that face the Congress and the Nation must be seen in that context. I wouldn't think you would have to plead for a strong viable tex- tile industry. You should be able to take that for granted. What I am trying to direct attention to is just this: How do we accomplish this result in context with all the other, industries within our society which include those engaged in importing? This is a very difficult problem. Your answer, I would respectfully suggest, is not very responsive to my detailed question of whether or not you would want to see the escape clause provision sharpened. I understand that in the Mills bill there is more reliance on the quota license approach. I will get into that later. In the meantime I am trying to explore whether the machinery we presently have can be utilized or improved so that it can be utilized. If so, the ad- ministration bill `could be directed toward such improvements. I will leave this issue at this point, but the record is open and I would be happy to receive a memorandum from your industry with your critique of the administration bill. Mr. DENT. We would be glad to supply it. (The following letter was received by the committee:) 95-159 0-68--pt. 6-6 PAGENO="0082" 2388 AMERICAN TEXTILE MANUFACTURERS INSTITUTE, INC., Washington, D.C., July 9, 1968. Hon. THOMAS Cun'ris, Committee on Ways and Means, U.s. Ho use of Representatives, Washington, D.C. D~a CONGRESSMAN CURTIS: When I appeared before the Committee on June 19, you asked that I furnish for the record a statement of position on the proposed Trade Expansion Act of 1968 (H.R.. 17551). In addition, you invited further comments with respect to administration of the Long Terni Cotton Textile Arrangement (LTA), the Kennedy Round results, and the possible effects on U.S. textile imports of increased access to other developed country markets for the textile exports of the less developed countries. This letter is being written in response to your questions, and I hope that it can be inserted in the printed hearings at an appropriate place. I appeared before the Committee on behalf of six textile organizations. Be- cause the precise language of the Administration's bill became available only shortly before the hearings opened, not all of the organizations for which I spoke have been able to complete their policy determining processes with respect to all aspects of the measure. Hence, I am writing this letter solely in my capacity as president of the American Textile Manufacturers Institute. TRADE EXPANSION ACT OF 1968 (H.R 17551) TITLE I-SHORT TITLE AND PURPOSES We have no change to suggest in Title I. TITLE Il-TRADE AGREEMENTS Sec. 201.-Basic authority for trade agreements Our position was spelled out in our prepared statement as follows: "Textile tariffs are already too low, as the size and rapidly rising trend of imports indicates-and further cuts are already scheduled for each of `the next four Januarys. However, we recognize that the government may need `house- keeping' negotiating authority. The Administration is proposing that the unused portion of the 50% tariff-cutting authority of the Trade Expansion Act, w-hich expired a year ago, be restored until July 1, 1970. Textiles were recognized in the Kennedy Round as particularly sensitive to import competition, and hence most textile tariff reductions were substantially less than 50%. We do not think tea'tile tariff-cutting authority of more than (3% should be granted in the pending legislation. "The Special Trade Representative told the Committee on June 4 that `it is not our intention to engage in any major negotiations . . .` The 5% authority should herefore, `be more than ample. There is no reason to expose sensitive products like textiles to the possibility of larger tariff reductions." see. 202.-General Agreement on Tariffs and Trade As the Congress has never yet formally approved U.S. membership in GATT, it would appear that the Bill's request for a continuing authorization of annual appropriations to finance the U.S. share of GATT expenses is premature. TITLE Ill-ADJUSTMENT AS5I5TANCE TO FIRMS AND WORKERS This Title improves the present criteria for adjustment `assistance-which have been inoperable since enactment in 1962. How-ever, our industry's long experi- ence with the Escape Clause and other Tariff Commission relief procedures con- vinces us beyond doubt that this is not an avenue for dealing practically or meaningfully w-ith an industry-wide import problem-certainly not for a large and diversified industry such as textiles. In fact, an examination of the complete record of the Escape Clause mechanism from the time it u-as first enacted in 1951 until now- certainly must leave any objective examiner with the firm conclusion that such procedures for the most part have been used as devices to delay. frustrate, and eventually to deny broad-scale relief for any industry. A major exception, of course, has been relief for agricultural products under Section 22 w-here such relief was requested and/or supported fully by the Executive Branch. PAGENO="0083" 2389 With this background, our industry could hardly be expected to have any faith or any interest whatsoever in an Escape Clause concept of relief. By its nature it will always be too little and too late. We favor instead a trade policy that will preserve the overall health of the American textile industry and thus avoid creat- ing problems of the sort contemplated by the Adjustment Assistance approach. TITLE Iv-NONTARIFF BARRIERS TO TRADE This Title would eliminate the American Selling Price system where presently used by the Bureau of Customs in valuing imports for duty purposes. Benze- noid chemicals-the major products affected-encompass dyestuffs used in large volume by U.S. textile mills, and we are highly interested in the maintenance of a healthy dye.stuff industry here at home. Great technological innovation has taken place in the textile industry. Forty percent of its products on the market today had not been developed twenty years ago. Processes such as soil release, permanent press, and resistance to mildew are of very recent origin. Much of this progress is due to new develop- ments in the finishing of textiles involving highly sophisticated and complex chemical products. In addition, these finishing techniques require expanded research in the development and application of dyestuffs. As such, the textile industry is increasingly dependent upon the nation's chemical industry. It is essential to our efforts to achieve at least temporary technical superiority that a strong and resourceful chemical industry, including its benzenoid sector, be encouraged in order to continually provide the textile industry the new products which it will need. The American Selling Price was originally established to assure that U.S. users of benzenoid chemicals, among which the textile industry is very prominent, would not again be at the mercy of foreign monopoly suppliers. We think that ASP is continuing to serve the essential purpose for which it was originally instituted, and we are, therefore, opposed to its abolition. TITLE v-ADJUSTMENT ASSISTANCE TO FIRMS AND WORKERS IN AUTOMOTIVE INDUSTRY We have no changes to suggest in Title V. ADMINISTRATION OF THE LONG-TERM COTTON TEXTILE ARRANGEMENT (LTA) As pointed out in my prepared statement, cotton textile imports have douhied since the GATT control mechanism was developed in 1961. While the GATT Long Term Arrangement for Cotton Textile Trade (LPA) contemplated a 5% growth in imports, actual import growth under it has been in excess of 10% per year. This has been due primarily to the failure of the United States govern- ment to promptly administer its rights and responsibilities under the LTA in the best interests of our nation. The LTA protocol provides that when a country finds its cotton textile market being disrupted by shipments from another country, it may request the other country to restrain its exports. However, the restraint level requested cannot be lower than actual imports of the product from the second country in the first 12 of the 15 months immediately preceding the request. In most instances the restraints cover a period of 12 months. If the exporting country refuses to honor the restraint request, then the im- porting country is authorized to restrict imports to that base level. Because the mechanism has been mutually agreed on in the GATT Cotton Textiles Committee, no compensation or retaliation is involved, as would be required under escape clause action, for example. For mutual ease of administration and to reduce market disruption, there has been increasing reliance upon bilateral agreements under the Long-Term Arrange- ment. Article IV of the Arrangement specifically authorizes such bilaterals. We now have them with 22 countries. In every instance they cover 100% of the import trade; i.e. all categories of cotton textile products. So far as restraint requests are concerned, there has been much import growth due to failure of the U.S. government to invoke restraints promptly; hence, the authorized base level has grown unnecessarily prior to invocation of the restraint by our government. Where bilateral agreements have been the instrument of control too many negotiating plums have been granted in the shape of larger than necessary quotas to induce signature of the bilateral by the ether country even though we have been granting them a share of our market. PAGENO="0084" 2390 A total of 04 different categories of cotton textile products-covering between them all such products-has been used by the United States in administering the LTA. In the most recent years, particularly in connection with bilateral agree- ments, the LTnited States has merged various of these categories and allowed wider quota "swings" between categories by the exporting country as well. Indeed, there is no bilateral w-hich includes a specific level for each of the 64 categories. Thus, it is true to say that the negotiation of the bilaterals has, in effect, w-eakened the category structure. Apart from category mergers, and even more serious, is the consolidation of groups of categories in a number of these bilaterals. For instance, yarn and fabric are combined in the Indian bilateral. Colombia and Israel have been granted a "free swing" into yarn from other product groups; indeed, if they so choose they can sw-itch all their remaining annual quota over into yarn very late in the agree- ment year, with disruptive effects. Negotiation of a bilateral agreement on cotton textile trade with Mexico illus- trates many of the problems involved. When negotiations started in 1965 we were importing 14 million square yards of cotton textiles per year from Mexico. The terms of the bilateral were finally agreed effective May 1, 1967; the total quota was set as 75 million square yards per year with, of course, future growth built in. In 1960 and early 1967. a total of 185 million square yards poured in ahead of the May 1 control date. There are six government agencies-the Departments of State, Treasury, Agriculture, Commerce and Labor plus the Trade Negotiator's Office-which administer the LTA for the United States. All basic policy decisions of this group must be unanimous. It frequently takes several months to arrive at agreed policy, during which period of time. of course, imports continue to rise. Because the LTA control formula specifies a base equal to imports in the first 12 of the 15 months immediately preceding the control action, delay can be extremely costly to the domestic industry. The Mexican negotiating experience illustrates this problem, but it is by no means the only example in the history of LTA administration. Indeed, other import increases have arisen from failure of several of our bilateral partners to enforce agi-eed export controls. `The LTA statistical and administrative techniques developed, particularly in the Department of Commerce which chairs the Interagency Textile Adminis- trative Committee, are most efficient. Given prompt policy determination, the LTA could work quite satisfactorily. KENNEDY ROUND The United States in the Kennedy Round reduced textile tariffs. As calculated by the Department of Commerce the depth of these cuts weighted by 196a trade w-as as follows: [In percent] Yarns Fabric Apparel Made up Miscellaneous Total Cotton 27.2 24.7 16.3 24.7 33.4 20.8 Man made 37.3 18.2 5.7 28.7 30.4 14.8 Wool 2.7 1.4 1.4 38.3 34.6 1.8 The first fifth of the agreed cuts went into effect January 1, 1968, Japan, Britain and the Common Market made the first two-fifths of their agreed cuts 0" July 1. Clearly, it is too early for any real appraisal of the effects of the Kennedy Round on U.S. textile trade; for one thing, additional cuts are scheduled for each of the next four Januarys. It is at least of interest, however, that in the first four months after the U.S. tariff reductions-January 1-April 30-U.S. imports of cotton, man-made fiber, and w-ool textiles and blends thereof jumped 15.2% over the same months of 1967 to a new- all-time high annual rate of 3.2 billion square yards. At the same time, U.S. textile and apparel exports during the first quarter of 1968 w-ere valued at $109 million as contrasted w-ith $184 million during the same period of 1967-a reduction of $15 million. In Europe, which has perhaps the greatest export potential for U.S. textiles, we anticipate no help from the Kennedy Round. It is non-tariff barriers- ~~articularly the border tax-which are the greatest impediment to exporting U.S. PAGENO="0085" 2391 textile products to Europe. The Kennedy Round did nothing for us here. Indeed, the import quota and export subsidy program recently announced by France undoubtedly will increase the pressure on the U.S. to accept even greater volumes of textile imports. Most developed countries continue to use various lion-tariff, barriers to re- strict their imports of textiles from the less developed countries and Japan. Indeed, the United States is the only major textile country which does not do so. However, even if the other developed countries substantially liberalized their hnports of textiles from the less developed, our textile trade problem would not be solved. Studies by the OECD Textiles Committee in Paris, the International Textile Federation in Zurich, and others, indicate a rapid ex- 1)ansion of textile capacity in the less developed countries, and they can easily expand that Oapacity further to supply additional textiles to other developed countries as well as the United States. The real solution to the United States textile trade problem is prompt enact- imient of the Mills Bill (HR. 11578). Sincerely yours, FREDERICK B. DENT, President. Mr. CURTIS. Questions I am asking most witnesses relate. to the effect of the Kennedy round on their industries. One of the things I hope that this committee will do is to evaluate the Kennedy round. I was very active in following it., but I was trying to follow essentially the working, of the machinery. I did not get in- ~rol~red in the substantive decisions. I deliberately didn't get involved in substantive decisions. I have told people that and it is very true that my mind is open on whether or not the Kennedy round was an overall success. One way I can evaluate the Kennedy round is by listening to the testimony from the industries who themselves were involved as to what they think the impact ha~s been. Essentially I would say the im- pact wasn't great on the textile industry because we left `out of the 1(eii- nedy round, or left. in it you might say, tile extension of the long-term Cotton Textile Agreement right.? Mr. DENT. Mr. Curtis, I think that the record will have to speak clearly for itself. Imports of textile products into the United States reached a peak in 1966, and declined slightly in 1967. The only experi- ence since the Keimedy round became effective is the period of t.his year since January 1, and during this period imports into this country have gone up 14 percent over the record rate of 1966. The decline of 1967 has been completely reversed. Mr. CURTIS. Wait a second. The Kennedy round has not gone into effect yet. Mr. DENT. The first of January the first cuts became effective. Mr. CURTIS. This is what I want to know. Were there cuts that affected your industry. What were these cuts? What are your antici- pations? This is what I would like to have on the record. I don't know. Don't misunderstand me. I have had plenty of people tell me behind closed doors their view-s but the way to move this dialog forward is as we are trying to do here in a public hearing where a statement can be made, where those who disagree can rebutt and those who then disagree with the rebuttal can have the opportunity for rejoinder. Here we are now in public hearings and I would like to, if the indus- try cares to, have you given us a critique of the Kennedy round. Per- haps the better method is through a~. considered memorandum. PAGENO="0086" 2392 Actually, the the preferable way would have been to have had that as part of your statement. and then I could have raised questions on it. Certainly I would like to have a. response a.t this time if you care to make it but I am more anxious to get a. rather complete memorandum from your industry on your evaluation of the Kennedy round. Mr. DARMAN. Mr. Curtis, I would like to comment if I may at this time and get. it. on the record now rather than awaiting a written memorandum bec.ause there are some substantive., questions that I would like to sprea.d before you for your consideration. First., I think that most of us could quickly agree that it is really too early to evaluate the Kennedy round in terms of its overall impact and that. anything that we offered in writing today would merely lay us open to speculation on the part. of those who might not share our view as to the future impact. The United States ha.s in fact made its first cuts. January 1. The EEC, for example, still has yet. to make its first reductions, so that this is too early in the game to talk about that.. Mr. CURTIS. Could I interrupt there on just one point. One of the things that I have hoped was going to come was the opening up of European markets for example to Japa.nese textiles which might re- move some of the pressure on our market. You c.ould comment on that; could you not? Mr. DARi~rAN. Yes, sir; I would be delighted to. Mr. C~mrns. This is the kind of thing that. I want. I a.pprec.ia.t.e that in many areas you would be reluctant. to comment for t.he reasons you gave-that it is too early and we a.re dea.ling in expectations. But to the extent t.hat you can give us the benefit of your views; will you do so? Mr. DARMAN. I think t.his is a. most appropriate body before which to raise what is to us a very slibstantive question having to do with the future of international trade as it. affects the United States. This bears on the Kennedy round but I would be raising the same question if the Kennedy roirnd had never occurred. Since the Kennedy round negotiations were concluded, we have seen a devaluation in the United Kingdom. The pound was reduced officially from $2.80 to $2.40. I suspect. without knowing that this was not taken into consideration in tot.o by the parties at the time that they attempted to set up some equilibrium in the world. However, at the time that devaluation occurred, in theory at. least the British had a. further 14-percent advantage in international trade with their currency having been reduced. This advantage was at least potentially real because the rest. of the major industrialized coimtries of the world agreed to stand by and not take any similar act.ion. Since that. time, the pound has not. shown any strength. On the con- trary, speaking as the head of a. company that imports a substantial amount of wool which is traded in British peiice, I know from personal experience that as recently as last week my company could buy t.he pound for forw~ard delivery 12 months at $2.28 a pound as agamst the present. official rate of $2.40. This is a fart.her reduction, Mr. Curtis, of 5 percent. PAGENO="0087" 2393 There has been speculation around the world that many major cur- rencies were going to decline in value. There has been talk of the dol- lar to gold, there has been talk of the weakness of the dollar, of the pound, more recently the Japanese yen, the Australian dollar, and the French franc since the most recent episodes in France. \Vheii you get to the bottom line, however, peoPie talk around the world, they are thinking of the necessity of adjustmg their currency in terms of the dollar. When they talk about the weakness of the pound they are thinking about the weakness of the pound in relation to the dollar. When they talk about the weakness of the franc it is in relation to the dollar. Discussion of the weakness of the yen concerns Japanese involve- ment with respect to reserved currency holding of sterling. Recently when the Japanese expanded their trade with China, prompted by French persuasion they entered into an arrangement with China to have the franc be the settlement currency whichever way the balance went. For the first time the French franc became an international currency for settlement of other than French affairs. I personally queried the trade negotiator on this matter and did not get an answer. Perhaps this committee could obtain an answer. Looking ahead beyond everything that has been indicated in conjunc- tion with the Kennedy round, there is a realistic international prob- lem as to the relationship of balances of trade and values of currencies to the dollar. The approach which many countries are attempting to use and which has been used in the past is to devalue in relationship to the dollar. Any future devaluation puts all U.S. industry in a much weaker competitive position. Would you not agree, sir? Mr. CURTIS. I certainly would. Mr. DARMAN. Secondly, more recently the economists who have been looking at this problem have been saying, `Well, the answer lies not in the area of a new devaluation from $2.40 for the pound to $2, but rather in an approach that says, `let these currencies float and just let them seek their own level in international trade.' " This may be economically defensible and I think a case can be made for some of this but, gentlemen, I submit to you that the only pro- tection for orderly international trade which can exist in the face of floating currencies must~ be some kind of international arrangements that provide for quantitative restraints because without these the flood gates are open. We who are holding the currency against which all other countries except the West German mark and the Swiss franc are pegged will be those who suffer the most, and this applies not just to textiles but to all U.S. industry. Mr. CURTIS. I couldn't agree* with you more. In fact, that is one of the reasons that for years I have been trying to plead unsuccessfully for us to maintain the integrity of the dollar. I am afraid that your logic is sound, that if you do not have an international medium of exchange that has credibility, you do move into the area of quantita- tiv.e restraint. I think I can picture in my own mind's eye what that means in w-orld trade. It means going backward eventually leading to the barter system. I would at any rate appreciate further points on the Kennedy round. I would like to leave this issue now, and if you care to, you can submit PAGENO="0088" 2394 a memorandum on the actual impact of the Kennedy round to the extent that you can say at this time. I have a collateral question which is somewhat the same thmg. What indeed has been the impact of the long-term cotton textile agreement. Your paper here is a revelation of what has happened and yet you are really asking a further extension of the long-term cotton textile agreement to cover a broader aspect of the textile industry; in other words, wool and manmade fibers. Am I correct in that simplification? Mr. DENT. It is correct that. we seek to have some sort. of import restraint on all flb~rs. Mr. CiTRTIS. Do you think that the long-term cotton textile agree- inent hasn't worked because it is difficult to police the quantitative restrictive approach to trade? Mr. DENT. There is no question that the long-tei~m cotton textile arrangement has had some influence in limiting cotton textile imports. Mr. CtRiIs. You say there is no question. That is what I am raising as a. question and asking for you to state your reasons why you have reached this conclusion. You may be correct. I am just. saying let's don't beg the question. Let's look at it. Mr. DENT. It has in some instances restrained countries from ex- porting to this market all t.hat they would have liked to have if it had otherwise been completely open. Mr. CiRTI5. If I can interrupt., your argument is not that it would have been worse but for the long-term agreement, because as I under- stand your testimony you are saying that you are in a critical situa- tion now even with the long-term cotton textile agreement. So that I t.hink my question is a very appropriate one. If this kind of medicine has not solved the problem why do you want to take more of it? Mr. DENT. Let me explain. When the cott.on textile arrangement was negotiated circumstances were different from those today. For instance in the area of mens' and boy's dress shirts such as we are now wear- ing, the U.S. consumption was approximately 92 percent all cotton and about 8 percent was manmade fiber or blends thereof. During the last marketing year this was absolutely reversed to where today 92 percent are synthetic or blended shirt which means that that segment of the market-and it's just an example of what. has happened across the board in apparel-has come out from under cov- erage of the long-term cotton textile arrangement. Furthermore while the long-term cotton textile arrangement has exerted some restraint on cotton textile imports, it has one weakness which the record indicates clearly to us. That is t.hat the administra- tion of t.he arra.ngemnt has permitted cotton textile imports to grow beyond anything contemplated when it was negotiated. We have permit.ted so-called one shots. We have permitted swings a.nd swa.ys and various other devices which have greatly widened access to our market. Mr. Cuni'is. In other words, you are now saying that those who were charged with administering the long-term cotton textile agreement have not been admimstering it. along the lines that at least the indusry would ha.ve liked to have seen. Am I correct in that statement? Mr. DENT. I think t.hat. is correct. There have been too many times when it has been liberalized far beyond reason. PAGENO="0089" 2395 Mr. CURTIS. Well, you see, this gets to a problem that has come up in previous colloquy. Other witnesses have said Congress `ought to get into `the act more and I point out that, whatever Congress does by writing laws and putting in guidelines, when the chips are down peo- ple have to administer the laws. That is, the executive branch of the Government administers them.' I am wondering whether we should simply write more laws when the laws that we presently have are not administered the way I myself have thought they were supposed to be administered. But on the other hand, it is perfectly proper to discuss whether we can improve the laws `themselves hoping that future administrators will administer them properly. But from what you have just, said, I must conclude that the long- term cotton textile agreement has not produced the results that you want, that really your argument is that things would have been worse but for it, but they are still bad with it. Is this a fair statement? Mr. DENT. The long-term cotton textile arrangement deals with only one segment of our industry which today is multifiber. Mr. CURTIS. You are talking about other things. I w-ant to first know whether I am making a fair statement. This is what I said, again simplifying the main thrust of what you are after now is to make the long-term cotton textile agreement more comprehensive to include wool and manmade fibers. Is this a fair statement? Is that what you are really saying you want to do? Mr. DENT. No, sir. This legislation which we are endorsing gives the President negotiating authority to come to agreements covering manmade fibers and wool textiles. It recognizes our obligations under the existing cotton long-term textile arrangement for its duration but it substitutes the will and direction of `Congress for administratively negotiated long-term cotton textile `arrangement. Mr. CURTIS. Then you are not extending the agreement manmade fibers? Mr. DENT. Yes, sir, w-e definitely are in the legislation. Mr. CURTIS. I want to let you fully explain. I am simply trying w explore this issue and get it on the record. Just because I say it, don't resist the statement if it is true. I think extension of the agreement is one of the things you are trying to do. I am not for or against. I am trying to find out what you really ~vant. I also want to find out. the machinery that you would change in your proposals. Again I resort to requesting a. memorandum, if that is the better way to proceed. If you care to I would like a response as to just where you think the present machinery in the long-term cotton textile agree- ment is ineffective, where the law--and you have already brought that out-needs to be changed to be more comprehensive. You think that if we include manmade fibers and w-ool and PossiblY change the ma- chinery somewhat that. then your industry will be able to move more smoothly. Am I correct? (See letter `dated July 9, 1968, on p. 2388.) Mr. DENT. That is correct. Mr. CURTIS. One other thing. Is it. your concept that this w-ould be permanent legislation, that we would permanently handle the textile PAGENO="0090" 2396 industry through the quantitative approach, or is this to be a tempo- rary measure until something else transpires. Mr. DENT. I think that. the question there relates to how soon the developing countries will move forward in raising their standards of living to where their people live as our people do. Mr. CURTIS. I think this is very responsive. Let me go to another area then and I might say I join with my colleague Mr. Landrum in complimenting you for your presentation and analysis of the various techniques employed by nations abroad which, in my judgment if proven, constitute what I call unfair trade. I assume though from your answer that. just. eliminating these un- fair trade practices would not put the domestic textile industry in a position where it would not. need the quantitative restrictions. In other words, it still would be essentially the labor cost item that bothers you. Am I right in that assiunption? Mr. DENT. Yes, sir: you are. Mr. C~nTIs. How much do you think getting rid of these unfair trade practices w-ould be of assistance? WTould that be of assistance? Is this the direction in which you would like to see your Government move, toward eliminating as many of these unfair trade barriers as we can? Mr. DENT. I think that without question movement in that direc- tion would be most. desirable but by the same token from a realistic standpoint our industry could not wait. until the milleimium has been achieved in this area. Mr. CURTIS. I am not asking that. I said that this was in light of whether the quantitative restriction quota was to be temporary or permanent.. Then I was relating it to whether or not the elimination of these unfair t.rade practices would put us in a position where we could get rid of quantitative controls. That was t.he .thrust of my remarks. Mr. DARMAN. Mr. Curtis, might. I make two comments on those observations. First, with regard t.o permanent. legislation my impression from readmg history is that no legislation is really permanent in that., jf conditions change, the Congress has the right to change the legislation. Mr. CURTIS. May I interrupt to say, "and none is temporary." Mr. DARMAN. But., sir, I would certainly urge for your considera- tion the fact that we are involved here, in what to many people is, a sensitive international area. Let's face the issue once, not have to face it with t.hreats of retaliation every 2, 3, 4 or 5 years. Let's be in a position where, when the millenium comes, the Con- gress can repeal the legislation and gracefully sa.y to the world, "We are doing something for you," and hopefully get. something in exchange. But let's not put this into a. form where we have t.o go through this every 2 or 3 yea.rs with all the cries that are engendered, not so much from abroad but. in large measure from those at home who don't see eye to eye with tile need for facing t.he world situation realistically. Mr. CURTIS. Well, of course, I agree with one part of what you say very much. I am afra.id-and Mr. Byrnes well expressed it-that we PAGENO="0091" 2397 have a grent tendency to cry but mea culpa in regard to ourselves. We have the old puritan guilt complex and I am sort of glad we have got it but on the other hand it can get out of bounds when we fail to see what countries abroad *are doing in the way of unfair trade practices. I think by any measure the TJnited States is by far the freest trading nation in the world today. I think it is good policy, I might add, but certainly we are fair traders if we can define what consti- tutes fair trade. If you do feel that eliminating unfair trade barriers is valuable I would think that you would be supporting the administration bill, or at least wanting to keep the present machinery which we have, inadequate as it may be, to try to move in eliminating these unfair trade practices. I am not saying you are not supporting the admin- istration bill, but I am raising this question as to whether you are. For instance, `as I `have asked other witnesses: Isn't the counter- vailing `duty machinery of great value? Can it be utilized? Many of these unfair practices you presented here I think might be eliminated through the utilization of this machinery, particularly if we would perfect it and use it. I think it has gotten rusty because of lack of misc or maybe misuse. Mr. DARMAN. Sir, I caii `speak from personal experience on the subject of the countervailing duty. It ha~s been imposed in the case of wool top some years back going back to the fifties. I `had the `personal experience of being the industry witness against the Treasury Department in conjunction with Uruguayan subsidiza- tion of wool textile products coining to the United States several years ago. It was rather an interesting hearing before the Senate Finance Committee. Briefly what was involved was this: The `law we thought was clear. The authors of the law were largely still alive and serving in the Senate. In fact, following the hearing the committee adopted a resolution saying, "We wrote the law. We know what we meant. This is in violation of the law." The State Department put sufficient pressure on the Treasury De- partment and indicated that they couldn't ferret out all the facts and nothing came of that. More recently the National Association of Wool Manufacturers in going over the annual report of the International Monetary Fund noted a bald statement in the annual report which said that Uruguay was susidizing a certain series of export of wool textile products. We wrote the Secretary of the Treasury and said: Here is what the International Monetary Fund, which is an objective interna- tional organization, says about these exports. Will you please in accordance with the law invoke the countervailing duty? Our Government again failed to act. There are two missing ingre- dients in an approach to countervailing duties. One is that it is almost impossible to have any p'ower of subp'ena. It is left to economic attaches or Embassies abroad to try to search out the facts. They usually come back to industry and say, "See if you can't pick it out" but the fact is that no one is put under oath and it is almost impossible to get hold of anybody's books. The second consideration PAGENO="0092" 2398 involved is that if you ha~l the most effective countervailing duty in the world all that would be count.ervailed is the degree of penetration that is attributable to the subsidy itself and the basic problem of the disparity in wage costs would still remain. Mr. Guwris. No, don't misunderstand me. I don't believe any tool by itself is going to be adequate in the complex field such as we are dealing with. I do raise the question though of whether this isn't a good tool. In fact., I could see that it could be extended beyond the subsidy approach to include other unfair trade practices. I certainly don't think it could ever work in getting into the area of wage differentials, but it could in getting at other unfa.ir trade practices. I have long thought that maybe the countervailing duty could be strengthened. I raise the question of whether it is wise to require proof of damage if what the countervailing duty is relating to is what all have agreed is an unfair t.rade .practice. \~Te find that in these economic areas it. is difficult to. prove damages. In our own laws in antitrust enforcement and fair trade laws we have applied the treble damage and other c.oncepts understanding that it is difficult to ever prove damage. Well now, the escape clause is a third area in a. list of tools that might be strengthened. OEP is another one that has come into the picture. Your industry too alleges, a.nd I think with some justifica- tion, that you are important to the national security. Again, how about this tool. Is it. adequate? Could it be improved? What has been your industry's experiences because OEP machinery does provide the quantitative approach but it is related to something specific-national security. Does your industry have a. view on this? Mr. DAm~rAx. Yes, sir, I think very definitely. We will ask Mr. Jackson if he would recite the OEP case. Mr. CURTIS. Go ahead, Mr. Jackson. Mr. PJACKSON. Robert Jackson. American Textile Manufacturers Institute. Mr. Curtis, in 1961, I think it was, the textile industry, the total complex, filed what. was perhaps the most elaborate cage that. has ever been filed under that procedure of law, documented in great depth and great. deta.il with an awful lot, of manpower hours and expense involved in the undertaking. That. was 7 years ago and there has not. been a finding in t.he case up to now. It. is still pending. So far as I know. incidentally there is only one case t.hat has ever succeeded under that. provision of law; as I recall, the oil import quota procedure. Generally speaking. t.he attitude of our industry on it would be that it is another mechanic of government that automatically involves a number of different agencies of Government.. It brings into t.he picture the same combination of Government agencies with all of the cross-purposes and cross philosophies that are involved on any matter of administrative procedure. It is like the administration of t.he long-term arrangement on cot- ton. One of the reasons t.hat we have experienced such difficulties under PAGENO="0093" 2399 it and that there has been so much leakage under it is because there are six agencies of Government inv~olved in its administration. They have to get together. They have to agree. This involves both the State Department and the trade negotiator's office. They are very often at vari~ince with the positions taken by the Departments of Commerce, Labor, Treas- ury, or Agriculture, for example. So we always get back in these administrative procedures to the complications of trying to get our complex Government together in order to take an action, and it is one of the reasons that we and other industries feel that our only recourse is to come to the Congress and to ask for much more specific guidelines for these executive agencies. Mr. CuRTIs. I appreciate that answer. That is very responsive. You actually point out what I have been seeking, which is some advice from industry and those who have actually had to go through these OEP proceedings as to how we can improve them. I wish I had more knowledge and wisdom on this point as to how we can improve OEP procedures because apparently they are not working. Again though, we get back to the key question and I don't know what the answer is. You can pass~ laws until you are blue in the face but, if people don't want to administer them and carry them out, what do you then do? It isn't just in this trade area. I have seen laws on the books that just remain ignored. Maybe it gets back to the concept that people in high office have, seeming to prefer government by men as opposed to government by law. I won't dwell on this further. I do have one little comment. On page 14 you say, "The textile in- dustry is presently supplying an average of 200 yards of cloth for every man and woman in uniform."~ In a modest way I think you did get Congress to do something on textiles because there is an appropriation bill now where the law says that the military can't. buy textiles from anyone but American pro- ducers. Am I correct in that? This wouTd be every bit. of cloth that is bought by our Armed Forces. Am I making a fair statement here? Mr. DENT. Yes, sir; and I hope the day will never come when we will clothe American fighting men in imported uniforms. Mr. CURTIS. Well, that is interesting. I think I have made my point. There are ways that assistance to the industry can be done. Now, I come to what I think is really the key question. We have had other industries before us. I assume that if you think this quota approach is the correct way to proceed for textiles that this is the proper way for others to proceed tOo, steel, for example, nonferrous metals and just about anyone you can think of. Is it your recommendation that the United States change its ap- proach on international trade from a multilateral approach-incluci- ing agriculture which I was very pleased to see got in the Kennedy round-and go back to this business of an industry by industry ap- proach to trade? Do you want to get away from the multilateral trad- ing of nations? Your approach would seem to move us back into the PAGENO="0094" 2400 bilateral approach a great deal more and to get away certainly from the most-favored-nation principle. Am I correct in saying that your industry does recommend that we change our trade policy approach and move to establishing quantita- tive methods of regulating international trade industry by industry. Mr. DENT. Mr. Curtis, I think that textiles has perhaps had the longest record of international trade of any industry in existence to- day. It dates from the days of the Phoenicians. When the United States adopted the reciprocal trade program in the thirties, a committee, I believe, which represented the executive branch and included Secretary Cordefl Hull, recommended that action be taken to voluntarily restrain cotton textile imports from Japan. I think that the record clearly indicates the existence not only in this country but in many countries of special programs relating to trade in textiles. This is so because of the unique vulnerability of the textile industry in developed nations to low-wage foreign imports. There is a special textile program in this country, although it has not geen adequately implemented. Now, by the same token, I believe that all industry deserves fair and equal consideration and we would hope that an emerging trade pol~cy recommended by this committee would look out for all Ameri- can jobs, not just textiles but include textiles. Mr. CURTIS. Well, we are all interested in that. Again in response to that, I hope no one involved in this dialog, whatever position they take, is not interested in jobs. When you make statements-as you just did- saying that you hoped that we never would have an American boy in a uniform not made out of American cloth, to me those are red herrings and it makes it difficult for me to carry on a dialog at length. I am just trying to figure out how you accomplish these results be- cause if you are wrong in your approach you can be the very ones doing the damage to the boy in uniform. You can be the ones who really are cutting jobs out from under our people. So let's don't go off on tangents. Our motives are the same. Mr. DENT. There is no question. Mr. CURTIS. These issues are so difficult that we have to devote a great deal of our brainpower to try to come out with solutions without these kinds of irrelevant approaches. So that, your point as I see it. and there is merit to it and it is worthy of consideration, is that. textiles remain healthy. I would point out that older than the textile industry are agricultural products. I thought thatOne of the achievements of the Reciprocal Trade Act of 1962 and the Kennedy round was that for the first time we began to treat agri- cultural products with the same methods that we have developed in our society for regulating and trying to create a fairer climate for international trade. Agriculture, my heavens, is really involved in the quantitative ap- proach. Arguments of national defense for agriculture cannot be gain- said by anyone because a country does have to have the ability to feed itself. But I had thought that the Kennedy round procedure was a step forward. I would say agriculture has the best argument of any to be treated differently, but I would be willing to listen to textiles. PAGENO="0095" 2401 I think you see the implications. You say you want all industry to be treated fairly and I do too. That is why the question comes up, if we use these techniques for textiles then should we not then use the same techniques for steel and other industries? When we get into this prob- lem, as I have described it., I remember the days of arguing the com- munity chest approach to charity. Each charity would say, "We can raise more money by going out and doing it ourselves," and they were right but, when it came to the total effort of a community to fill the community chest for the 100 agencies, we found that we ran short of manpower to solicit the people. So we went to the community chest approach. I see a comparable situation here and yet there could be exceptions. Maybe textiles are the exception, or maybe you think this analogy is not right and that we could have world trade on the basis of the quantitative approach. I am willing to think about it. 1 am willing to discuss it but every- thing that I have studied and seen seems to lead us down very blind alleys and would lead us back, I think ultimately, to the barter approach to trade. So that I hope that the textile industry doesn~t feel that we are wrong in the multilateral apprOach that we have taken and isn't arguing for the quota approach to be applied across the board to other industries, but is trying to point out why an exception should be made in its case. I want to be clear as to what your position is. Have you taken a position on the overall trade picture or have you just confined your thinking to what is good for your industry, out of context with the total picture of the Nation's international trade policies. Mr. DARMAN. Mr. Curtis. we have thought about this at length and let me say at the outset that, going back again to the theory of the matter, free trade is nonexistent in the world. Mr. Cm~TIs. That is true. I talk about fair trade. Mr. DARMAN. Free trade is dead and free trade in my judgment will not rise again for one very human reason which I can develop for you. WThen I went to college, which probably was about the time you did we were taught that free trade rested on three things: free movement of goods; free movement of capital; and free movement of people. IVe have documented in our case that around the world there is not free movement of goods. Until very recently the United States was the only country in the world permitting free movement of capital. More recently. our balance of payments probably has caused even us to interpose some impediments to the free movement of capital. Mr. CURTIs. Can I interrupt? Over the strong objections of people like myself, but go ahead. The administration did it.. Mr. DARMAN. We have to be pragmatic in describing the situation as it exists. The third thing involved free movement of people. Back in the depression we, in the United States, put in restricted immigration. IVe have had restricted immigration of sorts ever since. All around the world you have the same thing. People move on the basis of quotas but the original philosophy of free trade presumed PAGENO="0096" 2402 that if costs got out of line in one country and were low in another the high-cost country would lose its business, unemployment would result, the low-cost country would gain the business and employment would rise there. As a result of unemployment in the high-cost coun- try there would be reductions in wages because of the difficulties that ensued and equilibrium would be restored. That philosophy presumed that people were to be treated like a commodity subject to the law of supply and demand. The world has long since left this posture and we in the United States have long since left it, and the recent developments in France have indicated that even with a strong one-man control you can't maintain this posture and maintain order in the streets. If you talk to any American employer, he will say that his future plans do not envisage a reduction in wages, nor do his future plans envisage anything but full en~loyment for the. people for whom he has a responsibility. These circumstances constitute the basic reason why I say that free trade in the Adam Smith sense will not resurrect because we are now dealing with people as human beings and not as a com- modity. If t.hat is the way world trade ha.s now been restructured, and if the old laws don't apply, we should stop talking about. free trade. If we talk about. liberalization of trade, liberalization is something which comes by its very nature in waves, in stages. You don't turn it on or off. It is something that moves, and if some- thing is going to move, it. has to move from a. controlled situation and in a controlled situation. I think our position has been and should continue to be that we have a problem. We have studied it. We think you have a solution. We have not studied the problems of other American industry. It would not surprise us if other segments of Americal1 industry have a problem similar to ours. If in your wisdom after you have looked at all of American industry you think special treatment is needed or a quantitative approach is needed for a significant segment of American industry, we would urge you to write it into law and we will support it. If on the other hand you find American industry that does not need it, don't include it at this time. We would urge you not to do that. We are just as anxious as you to see liberalization of trade and would like to see it arrived at. in an orderly fashion. We think the only way that you can have order is to have some kind of an orderly ar- rangement prescribed by law. Mr. Cijirris. Well, you certainly are quite responsive. You and I read history a. little differently. I never knew there was free trade in Adam Smith's clay or any clay up to 1968. There has not. been a restructuring. Adam Smith might have had a dream. Mr. DAR~L~x. It was a theory. I agree. Mr. CURTIs. It was an ideal. Mr. DARMAX. Right. Mr. CURTIs. Free trade is dead, God is dead, idea.ls are dead. I don't agree with this. Mr. DAn~r~~x. I don't agree with the second, sir. Mr. CURTIS. It's t.he same thing. To me an ideal is something you set your course by. You don't attain it in your lifetime or possibly PAGENO="0097" 2403 for many many generations if it is a worthy ideal but it does give you something to set your course by. Now in this process I use the term "fair trade," because as I under- stand Adam Smith and his so-called laissez-faire, he was arguing against the mercantilism of his day where the state, the king, was doing the trading. Adam Smith was arguing that a better way to make economic judgments was through the marketplace, and that the Gov- ernment had a.n important part to play in keeping the marketplace honest so that caveat emptor did not prevail. To establish honest weights and measures, this is Government function as I view it. Now, what the quota and license approach is is moving back toward mercantilism. You are getting Government back into trade. You are moving toward state trading; not with a political agency perhaps, but it moves in that direction. You are dismantling the marketplace. The other approach that I suggest, if we could develop these techniques and I don't know if we can, is to identify unfair trade practices and to have the machinery to correct them and, as I argued back in 1957, a tariff differential to reflect wage and productivity, economic differentials, costs. Then we could be moving in this direction. I think it is important. I am pleased to have this dialogue reach this point because our country must make these decisions, I think on, the basis of ideals. We should not accept them just because someone says they are an ideal but to examine whether they are a proper ideal. If they are, then we should plot our course along that direction knowing that we will not attain it in our lifetime or close to it but at least we will move in that direction. That is why I asked the question, does the textile industry want us to change what I felt was a movement in this direction to come back to this other approach? I think yOu do, because your testimony said that you felt that the administration's bill was moving in a different direction from the Mills bill and I think your observation is correct, that there is a fundamental difference in approach. I am willing to make exceptions for temporary reasons and tem- porary reasons can be as long as 10 or 15 years as long as it is clearly understood that they are temporary and relate to specific things, that if and when certain actions are taken the reasons for having the tem- porary measures disappear and the measure should be done away with. You take clown the scaffold once our building is there. `Well, I have tried your patience but I appreciate your response and 1 hope .that we will have memorandums on some of these areas that. I have sought to discuss. Thank you. The CHAIRMAN. Are there any further questions of the witness? Mr. BATTIN. Mr. Chairman, I have just one. The CHAIRMAN. Yes, Mr. Battin. Mr. BATTIN. I would like this on the record. Other witnesses who have testified keep raising the flag of moving back in time, that we are proceeding with the approach that is being talked of here back to the days of the Smoot-Hawley tariff, this theory and concept. I personally don't see it and I would like to have your comment on it. 95-159 0-68--pt. 6-7 PAGENO="0098" 2404 Mr. DARMAX. I would like to say, Mr. Battin, that from our point of view what we are recommending is an approach to orderly trade that is structured to the facts of the situation as they exist in the pat- terns of the textile trade in the world in 1968. This is not a step back to the Smoot-Hawley tariff by any definition of the word. In fact, I think in response to an earlier question I made the observation that we are not looking for a solution to our problem in the form of higher tariffs. This is not. what we have suggested. Mr. BATTIN. This is not a change. Mr. DARMAN. There has been a change in basic position because world patterns of trade have changed and I think we are taking a position which is abreast of today's situations. I don't submit. that we are going to come up with a solution today that. may not at some future time need altering. Given today's pattern of trade, however, one can speak about moving in the direction of the ideal but, if the rest of the world is presently unwilling to move further in t.his direction, we would be ill-advised to move alone. We move alone only at the ex- pense of American industry and American agriculture and I think it is too early to tell as far as the Kennedy round is concerned how well American agriculture has done. Mr. BATTIN. Tha.t is all, Mr. Chairman. The CHAIRMAN. Mr. IJilman. Mr. TJLLMAN. My interest is primarily in wool textiles. Mr. Darman, isn't the situation generally this: that a portion of the textile industry is today covered under a long-term cotton textile ar- rangement and that in general what you are advocating is to cover the rest of the textile industry under the same general type procedures that already are well established in a. portion of the industry? Mr. DARMAN. Mr. Filman, I would certainly agree that a portion of the textile fiber spectrum is covered. I think that as far a.s t.he textile industry generally is concerned more and more it consists of all fiber companies or multifiber companies. Every textile manufacturing company is to a larger or lesser degree exposed, but those who concentrate heavily in wool or man-made are more exposed than those who may have historically concentrated more heavily in cotton. There is a. real area of exposure even for the cotton manufacturing industry because the long-term cotton arrangement covers only cotton products which are in whole or in part up, to 50 per- cent, of cotton. Any blend tha.t goes beyond the 50-percent level of ot.her than cotton is uncovered. Mr. T.JLLMAN. Putting it in another way isn't it more difficult each month and each year to rationalize covering a segment, just one seg- ment of this industry because of the fact that with man-made fibers and with blends coming in so strongly it. is quite simple for importers to circumvent any kind of ruling that. would cover a portion of the industry. Mr. DAn~rAN. It. certainly is. The long-term cotton arrangement is a multilateral arrangement. It involves some 22 count.ries. But it.s ex- tension was one of the easiest things for the ITnited States to negotiate in the Kennedy Round. This was not difficult.. It has become an ac- cepted pattern for both developed and less-developed countries. It seems to me that there is no reason to malign this arrangement, even though we might wish that it were enforced more effectively. On PAGENO="0099" 2405 the contrary, it seems to me that we have got a precedent that indi- cates that the major textile producing countries of the world have in fact already acquiesced and are now enjoying the benefits of orderly international trade in one area. I see no reason why we shouldn't be able to extend this concept to all textile fibers. When we do we will have a much more meaningful solution and, absent it., we really haven't got the job completely done. But the answer is not to give up the LTCA. The answer is to build on this base. Mr. ULLMAN. Thank you. The CHAIRMAN. Are there any, further questions? If not, we thank all of you for your very interesting testimony. Without objection the committee will resume its hearings at 2 o'clock this afternoon. Our first witness will be our colleague from South Carolina followed by our colleague from New York. Mr. DARMAN. Thank you. Mr. DENT. Thank you, Mr. Chairman. (Whereupon, at 12 :25 p.m., the committee recessed, to reconvene at 2 p.m. the same day.) AFTER RECESS (The committee reconvened at 2 p.m., Hon. James A. Burke, presiding.) Mr. BURKE. The hearing will come to order. Our first witness will be Congressman Samuel S. Stratton of New York. STATEMENT OF HON. SAMUEL S. STRATTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE. OF NEW YORK Mr. STRATTON. Thank you very much, Mr. Chairman. I have a pre- pared statement and I believe it has been made available to the com- mittee. I appear before you today in support of the legislation intro- duced by the chairman, Mr. Mills, and the other various items of companion legislation introduced to provide quantitative restrictions on the growth of textile imports. In an effort to save time let me just say that I fully support the statement that Congressman Dorn, of South Carolina, will be present- ing a few minutes after mine on behalf of a large number of Members who have joined together in introducing this textile import quota legislation. I was one of that group and introduced my own companion bill, H.R. 13755. I would also like to indicate my support for the statement made this morning to the committee by the American Textile Manu- facturers Institute. What I would like to comment on just very briefly, Mr. Chairman, is the one essential item of differenée between my bill, H.R. 13755, and the other companion textile bills, which is the specific inclusion in the meaning of textile products of cordage and cordage products. It appears on page 5 in section 7 of the legislation which deals with definitions. Cordage has traditionally been recognized as a part of textiles, but I believe that the legislation we adopt ought to make this point explicit rather than implicit and this is the one additional thing which my `bill would do. PAGENO="0100" 2406 I would point out. to members of the committee that t.he statement of the Textile Manufacturers Institute this morning also emphasized their support for the inclusion of cordage and cordage products within the basic legislation. and therefore I take it. that t.hey would support the substance of my own bilL H.R. 13755. Briefly, Mr. Chairmam with regard to cordage it should be borne in mind that the problems which have affected our domestic textile industry generally, and which have already been brought to your attention,. as a result of the rapidly increasing imports of foreign textiles, apply even more fully and to a more critical degree to t.he domestic cordage industry. During World War II, for example, the U.S. cordage industry was forced to expand to meet our wartime efforts. With 22 members: of the industry running 23 mills at. full capacity, they were able to meet these needs. That was in 1945. Today t.here are only 10 members of the cordage industry left in t.he United States operating 14 mills. The capacity of American producers to make rope is virtually half today what its capacity was back in 1945. The commercial market for hard fiber rope in the United States has declined over 53 percent since 1955 while the quantity of hard fiber rope imports has tripled. U.S. manufacturers are selling about 55 percent of what they were in 1955 and the whole industry is experiencing a definite downward trend. I say this with some personal knowledge of the situation since one of the leading American cordage manufacturers is located in my own district, t.he Columbian Rope Co. of Auburn, N.Y. They have been faced with a hea.vy loss in sales and consequently an attrition in em- ployment, which has been felt throughout the whole area. In the area of synthetic rope, which was pioneered in American markets, the Kennedy tariff round has reduced the dut.y on this pro- duce by 50 percent., a development which could well bring about the same situation for synthetic rope that already exist for natural fibers, unless the remedial action proposed in my legislation is taken. The cordage industry has already stated t.hat if another situation should develop as it did in World War IL the industry as a whole would simply not be able to respond to our increased needs because of the drastic decline in the industry since that. time. Therefore. for our own defense purposes. we cannot. afford to de- pend on foreign capacities. The domestic cordage industry simply must be kept viable, and it obviously cannot meet t.he competition of foreign markets wit.h t.heir lower selling price, their cost. of materials, and their lower labor cost under present tariff condit.ions as far as natural fiber is concerned; and they certainly couldn't. meet the situa- tion with regard to synthetic fibers if the tariff conditions proposed under the Kennedy Round are carried out. I just don't think that this country would want our merchant marine, our Navy, our Marine Corps. our Army, our Coast Guard, and our Air Force, to have to depend solely on foreign sources. So, Mr. Chairman, I hope that in t.hese remarks I have been able to show the vast importance of the domestic cordage industry to America's defense and by implicat.ion to the American economy generally. PAGENO="0101" 2407 The cordage industry has always been considered a part of the tex- tile industry and cordage products have always been grouped with textile products for tariff and duty treatment. Therefore, while supporting the basic legislation introduced by Mr. Mills to restrict the growth of foreigP textile imports generally, I do urge that the members of this committee include the specific reference to cordage and cordage products as a part of the definition of textiles which has been speUed out in H.R. 13755. Mr. BURKE. Thank you very much. Are there any questions? Mr. Utt. Mr. [iTT. No. I would like not to necessarily question, but thank Congressman Stratton for presenting this case. One of the big indus- tries in my district is a cordage plant and it has had its troubles ever since they were formed many,, many years ago. They were finally taken over some time ago and I know that they appreciate also your position on this matter. Mr. BURKE. I also wish to commend you for a fine statement and for bringing to our attention the problems in the cordage industry. Thank you. Mr. STRATTON. Thank you, Mr. Chairman and I also thank the gentleman from California for his support. Mr. BunIcE. Our next witness is the Honorable William Jennings Bryan Dorn of South Carolina who has been very patient here today. I wish to apologize for keeping you waiting. STATEMENT OF HON. WILLIAM JENNINGS BRYAN BORN, A REPRESENTATIVE IN CONGRESS PROM THE STATE OP SOUTH CAROLINA Mr. PORN. Mr. Chairman, I am not going to take up any of your time or that of the committee other than just to say that I am in favor of the Mills bill and ask permission to extend my remarks in the record. Mr. BURKE. Without objection that will be done. Mr. PoRN. I will say, Mr. Chairman, that 196 other Members of the House joined Mr. Mills after he introduced his bill on July 19, 1967. On that same day our distinguished colleague and great member of this committee, the Honorable Phil Landrum, introduced his bill al- most simultaneously with that of Mr. Mills and the rest of us followed over a period of several days. I believe that in the modern history of the Congress this is the great- est number of Members to join in cosponsoring or introducing a piece of major legislation. I do not recall a greater number than 197 doing so. There may be. This group represents every section of the United States, every single segment. of the textile industry, woolen, manmade fiber, staple fiber, filament, filament yarn, the garment industry, and I might say that you w-ill recall, Mr. Chairman, that our group, the informal textile House committee, was formed in 1961 and it was organized purely because `the textile industry was in `trouble, faced with unemployment and mills closing clown. You recall that 750, I think it was, textile plants closed in the 1950's, so ~t was imperative that something be done and this group organized and we elected Carl Vinson chairman of the committee. PAGENO="0102" 2~8 ~We met. in the old Armed Forces Committee room over in the Cap- itol Building, and organized, and it. was my honor to be elected secre- tary of the group; and I have served in that capacity ever since. When Mr. Vinson retired from Congress we elected your colleague and member of this great committee, Phil Landrum, as the chairman of our group, and we have been pursuing this problem all along, and I would say with some degree of success. When the Long-Term Textile Agreement was negotiated in Geneva in 1962, the cotton textile agreement, we met with virtually everybody with any authority in the Government. including the President and right on down, and I remember Mr. Hodges, then Secretary of Com- merce, offered to fly several of us, including myself, over to Geneva to help negotiate. I didn't go, but the agreement was negotiated and mention of it was made this morning by the distinguished gentleman from Missouri, Mr. Curtis. That agreement I think set the pattern or the blueprint for exactly what we are trying to do today with the Mills bill. It did help. The reason why it. did not completely do the job was because of the loop- holes. It did not cover man-made staple fiber, filaments, filament yarn. It did not cover wool. I would say that our industry is an overall industry and the Mills approach and the Lancirum approach would work. Their bill is not a. protectionist bill. It is not a. high tariff bill. I don't think anybody in the United States of America in his right mind could truthfully charge the chairman of this great committee, Mr. Mills, with being a. protectionist. or Mr. Landrum for that matter. I look upon Mr. Mills in the same category with Cordell Hull and the late Sam Rayburn. as one of the great architects of our trade policy in this country. He has done as much to promote trade as any living American, the chairman of this great committee, and his asso- ciates on this committee, most of them. So what Mr. Mills bill proposes to do is to promote trade in an orderly fashion. which will be mutually advantageous to our friends abroad and to the United States of America. That is what. his bill does. And all that needs to be done is to have it properly implemented and made to cover the man-made staple fiber filaments, and filament yarn, and wool and it. will do the jo.b, if prop- erly administered. I represent a textile area. My distinguished colleague represents a textile area, and I want. this committee to understand that my Com- mittee on Public Works has been groping over the years now with depressed areas, with the ghetto, with Appalachia, and we have author- ized to be appropriated million of dollars to promote jobs in Appala- chia, job opportunity, to keep them out of the big cities. These little textile communities, 500, 1000, two or 3,000 people, dot the Appalachia region employing nearly a. half million people, and in depressed areas, you know what we have done in that field, water pol- lution control, trying to aid industry to clear up the streams of this count.ry. More legislation has come out of my committee for the underprivi- leged, the minorities, for depressed areas, than any other committee, and I might a.dd the Rivers and Harbors, Interstate Highway System PAGENO="0103" 2409 which our committee authorized yesterday for 1972 and 1973 and 1974. Then to see this great work we have done in Appalachia go down the drain because of unfair trade tO me would be incredible. The same way with our depressed ~treas and the almost 400,000 jobs in the great city of New YOrk. What do we want to do? Increase this ghetto problem when we are desperately trying to solve it? These are questions rightly before this great Committee on Ways and Means, and I want to say again that I come from an area of the country which has championed the low tariff, which has championed trade, which was against the Smoot- Hawley tariff and tariffs of thatnature. So we are here today not as protectionists, just the opposite. We are promoting the Mills bill which will promote orderly trade in textiles and will help our foreign friends understand exactly what their market is so they won't overexpand and so they won't knife each other, promote orderly trade, and which assures them a good share of the American market and an increasing share of the American market as it grows. I just hope this committee will act expeditiously on the overall trade bill. I hope that bill will include a version of the Mills bill which the chairman introduced on the 19th of July in 1967 and cosponsored by my colleague from Georgia, Mr. Landrum, and other members of the committee and of the House. Thank you, Mr. Chairman. Mr. BURKE. Are there any questions? Mr. Landrum. Mr. LANDRUM. Let me say to you, Mr. Dorn, that we are grateful for this most forceful statement and for your position on what is a critical situation in our country. I know of no Member of Congress more knowledgea~ble, more capable of dispensing that knowledge, about the textile industry, what its problems are, what the solutions to those problems can be, than the gentleman from South Carolina, Mr. Dorn. I would like to ask your views in a short series of questions here relating to the statement you have just made. Is it your judgment, Mr. Dorn, that the textile industry lends itself more to dispersal throughout the countryside than perhaps any other industry that we have? Mr. Doux. I would say yes, of course, and President John F. Ken- nedy realized that when you, and I, and Mr. Vinson went to see him time and time again in 1961 along about this time he announced his seven point program for the textile industry. The reason why lie did that was because the textile industry was in a special category. subject to overnight fluctuations of the market, people unemployed who had a job in the morning and the mills closed late that afternoon. I saw this in the gentleman's great State-I haven't been in this fight just a few years-very frankly when I spoke to the New England society in New Hampshire. This was 1951. This was pointed out to me, 1951, 1952, 1953 along there, when you had ghost towns, and I know what it is like to see a ghost town in an era of an expanding economy, when other people are making good wages and you are out PAGENO="0104" 2410 of a job. I saw that in Fall River, saw it at Worcester, all up through there, and this was the beginning. Imports were beginning to come in then in the 1950's, I might say low-wage imports, undercutting our American jobs. Of course, Mr. Landrum, this industry is represented by every State in the American Union and it is in many areas a marginal industry. I didn't mention this a moment ago, but we make less profit than any major industry in this country. In fact our profit in the last 5 or 6 years has only crept up a fraction of 1 percent, less than any other major industry. So we just barely have our head above water and we are employing these people in low-wage areas and we are giving them job oppor- tunities. something they never had before. I am speaking of the mi- norities also. `We are employing them at a. fantastic rate. We talk about what is going on downtown on the Mall right now. I don't know really so much about what. is going on, what their objective is, but ostensibly it is for better jobs for poor people. That is exactly what. we have done in the textile industry. You heard the figures here this morning, went up from two percent to 270 percent since the implementation of the Kennedy seven point program, and so it is all across t.he country, of course, and these are some of the things. We can't do it if we continue to have to compete directly with 8 cents an hour wages such as they have in Korea. This is not trade at all. This will wreck trade, this kind of trade. Mr. LANDRIJM. So your judgment is that the textile industry par- ticularly, as well as others, can take employment opportunities to the areas where there is today a scarcity of employment opportunity? Mr. DORX. Exactly. Mr. LAXDRUM. And as a result of the scarcity of employment of op- portunity that exists in certain areas of the country today the people there are finding it more and more necessary to go into the metropoli- tan areas, the already heavily populated cities, and compounding the ghetto situation that already obtains in these cities. Now, assuming that what we are saying is true and that your judg- ment is correct, is it your judgment also that unless this industry can have the support of its government in getting the relief that is being sought here, not in creating a wall of tariffs so that. we won't have international trade. but in having an orderly infusion of the imports so that our domestic economy can remain stable, unless it can have that do you foresee the total inability of this industry to offer the type employment we are talking about? Mr. Doux. Yes, Mr. Landrum; not only that, I foresee the in- ability of our industry to continue to employ these vast numbers of people in Appalachia, for instance, and other areas too innumerable to mention. Of course I see the inability of our industry to continue to employ these people, but I hear it every clay w'hen I am home talking with the the great textile people. They say- How much longer can I resist this temptation or these lucrative offers to go to countries in the Caribbean and all. Across the seas most every day someone w'ill call and say, "Come on. close your plant down. Let the boys here go. Wel- fare will take care of them. Come on over and join us. Build your plant overseas, make some money." PAGENO="0105" 2411 This is what we are confronted with. I have never seen, Mr. Land- rum, a more patriotic people than our textile people, just staying on fighting daily with their head just barely above the water to keep folks employed because they believe in this country, and they believe in this orderly trade business. This thing is mutually advantageous. It is advantageous to our friends abroad to pass the Mills bill, very much advantageous. Other- wise the whole world's textile market can be wrecked and people get into it that have no business in it. Then you will have friction between Japan and some other undeveloped country. You create chaos in the field of world trade if we continue along the lines we are going. I say the Mills bill is just as essential for our foreign friends as it is for our own textile industry. Mr. LANDRUi\I. Thank you. Thank you, Mr. Chairman. Mr. BURKE. Are there any further questions? I just wish to commend my good friend, particularly about his knowledge of the New England area. He has shown keen insight. Can you give an answer to this committee on why there should be any opposition to an orderly marketing bill? Mr. PORN. Mr. Chairman, I don't see how honestly, once a person evaluates the situation as it is, how there could be any opposition whatever to a bill such as the one you introduced, and Mr. Landrum, and Mr. Mills, because the things we are talking about here today are basic. They are fundamental. You know, I go down there quite often and talk to some of my friends and they say, "Oh, don't holler wolf. Quit crying wolf." Well, I mentioned the profit a moment ago, and they mention, "Oh, well, you have increased wages the last few weeks." We have. The average wage is $2.14 an hour for the textile industry across the board in the United States. Some of our plants down home have already granted more hourly wage than the peop'e are paid in South Korea. It is going up to $2.27 an hour in a few days. They say, "Well, doesn't that indicate that you are in good shape?" It doesn't indicate any such thing. It indicates that we have to be competitive to even keep the good labor that we have, and Mr. Chair- man-I might run the risk of rambling a little bit-I walked in and looked at the books of a textile plant not long ago, kept in that beauti- ful hand that people used to write about 65 years ago. You know, they would pay this fellow so much and the foreman got $2.50 a week and a lot of people then were working for $1.50 or $2 a week and I saw what the foreman was paid in one of these textile mills, and now we have progressed to where we are employing our minorities, taking up those that never had job opportunities before in history, coming off the farm. We are employing those people. This is what we have been preach- ing. This is what we want. Our textile industry is training them. We have an across the board $2.14 an hour and in a few days were are going up to $2.27 an hour. Let me tell you, Mr. Chairman, in some little isolated community in Appalachia 1 would rather get $2.27 an hour than to get $4 and live here in Washington or in the middle of New York. My money would go a lot further. So we are affording these people great opportunity and I want to see it continue and I want to empha- size again what I saw in your great State. PAGENO="0106" 2412 It is not. a pleasant sight to see a whole community unemployed when right next door that. community is enjoying the best standard of living they have ever enjoyed. The worst under the leadership of John Kennedy, with a lot of our good friends on this side of the aisle, we instituted a program and this program was nonpartisan. We have been able to air condition some of our textile plants for the first time down south where it is hot and to do a few of those things that needed to be done years ago, and now we are threatened by this increased volume of imports, daily increase, and might have to go back to that unemployment again and perhaps cut down on some of our capital improvements such as air conditioning. All of them aren't air conditioned yet. It is a great. problem, Mr. Chairman, and I appreciate the sympathetic hearing of this committee and I ask unanimous consent to extend my remarks. Mr. BURKE. Without objection it isso ordered. Thank you very much. Mr. PORN. Thank you, Mr. Chairman. (The following statement was received by the committee:) ADDITIONAL STATEMENT OF HoN. WILLIAM JENNINGS BRYAN DORN, A REPRE- SENTATIVE IN CONGRESS FROM THE STATE OF SOUTH CAROLINA Mr. Chairman, by introducing H.R. 11578, YOU have greatly encouraged the textile industry of the United States and its more than two million employees. I appear here today, Mr. Chairman, to recommend and urge this great Committee to adopt your bill or incorporate your bill in the general trade legislation now being considered by this Committee. Mr. Chairman, you have been the champion of increased world trade for many years. You have taken your place in history along side the late Cordell Hull and Sam Rayburn as proponents of trade. No one in American history has opposed with more vigor the old Smoot-Hawley high tariff type of protectionism. You have introduced H.R. 11578 in your tradition of advocating more trade. Your bill is the opposite of protectionism, strict quotas and high tariff legislation. Your bill promotes orderly and fair trade in textiles. Your bill, when enacted into law, will guarantee to the foreign textile producers a fair percentage of the American market and an increasing percentage of that market as it expands. Your bill will set the pattern for orderly trade in textiles among other nations in the world. When you introduced your bill on the 19th of July last year, Mr. Chairman, you w-ere joined that day by a most distinguished member of this Committee, our able colleague, Phil Landrum, of Georgia, who introduced an identical bill. 1 was honored to have the privilege of joining you and Mr. Landrum. Subse- quently 195 other members of the House joined us in introducing your orderly trade bill. These members reside in every section of the United States and every conceivable category of textiles is represented. May I remind the members of this great Committee that our colleague, Phil Landrum, w-as elected Chairman of the Informal House Textile Committee. He is thus serving us in a dual capacity as a member of this great Committee on Ways and Means and as Chairman of the informal House Textile Committee. You will recall that the first Chairman of this group w-as the Honorable Carl Vinson, of Georgia, who was elected Chairman in 1901 and who also served as Chairman of the House Armed Services Committee. I appear here today as Secretary of this informal group and as one whose Congressional District is largely textile. Since Monday, when the membership learned that I was to appear here today, approximately 80 members have urged that I speak for them today in urging this great Committee to adopt your bill. Requests from other members continue to conic in hourly. These, our colleagues, have asked by card, by telephone, letter and in person that I plead with you here today for early passage of the Mills Bill. Your bill, Mr. Chairman, does not set any precedent. It only plugs the loopholes and carries out a policy largely already in effect. I refer to the Long Term Agree- PAGENO="0107" 2413 ment adopted at Geneva in 1962 and renewed for another three years last year. This agreement was entered into by all the major textile manufacturing nations of the world, thus indicating beyond question that orderly trade in textiles is to the mutual advantage of all textile producing nations, and will promote orderly trade and hold to a minimum fluctuations in the market, unemployment and trade restrictions. The reason why I am here today supporting the Mills Bill is because this agreement has not been fully implemented by `our own administrative authorities and the Long Term Agreement did not cover man-made staple fiber, filaments and filament yarns, man-made fiber textiles, and woolen and worsted textiles. Thus, many nations who entered into the original Long Term Agreement were able to largely circumvent its effect by increasing their imports into the United States of man-made staple fiber, filaments and filament yarns, wool, and man- made textiles. The textile import problem has `been with us for many years. It has grown progressively worse. We have tried to meet it with partial solutions, but they have not been effective. The problem is industry-wide and, the answer to it must likewise be industry-wide. Your bill on orderly trade, we believe, will do the job. Your legislation is fair. It provides for a very `high `level of textile imports and it provides for foreign producers `to share in our future market growth. It is not protectionist. It merely `says `that the fu'ture growth of tex'tile imports will be geared to U.S. market ~on'ditions, so that our domestic industry can grow and provide additional jobs for American citizens. There will be people who will poin't `to the industry's profits and say that re- straints on imports are not needed. They have said and will say that the textile industry is crying wolf. But this argument needs examining. In 1960 textile profits per sales dollar were 2.5 cents. In 1967 `they were 2.9 cents. Whereas, textile profits rose .4 of a cent over this period, the all manufacturing industry profit rose .6 `of a cent-from 4.4 cents `to 5.0 cents. This is qui'te a disparity and would indicate textiles are not holding their own. We should all hope for improvement in `this picture `because if profits don't exist, textile mills cannot long provide jobs `and serve as `dependable markets for the vast array of fibers produced in this country. Some will say "if the import problem i's so serious, how can the textile in- dustry raise i'ts wages ?" The answer is almost too simple. Like any other industry, textiles must have labor. The industry must compete in the labor market. And incidentally, the most recent wage increase by itself was greater than the average hourly wage of a Korean textile worker. At `the same time, it remains `confronted with the `threat of low-wage textile imports. Undoubtedly, this latest `increase will aggravate even more the dis- crepancy between wages in the United States and those in the principal countries shipping textiles to us. Mr. Chairman, I know first hand what' unlimited textile imports mean. I know what they mean to the South and to the Nation and to my State of South Carolina. My district has one of the largest textile and apparel manufacturing and man~ made fiber producing complexes in the country. The economic base of my district will depend, in large measure on what is done about textile imports. The Committee on Public Works, on which it is my honor to serve, has over the years devoted much of its time to seeking a solution to the problems of under- employment and depressed areas. We have authorized billions of dollars to be appropriated for Appalachia, economic development, pollution abatement, inter- state highways and river development. The concept largely behind Appalachia and economic development of depressed areas was to keep people out of the over- crowded urban areas and ghettos and to provide job opportunity. It would seem foolish indeed to create jobs on the one hand and then to take these jobs away on the other hand with an unfair trade policy. Just when we are moving ahead with job opportunity for the minorities and the development of our depressed areas, now we are faced with a set-back in the form of unfair foreign trade. Mr. DORN. Mr. Chairman, I also `ask permission to insert into the record, as secretary of the Informal House Textile Committee Group, a statement authorized by over 100 members of the House. Mr. Buiuci~. Without objection it is so ordered. PAGENO="0108" 2414 JOINT STATEMENT OF OVER 100 MEMBERS OF THE HOUSE, PRESENTED BY HON. WilLIAM JENNINGS BRYAN DORN (SOUTH CAROLINA), SECRnI'ARY, INFORMAL HOUSE TEXTILE COMMITTEE GROUP The volume and trend of low-wage foreign textile imports including man- made fiber, filaments, and filament yarns are undermining the U.S. textile industry. Their rate of growth demonstrates beyond questiton that foreign ex- porters, in the absence of inclusive quantitative limitations on imports, can exploit the U.S. market for textiles at will. For the first four months of 1968, total textile imports reached 1,055,600,000 equivalent square yards-a record for any consecutive four-month period. At this rate, they will reach almost 3.2 billion square yards In 1968, 14% over the pre- vious record set in 1900. The textile import problem resolves itself into this overriding issue: Will U.S. textile trade policy be such as to permit the textile industry to survive and grow as textile markets expand, to provide additional job opportunities and enlarge its contributions to our economy in general; or will it cause the shifting of productive capacity abroad to supply this market with a consequent loss of jobs, capital investment, and tax revenues? Despite the fact that the U.S. textile industry is the world's most efficient, it is marked by unique characteristics which impose no inherent economic limitation on a low-wage producer's ability to exploit its markets. These characteristics, which are worldwide in their application, have led other industrialized countries to adopt quantitative restrictions on textile imports of all fibers as the only an- swer to the import problem. The United States of all developed countries, has perhaps the most liberal textile trade policy. Except for very lenient restraints on cotton textile imports, no limits on the growth of U.S. textile imports. The impact of textile imports is widespread, but nowhere is it greater than on employment. The textile-fiber-apparel industry provides 26% of the manu- facturing jobs in the Appalachian region. More than one-third of the manufactur- ing jobs in New- York City are in this industry. In the States of North Carolina and South Carolina, and Georgia, it is the leading manufacturing employer. In Virginia, it supplies over one-cpiarter of the manufacturing employment, and in Tennessee, 30%. It makes substantial contributions to industrial em- ployment in New England, and in such States as Pennsylvania and New Jersey. Altog~ether, some 970,000 persons are em~~1oyed by the textile industry. Another 1.3 million manufacture apparel. Still another 2,000,000 are employed in activities supplying the industry, such as the production of fibers, chemicals and machinery. It is the largest customer of the nation's chemical industry. It provides the only domestic market for the products of 243,000 sheep ranches and 500.000 cotton farms. The jobs of millions of Americans depend, in large measure, on responsible action to limit the growth of textile imports. The legislation which you have introduced, Mr. Chairman, and which we are co-sponsoring provides just this. It recognizes the necessity for sharing the grow-tb of U.S. textile markets with our friends abroad. It provides for a large volume of textile imports plus participation in future market growth. At the same time. it would place some restraint c~n the rate at which imp~rts can grow. If we have learned anything in our efforts to meet the problem of textile imports, it is that its solution must come through Congressional action. And, its solution requires quantitative limitations on an all-fiber basis, limitations which apply to textile products, manmade staple fiber, filaments, and filament yarns. What is more important: the provisions of jobs for workers in Japan or Hong Kong-or for United States workers? What is more urgent: a textile trade policy that seeks the retrenchment of the domestic industry or its expansion? We believe the answers to these questions are obvious. To achieve the answ-ers to those questions and consistent with the recom- mendations of the Textile industry, we strongly urge the Committee's approval and Congressional passage of H.R. 11578 with an amendment to the definition to insure that cordage products are recognized as a part of the Thxtile industry. `Mr. Chairman, 100 of your colleagues have joined you in sponsoring your (1 egislation. Over 100 nienibers have by letter~ phone, or personal request authorized me, as the Secretary of our Informal House Textile Committee PAGENO="0109" 2415 Group, which is chaired by the distinguished gentleman from Georgia, Mr. Landrum, to s~ay that they concur in this statement. Their names are available in my office, and should you desire we can provide them for the record. Mr. BURKE. Our next witness is Mr. Bernard L. Hohenberg, chair- man, and Michael P. Daniels, counsel, American Importers Associa- tion, Textile and Apparel Group. Will you identify yourselves. STATEMENTS OP BERNARD L. HOHENBERG, CHAIRMAN, TEXTILE MID APPAREL GROUP, AMERICAN IMPORTERS ASSOCIATION; AND MICHAEL P. DANIELS, COUNSEL Mr. IE[0HENBERG. Mr. Chairman, members of the committee, my name is Bernard L. Hohenberg. T am the chairman of the Textile and Apparel Group, American Importers Association of New York City. I am accompanied by counsel to the group, Mr. Michael P. Daniels, who will present his testimony at the conclusion of my statement. The American Importers Association is the major organization rep- resenting importers' general interests. The textile and apparel group is the principal spokesman for the importer interests in this field. We appear before the committee today in support of the administra- tion bill, H.R. 17551, and in opposition to various quota bills intro- duced in the Congress, both in the field of textiles and apparel specifi- cally, and to general quota bills which would restrain the entire U.S. import trade. We believe that enactment of such measures would be a regressive step, with serious implications for the continued economic health of the United States and for the viability of the world economy. Quite specifically, in the case of textile and apparel quotas, we be- lieve that such measures are completely unjustified by the economic facts, would be disruptive of our international trade relations, would most certainly engender retaliatory measures by other countries, would raise prices to the consumer, and would impede the sound growth and progress of our economy as a whole and of the textile and apparel sectors in particular. The domestic industry has consistently resisted objective investiga- tions into the facts. They have preferred to engage in a massive politi- cal campaign to obtain import quotas. Our group has since its inception in 1963 repeatedly challenged the domestic textile industry to accept an objective investigation into the facts. We have on numerous occasions over the years thoroughly docu- mented our economic case. As the political pressure of these industries reached a crescendo in the fall of 1967, the President, joined by the chairman of this com- mitee, reque,sted the U.S. Tariff Commission to make an investigation and report on the economic condition of the textile and apparel in- dustries and the impact of imports on these industries. This request was met with bitter~ cries by the domestic industries that no investigation was needed. In our view, the resistance to this investigation was because they had no economic case for the extraor- dinary protection which they demanded and they feared exposure of the weak factual basis of their campaign. It is no wonder, then, that the Tariff Commission report was im- mediately attacked by the domestic industries. They have attempted PAGENO="0110" 2416 to dismiss the report., but they have never convincingly demonstrated that the Commission report is inaccurate or misleading. The Commission has presented the relevant facts in an unbiased manner. If these facts lead inescapably to the conclusion that the domestic industries have shown remarkable growth, are in a sound position, and are well able to withstand import competition, this is in the nature of t.he facts themselves, not in any interpretation im- posed upon the facts by the Tariff Commission. `We commend t.he Tariff Commission report to the committee. It is a monumental piece. of work by an arm of the Congress with no ax to grind. We believe as the committee proceeds to consider the textile and apparel issue that great weight should be given to this report. We are sure you will find it, as we did, a competent, thorough, and objective study. The Commission report conclusively supports our contention that import quotas on an overall basis are not justified. There may be par- ticular areas in which imports are a serious problem and may even have occasioned serious injury. Our investigatioiis, and our analysis of the Tariff Commission report, have revealed no such areas. If there are, however, particular product.s where the domestic in- dustry believes injury or an imminent threat of injury exists, we again challenge them to bring an appropriate case before the U.S. Tariff Commission. The textile industry complains that it has been "investigated to death." Indeed, on an overall basis, the industry's contentions have been put to the test and found wanting. Conceivably, there may be selected cases where import protection might be justified or even useful on a. temporary basis, or where the adjustment assistance provisions of the administration's proposed bill might be appropri- ately applied. However, the determination of such areas must be made pursuant to law with an opportunity for a. full investigation of such contentions. We would welcome any such investigation and such an approach on the part of the industry or the U.S. Government. We are not afraid of the facts and we are not afraid to risk the possibility of import protection on a selected basis if this is justified by the facts. We insist, however, that we be given an opportunity to present our view of the fact.s and that determinations be made objectively and in accordance with law. Certainly, policy in such an important area cannot be made on the basis of self-serving assertions which have not been submitted to careful scrutiny in a proper proceeding. Such a proceeding, initiated by the chairman of this committee, Mr. Mills, has resulted in conclu- sive evidence that there is no justification for import quotas on an overall basis. We urge the committee to accept the results of this investigation and to resist t.he pressure of these domestic industries for unwarranted and unjustified protection. Mr. Daniels will now present our views on some of the economic and policy considerations involved. Thank you. Mr. B1JRKE. Mr. Daniels if you wish to skip any part of your state- ment, the entire statement will appea.r in the record. PAGENO="0111" 2417 STATEMENT OP MICHAEL P. DANIELS Mr. DANIELS. Yes, that was the first order of business, Mr. Burke. If I may ask that my statement together with the tables attached to it be made a part of the record, then I will proceed by way of sum- mary so as to conserve the time and I might say the interest of the committee. Mr. BURKE. It will all appear in the record. Mr. DANIELS. Mr. Chairman, members of the committee, my name is Michael P. Daniels. I am counsel to the Textile and Apparel Group, American Importers Association, and a partner in the firm of Daniels & Houlihan of this city. My statement will review some of the eco- nomic data and our reasons for~ concluding that import quotas would be unjustified and undesirable. I. IMPORT RESTRICTION IS NOT JUSTIFIED BY THE ECONOMIC FACTS The Tariff Commission Report documents the remarkable progress made by the textile and apparel industries and the revolutionary changes which have taken place in these industries, especially over the last 5 years. The principal conclusion of the Tariff Commission was that- the domestic producers, have, by, most broad measures, enjoyed a period of unparalleled growth since the early 1960's". The Commission continued: Along with increased output, there was also a marked expansion in sales, em- ployment and new investment in plant and equipment during this period. Simi- larly, overall corporate profits (whether measured as a ratio of profits to sales, or on the basis of the rate of return on stockholders' equity) increased. From 1961 to 1966, for example, the value of shipments rose from $29.1 billion to $39.6 billion, or 36 percent. For the producers of textile mill products, profits as a percentage of net sales rose by 48 percent. The corresponding increase for the producers of apparel and related products was 52 percent. The corresponding gain for all manufacturing corporations over the same period was 21 percent. In other words, Mr. Burke, these industries over this time period have consistently outperformed the economy as a whole. I might say, departing from my statement, that it was simply amazing for us to sit here this morning and hear this horrible tale of woe and grief painted by the witnesses who preceded us at this table. Any objective analysis of this industry and its performance would certainly make one wonder what industry they were talking about. We noticed their charts over here and we were shocked to find that there was not one single chart or one single table which demonstrated the progress that this industry has made. Every chart had to do with imports. `We have admitted, and I don't think it is any matter of means a fatal admission, that imports have increased. The key question though for this committee is, has the increase in imports been met by an in- crease in domestic production; what has beeii the impact of those im- ports on the domestic industry? Now, every single bit of economic evidence which is available in- dicates that not only has the domestic industry met the competition from imports but it has prospered fantastically. PAGENO="0112" 2418 I am sure that they don't tell their stockholders and they don't tell their financial analysts the same story that they have told this com- mittee. Somebody called them a jaundiced industry, an industry that talks out of two sides of their mouth. When they talk in the stock market they talk about their dynamic progress over the last 6 or 7 years and their bright prospects for growth; It seems to me to isolate import statistics without comparing them to domestic production and the performance of this industry borders upon misrepresentation. I would like the committee to have the entire picture and compare what has happened on the import side and what has happened on the domestic production side. Now, with regard to imports. the Commission stated: By quantity, about two-thirds of the actual increase in imports from 1961 to 1966 was composed of products (such as yarns and fabrics) for which further processing was required in the United States. Most of the remainder consisted of apparel products. Although the volume of imports in each of these broad categories was substantially larger in 1966 than in 1961, the actual increase in the volume of domestic production was of substantially greater magnitude over the same period. At this point I would like to talk about what one might call the game of percentages. We hear percentage figures thrown around, im- ports have increased by so much. I think that without really looking at the magnitudes involved that people can become misled by these bare assertions of a percentage number. For instance, and I am now looking at table 5 in my presentation, mill consumption, which is a measure of all the fibers that go into our domestic mills, increased in the period 1962 to 1967 by 24 percent. Imports increased by 41.6 percent, and that is almost double, and this calls for cries of alarm that imports are growing at twice the rate of domestic production. But it doesn't take a mathematician to see what the hidden fallacy in these figures are. If you start from a low base and you have a certain increase it is going to show up in a higher percentage increase. If you start from a high base it is not going to show up in the per- centage figure. And during this period 1963 to 1967 the mill consump- tion-that is, a measure of domestic production-increased by 1.7 bil- lion pounds and in the same period iniports increased by 204.9 million pounds, so we are comparing here millions and billions. Now, I think this puts the percentage figures in a little better per- spective for the committee. We have heard a lot about employment. Concerning employment, Commissioner Clubh summarized the finding of the Commission as follows: Employment has been relatively stable in the face of continuing automation; take home pay, hourly pay, and overtime have all increased in recent years. Indeed there is some evidence that in certain worker categories labor shortages exist. To hear the previous witnesses one would think that their workers were being laid off daily. The truth of the matter is, as shown in our table 3, that there has been a very large increase in employment. In the apparel and related products industry in 1961 we had 1,215,000 workers employed. In April 1968 there is 1,405,000. PAGENO="0113" 2419 That is a growth of almost 200,000 workers in the apparel sector. In the textile mill pfoducts industry it grew from 893,000 in 1961 to 971,000 in April of 1968. This is a growth of some 80,000 or so workers. Even in those particular product areas where domestic production has declined the Commission concluded: For the most part, the failure of output for such products to expand appears attributable chiefly to changes either in fashion or style, to technology, or both. In relatively few instances do imports appear to have been a major factor. We coimmend the entire Commission report to the committee. For the convenience of the committee, we have reprinted the principal con- clusions of the Commission, pages 4-14 of the report, and we ask that this be inserted into the record at the conclusion of our testimony. Mr. BURKE. Without objection it is so ordered. (See p. 2433.) Mr. DANIELS. I think this is important to get some historical per- spective and put some of these allegations to the test of analysis. The textile industry emerged from World War II with vastly ex- panded capacity. This was further exaggerated by the destruction of overseas textile and apparel industries and by the explosion of pent-up consumer demand in the immediate postwar period. Requirements for the Korean war perpetuated the abnormal expansion of the industry. Following the Korean war, however, there ensued a period of basic adjustment in the industry. This was aggravated by the sluggish per- formance of the domestic economy throughout the middle and late 1950's. This period saw the first phase of the domestic textile revolution, a phase which might be termed the structural revolution. It was char- acterized by the liquidation of smaller, inefficient, and obsolete units of production, a period of extensive merger and acquisition and the flight from New England to the south to escape the labor unions and higher land, power, and other costs. It witnessed the shift of the textile industry from small family managed enterprises engaged in single product lines and marketing through a cumbersome chain of con- verters, wholesalers and other intermediaries to large, vertically inte- grated units, professionally managed, well-financed, with diversified product lines and an emphasis on marketing. During the 1960's and up to the present time the industry has ex- perienced the second phase of the revolution involving significant changes in marketing and management techniques, greater investment of capital, research and development of new products, more efficient production methods, and greater promotional and marketing activities. These qualitative changes, following the structural changes which com- menced in the 1950's, have resulted in a strong, dynamic, and progres- sive industry with excellent prospects for the future and well able to compete with import competition. A marked and accelerated pattern of growth was demonstrated by both the textile and apparel industries commencing in 1961 and con- tinuing uninterrupted through 1966. The industry in 1966, although rapidly adding capacity, was operating at 98 percent of capacity (well over the industry's preferred rate of 96 percent) in order to meet very high levels of consumer demand as well as the added requirements for the Vietnam war. The credit squeeze and the resulting downturn in 95-159 O-68--~pt. 6-8 PAGENO="0114" 2420 the economy generally in 1967 reversed the trend and for the first time in 6 years indicators for the economy as a whole and for the textile and apparel industries, either showed stagnation or a downward move- ment. Commencing with the middle part of 1967, however, the indus- tries involved reversed this movement and today have recovered, and ii~ most instances, measured by most indicators, have surpassed pre- vious peaks in 1966. These industries are now producing at peak and record levels. During this period, as we have said, imports also grew. However, by and large this growth was commensurate with the growth in the do- mestic industries and reflected the increased demand for textile and apparel products. Imports reached a height in 1966, in order to supply the high demand of that year, but fell off sharply in 1967 with declines greater than those for shipments of the domestic industries. Along with the recovery in the domestic industries in the last part of 1967 and first months of 1968 imports have also resumed their growth but this has been a growth comparable to that of the domestic industries and on an overall basis at a rate lower than that for the domestic industries. I have att.ached to my statement a number of tables and graphs. I don't think that any point would be served by reading the tables or discussing them at any length. They do indicate, Mr. Landrum, a fan- tastic pattern of growth in this industry, a temporary setback as the economy itself was set back in 1967, and a resumption of that growth at record levels. I said in the beginning of my statement that I felt that it was im- portant that one talk not only about the growth of imports but the growth in domestic production to put these two movements in perspec- tive and relate them to each other, and I invite your attention to the very last page where we have a graph setting forth the growth of domestic production as measured by mill consumption and imports. I think any examination of that table will indicate that the repre- sentations made to this committee this morning concerning the im- ports will not stand the light of day. We in the balance of our statement talk about some of the problems that have been raised before this committee, some of the arguments concerning employment, some of the arguments concerning the balance of payments, some of the arguments regarding overseas investments, nontariff barriers on the part of other countries. We haven't tried to dodge any issue. We have not tried to dodge the hard issues and I suggest in view of the lateness of the hour that I skip this portion of my testimony and invite any questions which you might have. (Mr. Daniels' prepared statement follows:) STATEMENT OF MICRARL P. DAN~LS, COUNSEL, TEXTILE AND APPAREL GROUP, AMERICAN IMPORTERS ASSOCIATION Mr. Chairman, members of the Committee, my name is Michael P. Daniels. I am Counsel to the Textile and Apparel Group, American Importers Association and a partner in the firm of Daniels & Houlihan of this city. My statement will review some of the economic data and our reasons for concluding that import quotas would be unjustified and undesirable. PAGENO="0115" 2421 I. Import Restrictions Is Not Justified by the Econom4c Facts. The Tariff Commission Report documents the remarkable progress made by the textile and apparel industries and the revolutionary changes which have taken place in these industries, especially over the last five years. The principal conclusion of the Tariff Commission was that: "~ * * the domestic producers, have, by most broad measures, enjoyed a period of unparalleled growth since the early 1960's." The Commission continued: "Along with increased output, there was also a marked expansion in sales, employment, and new investment in plant and equipment during this period. Similarly, overall corporate profits (whether measured as a ratio of profits to sales, or on the basis of the rate of return on stockholders' equity) increased. "From 1961 to 1966, for example, the value of shipments rose from $29.1 billion to $39.6 billion, or 36 percent. For the producers of textile mill products, profits as a percentage of net sales rose by 48 percent. The corresponding in- crease for the producers of apparel and related products was 52 percent. The corresponding gain for all manufacturing corporations over the same period was 21 percent." With regard to imports, the Commission stated: "By quantity, about two-thirds of the actual increase in imports from 1961 to 1966 was composed of products (such as yarns and fabrics) for which further processing was required in the United States. Most of the remainder consisted of apparel products. Although the volume of imports in each of these broad categories was substantially larger in 1966 than in 1961, the actual increase in the volume of domestic production was of substantially greater magnitude over the same period." Concerning employment, Commissioner Clubb summarized the finding of the Commission as follows: "Employment has been relatively stable in the face of continuing automation; take home pay, hourly pay, and overtime have all increased in recent years. In- deed there is some evidence that in certain worker categories labor shortages exist." Even in those particular areas where domestic production has declined, the Commission concluded: "For the most part, the failure of output for such products to expand ap- pears attributable chiefly to changes either in fashion or style, to technology, or both. In relatively few instances do impOrts appear to have been a major factor." We commend the entire Commission Report to the Committee. For the conveni- ence of the Committee, we have reprinted the principal conclusions of the Com- mission, pages 4-14 of the Report, and we ask that this be inserted into the record at the conclusion of our testimony. The textile industry emerged from World War II with vastly expanded ca- pacity. This was further exaggerated by, the destruction of overseas textile and apparel industries and by the explosion of pent-up consumer demand in the im- mediate post-war period. Requirements for the Korean War perpetuated the ab- normal expansion of the industry. Following the Korean War, however, there ensued a period of basic adjustment in the industry. This was aggravated by the sluggish performance of the domestic economy throughout the middle and late 1950's. This period saw the first phase of the domestic textile revolution, a phase which might be termed the structural revolution. It was characterized by the liquidation of smaller, inefficient, and obsolete units of production, a period of extensive merger and acquisition and the flight from New England to the South to escape the labor unions and higher land, power and other costs. It witnessed the shift of the textile industry from small family managed enterprises engaged in single product lines and marketing through a cumbersome chain of converters, wholesalers and other intermediaries to large, vertically integrated units, profes- sionally managed, well-financed, with diversified product lines and an emphasis on marketing. During the 1960's and up to the present time the industry has experienced the second phase of the revolution involving significant changes in marketing and management techniques, greater investment of capital, research and development of new products, more efficient production methods, and greater promotional and marketing activities. These qualitative changes, following the structural changes which commenced in the 1950's, have resulted in a strong, dynamic and progres- sive industry with excellent prospects for the future and well able to compete with import competition. PAGENO="0116" 2422 A marked and accelerated pattern of growth was demonstrated by both the textile and apparel industries commencing in 1961 and continuing uninterrupted through 1966. The industry in-lOGO, although rapidly adding capacity, was operat- ing at 98% of capacity (well over the industry's preferred rate of 96%) in order to meet very high levels of consumer demand as well as the added requirements for the `S/jet Nam w-ar. The credit squeeze and the resulting downturn in the econ- omy generally in 1967 reversed the trend and for the first time in six years indi- cators for the economy as a whole and for the textile and apparel industries showed a downward movement. Commencing with the middle part of 1967, how- ever, the industries involved reversed this movement and today have recovered, and in most instances, measured by most indicators, have surpassed previous peaks in 1966. During this period imports also grew. However, by and large this growth was commensurate with the growth in the domestic industries and reflected the increased demand for textile and apparel products. Imports reached a height in 1966, in order to supply the high demand of that year, but fell off sharply in 1967 with declines greater than those for shipments of the domestic industries. Along with the recovery in the domestic industries in the last part of 1967 and first months of 1968 imports have also resumed their growth but this has been a growth comparable to that of the domestic industries. The Tariff Commission Report thoroughly documented the pattern of growth in both the textile mill products and apparel products industries and compared the performance of imports. Tables 1 through 10 appended to our statement briefly summarize the facts and bring up to date some of the figures. The Index of Industrial Production for the textile mill products industry (Table 1) shows a growth of 35 points, from 107.1 to. 142.2, for the years 1961- 1967. The Index remained almost constant from 1966 to 1967, slipping by only 0.3 of a point. During 1967 the Index fell to a monthly low of 136.6 but has shown a rapid recovery since June. By October the Index w-as above the average for 1966 and in April 1968 (the latest available month) the Index stood at 147.5, almost 10 points above the April 1967 Index, and 5 points above the 1966 and 1967 averages. The Index of Industrial Production for Apparel Products (also shown in Table 1) shows a similar pattern. The Index grew by over 35 points from 1961 to 1967. 1967 was approximately two points below the 1966 average. For apparel the Index also reached its low point in June of 1967 with substantial recovery since. The Index for i~Iarch 1968 (the latest available) of 148.1 stood 4.5 points above the March 1967 Index. All indicators from the trade press and particularly the performance of the textile mill products industry, the supplier of the apparel industry, indicate that April and subsequent months will show an even more dramatic upturn. Measured by sales an dprofits these industries have also shown dramatic growth. Sales for the textile industry grew by 39.4% from 1961 to 1967 (13.4 billion dollars to 18.7 billion dollars) and sales for the apparel industry grew by 46.9% for the same years (12.4 billion dollars to 18.2 billion dollars). Profits for the textile grew by 66.7% for the time period covered and those for the apparel industry by 119.3%. There were slight decreases in 1P67 from the boom year of 1966. Sales for 1967, however, were substantially above sales in 1965 for both industries. Profits for the textile industry in 1967 were slightly below 1965 levels but for the apparel industry in 1967 substantially above 1965 levels. Table 7 shows a 14.5% increase in shipments of the domestic textile industry for the first quarter of 1968 over the first quarter of 1967 and Table 8 shows a 5% grow-th in shipments of the apparel and related goods industry for the first quarter of 1968 over 1967. This presages substantial growth in both sales and profits in 1968, levels which should be above 1966. On the basis of the first quarter figures textile sales should jump to approximately 21 billion dollars in 1968 com- pared to 18.7 billion dollars in 1967 and 19.5 billion in 1966. This prediction is not ours alone. The E. F. Hutton & Co., Inc. in a comprehensive analysis of the textile industry states: "With both unit volume and dollar sales running well ahead of last year and forward order positions being built up steadily in most areas, an industry-wide sales gain of at least 12% now- seems likely. This would place full year dollar volume at or near the $21 billion mark." Textile World in its May 1968 issue notes that its exclusive Index of Textile Manufacturing Activity for March w-as fifteen points over a year ago and that textile mills are operating "at or close to their preferred rate of 96% of capacity." PAGENO="0117" 2423. They further note: "With shipments running at more than a 20 billion dollar rate (seasonally-adjusted) plant activity promises to stay strong." We believe 1968 will be the most profitable year yet enjoyed by the textile and apparel industries. Employment has also grown substantially over the years since 1961 as shown on Table 3. From 1961 to 1967 the textile mill products industry added 59,000 employees and the apparel industry added 176,000 employees. As the Tariff Com- mission points out, there are even labor shortages in some areas of the textile industry. Employment also decreased slightly during the slack of 1967 from the highs of 1966, but, as shown on Table 3, employment figures for April 1968 indi- cate a complete recovery. For the textile mill products industry, employment in April 1968 of 971,000 employees compares to 945,000 for April of 1967. 1,405,000 workers in the apparel industry in~, April of 1968 compares with 1,390,000 in April of 1967. Another measurement of the growth of the domestic industry is by fiber con- sumption shown in Table 4. In the five years from 1963 to 1967, total fiber con- sumption by United States mills jumped from 7.2 billion pounds to 9.0 billion pounds, an increase of about 25%. The table is also interesting in that it shows that almost all of the growth took place in manmade fibers which increased from 2.8 billion pounds in 1963 to 4.2 billion pounds in 1967. A comparison of imports on the basis of mill consumption and domestic con- sumption of fibers is shown in Table 5. This is a rather crude measurement, which would require considerable refinement, but it nonetheless indicates the gen- eral relationship of imports to domestic consumption. This relationship is illus- trated on the attached graph. The domestic industries have also emphasized the percentage growth in im- ports. These representations are put in better perspective by an examination of Table 5, noting especially the magnitudes involved. It is true that imports had a higher percentage growth than mill consumption or domestic consumption hut imports start from a considerably lower basis. Thus, the increase in imports of 41.6% between 1963 and 1967 represents only an absolute increase in quantity of 204.9 million pounds, whereas the increase in domestic mill consumption of 24% represents an increase of 1.7 billion pounds. The table also shows that whereas mill consumption remained practically unchanged for 1966 and 1967 (a decrease of 0.3%) imports dropped by 9.6%. An examination of the magnitudes involved (Table 5) puts these percentage figures in perspective as well. A more meaningful measure of imports to apparent consumption is contained on Table 6 based upon the Tariff Commission Report. Overall measures such as those in Table 5 distort impact. Breaking the ratios into yarn, fabric and wearing apparel, modest levels of import penetration are revealed with moderate in- creases in the years since 1962. Although the ratios for 1967 cannot yet be computed because of the unavail- ability of the underlying data, the general trends of imports and domestic pro- duction would indicate that they are not greatly changed from 1966 levels, with probably a lower ratio for fabric and a slightly higher ratio for apparel. Some rough indication may be obtained from an examination of Tables 7 through 10. Table 7 shows that shipments of the domestic textile industry decreased by 2% from 1966 to 1967. Imports of textile products (yarns and fabrics) shown on Table 19 decreased by 18.3% from 1966 to 1967. This would indicate a lower ratio of imports to domestic consumption for fabrics and probably for yarns as well although separate figures for yarns are not available on the domestic side. First quarter figures show shipments for the domestic textile industry increased by 14.5% in 1968 over 1967 (Table 7). Textile imports for the same period in- creased 11% (as shown on Table 9). However, fabric imports dropped by 11.7% and yarn imports increased by 54.3%. Thus, overall shipments for the domestic industry in the first quarter of 1968 are growing faster over 1967 levels than imports with the indications of sub- stantially better performance for the domestic industry in the fabric sector. It is interesting to note that the increase in imports was due almost entirely to cotton yarn imports covered by the LTA. This is undoubtedly due to the short- age of cotton in the United States. For the apparel and home goods industry, production in 1967 was practically the same as in 1966 (see Table 8). In imports, however, there was a 7.7% increase for roughly the same items, with a 12.9% increase in apparel imports and a decline of 4.9% made-up and miscellaneous goods (Table 10). For the domestic PAGENO="0118" 2424 apparel and home goods industry the first quarter of 1968 shows a 5.1% improve- ment over the 1967 period. Imports during the same period increased by 11.1%. Although the above figures are not strictly comparable, since the domestic figures are in the value of shipments and imports are in an equivalent square yard basis, they do roughly indicate that imports of textile mill products are doing relatively poorer than domestic shipments, but that apparel imports are increasing more quickly than domestic shipments of apparel. From all indica- tions, however, figures for the remainder of 1968 should see a marked improve- ment of the domestic apparel industry's performance. Apparel industry's per- formance. Apparel industry performance usually lags somewhat behind its sup- plier, the textile industry. Given this performance of the textile and apparel industries, despite increasing imports, there is simply no basis upon which the claim for special import pro- tection could legitimately be made. The textile industry has, in effect, admitted there has been no injury due to imports; and it could hardly claim an imminent threat of injury such as to justify escape clause action under the Trade Expansion Act of 1962. Rather. the textile and apparel industries have indulged themselves in expressions of vague apprehension about the long-range future growth of imports and the long- range impact of such imports on their industries. Although the domestic textile industry has made half-hearted attempts at projecting imports on the basis of past performance, such projections have been without real conviction; and dur- ing the hearings, a major witness for the industry, in effect, admitted that such projections are worthless. The Tariff Commission did not directly engage in a forecast of the long-range future other than to note an expected increase in the consumption of fibers of about 10 billion pounds in 1970 compared with 8.7 billion pounds in 1967. We believe that the truth of the matter is that it is impossible, and it would be foolhardy, to make any real projection of future share of imports and of domes- tic production in U.S. consumption. There is, however, a general concensus that the consumption of textiles and apparel will increase markedly in the next decade. The factors accounting for this projected increase are (1) a growing population, (2) an increasingly favor- able distribution of population by age group with increases in the younger family-forming age brackets, (3) a projected increase in per capita income, (4) a marked increase in families earning over $10,000 a year (21% in 1903 com- pared to 58% in 1976 as projected by the NPA) and a marked decrease in families earning under $4,000 (from 29% in 1963 to 12% in 1976 as projected by the NPA). There is also an increasing per capita consumption of textiles and apparel evident over the last five years which could continue with the growth of descretionary disposable income and increased promotional activities on the part of fiber producers and manufacturers. The immeasurable factors of style, fashion, and changes in the style of living will probably also enhance the sales of textile and apparel items. Te~vtilc World in a study of the long-range consumption of textiles and apparel predicted a 4% yearly gain in physical production over the next 10 years and predicted that the Textile World Index would hit 220 in 1976 compared with 152 in 1966. Also of immeasurable importance in calculating the future performance of the industry is the increasing and substantial rate of capital investment in the indus- try of the last five years, increased expenditures for research and development and the substantial modernization and improvement of plant and machinery. We believe that the best answer to the question of future impact is that over the last seven years the textile industry has been well able to withstand import competition. In the face of rising imports the industry has performed remark- ably with most indices registering performance superior to that of the economy as a whole. The industry has become immeasurably strengthened. We believe that a serious question remains as to whether imports in important sectors will be able to continue to compete with domestic production. This is not our judgment alone. Goodbody & Co. in au industrial survey of the textile in- dustry this year states: "Apparently, the industry has learned to live with such problems as growing imports and rising wages. The emergence of large integrated mills, staffed with professional managements, has greatly strengthened the textile industry's finan- cial position and enhanced the investment attractiveness of the group." * * * * * * * PAGENO="0119" 2425 "The outlook is for some increase in imports this year, especially synthetics. However, we believe that the U.S. textile industry's ability to meet competition through quality, service, new technology, and highly efficient facilities will go far to stern the inroads made by imports." Under the standard of the Trade Expansion Act of 1962 (continuing the stand- ard of the escape clause under the Reciprocal Trade Agreements Act) the ques- tion of future impact is limited to the concept of "threat `of injury." This concept was defined definitively by the Tariff Commission in the Lamb and Mutton case as follows: "[A] finding of threatened serious injury must be based upon facts which, applied to the statutory criteria, show that serious injury is about to occur. In other words, the serious injury mustbe imminent and not remote, conjectural, or based on mere suspicion, runior, fear or possibility." President Eisenhower, in rejecting a finding `of threat of injury in the case of Scissors and Shears, stated in a letter of May 11, 1954: "When this provision of the law is invoke~, I believe that the evidence brought forth to substantiate the judgment of threat must be of such character as to leave no doubt that actual injury is imminent." Certainly, there is no evidence that injury is "imminent" `or "about to occur." The assertions which we have seen emanating from the domestic industries are certainly "remote, conjectural" and "based on mere suspicion, rumor, fear or possibility." Based on the foregoing we do not believe that there is any economic justifica- tion for the imposition of quotas or for other import restrictions on imports of textile and apparel products. II. Import Quotas or Other Import Restrictions will not Solve the Real Prob- leins of the Domestic Textile and Apparel Industries nor would They Solve Other Problems for which Import Protection is Claimed to be a Solution. There are, despite the remarkable progress made by the textile and apparel industries, important problems both at present and in the future. Import restric- tion by quota or otherwise would not solve these problems and in most cases would either hinder solutions or perpetuate existing difficulties. Imports are a stimulant to these industries; their removal as a factor would dampen the incen- tive to improve. The principal problems faced by these industries were well set out by the Bureau of Labor Statistics in an artièle entitled "Technology and Labor in the Textile Industry" published in the "Monthly Labor Review" for February 1968. After reviewing the movement toward "larger, vertically integrated companies and substantial investments in plant and equipment" the article stated: "The changes, however, are spearheaded by large companies with necessary financial means while thousands of small firms are only moderately involved in modernization. Consequently the gap in unit costs and productivity between the industry's leading and marginal milis may widen, placing the smaller plants under increasing competitive pressure." The real problem of the smaller plants in the industry are technological develop- ments and the competitive strength of the larger units. Import protection would merely constitute a windfall to those larger units who by and large dominate the marketplace and would not materially assist the smaller, less efficient units of production which would still face fierce competition from the industry giants. To the extent that smaller units were helped by import protection, this could per- petuate weaker, inefficient units with lower productivity and hence lower wages and impede what may be a desirable trend of consolidation and merger in the industry to form stronger productive units. This might be particularly true in the apparel sector where the movement to larger units, although pronounced, has not been as extensive as in the textile sector. Import protection might likewise, for both smaller and larger units, impede needed investment, modernization of facilities, research and development in new product lines, improved inventory control and promotional efforts. It is in these areas that solutions lie, not in a regressive protectionism which masks inefficiency. The solution to the problem of smaller marginal firms certainly lies either in an increase in their efficiency or in merger with organizations which can supply the financial strength, marketing or managerial skills necessary to sustain a viable economic unit. The cruel way, which existed in the past, was to let such units die. PAGENO="0120" 2426 The adjustment assistance provisions of the Trade Expansion Act, and es- pecially the modifications and improvements contained in the Administration's draft bill on trade now before the Congress provides the avenue to attack the real problems of the smaller, less efficient units of production. It has been suggested that import quotas are the solution to the problems of employment, especially those of unskilled minority groups. There has, in the first place, been increasing rather than decreasing employment in both industries. This has been particularly true in the South and particularly true among Negroes. These assertions are well documented in the report of the Bureau of Labor Sta- tistics cited above. The problem of employment in the future is also discussed in this article. Future problems stem from the rapid development of labor-saving devices and more effi- cient production, especially in the textile sector. This progress in the industry, however, also means greater productivity per worker which can, in turn, support a higher wage level. Given a rapidly expanding economy over the long run it would be economic suicide and no service to workers to impede this progress and with it the possibility of a higher wage level. This may mean a gradually decreas- ing level of employment in this particular industry. It augurs well, however, for increasing worker prosperity in the economy as a whole. The solution to the problem of unskilled minority workers certainly does not lie in artificially creating jobs for the unskilled for wages at an extremely low level. The future would be mortgaged by a policy which called for impediments to technological development at the expense of creating immediate jobs for the unskilled. Certainly the solution lies in more positive programs such as an ade- quate program of worker training. Constructive solutions to these problems are certainly not beyond our imagina- tion, intelligence and will. Certainly quotas are not the answer to problems of employment. Import re- striction in the textile field would beget retaliation on United States exports in other fields. Any protection which might be afforded workers in the textile and apparel industries would be at the expense of employment in other industries. It is also claimed that somehow import restrictions will solve the problem of the cotton farmer and the sheep grower. Clearly, their problems lie in the competition of manmade fibers. The available supply of cotton has been dras- tically reduced while the price of cotton has increased to levels not competitive with manmade fibers. With or without import quotas a steady attrition in the consumption of cotton by textile mills is clearly indicated unless an effective pro- gram can be mounted encompassing research, fiber improvement, more competi- tive prices to the mills and finished product promotion. The domestic industries have claimed that our balance of payments problem would be solved by import quotas. The weakening of the foreign trade balance in textiles and fibers has in large part been due to a vastly restricted availability of raw cotton for export. Here again a solution to the problems of cotton would probably do much to ease the balance of trade in this particular sector. Certainly, however, a favorable trade balance in each sector of production is not a realistic goal for the national economy. An import balance in textiles, fibers and apparel is certainly tolerable if there is an overall export balance. The real answer to the balance of payments argument, however, is that import quotas on textiles would be self-defeating and would beget at least equivalent protection by other countries, with a real danger that the imposition of such quotas could trigger a trade war. Fundamentally, our balance of payments has suffered because our economy is inflationary and because of overseas military expenditures. Imports are attracted, and exports discouraged under these conditions. General measures to remedy our internal situation are clearly the constructive and meaningful responses to our current balance of payments difficulties. - The domestic industries have threatened to run away to foreign countries unless their demands for import restrictions are satisfied. We heard the same story in connection with the flight from New England in the 1950's. This industry will invest overseas if it is profitable to invest overseas and in those areas and those products where such investment is economically meaningful. Import quotas, unless drastically restrictive would not stop whatever investment which w-ould take place without quota protection. In fact, since profit, not volume, is the motive of these enterprises, a quota system might even stimulate foreign investment in some product lines, since reduced overseas costs combined w-ith a controlled market in the United States and quota allocation could mean higher profits in some cases. PAGENO="0121" 2427 There is, furthermore, nothing unhealthy about foreign investment in under- developed areas and indeed it is a policy of the United States Government to stimulate such investment by the private sector. We seriously doubt whether the extensive, modern facilities in South Carolina are going to move lock, stock and barrel to Timbuktu. Foreign investment will undoubtedly be moderate and in those areas where production in the United States is least competitive. The advantages of production in the United States, close to the market, without the difficulties attendant upon production in foreign countries, will in most cases outweigh~ the advantages of moving off shore. Cer- tainly the Committee must consider that some investment overseas by this indus- try might be a healthy thing both for us and for the rest of the world. Another argument utilized by the industry is that import quotas would help the economic development of "Appalachia." The textile industry has moved to the South and expanded the economy of this region. In 1963, 57% of the employment in the textile industry was located in the Southern Atlantic states. In contrast, in the apparel industry, only 16% of employment was located in the Southern Atlan- tic states with 44% in the Middle Atlantic states. This is clearly releated to union policies and practices preventing the movement of the apparel industry from high cost areas centered around New York City to areas such as the Appalachian region. If the union and industry are truly interested in the development of Appalachia, we suggest that they look to an amelioration of their own practices for a solution, rather than to import protection which would not increase any movement to these areas if the same union policies are maintained. There is an argument that other countries impose quotas on imports of textile and apparel articles not only from the United States but from the lesser developed countries. We hold no brief for such import restrictions on the part of other countries and join United States textile and apparel industries in calling for their prompt termi- nation. This is a difficult and often frustrating endeavor for the United States. The solution, however, clearly does not lie in erecting import barriers of our own. We cannot allow the most protectionist pOlicies in some other countries to become the common denominator of either our policies or those of the trading world. It is no solution to protectionism in some countries to erect world-wide cartels. III. Quotas are the Most Regressive Form of Protection. Quotas create more disruption than they attempt to cure. The arguments against quotas as a device are set forth in a pamphlet published by the American Importers Association entitled "Here's What's Wrong With Import Quotas." These arguments are familiar to the Committee, and we will not repeat them at any length here. But it bears repeating that the administrative burdens and red tape involved strangle commerce, introduce artificial elements into business decisions and contort commercial practices and policies. Quotas are certainly the most inflation inducing of protectionist devices. And no other device is better calculated to fetter the free play of market forces. In industries like textiles and apparel, for example, with sudden shifts in fashion and style, complicated by seasonal factors, quotas can wreak havoc. We do not have to go back to the stagnation of the inter-war period to learn of the disasterous effects of quotas. Recent experience under the LTA has been sufficiently detrimental. The operation of the agreement has vastly proliferated the number of supplying countries as purchasers in the United States scoured the world for available quota. We now have bilateral agreements with over 20 countries with all the attendant difficulties and problems involved in negotiation, and a cumbersome and costly governmentalbureaucracy to deal with the minutiae of regulation. We have used up valuable good will in these negotiations which might best have been utilized in more productive discussions looking toward the expansion of U.S. exports. Not the least damaging aspect is the aggravation of our relations, particularly with the lesser, developed countries. Our experience under the LT'A should be enough to convince us that extension of the principle would not be in the best interest of the United States. IV. The Imposition of Quotas would be Disruptive of United States Trade Re- lations and would Engender Retaliation leading to a Deterioration in World Trade and Concomitant Regressive Effects on the United States Economy. This general proposition has been thoroughly enunciated by leading spokes- men in the Administration from the President on down, as well as numerous witnesses before this Committee. No purpose would be served by extensive repe- PAGENO="0122" 2428 tition or rephrasing of such general arguments here. Retaliation is not a nice concept and threats of retaliation, it seems to us, should be made with great restraint. It would, in our view, however, be "pollyannish" to expect that the im- position of quotas by the United States on the textile trade would not be met by retaliation. Such action on the part of our trading partners would not flow from any feeling of revenge or vindictiveness. They would find it necessary to compen- sate for the loss of this trade in order to maintain viable economies themselves. V. Import Quotas would Contribute to Inflationary Pressures and Penalize the Consumer by Higher Prices and. Restricted Choice in Style, Fashion and Variety. This point has also been made extensively by Administration offidals, including Betty Furness, Special Assistant to the President for Consumer Affairs. The Tariff Commission in its report found (w-ith some Commissioners not taking a definite position) that import restriction would act as a tax on the low income consumer buying the cheaper lines of import goods. The element of style, fashion and variety introduced into the market by textile and apparel imports also would be severely affected by quotas reducing not only consumer choice but a needed stimulant to domestic sales. This is probably the most significant role of imports and would be the most serious casualty of im- port quotas We believe that imports in the past have injected price discipline into the mar- ketplace and restrained the increase in wholesale and retail prices for textile and apparel goods. Nonetheless, the index is creeping up, particularly in the apparel sector. The most recent Consumer Price Index for apparel and upkeep shows a jump of five points from March 1967 to March 1968 compared to an increase for non-durable commodities of four points in the same period. The Wholesale Price Index for textile products and apparel combined increased by 2.8 points for the same months, while non-durable goods increased by 1.7 points. Apparel alone had an even greater increase of 3.1 points. With restricted imports, the Index would climb unhindered by any factors outside the industry itself. For these reasons, we urge the Committee to reject the quota proposals now before it. We would be pleased to answer any questions which the Committee might have. TABLE 1.-INDEX OF INDUSTRIAL PRODUCTION [1957-59=1001 Textile mill Apparel products products Annual: 1961 1962 1963 1964 1965 1966 1967 Monthly (seasonally adjusted): 1967-January February March April May June July August September October November December 1968-January February March April 107.1 115.3 116.9 122.9 134.9 142.5 142.2 112. 1 118.9 125. 6 134.1 145. 1 150. 1 147.7 140.7 150.2 138.9 147.1 138.8 143.6 137.8 142.5 137.8 142.6 136.6 142.4 136.8 144.2 138.7 146.4 141.3 146.8 144.9 146.2 147.4 148.6 151.6 150.9 147.6 145.2 148.8 146.4 149.9 148.1 147.5 Source: Federal Reserve Board. PAGENO="0123" TABLE 2.-SALES AND PROFIT: CORPORAT!ONS MANUFACTUR'NG TEXTILE MILL PRODUCTS AND APPAREL AND OTHER FINISHED PRODUCTS, 1961-67 [In millions of dollarsj NET SALES Textiles Apparel 1961 1962 1963 1964 1965 1966 1967 Change, 1961 to 1967 (percent) 13,398 14,449 15,092 16,249 18,028 19,513 18,672 39.4 12,365 13,241 13,696 14,880 16,263 18,110 18,170 46. 9 NET PROFIT BEFORE FEDERAL INCOME TAXES 1961 589 331 1962 724 415 1963 721 414 1964 947 553 1965 1966 1967 1,268 1,272 982 644 740 728 Change, 1961 to 1967 (percent) +66. 7 +119. 3 Source: U.S. Tariff Commission, FTC-SEC. TABLE 3.-TOTAL EMPLOYMENT: TEXTILE MILL PRODUCTS AND APPAREL AND RELATED PRODUCTS, 1961 TO 1967, MONTHLY 1967 AND 1968 Textile mill products Apparel and related products Annual: 1961 1962 1963 1964 1965 1966 1967 893 902 885 892 926 962 952 1,215 1,264 1,283 1,303 1,354 1,399 1,391 Monthly (seasonally adjusted): 1967-January February March April May June July August September October November December 1968-January February March April 963 954 952 945 941 948 940 946 950 954 957 964 966 976 972 971 1,414 1,401 1,384 1,390 1,395 1,396 1,376 1,381 1,377 1,384 1,389 1,397 1,385 1,393 1,391 1,405 Source: U.S. Tariff Commission, Survey of Current Business. 2429 [In thousandsi PAGENO="0124" 2430 TABLE 4.-MILL CONSUMPTION, DOMESTIC CONSUMPTION, AND IMPORTS OF MANMADE, COTTON, AND WOOL FIBERS AND PRODUCTS, 1963-67 MILL CONSUMPTION' [In millions of poundsj Manmade fiber Cotton Wool Total 1963 2,787.8 4,040.2 411.7 2,739.7 1964 3, 174. 3 4, 244. 4 356. 7 7,775. 4 1965 3, 624. 1 4, 477. 5 387. 0 8, 488. 6 1966 4, 002. 2 4, 630. 5 370. 2 9, 002. 9 1967 4, 240. 4 4,420. 7 312. 6 8,973. 7 DOMESTIC CONSUMPTION 2 1963 2, 726. 9 4, 136. 7 558. 6 7,422. 2 1964 3,115.8 4,331.4 490.8 7,938.0 1965 3, 567. 1 4,664. 3 527. 5 8, 758. 9 1966 3,977. 1 4,947.9 500.4 9,425.4 1967 4, 239. 2 4,670. 8 423. 7 9,333. 7 1963 36.2 304.3 152.5 493.0 1964 50.0 300.2 141.1 491.3 1965 79. 0 360. 6 156. 1 595. 7 1966 122.3 507.0 142.9 772.2 1967 137. 6 438. 5 121. 8 697. 9 1 Producers' domestic shipments plus imports of fibers. 2 Mill consumption plus imports less exports of semimanufactured and manufactured products. 3 Imports of semimanufactured and manufactured products. Source: Textile Organon. TABLE 5.-MILL CONSUMPTION, DOMESTIC CONSUMPTION, AND IMPORTS OF MANMADE, COTTON, AND WOOL FIBERS AND PRODUCTS COMPARED,' 1963-67 [In millions of pounds] Ratio of Ratio of Mill Domestic lmports imports to imports to consumption consumption mill domestic consumption consumption 1963 7, 239. 7 7,422. 2 493. 0 6. 8 6. 6 1964 7,775. 4 7,938. 0 491. 3 6. 3 6. 2 1965 8, 488. 6 8,758. 9 595. 7 7. 0 6. 8 1966 9, 002. 9 9, 425. 4 772. 2 8. 6 8. 2 1967 8, 973. 7 9, 333. 7 697. 9 7. 8 7. 5 Increase, 1963-67 +1,734.0 +1,911.5 +204.9 Percent 24.0 25.8 41.6 Decrease, 1966-67 -29. 2 -91. 7 -74. 3 Percent -. 3 1. 0 9. 6 1 For definitions see table 4. Source: Textile Organon. TABLE 6.-RATIO OF IMPORTS TO APPARENT CONSUMPTION Yarn Fabric Wearing apparel 1961 0.3 1962 .7 1963 .6 1964 .5 1965 .6 1966 1.4 2.7 4.4 4.5 4.1 5.4 6.5 2.7 3.9 4.1 4.6 5.1 5.2 Source: U.S. Tariff Commission, Textile Organon. PAGENO="0125" 2431 TABLE 7.-Shipments of the domestic tea~tite industry [Millions of dollars] Annual: 1966 19,588 1967 19,205 Percent Change -2.0 January through March: 1 1967 4, 504 1968 5,158 Percent Change +14. 5 1 Not seasonally adjusted. Source: Bureau of the Census, Current Industrial Reports. TABLE 8.-Shipments of the home goods and appare' industry, 1966 and 1967; January through March 1967 and 1968 [Millions of dollars] Annual: 1966 49, 716 1967 49, 388 Percent Change -0. 7 January through March: 1 1967 12,407 1968 13,041 Percent Change +5. 1 1 Not seasonally adjusted. Source: Bureau of the Census, Current Industrial Reports. TABLE 9.-TEXTILE IMPORTS (YARNS AND FABRICS) [Millions of equivalent square yardsj Yarn Fabric Total 1966 622.2 1,077.9 1967 463. 0 925. 5 Percentchange -9.5 -14.1 January through March- 1967 140.8 267.6 1968 217.2 236.2 Percentchange +54.3 -11.7 1,700.1 1, 388. 5 -18.3 408.4 453.4 +11 Source: U.S. Department of Commerce. TABLE 10.-IMPORTS OF APPAREL AND MADE-UP AND MISCELLANEOUS GOODS [Millions of equivalent square yardsj Apparel Made-up and miscellaneous Total 1966 777.3 319.1 1967 877.3 303.5 Percent change +12. 9 -4. 9 January through March- 1967 217.5 77.1 1968 246.1 81.2 Percent change +13.1 +5.3 1,096.4 1,180.8 +7. 7 294.6 327.3 +11.1 Source: U.S. Department of Commerce. PAGENO="0126" 2432 United States Mill C~onsum~tlon and lm~orts of Man Made Cotton and Wool Producfs Compared, 1963-1967 OF POUNDS 8~ Mill Consui ~- ~tion 6 S 4 S 7._ - 2 Imports `.1. 1963 1964 19G5 1966 PAGENO="0127" 2433 (The Commission report; referred to follows:) UNITED STATES, TARIFF CeaIMI55I0N Tecetiles and Apparel (Report to the President on Investigation No. 332-55 Under Section 332 of the Tariff Act of 1930) TEXTILES AND TEXTILE PRODUCTS-AN OVERALL VIEW Particularly since the early 1950's, the various producing industries discussed herein have been subject to rapid and profound changes-of both foreign and domestic origin. In the industrialized countries of the world, the production of textiles, while expanding, has shifted in emphasis from natural fibers to a com- plex of fibers involving cellulosic and noncellulosic manmade materials as well as cotton and wool. Indeed, for such countries, there was a singular similarity of trend, with production and consumption of manmade fibers accelerating (both in absolute and relative amounts), the consumption of cotton remaining fairly stable, and that of wool tending to decline, if not in absolute amounts, at least relatively. Concurrently, increasing numbers of countries have achieved independence and, in endeavoring to attain a measure of economic growth, many of these have turned to the production and exportation of textiles. To a significant extent, the textile industries in these newly developing countries were based upon cotton, and in some areas were supported by U.S. aid programs.1 In more recent years some of these have also turned increasingly to the production of textiles from manmade fibers and blends thereof. This increase in the world output of textiles and change in fiber composition affected U.S. exports. With the emergence of manmade fibers in the industrialized countries, and of many new producers of raw cotton and of cotton textiles in lesser developed countries, U.S. exports of raw cotton declined. Noteworthy, for example, was the decrease in shipments of raw cotton to the European Economic Community, where expanded output of manmade fibers, coupled with the in- creased production of cotton in associated countries, reduced the requirements of the Community for imports. Of no less significance was the increased competition in world textile markets, as a result of which United States exports showed little growth whereas imports increased rapidly. Within the U.S. textile industries, changes of great magnitude were also taking place. From 1961 to 1966, the annual U.S. mill consumption of all textile fibers expanded rapidly, rising from about 6.6 billion pounds to about 9.0 billion.2 This annual growth rate, amounting to about 6.5 percent, was several times higher than in the previous decade. Virtually all of this increase was attributable to manmade fibers, the aggregate consumption of which increased by 1.9 billion pounds from 1961 to 1966. Whereas manmade fibers accounted for about 31 per- cent of the total U.S. mill consumption in 1961, this proportion rose to about 45 percent by 1966. The share for cotton declined from 62 percent to 51 percent in the same period, and that for wool from 6 percent to about 4 percent. This dramatic shift in the fiber composition of consumption also had a pro- nounced effect upon the technology and the traditional structure and organization of the producing industries. With the emergence of large chemical concerns as important producers of textile fibers, sizable and increasing amounts of capital were invested in the development of new, products, new processing technology, and market promotion, while the use of manmade fibers often resulted in the sim- plification, or even elimination, of some processing operations. Modern manage- 1 U.S. aid programs identifiable with textile mills totaled $16.7 million in the fiscal years 1955-59, $13.4 million in 1960-63, and $7.5 million in 1964-67, or an aggregate of about $38 million from 1955 to 1967. Of the total amount, Near East and South Asian countries (chiefly India and Iran) received $13 million; East Asia (Indonesia and Korea) $13 million, and Africa (virtually all in Sudan) $10 million. During the fiscal years 1960-67, program assistance for textile machinery totaled $44 million, compared with commercial exports of such machinery valued at $941 million in the same period. 2 It should be noted that a comparison of 1961 with 1966 results in some upward bias in growth rates because of the low level of economic activity in the early 1960's and the impetus that has been given the economy by the hostilities in Viet-Nam.. Nonetheless, the recent growth in the production of textiles kept pace with that of nondurable goods man- ufacturing in general, and the expansion during the intervening years 1962 to 1965 was of high magnitude relative to that of the 1950's. PAGENO="0128" 2434 ment techniques, and the introduction of new, sophisticated, high-speed machinery resulted in greater efficiency. New products, Such as laminated fabrics, were in- troduced with increasing frequency and gained wide consumer acceptance. As these changes occurred, often at an accelerating rate, many small concerns, lack- ing adequate capital resources, found it increasingly difficult to adjust to new conditions of production and marketing. Partly as a result of this difficulty, notably in the past decade, there was a pronounced tendency toward merger and consolidation within the industry, and larger companies have thus accounted for a greater share of the market. In addition to the foregoing changes, total imports also expanded sharply from 1961 to 1966, whether measured by quantity, by value, or in relation to consump- tion. Such imports, moreover, have encompassed a wider range or variety of goods than heretofore, and they have been supplied by ever increasing numbers of countries. Accompanying these significant changes in the production and marketing of the textile and apparel industries, the domestic producers, have, by most broad meas- ures, enjoyed a period of unparalleled growth since the early 1960's.3 By and large this growth is attributable to the sustained rise in the level of economic activity in the U.S. economy. As the national product, industrial output, and population and disposable incomes expanded, the demand for textiles for both personal and industrial use grew accordingly. Along with increased output, there was also a marked expansion in sales, em- ployment, and new investment in plant and equipment during this period. Simi- larly, overall corporate profits (whether measured as a ratio of profits to sales, or on the basis of the rate of return on stockholders' equity) increased. From 1961 to 1966, for example, the value of shipments rose from $29.1 billion to $39.6 billion, or 36 percent. For the producers of textile mill products, profits as a percentage of net sales rose by 48 percent. The corresponding increase for the producers of apparel and related products was 52 percent. The corresponding gain for all manufacturing corporations over the same period was 21 percent. In the third quarter of 1967, profit ratios (based on net sales) of textile producers were higher than in earlier periods of that year, whereas those of all manufactur- ing corporations were not. Notwithstanding that the profit ratios for the pro- ducers of textiles have expanded at a faster pace since 1961 than have those for all manufacturing, these ratios continue to be substantially below those of all manufacturing corporations. Thus, in July-September, 1967, the net profit of the textile mill products industries (5.3 percent) was about a third lower than that of all manufacturing corporations (7.8 percent). The profit ratio for apparel products (4.7 percent) was about 40 percent lower. It should be observed, how- ever, that the rate of return on equity for apparel producers tended to be as high as that for all manufacturing corporations during 1961-66. The comparable rate of return for the producers of textile mill products was below that of all manufacturing. The foregoing indexes of economic activity are, of course, overall measures, or averages, which conceal significantly divergent trends within industry groups covered by the broad classification for "Textile Mill Products," ~nd "Apparel and Related Products." The causes for these divergencies reflect the interaction of a variety of complex economic forces. These include such factors, for example, as changes in technology and the failure or inability to adjust thereto; the swift, and often accelerating, change in consumer tastes and fashion; the influence of the very marked shift in the composition of raw fibers consumed; competition from nontextile products such as paper or plastics; and, finally, the increased imports. By most broad measures, whether in terms of quantity or in relation to con- sumption, the trend in the imports has been upward since 1961, as is to be ex- pected during a period of expanded economic activity. The impact of such im- ports, however, is clearly unevenly distributed and varies according to the market conditions for the product concerned. An increase in the ratiO of the imports to consumption is not necessarily indica- tive of the impact that such imports had, or are having, upon particular domestic producers. Some imports, such as yarn or woven fabrics, for example, constitute the raw materials of domestic producers of finished products but may be directly ~ The Federal Reserve Board Index of production (1957-59 = 100) shows that the pro- duction of textile mill products expanded 33 percent from 1961 to 1966, while that for apparel and related products rose 34 percent. Although production declined In the first half of 1967, a reflection of the recent leveling `of the economy as a whole, the September 1967 index of output of mill products (141.2) was almost as high as the 1966 average (142.5). The production index for apparel products in August 1967 (146.1) was higher than in Immediately preceding months, but still lower than the 1966 average of 150.1. PAGENO="0129" 2435 competitive with yarn or fabric manufactured by domestic mills for sale to others. To the extent that such imports displace the domestic output of yarn or fabric, they obviously affect the domestic production of raw textile fibers. The relationship between domestic output and imports is in fact considerably more complex than is indicated by this illustration. Some of the products of the types imported are not produced in great quantity in the United States for a variety of reasons. Many of the imported products are directly competitive, but the impact of imports varies according to whether the domestic output is mainly captive of a large, prosperous, integrated, multiproduct mill or is produced chiefly by a small independent mill which derives its income principally from the. sale of fabric to others. The competitive impact also varies over time. In periods of relatively full employment of domestic textile resources, the imports of such materials fre- quently are complementary rather than supplementary to domestic production. In periods of slack demand, the imports may have a more pronounced economic effect than when business activity is at a high level, even though the imports be of a lower relative magnitude. With regard to apparel, the increasing level of imports in recent years reflects in great part the active efforts of both retail and wholesale institutions in the United States to broaden the variety of their product lines and the price ranges at which they are sold. A large but unknown portion of this merchandise is com- parable to the domestic product both in terms of price and quality. A substantial proportion of the total volume and value of the imported merchandise appears to be made up of products which are of low price and are marketed principally in retail outlets which promote and sell these products mainly on the basis of price; such products appear to be sold principally to lower income groups or to others for whom cost is a major consideration.4 On the other hand, still other products are characteristically of high price and style, for which demand and the domestic output may be limited. Thus, the effects of the imports of apparel, like imports of fabrics, vary greatly. Imported cotton shirts selling for low prices may have a considerable impact upon a small concern whose output is limited to shirts of the same price range, but have little or nO effect upon that of a large, multiproduct producer whose shirts sell at substantially higher prices. The quantitative data respecting either the trend of imports or the relationship between imports and consumption overall fail to indicate the actual effects such imports have either or' profits or on employment for particular producers. As noted above, there has been a general increase in the level of imports. The percentage of U.S. consumption represented by such imports varies. Based on quantitative data, the report shows that in the aggregate, the annual imports of yarns of the three major fibers (cotton, wool, and manmade fibers) rose from about 25 million pounds in 1961 to about 121 million pounds in 1966. They were consistently less than 1 percent of apparent consumption in each of the years 1961-65, and were 1.4 percent of consumption in 1966. U.S. imports of broad- woven fabrics rose from 356 million square yards in 1961 to 1.0 billion in 1966. In that period, the annual ratio of imports to consumption rose from about 2.7 percent to about 6.5 percent.5 In terms of their raw fiber equivalents or content, the annual imports of wearing apparel increased from 79 million pounds to 186 million over the 1961-65 period, and increased further to 194 million pounds in 1966. The annual ratio of imports to consumption increased from 2.7 percent to 5.1 percent from 1961 to 1965. The comparable ratio for 1966 is not available. By quantity, about two-thirds of the actual increase in imports from 1961 to 1966 was composed of products (such as yarns and fabrics) for which further processing was required in the United States. Most of the remainder consisted of apparel products. Although the volume of imports in each of these broad cate- gories was substantially larger in 1966 than in 1961, the actual increase in the volume of domestic production was of substantially greater magnitude over the same period. Commissioner Clubb observes that the Commission' has not assembled evidence which supports the proposition that low price goods are sold to low income groups, but general experience would indicate that this is probably true. To the extent that it is true, of course, any import restriction which increased the price of such goods would operate as a tax on these low income consumers. ~ As indicated in table 20, the import-consumption ratio for cotton fabric rose from 2.9 percent in 1961 to 7.4 percent in 1966, and that for fabrics made from manmade fibers from 1.3 percent to 4.5 percent. The comparable ratio for wool fabrics rose from 8.8 percent in 1961 to 17.1 percent in 1965 and was 14.4 percent in 1966. A large part of the increased imports of wool fabric over the 1961-66 period consisted of so-called Prato cloth from Italy. Imports of this fabric may be expected to' decline if certain tariff classi- fication changes under consideration by the Congress are enacted. 95-159 0-68--pt. 6-9 PAGENO="0130" 2436 With the leveling in the domestic economy in the first half of 1967, the total value of imports declined.6 An upturn in the economy in 1968 would doubtless have the effect of stimulating a further expansion in imports, particularly of mill and apparel products, including those made from manmade fibers and blends thereof, for which the demand is expanding most rapidly. Data respecting the supply elasticities of existing or potential foreign suppliers of textiles are, how- ever, limited. With respect to longer-term prospects, the President's National Advisory Com- mission on Food and Fiber estimated recently that the total domestic consump- tion of all fibers will reach about 10.0 billion pounds in 1970, compared with 8.7 in 1967. The forecast for manmade fibers is 4.5 billion pounds, compared with 3.9 billion in 1967. 789 6 In January-September 1967, the annual rate of the total foreign value of textile imports, including fibers, was 9 percent lower than in 1966. The value of imports of textile mill products was 10 percent lower; the annual rate for clothing was 8 percent higher. Cotton and Other Fiber Problems and Policies in the United States, National Advisory Commission on Food and Fiber, Washthgton, D.C., July 1967. 8 Commissioner Culliton wishes to make the following statement: "I disassociate myself from the foregoing material on pages 4-13. I do this not because I object strongly to specific observations but because I disagree with certain explicit and implied relationships and the relative emphasis on various factors. "In my opinion the Commission's collection selection, and organization of available data, as presented in Volume II and the analysis in Volume I, treat with facts and signifi- cant relationships. I prefer to have the Commission's investigation, which was done under extreme time pressures, rest on such factual arid analytical work alone without the addition of this particular statement." ° Statement by Commissioner Clubb follows: "During the course of the Commission's investigation a number of important factors were developed which I believe should be stated clearly at the beginning of the Report. All of these are mentioned someplace in the 400 odd pages of the Report's two volumes, but I fear that unless they are all mentioned In one place some will be lost or diluted in the mass of other material. "The first and most important factor is that the `textile and apparel industries,' which are the subject of this Report, contain many diverse elements, having widely varying experiences with profits, employment, investment and imports. When all of these are lumped together into `textile and apparel industries,' the aggregate figures undoubtedly conceal many individual cases of both hardship and success. Profits, employment and investment may be going up for the entire industry, but certain segments of the industry may be in a state of considerable distress; imports may not be accounting for a significant part of the total market, but they may be almost completely displacing domestic production in isolated areas. "The Commission investigation was addressed only to the industry-wide questions, and therefore the principal limitation of the report is that it provides information which is primarily useful in determining whether or not industry-wide problems exist. No attempt has beea made to identify individual areas of difficulty which might justify separate treatment. "With this qualification in mind, the following statements appear to be true of the `textile and apparel industries:' "1. Producers: Profits, which are lower than the average for manufacturing industries, have been rising in recent years at a faster rate than for the average manufacturing industry; sales and investment are also rising, and the short~term prognosis is quite favorable. "2. Employees: Employment has been relatively stable in the face of continuing auto- mation; take home pay, hourly pay, and overtime have all increased in recent years. Indeed there is some evidence that in certain worker categories labor shortages exist. "3. industry Structure: There appear to be two developments taking place which are changing the structure of the textile industry. First, the marked and continuing shift to the use of manmade fibers has caused the portions of the industries associated with such fibers, notably chemical concerns, to assume a greater role within the industry. Second, there appears to be a trend toward greater concentration in the textile industry, with some of the larger firms becoming still larger, and some of the smaller firms going out of business. "4. Imports: Imports are rising at a faster rate than the sales of domestic producers. Nonetheless, overall imports of textile and apparel merchandise remain below 6% of total U.S. consumption of these articles. It should be noted, however, that in some categories, imports account for a substantially higher proportion of U.S. consumption. "5. U.S. Consumers: It appears that a substantial portion of the total apparel imports are in the form of low price merchandise. There is some indication that such items are purchased largely by low income groups, although this cannot be said with complete certainty. (See note on page 10.) To the extent that such imports are purchased by low income consumers, however, it is perhaps relevant to note that any import restrictions on them raise the price of such purchases, and would in effect operate as a tax on these low income consumers. "Finally, it may be relevant to note that the fiber producers, textile manufacturers, and apparel producers are related in such a way that Government programs designed to assist one group may have adverse effects upon others. For example, programs of assistance to cotton and wool producers may raise the raw material costs of the textile mills and make the mills less able to compete with foreign mills which have lower raw material costs. PAGENO="0131" 2437 Mr. DANIELS. I would like before concluding, however, to insert; a few things into the record so that our testimony can be complete. First, I would like to insert an article from the Textile World of May 1968 headlined, "Index Up 15 Points Over Year Ago," in which this trade journal, which is a leading publication in the field and cer- tainly one well respected by the domestic industry, points out that the textile industry is now producing and operating at peak capacity, that they are now at 96 percent of capacity, which is their preferred rate, and that they will break all previous records for production. I would also like to introduce from the same publication, however from the February 1968 issue, ,a survey of the outlook for 1968 in which this publication predicts a very remarkable year for the indus- try. I would also like to introduce what we have found most interesting reports by financial analysts on the textile industries. I would like to insert these as they appear, inserted into the Congressional Record by the Honorable Joseph D. Tydings, Senator from Maryland, with a speech and the reports. And finally, I do think that the committee would be interested in an article appearing in the Monthly Labor Review prepared by the ~Bureau of Labor Statistics, TJ.S. Department of Labor, entitled "Technology and Labor in the Textile Industry" which I think gives the lie to some of the arguments we have heard concerning employ- ment, the impact of imports, and the employment outlook for this industry. Mr. LANDRUM (presiding). Without objection they will be included at this point in the record. PAGENO="0132" 2438 {From Textile World, May 1968] ~d~x i~p f~f~r~ pc~°~°~ ov~ ~ ~ Textile industry activity contin- ued upward in March, reaching 164 on TW's exclusive Index of Textile Manufacturing Activity. Textile plant managers continue to operate at or close to their preferred rate of 96% of capacity. And with ship- ments running at more than a $20- billion rate (seasonally-adjusted), plant activity promises to stay strong. While the inventory-to-sales ratio picked up in February to 1.91, it remains below the 2.02 of a year ago and reflects a modest inventory build up before the seasonal tap- ering off of plant activity in the April-May period. All other major textile indicators pointed up in March. Hourly earn- ings rose to a record $2.17, with employment up to 969-million. By March, textile plant production was close to ten points above a year ago on the Federal Reserve Board's production index, well outpacing the gain of just over five points registered by the total U.S. pro- duction index for the same period. 0 National indicators also register- ed the healthy pace of the overall economy. The unemployment rate edged down to 3.6% from a Feb- ruary rate of 3.7%. A record num- ber of persons (74.5-million) was employed during March. Industrial production rose again for the third straight month, pushed by produc- tion advances in the major indus- trial sectors such as autos, iron and steel, and coal. The strong performance of all the major economic indicators closed out a first quarter that saw the Gross National Product increase $20-billion (annual rate) from the fourth quarter of 1967. J M M .1 S N 1965 ~n~cx of 1c: ~~mf~cturin~ Act~v~ (Man.haurs worked, adjusted for changes in productivity 39543 00) 170p - 166~- EstirncOa ~I~/'~2 j~f\/\\/~k~/J 042~- /" 1 Ff963 1964 // \ / July 123 Jon. 123 July 130 135 .-/~~`f V Aug. 126 Fob. 125 Aug. 134 Sept. 126 Mar. 128 Sept. 131 134( ~ 130 0 128 J 134 D 1 1261 Ill I (_LLI (11(511 1 I lIlt Ill It t tllJ J MMJ SN J MMJ SN J MM 1966 1967 1968 Source: McGraw-Hilt Department of Economics Latest Previous Year month month) 080 TEXTILE `,`OOSLD'S conTusion Index (chart above) .. 164 162 149 Employment (thousands)' 969.0 967.1 948.1 P,odsction h'/orkers (thousands)' 858.7 857.9 841.7 Weekly Eaeniegs (dollors)c 89.62 89.42 81.20 Hourly Enenings (dollars)' 2.17 2.16 2.02 Weekly Hours Worked' 41.3 41.4 40.2 Production Index (1957-1959=100)' 151.7° 146.9 141.7 Wholesale Price index (1957-1959=100)' 104.6 104.3 102.0 Wholesolo Price loden (1947-1949oo105)' 99.0 98.7 96.3 Maeofantuerrs' Soles (bilton $5' 17.12° 17.47 15.13 Manufacturers' lnvretories (billion $5' 32.64° 32.39 30.60 tnventonies-to-Soles Seem 1.91° 1.85 2.02 Stock Felon Index (1941-0943=100)' 81.68 83.21 70.10 Failures' 3 5 2 Operating Rote' 96.0 96.0 91.5 Seasonally Ad)ustod Tectile Shipments (billion $1) 20.5* 21.0 18.2 NATIONAL ECONOMIC INDICATORS Industrial Production (1957.1959=1001° 162.1 161.5 156.4 Consumer Pei,o loden (1957-l959oolOSl' 119.0° 118.6 114.8 Wholesale Felon ledeo (1957.1959=105)' 108.2 108.0 106.0 Civilien Populotion (millions)' 197.0 396.9 195.0 Unemployment (millions)' 2.9 3.3 3.0 Employmrnt (millions)' 74.5 74.1 72.6 Seasonally Adjusted Unemployment Rate (percent)' 3.6 3.7 3.7 Personal Income (billion $5)' 666.0 659.3 615.6 °Pebruory. Otherwise lotost month is March. tRevised. tAnnuot rate. 1. Eureou at Labor Statistics; 2. Federal Reserve Board: 3. Department of Com- merce; 4. Standard & Poor's; 5. Dun & Bradstrene; 6. Bureau of Census: 7. McGraw- Hill Department of Economics. PAGENO="0133" 2439 [From Textile World, February 1968] The Look of `68- Consumer vitality promises textiles a good year TEXTILE MANUFACTURING ACTIVITY will break new records this year - and the consumer will supply much of the impetus. After a modest decline in 1967 that interrupted six years of continuous growth, TEXTILE WORLD'S exclusive Index of Textile-Manufacturing Activity should reach 162-up 6% from last year. Strong consumer demand will spur the industry to a new record. Even if there is a tax hike, consumers will have CONSUMER TEXTILE CONSUMPTION ~ FOR NON DURABLES ( -~ r 2 C CO -4 -< NC NC 00CC) CQ O0~CO CO 0 -Ti C, -I 2 -4 >< -4 rn fl 00 CO 000 ONC ~ CO 3 00 NC CO NC 00(0 ~ 00CC) NC ~±~L ~ CC)C)C00CC) C)NC0000 -u PAGENO="0174" TABLE 12.-PRODUCTION AND IMPORTATION OF COTTON VERSUS PRODUCTION AND IMPORTATION OFMANMADEFIBERS, 1958-59-1966-67, BY NATIONS PRODUCING MANMADE FIBERS IN 1966 [In millions of pounds 1958-59 1961-62 1962-63 1963-64 1964-65 1965-66 1966-67 Percent change, ______________ ______________ ______________ _______________ 1958-59-1966-67 Produc- Im- Produc- Im- Produc- Im- Produc- Im- Produc- Im- Produc- rn- Produc- Im- Produc- Im- tion ports 1 tion ports 1 tion ports 1 tion ports 1 tion ports 1 tion ports 1 tioo ports tion ports 1 United States: Cotton 5, 752 68 7, 224 79 7, 460 69 7, 670 49 7,623 37 7, 460 49 4 930 37 -14. 3 -45. 6 Manmade fiber 1, 525 88 1, 846 46 2, 245 74 2, 505 132 2, 839 140 3, 304 142 3, 588 194 +135. 3 +120. 5 Other Americas: Cotton 2, 572 228 3, 165 337 3, 251 271 3, 128 387 3, 237 396 3, 376 431 2 924 372 +13. 7 +63. 2 Manmade fiber 301 53 360 76 387 83 415 77 486 96 536 122 558 124 j-85. 4 +134. 0 EEC: Cotton 18 1,891 13 2 124 9 2,182 13 2,311 11 1,963 11 2 102 6 2 161 -66.7 +14.3 Manmade fiber 1,371 82 1,755 154 1,982 218 2,213 271 2,466 314 2,479 369 2,662 472 +94.2 +475.6 EFTA: Cotton 914 925 955 1,060 - 971 916 850 -7.0 Manmade fiber 708 74 877 104 965 141 1,093 194 1,237 262 1,316 304 1,331 305 +88.0 +312.2 Other Western Europe: Cotton 655 231 958 179 1,024 8 1,033 37 1,085 92 1,110 165 1,291 103 +97.1 -55.4 Manmadefiber 117 22 122 25 148 42 168 64 175 71 172 91 179 133 +53.0 +504.5 Eastern Europe and mainland China: Cotton 7, 808 1, 595 5, 629 1, 652 5, 580 1, 895 6, 406 1, 970 6, 905 2, 096 7, 305 2, 031 7, 555 2, 056 -3. 2 +28. 9 Manmade fiber 991 227 1,309 213 1,417 211 1,513 3412 1,673 3470 1,844 3468 2,043 ~385 +106.2 Middle East and Africa: Cotton 1, 251 39 1, 123 73 1, 353 69 1, 352 72 1, 544 94 1, 629 86 1, 422 99 +13. 7 +153. 8 Manmade fiber 22 7 26 11 28 12 30 15 34 101 38 130 46 91 +109.1 +1,200.0 Japan: Cotton 1,268 1,428 1,547 1,590 1,716 1,546 178 +40.9 Manmade fiber 819 2 1,314 -27 1,339 -26 1,537 -14 1,816 -24 1,908 -42 2,102 -55 +156.7 India: Cotton 2, 110 196 2,038 336 2,475 375 2,625 279 2,460 375 2,300 228 2,300 300 +9. 0 +53. 0 Manmadefiber 65 31 109 45 134 41 151 47 176 31 187 20 203 12 +212.3 -61.3 Other Asia and Oceania: 4 Cotton 681 278 809 397 895 418 1,021 466 949 456 998 489 1,169 541 +71.7 +94.6 Manmade fiber 22 30 25 57 31 100 38 93 47 108 56 129 67 160 +204. 5 +433. 3 Total above: Cotton 20, 841 6, 708 20, 959 7, 530 22, 147 7, 789 23, 248 8, 221 23, 814 8, 196 24, 189 8, 043 21, 597 8, 305 +3. 6 +23. 8 Manmadefiber° 5,937 416 7,743 504 8,676 696 9,663 1,291 10,949 1,569 11,840 1,723 12,779 1,821 +115.2 -f-338.0 1 As given in the source, import data are adjusted to reflect the net foreign trade balance in spun Note: Cotton data are for crop year commencing Aug. 1 of 1st year stated in each heading. Manmade yarn. A minus sign indicates a net export surplus. See o. 96, Textile Organon, June 1967, notes a and b. fiber data are for calendar year 1st stated in each column heading. 2 Yugoslavia only; other Communist country imports not available. Source: Cotton data, International Cotton Advisory Committee, Cotton-World Statistics, October 3 Communist country imports are only those from the free world. 1967. Manmade fiber production data, Textile Organon, June issues 1962, 1967. Manmade fiber Pakistan production and import data not included, import data, Textile Organon, June issues, 1959, 1962-67. °Totals differ due to rounding and due to revisions of data for individual countries. PAGENO="0175" 2481 TABLE 13.-WORLD MANMADE FIBER PRODUCTION AND PRODUCING CAPACITY, BY REGION, 1958-68 [In millions of poundsi Eastern United Other Western Europe and Japan All World States Americas Europe mainland other total China Production: Average, 1958-60: Cellulosic 1,077 289 2,086 1,011 839 125 5,427 Noncellulosic 604 41 349 68 180 5 1,247 Total 1,681 330 2,435 1,079 1,019 130 6,674 1961: Cellulosic 1, 095 294 2, 195 1, 200 976 153 5, 913 Noncellulosic 751 66 559 109 338 7 1, 830 Total 1,846 360 2,754 1,309 1,314 160 7,743 1962: Cellulosic 1,272 301 2,332 1,272 936 183 6,296 Noncellulosic 973 86 763 145 403 10 2,380 Total 2,245 387 3,095 1,417 1,339 193 8,676 1963: Cellulosic 1, 349 310 2, 522 1, 334 1, 010 201 6, 726 Noncellulosic 1,156 105 952 179 527 18 2,937 Total 2,505 415 3,474 1,513 1,537 219 9,663 1964: Cellulosic 1, 432 349 2,709 1, 449 1, 061 228 7, 228 Noncellulosic 1, 407 137 1, 169 224 755 29 3, 721 Total 2,839 486 3,878 1,673 1,816 257 10,949 1965: Cellulosic 1, 527 356 2, 599 1, 545 1, 071 232 7, 330 Noncellulosic 1,777 180 1,368 299 837 49 4,510 Total 3,304 536 3,967 1,844 1,908 281 11,840 1966: Cellulosic 1,519 334 2,473 1,659 1,087 249 7,321 Noncellulosic 2,069 224 1,699 384 1,015 67 5,458 Total 3,588 558 4,172 2,043 2,102 316 12,779 Capacity, as of- March 1967: Cellulosic 1,717 413 3,112 1,853 1,269 300 8,664 Noncellulosic 3,117 366 2,479 483 1,178 99 7,722 Total 4, 834 779 5, 591 2, 336 2,447 399 16, 386 December 1968: Cellulosic 1,753 422 3,076 1,976 1,278 447 8,952 Noncellulosic 3,893 486 3,256 618 1,520 202 9,975 Total 5,646 908 6,332 2,594 2,798 649 18,927 As to total production or capacity: Percent change 1958-60/1966 +113. 4 +69. 1 +71. 3 +89. 3 +106. 3 +143. 1 +91. 5 Percent change 1966/1968 +57.4 +62.7, +51. 8 +27. 0 +33. 1 +105.4 +48. 1 Percentchangel958-60/1968 +235.9 +175.2 +160.0 +140.4 +174.6 +399.2 +183.6 Share of total(percent)- In 1958-60 25.2 4.9 36.5 16.2 15.3 1.9 100.0 In 1968 29.8 4.8 33.5 13.7 14.8 3.4 100.0 Source: Textile Organon, June 1965, June 1967. PAGENO="0176" TABLE 14.-U.S. BALANCE OF TRADE IN MAN-MADE FIBERS AND ALL OTHER TEXTILE MATERIALS, 1958-671 IDollar amounts in millionsi Percent 1958 1959 1960 Average 1961 1962 1963 1964 1965 1966 1967 change 1958-60 1958-60 to 1967 SITC 26, textile fibers: Imports $336. 8 $434. 4 $387. 8 $386. 3 $385. 0 $410. 5 $440. 3 $403. 8 $432. 6 $435. 9 $312. 4 -19. 1 Exports 762. 7 576. 7 1, 121.6 820.3 1, 011. 5 662. 8 723. 1 829. 7 617. 3 565. 8 592. 5 -27. 8 Balance of Trade +425. 9 +142. 3 +733. 8 +434. 0 +626. 5 +252. 3 +282. 8 +425. 9 +184. 7 +129.9 +280.1 35. 5 SITC 65, textile yarn, fabrics, madeup articles and related products: Imports 386. 9 490. 1 554. 7 477. 2 530. 0 654. 3 679. 8 683. 2 795. 2 901. 3 811.3 +70. 0 Exports 431. 8 448. 4 483. 2 454. 5 481. 8 494. 0 491. 3 581. 5 527. 8 554. 2 525. 8 +15. 7 Balance of Trade +44. 9 -41. 7 -71. 5 -22. 7 -48. 2 -160. 3 -188. 5 -101. 7 -267. 4 -347. 1 -285. 5 -1, 157. 7 ~ SITC 841, clothing (except fur clothing): Imports 175. 5 254. 2 292. 6 240. 8 268. 2 362. 7 390. 4 450. 1 537. 1 599. 1 654. 4 +171. 7 Exports 91. 3 91. 6 102. 3 95. 1 97. 8 85. 0 89. 8 98. 2 140. 4 160. 4 158. 1 +66. 2 Balance of Trade -84. 2 -162. 6 -190. 3 -145. 7 -170. 4 -277. 7 -300. 6 -351. 9 -396. 7 -438. 7 -496. 3 -240. 6 Total, all textile materials (SITC 26 + 65 + 841): Imports 899. 2 1, 178. 7 1,235. 1 1, 104. 3 1, 183. 2 1,427. 5 1, 510. 5 1,537. 1 1 764. 9 1 936.3 1 778. 1 +61. 0 Exports 1,285. 8 1, 116. 7 1,707. 1 1,369. 9 1,591. 1 1,241. 8 1,304. 2 1, 509. 4 1,285. 5 1,280. 4 1,276. 4 -6. 8 Balance of Trade +386. 6 -62. 0 +472. 0 +265. 6 +407. 9 -185. 7 -206. 3 -27. 7 -479. 4 -655. 9 -501. 7 -288. 9 I Annual rate based on January-November 1967 imports, and exports. Source: U.S. Department of Commerce, Bureau of the Census, Foreign Commerce and Navigation of the United States 1946-63 FT 125, December 1964, 1965, 1966; FT 135, November 1967; FT 410, 1964 annual, December 1~65, 1966, November 1967. PAGENO="0177" 2483 TABLE 15 1. U.S. FOREIGN TRADE IN PRODUCTS OF THE TEXTILE INDUSTRY un millions of pounds of fiber or fiber equivalenti Imports Exports Balance of trade Cotton Wool Man- made Total Cotton fiber Wool Man- made Total Cotton fiber Wool Man- made Total fiber 1960 252. 3 132. 1 105. 3 489. 7 233. 3 4. 7 200. 1 438. 1 -19. 0 -127. 4 +98. 4 -48. 0 1961 188. 9 127. 4 83. 6 399.9 239. 2 4. 5 203. 1 446. 8 +50. 3 -122. 9 +119. 5 +46. 9 1962 309. 8 145. 6 118. 2 573.6 220. 3 4. 4 243. 4 468. 1 -89. 5 -141. 2 +125. 2 -105. 5 1963 304. 3 152. 5 181. 4 638. 2 207. 8 5. 6 240. 7 454. 1 -96. 5 -146. 9 +59. 4 -184. 0 1964 300. 2 141. 1 208. 2 649. 5 213. 2 7. 0 276. 8 497. 0 -87. 0 -134. 1 +68. 7 -152. 4 1965 360. 6 156. 1 238. 3 755. 0 173. 8 15. 6 264. 1 453. 5 -186. 8 -140. 5 +25. 9 -301. 4 1966 507. 0 142. 9 335. 0 984. 9 189. 6 12. 7 297. 4 499. 7 -317. 4 -130. 2 -37. 5 -485. 1 1967 438. 5 121. 8 334. 0 894. 3 188. 4 10. 7 308. 0 506. 6 -250. 1 -111. 6 -26. 0 -387.7 Percent change 1960-67_ +73. 8 -7. 8 +217. 2 +82. 6 -19. 3 +127. 6 +53.9 +15. 6 Source: Textile Organon, April issues 1963-67, March1967, Textile Economics Bureau, Inc. 2. EMPLOYMENT EQUIVALENT 0 F FOREIGN TR ADE IN THE P RODUCTS OF THE TEXTILE INDUSTRY Total Employment equivalent of- Employment (thousands) Mill consumption (millions of pounds) employment per million pounds of mill consumption ~ Imports Exports at mill at mill consumption consumption pound pound equivalent equivalent ratio ratio Net balance of employment due to foreign trade 1960 2,228. 4 6, 486. 6 343. 4 168, 163 150, 444 -17,719 1961 2, 178. 9 6, 561. 0 332. 1 132, 807 148, 382 +15, 575 1962 2,242.7 7,042.1 318.5 182,692 149,090 -33,602 1963 2,250.2 7,246.1 310.5 198,130 140,998 -57,132 1964 2,281. 9 7, 782. 1 293. 2 190, 404 145,720 -44, 684 1965 2,376.4 8,494.7 279.7 ~11,455 126,844 -84,611 1966 2, 463. 2 9, 007. 5 273. 5 269, 343 136.668 -132,675 1967 2,436.6 8,976.5 271.4 242,713 137,491 -105,222 Source: Employment, U.S. Dept. of Labor, Bureau of Labor Statistics, "Employment and Earnings for the United States, 1909-66," October 1966; February 1967-February 1968 issues. Mill consumption, "Textile Organon," March 1967 for 1960-66; "Cotton Situation," October 1967 for 1967. Import and export data in pound equivalent, op. cit. supra, item 1 of this table. 95-159 0-68-pt. 6-12 PAGENO="0178" TABLE 16.-UNITED STATES, EEC, EFTA, JAPAN, EXPORTS OF TEXTILE MATERIALS, 1958-66 Un millions of pounds of fiber or fiber equivalentj United States EEC EFTA Japan Total fiber Textile Total products Total fiber Textile Total products Total fiber Textile I Total products Total fiber Textile Total products Average 1958 to 1960 2, 525. 1 344. 0 2, 869. 1 502. 0 1,762. 6 2, 264. 6 238. 0 446. 2 684. 2 2 67. 5 1 030. 6 1 098. 1 1961 2, 732. 2 327. 7 3, 059. 9 570. 1 2, 113. 3 2,683. 4 273. 7 551. 8 825. 5 155. 3 966. 6 1121. 9 1962 2,013. 2 312. 8 2,326. 0 676. 1 2, 163. 4 2, 839. 5 344. 9 744. 5 1, 089. 4 200. 2 1 009. 3 1 209. 5 f~ 1963 2, 129. 1 308. 6 2, 437. 7 779. 7 2,382. 4 3, 162. 1 393. 7 797. 7 1, 191. 4 232. 9 903. 5 1136. 4 4~ 1964 2,331. 7 325. 9 2,657. 6 755. 9 2,616. 6 3,372. 5 450. 6 847. 2 1, 297. 8 324. 2 1 064. 4 1 388. 6 1965 1,718.3 328.0 2,046.3 992.4 2,798.6 3,791.0 517.4 862.8 1,380.2 439.9 1 084.8 1524.7 1966 2, 260. 1 347. 7 2,607. 8 1, 117. 8 2,959. 6 4, 077. 4 541. 8 895. 2 1, 437. 0 512. 0 1,224. 4 1, 736. 4 Percent change 1958 to 1960 and 1966 - - -10. 5 +1. 1 -9.2 +122. 4 +67. 9 +80. 0 +127. 6 +100.6 +110. 0 +658. 5 +18. 8 +58. 1 `Generally does not include exports of United Kingdom, see notes to Appendix table 18, infra. Note: Total fiber exports of EEC, EFTA, and Japan composed exclusively of man-made fibers. 2 Does not include exports of spun yarn. Source: Appendix tables 17 and 18, infra. PAGENO="0179" TABLE 17.-UNITED STATES. EEC, EFTA, JAPAN, FOREIGN FREE WORLD FIBER EXPORTS 1958-66 [In millions of poundsi Foreign fre e world (ex clusive Uni ted States) United States EEC EFTA Japan Cotton 1 Wool 2 Man- Made Total Cotton Wool Man- Total Cot- Wool Man- Total Cot- Wool Man- Total Cot- Wool Man- Total Made ton Made ton Made ton Made Average: 1958-60 3 5254 28170 8662 72086 24289 1 9 943 2525 1 5020 502 0 2380 2380 367 5 ~67 5 1961 3,752.7 3,871.0 1,036.0 7,942.7 2,599.9 .3 132.0 -2,732.2 -~ 570.1 - 570.1 273.7 273.7 155.3 155.3 1962 4,171.6 3,110.0 -1,272.5 8,554.1 1,852.2 .1 160.9 2,013.2 676.1 676.1 344.9 344.9 200.2 200.2 1963 4 666 7 3 099 0 1 489 0 9 254 7 2 008 6 2 120 3 2 129 1 779 7 779 7 393 7 393 7 232 9 232 9 1964 4, 594. 5 2,898. 0 1,610. 0 9, 102. 5 2, 175. 0 . 1 156. 6 2,331. 7 755. 9 755. 9 450. 6 450. 6 324. 2 324. 2 ~ 1965 4, 827. 1 3, 139. 0 1,985. 7 9,951. 9 1, 577. 6 . 6 140. 1 1,718. 3 992. 4 992. 4 517. 4 517. 4 439. 9 439. 9 1966 44,7453 3,209.0 2,182.8 10,137.5 2 108.8 .1 151.2 2 260.1 1,117.8 1,117.8 541.8 541.8 512.0 512.0 Percent Change, 1958-60/1966 +34.6 +11.9 +152.0 +40.6 -13.2 +60.3 -10.5 +122.4 +122.4 +127.6 +127.6 +658.5 +658.5 I Annual rate equals average of cotton crop year reportings terminating and commencing during Source: Manmade fiburs, Textile Economomics Bureau ,"Textile Organon." Cotton, International calendar year. Cotton Advisory Committee, "World Cotton Statistics." Wool, U.S. Department of Agriculture, "Wool 2 Represents exports of major free world wool exporting countries (1966 exports represent 1965 Statistics and Related Data." exports adjusted proportionately to 1966 wool production). . ,, . . 3 Average 60 does not include exports of spun yarn. Note: Foreign free worldS exc!udes USSR, Poland, Bulgaria, Rumania, Czechoslovakia, 4 1966-67 cotton crop year. Hungary, East Germany, Albania, China (mainland), North Korea, North Vietnam, Cuba, and Yugo- slavia. PAGENO="0180" TABLE 18.-EXPORTS BY UNITED STATES, EEC, EFTA, AND JAPAN, TEXTILE PRODUCTS, 1958-66 (In millions of pounds of fiber equivalentj United States total textile products EEC EFTA Japan Total EEC, EFTA, and Japan Textile products T -~ extile products T extile products . Textile products - Apparel (SITC 841) Other Total Apoarel Other Total Apparel Other Total Apparel Other (SITC 65) (SITC 841) (SITC 65) (SITC 841) (SITC 65) (SITC 841) (SITC 65) Total Average: 1958-60 344.0 91.4 1,671.2 1,762.6 8.4 437.8 446.2 114.9 915.7 1,030.6 214.7 3,024.7 3,239.4 1961 327.7 121.5 1,991.8 2,113.3 17.4 534.4 551.8 105.2 861.4 966.6 244.1 3,387.6 3,631.7 1962 312. 8 131. 1 2, 032. 3 2, 163. 4 20. 8 723. 7 744. 5 106. 2 903. 1 1, 009. 3 258. 1 3,659. 1 3,917. 2 1963 308.6 154.7 2,227.7 2,382.4 27.5 770.2 797.7 112.7 790.8 903.5 294.9 3,788.7 4,083.6 1964 325. 9 170. 4 2, 446. 2 2, 616. 6 34. 1 813. 1 847. 2 134. 5 929. 9 1, 064. 4 339. 0 4, 189. 2 4, 528. 2 1965 328. 0 193. 4 2,605. 2 2, 798. 6 37. 3 825. 5 862. 8 147. 5 937. 3 1,084. 8 378. 2 4,368. 0 4,746. 2 1966 347. 7 216. 5 2,743. 1 2,959. 6 43. 3 851. 9 895. 2 157. 0 1, 067. 4 1, 224. 4 416. 8 4, 662. 4 5, 079. 2 Percent of change, 1958-GO to 1966 +1. 1 +136. 9 +64. 1 +67. 9 +415. 5 +94. 6 +100. 6 +36. 6 +16. 6 +18. 8 +94. 1 +54. 1 +56. 8 Source: U.S.: Department of Agriculture, Cotton Situation, Wool Statistics. EEC, EFTA, JAPAN: 65 for the United Kingdom includes only STIC 651, 652 and 657. Aggregate for both SITC 65 and 841 United Nations and OECD Export Trade Data Aggregate for SITC 65 and 841 above represents all does not include exports of various commodities at the 4-digit level for which no quantity data is published export data available at all three and four digit SITC grou'lng levels. Data published for published These movements generally represent movements of less than $1,000,000 in value and EFTA SITC 841 consistently excludes quantity data for the United Kingdom and Norway. Also, SITC would therefore represent relatively insignificant quantity movements. PAGENO="0181" 2487 TABLE 19.-EXAMPLES OF NONTARIFF BARRIERS AND EXPORT INCENTIVE PROGRAMS BY COUNTRY : ~ International agreements or treaties ~ Quotas Import licenses Consular fees, import sur- charges, prior deposit re- quirements, and mis- cellaneous Export incentives Western Europe: Austria Belgium Benelux x x x Denmark x x x x Finland France x x x x x Germany-West x x x Greece Italy x x x Netherlands Portugal Spain Sweden x x x Switzerland Turkey United Kingdom x x x x Far East and SoutheastAsia: Australia x Ceylon India x Indonesia Japan Laos Malaysia New Zealand Pakistan x x x Philippines Taiwan Thailand Vietnam MIDDLE EAST AND AFRICA: Algeria X Iran X X Israel Lebanon x Morocco X X South Africa x SOUTH AND CENTRAL AMERICA AND MEXICO: Argentina X X Bolivia X Brazil X X X Central America Common Market X Chile X X X X Colombia X X X Costa Rica x Ecuador x El Salvador X Guatemala X Jamaica x Mexico X X Peru x Trinidad x Uruguay X~~_ X Venezuela x Source: Member companies-Man-made Fiber Producers Association, Inc. PAGENO="0182" 2488 TABLE 20.-COTTON AND WOOL SPINNING SPINDLES AND LOOMS, UNITED STATES, SELECTED COUNTRIES, AND WORLD TOTAL, 1952, 1965 Cotton system spining spindles Number Percent of Cotton looms Wool spinning spindles Wool looms Number Percent of Number Percent of Number Percent of (thou- total sands) (units) total (thou- total sands) (units) total United States: 1952 23,226 21.6 398,501 14.8 2,818 14.7 31,855 12.3 1965 19, 363 14. 8 285, 000 10. 5 1, 223 8. 9 13, 723 7. 2 Percent change -16.6 -28. 5 -56. 6 -56. 9 Other Americas: 1952 7, 149 6. 6 203, 096 7. 5 643 3. 4 9, 029 3. 5 1965 9, 067 6. 9 214, 001 7. 9 528 3. 8 10, 918 5. 8 EEC.Percent change +26.8 +5.4 -17.9 +20.9 1952 21,481 20. 0 512, 359 19. 0 6, 577 34. 4 99, 380 38. 5 1965 16, 057 12. 3 293, 613 10. 9 4, 579 33. 2 55, 661 29. 3 Percent change -25. 3 -42. 7 -30. 4 -44. 0 E.F.T.A.: 1952... 13,902 12.9 424,794 15.8 6,109 31.9 78,794 30.5 1965 7, 680 5. 9 190,955 7. 1 4, 435 32. 2 47, 588 25. 1 Percentchange -44.8 -55.0 -27.4 -39.6 Other Western Europe: 1952 3,091 2.9 85,428 3.2 679 3.5 10,322 4.0 1965 4,293 3.3 99,361 3.7 639 4.6 10,660 5.6 Percentchange +38.9 +16.3 -5.9 +3.3 Eastern Europe and mainland China: 1952 17,709 16.5 505,755 18.8 102 .5 1,921 .7 1965 33,092 25.4 760,194 28.1 97 .7 8,686 4.6 Percentchange +86.9 +50.3 -4.9 +352.2 Middle East and Africa: 1952 1,042 1. 0 25, 526 . 9 (-) (-) 1965 3,663 2.9 79,945 3.0 119 .9 2,351 1.2 Percentchange +251.5 +213.2 (+) (+) Japan: 1952 6,942 6. 5 290, 193 10. 8 1, 539 8. 0 19,755 7. 7 1965 12,728 9.8 396,988 14.7 1,510 11.0 33,049 17.4 Percentchange +83.3 +36.8 -1.9 +67.3 India: 1952 10,980 10.2 198,473 7.4 142 .7 (-) (-) 1965 15,880 12.2 209,005 7.7 213 1.5 2,276 1.2 Percent change +44.6 +5.3 +50.0 (+) Other Asia and Oceania: 1952 1,124 1.0 18,085 .7 538 2.8 7,041 2.7 1965 6,414 4.9 138,673 5.1 436 3.2 4,881 2.6 Percent change +470. 6 +66. 8 -18. 9 -30. 7 Total above: 1952 106,646 99.2 2,661,210 98.9 19,137 99.9 258,097 99.9 1965 128,237 98.3 2,667,735 98.7 13,779 100.0 189,793 100.0 Percent change +20. 2 +0. 2 -28. 0 -26. 5 World total: 1952 107,598 100.0 2,693,125 100.0 1965 130,495 100.0 2,703,535 100.0 Percentchange +21.3 +0.4 Source: United Nations, Statistical Yearbook, 1966. Note: As explained in the source, data were not available for certain countries for the years 1952 or 1965, in which event data for the year closest to the year in question were used. PAGENO="0183" 2489 TABLE 21-MANMADE FIBER PRODUCTION, AN INTEGRAL PART OF THE U.S. TEXTILE INDUSTRY Manmade fibers ~ Apparel and Textile mill other products textile products Total textile industry Percent man- made fibers of total Employment, March 1968 (in thousands~_ Value added by manufacture, 1966 (in millions) Exenditures for new plant and equip- ment, 1966 (in millions) Research and development, 1966 (in millions) Sales, 1966 (in millions) Research and development as percent of sales, 1966 104. 9 $1,852.2 $474. 0 ~ $134. 5 $2, 915. 9 ~ 4. 6 967. 9 1, 404. 2 $8,028.4 $9,220.5 $887. 3 $205.8 2, 477. 0 4. 2 ` $19,101.1 9.7 $1, 567. 1 30. 2 $176. 5 76. 2 $42, 486. 8 6. 9 0. 4 $42. 0 $39, 570. 9 0. 1 Source: Employment: U.S. Department of Labor, Bureau of Labor Statistics, "Employment and Earnings and Monthly Report on the Labor Force," May 1968. Value added, expenditures for new plant and equipment, and sales: U.S. Depart- ment of Commerce, Bureau of the Census, "Aiinual Survey of Manufactures," 1966. Research and development: National Science Foundation, "Research and Development in Industry," 1966, January, 1968, table 2; manmade fibers, Textile Economics Bureau, Inc. Mr. LANDRUM. Thank you, Mr. Broun. Mr. Stewart, do you have a statement? Mr. BROtTN. Mr. Stewart, as I said at the outset, is counsel for our association. We have worked together in preparation for this ap- pearance and I have therefore asked him to be here for the purpose of answering any questions the committee may have. Mr. LANDRUM. Mr. TJtt. Mr. Urr. Mr. Chairman, I have one question. That is in this man- made fiber do you include glass fiber? Mr. BROUN. Manmade fiber is a concept which does include glass fibers but in the definition I gave it was not included because itso hap- pens that no glass fiber maker is a member of our association. Mr. LANDRUM. Any further questions? I want to ask one question on this credit for foreign border taxes, recommendation number two on page 17. Is that to be interpreted that we would get into the subsidy business the same as we discussed in earlier, testimony `here that foreign govern- ments are doing for their exporters? Mr. BROUN. Well, not having heard the testimony to which you refer, I can't answer that categorically. What I have said is that for- eign border taxes paid on behalf of the U.S. exporters should be al- lowed as a direct credit against their income tax liability, and that of course would tend to reduce their income tax liability and alleviate them to that extent of the burden of those taxes. Whether that was the tax to which you have reference I don't know. Do you wish to add something to that, Mr. Stewart? Mr. STEWART. If I may supplement, Mr. Landrum, there is a dis- tinction between the proposal that the United States subsidize its exports by remission of its own taxes and this proposal which would allow a tax credit to a U.S. exporter in respect to foreign border taxes that had to be paid to get his goods into that country. In this sense we are not subsidizing our exports by remission of our taxes, but we are recognizing that a foreign country's border taxes are a barrier to our getting into that country and by this method of a tax credit we have a system, as it were, of automatic countervailing measures to offset their unfair border taxes. PAGENO="0184" 2490 There is that very important distinction. Mr. LANDRUM. I think that clarifies it. Mr. Burke? Mr. Bui~. No questions. Mr. LANDRUM. Gentlemen, for the committee let me thank you for this very complete statement, particularly for the recommendations with regard to the import quota bills and the recommendations in relation to the Trade Expansion Act~. Mr. BROUN. Thank you, Mr. Chairman, for the opportunity to appear. Mr. BURKE (presiding). Mr. Masaoka is the next witness. Will you identify yourself for the record please? STATEMENT OP MIKE M. MASAOKA, WASHINGTON REPRESENT- ATIVE, ASSOCIATION ON JAPANESE TEXTILE IMPORTS, INC. Mr. MASAOKA. Mr. Chairman and members of the committee, my name is Mike Masaoka, Washington representative for the Associa- tion on Japanese Textile Imports, Inc. I have a rather voluminous statement, Mr. Chairman, which I would like to submit for the record. Mr. BURKE. If you care to you could submit what part you want and leave the other out. We will include the entire statement. Mr. MASAOKA. I would like to have the entire statement included, Mr. Chairman, for this reason. The domestic industry made quite a presentation and one of its targets, directly or indirectly, was Japan and I think for the sake of those who would like to read the testimony it would be useful to have the complete record as we would submit it, sir. Mr. BURKE. I know there will be a great deal of interest in your statement and I imagine every member of the committee will read the entire statement. Mr. MASAOKA. Thank you, sir. Rather than going through the state- ment or a summary, perhaps I can discuss the testimony this morning and try to put it in perspective as we see it. As the representatives for the American Importers Association pointed out, the domestic industry made a great plea on the basis of increased imports and they did not relate this increase in imports to the tremendous profitability which the domestic industry has enjoyed. During the past 10 years, as a matter of fact, according to various Wall Street brokers and others in the investment business, the domestic textile industry has enjoyed its golden decade and, strangely enough, or perhaps because of that, the American imports of textiles also increased, and for a considerable portion of our testimony we discuss the specific factors regarding the increases in the prosperity of the American industry. Now, we grant, as pointed out by a witness, that there is a differ- ence between the textile industry lagging behind other industries, but during the last ten years, Mr. Chairman, this gap has been nar- rowing and, as the Tariff Commission has pointed out time and time again, it is a question of the impact of selective imports, not the over- all imports. For example, let us put the question in reverse. Today 85 percent of the Japanese soybean market is controlled by the United States. PAGENO="0185" 2491 Japan can grow its own soybeans, but they prefer to buy them from the United States because to them it economically makes sense. At one time, Mr. Chairman and members of the committee, as you know, Japan grew her own raw cotton but she found that this was not to her economic advantage and so she began to buy a hundred years ago from these United States. In not only agricultural prodñcts does America enjoy a tremendous share of the Japanese market but 84 percent of Japan's electrical im- ports are from the United States, 47 percent of the chemicals, another great Japanese production, 39 percent of its production in petroleum, from the United States. Now, who are we to say that the share which the Japanese may consider disproportionate on the part of the United States is an un- fair share for America, because, gentlemen, as you know, there are economic factors and the harsh realities of economics that go through- out the world and these are the factors, gentlemen, that dictate what imports will come in and what will not. Beyond that in an industry, as a domestic industry pointed out, with almost 35,000 different units there are bound to be weak sectors and there are bound to be strong sectors so why should we impose an overall import quota on all of them? For example, does the Japanese kimona compete with an American garment? Does a Japanese rug èompete with Axminster? No. Jap- anese imports come in and compete with certain kinds of imports here in the United States and thus when we consider the impact of imports, as the U.S. Tariff Commission has declared on more than two occasions, the impact is seleètive. This is why in certain areas imports are large and in other areas small, for if the impact were overall then how does the American industry explain the fact that they ,are making more money now than they ever have. Let's even look at the statistics. From the year 1966 to 1967-1966 was a peak year for American production as well as imports-by 1967 for reasons already explained imports dropped 58.3 million pounds, just imports, mind you. In the same year domestic production, which is so much bigger than imports, dropped only 24.7 million pounds or about half of the import loss. Certainly the impact is not overall. During the period 1958 to 1967 imports increased only 482.3 million pounds, that's all, to take per- haps 7', 8, or even 9 percent of American consumption. During the same period the American production of textiles jumped 50 percent or by more than 3 billion pounds. We aggree with the gentlemen of the domestic industry. The American industry is prob- ably the most efficient in the world for most of its sectors and in those sectors, relatively few, that are having difficulties the administration bill provides certain kinds of selective assistance for adjustments. Beyond that if a large group is concerned we have a tariff com- mission escape clause and other provisions, but the important point to remember is imports are selective in terms of the impact upon the United States and to require all the American people to pay for the subsidy of the total industry when only a few are affected we think is PAGENO="0186" 2492 a difficult thing to ask when our country is faced with its problems in terms of appropriations for the great urban programs which we have. In 1967, gentlemen, the imports and production in the United States decreased, but American exports of textiles increased by 7.8 percent and the biggest increases, incidentally, were in the man-made fabric field. Now, there is much more I could say about the total impact but let us try to keep this picture in perspective. We cannot take the textile industry and its statistics in isolation. We have to take it in connection with all other imports and all other exports of the United States. Otherwise we do serious damage to our country. And of all the sectors in the American textile industry the manmade fiber sector is the most efficient, t.he most productive, the most profitable, and the least eligible for requests for import quotas. As of January 1958, for example, we understand that establishments producing manmade fibers employed only about 4 percent of the textile work force, yet accounted for about 7 percent of the value of sales within the complex and almost 10 percent of the value added by manufacture. Expenditures for new plant and equipment amounted to about 30 percent of that expended by the entire textile industry while the amount spent for research and development was about 76 percent of that spent by the total industry. Wages paid to its workers were higher on the average than that paid to the average textile employee and even higher than for the average nondurable goods industries, except ordnances and accessories, metals, nonelectrical machinery, and transportation equipment. Mr. Chairman, there are some interesting statistics here which we would like to recite regarding the manmade fiber industry, and all due credit to them, because here in this country as well as in Japan and elsewhere the manmade fiber is the new technological development in the textile industry and this is where the great competition has come in the past 10 years in the United States, not between the piddling little imports and the mammoutli American industry, but between the tre- mendous upsurge of the manmade fiber industry within the American industry, and as we document on various pages beginning on page 61 this is the fact. For example, imports from 1964 to 1966 increased at a rather fast pace but from 1966 to 1967 they decreased by approximately 5,000 pounds. Exports, on the other hand, have risen steadily since 1964 and between 1966 and 1967 when all other textiles were declining, exports of the American manmade fiber industry increased by 31/2 percent. Now, as far as Japan is concerned we have heard so much that would suggest that Japan targets her textile imports to the United States. The fact is that less than 26 percent of Japan's textile exports in total are shipped to the United States, and yet this relatively one-quarter of her total output for export generates enough dollars with which she buys so much in the way of American goods. - Now, as far as the total imports in Japan are concerned in 1965 m terms of thousands of pounds 39,120,000 pounds, in 1966 44,865,000 pounds, and yet in this one year period from 1966 to 1967 the imports from Japan dropped down to 26,693,000 pounds, which we submit is a substantial loss. PAGENO="0187" 2493 Now, during this same period the U.S. mill consumption of all fibers, cotton decreased 41/2 percent, wool decreased 16 percent, but man-made fibers went up 6 percent. The capacity of the United States to produce manmade fibers from 1958 to 1960 increased in the United States from 1958-60 to 1968 by 236 percent and in Japan by only 175 percent, so that the margin that started some 8 years ago has been extended even further to the ad- vantage of the American industry. Finally, I have some statistics here and I would like to point out that in terms of broad woven fabrics, which is one of the indica- tions of the prosperity of tile textile industry, manmade fibers has taken over and is rapidly taking up 50 percent of the entire fiber used in textiles. This we think is an indication again just as there are fibers within the textile industry that do better than other fibers, so there are plants and little different kinds of productions within this giant industry that do better than the others, and we think that in a country such as ours we ought tO do our best to upgrade competitive- ness of individual workers and of industries rather than trying to subsidize and permit sheltering of the weak and inefficient. This morning a great question, was raised about possible retaliation and tile opinion of tile witness from tile domestic industry was there would be no retaliation. May I refer you to the testimony of Secretary of Agriculture Free- man last week? As I recall he specifically stated that he heard from Japanese and other sources that if America had to impose these im- port restrictions Japan and other countries would not necessarily retaliate because they wanted to, but because they would be forced to. Let's take, for example, Japanese purchases of soybeans, $207 mil- lion, raw cotton $118 million, wheat $141 million, tobacco $28 million, skins and hides over $200 million, then industrial machinery which she buys from the United States $413 million, home and other appliances and apparatus $130 million, aircraft and other transport $39 million, iron and steel scrap $174 million, petroleum products $78 million, coal and coke $131 million, chemicals $227 million. I could go down the list. In other words, if Japan is unable with the use of textiles which don't compete across the board to~ generate money with which to buy these goods, and every one of the goods that I mentioned is available to Japan from other sources and in some instances at a cheaper rate than they can buy from the United States and yet Japan continues to buy such large amounts from America in part because she is ~ratefu1 for the opportunity to be able to sell her-thus in terms of interna- tional relations this is a two-way street. Some comment has been made about the long-term textile arrange- ment and whether this was a proper way to extend in the future. We don't think so. Why? Because under the long-term textile arrangement a structuring of the various products that can come into this country was done in such a way that for 11 years, for example, in only one out of 11 years was Japan able to fill her fabrics quota and only three out of 11 years was Japan able to reach her made-up goods quota. Yet we say that this is a wonderful arrangement. Japan at one time enjoyed 70 percent of the import, market for textile in the United States. Today she enjoys less than 17 percent. Yet Japan was a country that voluntarily started this because she felt that she was going to help the United States out of a temporary PAGENO="0188" 2494 situation which has developed into a permanent long-term textile arrangement. Already half of the imports into the United States or approximately that, from Japan are under the Long-Term Arrangement or the bi- lateral. This leaves wool and man-mades. We have already indicated that the man-made sector in this country of all sectors isn't entitled to this kind of protective sanctuary, if you will, from import competition and as far as the present bills which are before this committee are con- cerned we think that they will invite retaliation because, well, let me put it this way, and I want to be very frank with you gentlemen be- cause I think this kind of decision on the part of this important com- mittee is most vital to the future of the United States. In this legislation is written a proviso that the President can negoti- ate bilateral arrangements but it must be done within a certain period. Is this true negotiation? This is like putting a pistol to the head of the man and saying, "If you do not capitulate to our terms there are even more serious consequences." And what are some of these more serious consequences? These figures may not be exact, Mr. Chairman. We did a rough estimate of what would happen to manmade fiber imports in the United States, for example, if we use that 6-year average period from 1961 to 1966 that is a part of the major textile import quota bills pending before this committee and again because manmade fiber tex- tiles are somewhat relatively new in the market and since they weren't such a factor in 1961 to 1966 period let's see what happens and then I wonder if you, representing another country, for example, will say that these reductions are not so large that you would have to consider some kind of compensation or retaliation. In manmade fiber imports there would be about a 26 percent reduc- tion, with Japan losing about 6 million pounds. In manmade fiber yarns there would be about a 63 percent loss in imports with Japan losing more than 2 million pounds. In manmade fiber fabrics there would be a 33 percent decrease in imports from all sources with Japan losing about 51 million pounds and on manmade fiber textiles of made- up goods there would be a reduction of about 48 percent on all imports from all countries. On manmade fiber knitted goods there would be a cut of some 48 percent and on manmade fiber wearing apparels the reduction would amount to about 68 percent and on manmade floor coverings the drop would be in the range of about 66 percent. We have taken some individual products from Japan. For example, in manmade dress shirts, nonknit, the imports would be reduced by about 87 percent and Japan's reduction would be 83 percent. I have given you a tabulation of these which I won't go into further but I do think, again admitting that there may be some error in this calcula- tion, that the committee should give careful thought to just how these particular averages work out because unless we are very, very careful we may find in the long run that we have created a difficult situation which was never anticipated. For example, why should textiles that are not manufactured in the United States be placed under quota? Like a Japanese kimono, or yukata cloth. Why should certain items that are brought in, like permanent press, to fill a demand that couldn't be satisfied by the American mills be placed under a quota? PAGENO="0189" 2495 And during our recent emergency when we had to open up the LTA to allow certain yarns and certain fabrics to come in should these be placed under quota if they can be helpful to our military? I could go through a list where certain management decisions were made by the United States to go Qut of certain lines. These are the cheaper, less expensive cloths, and so on and the Japanese importer brought clothes in so that the poOr and disadvantaged could get some- thing to wear. Why should things like this where American management made a decision for greater profit be penalized to the disadvantage of our poor? These indicate I think gentlemen, that impacts of imports are selective. They are not general. These indicate that most textiles do not need to be placed under quota because they are not competitive here in the United States. As a matter of fact, we made one proposition to the Trade Informa- tion Council which we would like to suggest to the committee. Since overall import quotas of t:his type are a tax upon all the American peo- ple and since they may invite some kind of retaliation which could be very difficult for America to surmount if the long-term arrangement is to be continued or if other import quotas are `to be imposed not on textiles, but on any product, we believe that the Government has the responsibility to the people of the Uni'ted States, the taxpayers ,and the citizens, to oversee the production, the management, the opera'tion, of that industry, and the companies to see that they do not violate the public trust which is inherent in the imposition of an import quota. Thus, gentlemen, if I may `briefly summarize, we believe `that the economic facts do not justify an overall import quota on all textiles. We do not believe that our country's best interest or the best interes't of our national security or of even `the textile industry itself is served and we suggest `that if there are any selective difficulties with industry the administration bill and existing law will take care of those problems. Thank you, Mr. Chairman. (Mr. Masaoka's prepared statement follows:) STATEMENT OF MIKE M. MASAOKA, WASHINGTON REPRESENTATIVE, ASSOCIATION ON JAPANESE TEXTILE IMPORTS, INC. INTRODUCTORY COMMENTS My name is Mike M. Masaoka, WaShington Representative for the Association on Japanese Textile Imports, Inc., a New York trade association headquartered at 551 Fifth Avenue whose members handle more than 70% of all Japanese tex- tiles exported to the United States. On behalf of its members, may we express our appreciation for this opportunity to appear before this Committee and to express our views regarding pending trade legislation. Admittedly, we have a vested interest in the promotion of textile imports, for Japanese textile exports to the United States in 1966 amounted to $420 million and in 1967 to $347 million. Nevertheless, we believe that a freer, nondiscrimina- tory trade policy for the United States, not only for textiles but for all other products, is clearly in the national and international self-interest. For the net trade balance has always been in our favor since the end of World War II, not to mention the economic stimuli that competitive imports provide the American consumer and industry. Accordingly, we endorse and urge the enactment, with certain amendments if possible, of the so-called Administration's trade package, H.R. 17551, the Trade Expansion Act of 1968, "To continue the expansion of international trade and thereby promote the general welfare of the United States, and for other pur- PAGENO="0190" 2496 poses," introduced on May 28, 1968, by Chairman Mills of this Committee, as another significant forward step in the direction of freer, nondiscriminatory trade. At the same time, we must express our most vigorous opposition to the general and specific import quota bills and other protectionist measures pending before the Congress at this time. Since economic isolationism and trade protectionism encourage reciprocal actions, as the world's greatest trading nation the United States would have by far the most to suffer and to lose in any trade war. As far as Japan is concerned, for example, we understand the several specific quota bills for electronic products, steel, lead and zinc, meat and meat products, groundfish, textiles, hardwood plywood, petroleum articles, and footwear, would seriously jeopardize some 44% of the nearly $3 billion exported to the United States last year. An across-the-board, comprehensive omnibus general import quota statute, moreover, would substantially threaten all Japanese exports to this country. On the other side of the coin, such drastic reduction in Japan's ability to earn the dollars with which to continue to be America's biggest overseas cash cus- tomer might well result in a loss of most of the more than $2.7 billion in pur- chases made in 1967, much of it in agricultural goods that are readily available in other countries, often at lower prices than in the United States, such as raw cotton, wheat, soybeans, tobacco, and even hides and skins and logs and lumber. And Japanese imports from this country are not confined to the output of our lands and farms; they include office and industrial machinery, home and other appliances and apparatus, aircraft and other transport equipment, iron and steel scrap, petroleum products, coal and coke, chemicals, scientific instruments, and most other American manufacturers. Thus, it would be particularly ironic if the imposition of import quotas on $347 million of Japanese textiles resulted in the loss of $865 million in American exports of agricultural products, for the huge United States textile combine is enjoying unprecedented prosperity and production, while looking forward to even increased profits and output. In any event, because of the limitations of time and space, we shall concentrate our attention on pending legislation in terms of the textile trade, though our statement and testimony will apply generally to international commercial prin- ciples, policies, and practices. And, because we are specifically concerned with Japanese textiles, we are in- debted to the following Japanese textile associations for certain facts, data, and information which we secured for the consideration of this Committee: The Japan Spinners' Association, The Japan Cotton Textile Exporters' Association, The Japan Textile Products Exporters' Association, and The Japan Silk and Synthetic Textile Exporters' Association, all of Osaka, and The Japan Chemical Fibers Association of Tokyo and the Japan Silk Association of Yokohama. FOR ADMINISTRATION TRADE BILL Bifl's Purpose As advocates of freer, nondiscriminatory trade in textiles and other merchan- dise, we believe that the specific purposes of the Administration's trade expan- sion bill, as stated in Section 101 of the proposed H.R. 17551, are most worth- while and vital to our national progress: (1) "to continue and strengthen the trade agreements program of the United States", (2) "to establish a viable pro- gram of adjustment assistance for firms and workers affected by imports", and (3) "to promote the reduction or elimination of nontariff barriers to trade". To implement these praiseworthy objectives, the bill provides (a) that the President's authority to enter into trade agreements with foreign countries be extended to July 1, 1970, (b) that the criteria and the procedures for adjustment assistance for individual companies and workers be liberalized and modified, and (c) that the American Selling Price (ASP) system of customs valuation be abolished. Proposed Amefldments To better assure freer, nondiscriminatory trade, we would urge that the Ad- ministration's trade bill be amended to include at least the following provisions: (1) Authorize the Tariff Commission to accept and consider applications for escape clause and other import relief for individual, single products, and not for a range of products. (2) Direct the Tariff Commission, or some other appropriate agency, to closely observe the management and the operations of any industry or company author- PAGENO="0191" 2497 ized escape clause or other import relief to insure that the special privileges accorded will not be abused to the public detriment. (3) Limit any special import relief to not more than five years, with the understanding that if, prior to that five year period, conditions in that industry or company so improve the import benefits will be withdrawn or cancelled. We urge these amendments out of Our experience with textile imports and out of our belief that, in order to meaningfully promote freer, nondiscriminatory trade, unjustified and unwarranted appeals for import relief should be discouraged. We believe, for instance, that all textile imports do not have an adverse impact on the totality of the vast American textile combine, with its 33,000 mills and plants in 45 States. Take cotton typewriter ribbon cloth as a case in point. Imports from Japan are under bilateral restraint, and domestic production of this specialized fabric is substantially by one company. Or, to ask a question: How can Japanese tubular rug imports affect the American production of miniskirts? On the other hand, under certain conditions, in certain times, it is possible that certain textile imports might have a selective influence on certain United States competition. If this is so, the investigation should be on an individual product basis, and, if an import remedy is called for, granted on an individual product basis. Such a procedure seems more reasonable and equitable than pro- viding protectionism to many who may not produce the similar article or a directly competitive one. Then, if an industry or a company is provided with protective relief, since such a benefit is at the expense of the national purpose, that favored entity is obligated at least to the government and the consumers to try to update and modernize his operations and to bring about more efficient and economic produc- tion. Import protection, we hold, should not be abused to shelter or subsidize the obsolete, the uncompetitive, the badly managed. Constant surveillance by federal authorities-of the books, of the planning, of the operations-should help insure that the public trust implicit in such import protection is not violated. Finally, if an industry or company cannot adjust within a five year period to compete with imports, it would seem that such an industry or company is not the type that is economically advantageous to the United States economy. Such an enterprise might well be given additional adjustment assistance, if necessary, to change its operations to prevent the further wasting of America's comparative advantages in international trade and from slowing and cheating the growth of the national economy. If, however, through modernization and innovation, or merger and consolida- tion, or other activities, that industry or company recovers its competitive edge, even before the five year adjustment period is over, it seems clear that the public good would call for the immediate termination of the favored treatment. Here again, since the national interest is involved, government inspection will be helpful in making the proper determination. In nationaT interest Perhaps the quickest way to document that the proposed legislation is in the national and international self-interest of the United States is to summarize the President's message of May 28, 1968, transmitting the draft bill to the Congress, and the impressive testimony of his Cabinet Secretaries who have special respon- sibilities in this area of federal activity, his Special Trade Representative, and his Special Assistant on Consumer Affairs. The President emphasized that by continuing America's historic 34-year pro- gram to open trade channels and to encourage international commerce, all seg- ments of the Nation would profit greatly. He explained that "When trade barriers fall, the American people and the American economy benefit. Open trade lines: (a) Reduce prices from goods from abroad. (b) Increase opportunities for American businesses and farms to export their products. This means ex- panded production and more job opportunities. (c) Help improve the efficiency and competitive strength of our industries. This means a higher rate of economic growth for our nation and higher incomes for our people." `Then, noting `that there are many proposals before the Congress to impose import quotas or other restrictions involving about half ($7 billion) of all our imports subject to duty, the Chief Executive warned that "In a world of expanding trade, such restrictions would'~ be self-defeating. Under international PAGENO="0192" 2498 rules of trade, a nation restricts imports oniy at the risk of its own exports. Restriction begets restriction. In reality, `protectionist' measures do not protect man. In the long run, smaller markets mean smaller profits. (c) They do not any of us: (a) They do not protect the American working man. If world markets shrink, there will be fewer jobs. (b) They do not protect the American business- protect the American consumer. He will pay more for the goods he buys. "The fact is that every American-directly or indirectly-has a stake in the growth and vitality of an open economic system." The Secretary of State declared that "Our position as the largest single trading nation underlines our special responsibility to insure that our trade policy promQtes continued growth of our own and the world economy. Fortunately, in this area, actions which best advance the welfare of our own people are pre- cisely those which best serve our foreign policy objectives." As the Secretary saw it, "Our relations with Japan deserve special attention in this context. Here too we see the benefits of a policy with even more explicit links tQ trade matters. It is difficult to see how we can count upon Japan as a major partner if w-e had not deliberately fostered-or if we were suddenly to change-a system of world trade which permits Japan's 100 million people to achieve through trade w-hat they could not attain in the narrow- confines of their crowded islands. And here, too, our trade policy toward Japan is no give-away. Japan is our largest overseas market, second only to neighboring Canada, and the leading commercial market for the output of our farms. Last year nearly cannot buy from us if we do not buy from them . . . The partnership we have one-third of our $2.7 billion in exports to, Japan consisted of cotton, wheat, feed grains, soy beans, and other U.S. agricultural products. The Japanese, like others, nurtured with Japan w-ould be put to a severe test-and it might not survive if we were to adopt wholesale restrictions which would have a serious impact on Japan's ability to make its way in the w-orld." The Secretary of the Treasury, w-e understand, submitted a letter for the record in which he indicated that increased trading opportunities would help alleviate some of our most serious economic and fiscal problems, including that involving our balance of payments. Japan too is troubled by a serious balance of payments problem. Still, over the past 23 years since the end of hostilities and over the past 16 years since Japan regained her sovereignty, with the exception of only three years, the United States has enjoyed a favorable trade balance with Japan. Last year was one of the exceptional years, though the trade accounts were almost in balance. Japan sold the United States almost $3 billion, while buying more than $2.7 billion. Of all the nations of earth, last year Japan was the only one which experienced a favorable trade balance with the United States, and-even for Japan-it was an unusual circumstance. The Secretary of the Interior, in stressing the importance of freer trade in terms of the natural resources of the country, expressed the hope that there would be more opportunities for the exportation of coal, among other items. In this connection, Japan imported from the United States some $81 million in coal and coke and $62 million in petroleum products in 1966. The Secretary of Agriculture proudly claimed that commercial agricultural exports increased from $3.2 billion in 1960 to a record $5.2 billion in 1967. In reporting that his Department w-as attempting to persuade many other countries to lower their nontariff impediments to American farm products, the Secretary warned that "Protectionism on non-agricultural items can hurt U.S. exports of such goods. And it most certainly will hurt our agricultural exports. "Japanese-American trade figures will show- w-hat I mean. ,In 1967, Japan sold us $3.0 billion worth of non-agricultural products. Our buying of those products was a big factor in Japan's purchase of $865 million w~orth of U.S. farm prod- ucts, making Japan our single biggest cash customer. What w-oulcl happen if we were to drastically reduce our buying of Japanese non-agricultural products? Japanese officials have told me that under such circumstances Japan almost cer- tainly would reduce its buying of our food and fiber. They also would back off on their substantial buying of U.S. non-agricultural goods, which in 1967 amounted to a whopping $1.8 billion." In 1967, the total of all Japanese textile exports to the United States including those "restrained" under the Long-Term International Cotton Textile Arrange- ment (LTA), was $374 million, while Japanese purchases of agricultural prod- ucts alone from the United States amounted to more than twice that total, or $865 million. PAGENO="0193" 2499 The Secretary of Commerce endorsed the Administration bill "as providing the tools for creating a world trading environment in which American business and American labor can participate equitably in the benefits of expanding world trade." He cited data to show that exports have expanded at a growth rate of 6.7% from 1960 through 1967, from $19.6 billion in 1960 to $30.9 billion in 1967. In this same period, imports increased by 9%, from $15 billion to $26.8 billion. He attributed the recent increase in imports to "an inflating domestic economy", "the copper strike and the threat of a steel strike". While Japan does, and did, purchase close to a billion dollars worth of agri- cultural products from the United States annually, being America's biggest cash customer for farm output, Japan is also a major buyer of American machinery and industrial equipment. In 1966, for example, Japan purchased industrial ma- chinery, other than electrical, valued at $225 million, transport equipment valued at $125 million, and professional instruments valued at $55 million, among import items from the United States valued at $2,311 million. The Secretary of Labor recorded that "in recent years expanded trade and high employment have gone hand in hand . . . In general, . . . the lowering of trade barriers increases, rather than reduces, net employment . . . We recognize that some imports may cause dislocation. That is why we urge liberalizing the adjustment assistance criteria so as to deal effectively with employment disloca- tions resulting from import competition. But taking import and export factors together, it appears certain that a tightening up of foreign trade policy would result in fewer, not more, jobs." The Special Trade Representative explained the gains made by the United States in the recently concluded Kennedy Round of tariff negotiations, discussed the background and detailed the specifics of the Administration's trade package, as well as underscoring the need for the proposed measure and the real dangers of protectionist legislation, with particular reference to the balance of payments and inflation problems. He noted that Japan was among those trading partners which were consider- ing certain positive steps to help America's current balance of payments and gold situations. The Special Assistant to the President on Consumer Affairs urged that the "rights" of the consumers be protected through enactment of the Administration trade package. She spelled out in specific detail the exact "added cost" to various necessities if import quotas were levied. She cited apparels as an illustration of the consequences of the textile quota bills, estimating that clothing alone, for a family of four, would cost $25 to $30 annually to begin with. If imports are restricted by protective means, and domestic prices permitted to skyrocket, it would be like imposing "an added tax on low-income consumers", in the words of the 1968 Tariff Commission, if the poor and the disadvantaged who are so dependent upon inexpensive, "best buy for the dollar" garments from Japan are forced to pay higher prices. In quick summary, then, while agreeing unanimously to the many and great advantages that would accrue to the citizens and nation from an enlightened trade policy, the President and his principal trade officials were equally agreed that a reversion or return to protectionism, regardless of the guise or reason, would be most detrimental to the general welfare of the people and the country. Tewtile tariff reductions The Administration's trade package provides for an extension of the Presi- dent's authority to enter into trade agreements with foreign countries. We understand this authorization to mean that the Chief Executive may use his power to reduce rates up to 50% for those items for which he did not choose to lower rates to the maximum in the recent Kennedy Round of tariff negotiations. Since it is conceded that in the final stages of the Geneva negotiations a number of offers to reduce textile tariffs were withdrawn or modified, and since United States tariffs on textiles continue to be higher-on the average- than those for most industrially advanced countries, including Japan, we urge that the tariffs on most textile imports be further reduced. As we understand the consequences of the Kennedy Round for textile imports into this country, on a weighted basis the United States agreed to tariff reduc- tions which averaged about 13% on $876.7 million worth of imports (1965 com- putations) of cotton, wool, and manmade fiber textiles, or 37% less than the maximum 50% authorized by Congress. 95-159 O-68---pt. 6-13 PAGENO="0194" 2500 For cotton textiles, the 1965 overall depth of cut averaged 20.8%. The depth of cut varies, however, by individual groups. For yarns, the average weighted cut was 27.2%; for fabrics 24.7%; for apparel 16.3%; for made-up goods 24.7%; and for miscellaneous textiles 33.4%. For manmade fiber textiles, the 1965 overall depth of cut averaged 14.8%. The deepest cuts were in yarn (37.3%), miscellaneous articles (30.4%), and made-up goods (28.3%). In the more sensitive areas of fabrics and apparel, the depth of cuts averaged 18.2% and 5.7% respectively. For wool textiles, excluding carpets and rugs, the 1965 overall depth of cut average 1.8%. Wool fabrics arid apparel, which comprised nearly 90% of the trade, each had an average cut of 1.4%, reflecting the exceptions made for all sensitive items in this wool and worsted area. Yarns and tops were also subject to a low average reduction of 2.7%. Made-up goods were reduced by 38.3% and miscellaneous wool products by 34.6%, although these latter products rep- resented less than one percent of the 1965 trade in foreign textiles to the United States. A quick recapitulation of the number of items affected by the Kennedy Round and the number of such affected items which were reduced the full 50% authorized by the Trade Expansion Act of 1962 is presented on a category basis. All 17 manmade fiber items listed in the Tariff Schedules of the United States (TSIJS) were reduced the maximum 50%: Tariffs on the two TSUS wool top items were not affected. Tariffs on the five TSUS cotton yarn items were not changed; 14 of the 16 manmade fiber yarn TSUS items were reduced, 13 for the full 50% cuts; and only one of the three wool yarn TSUS items was cut, and that for 50%. Tariffs on 53 of the 63 TSTJS cotton fabric items were modified, with nine being cut the full 50%; 35 of the 40 TSUS manmade fiber fabric items were also changed, with 19 being reduced the full 50%; and 30 of the 39 TSUS wool cloth items were reduced, 11 for the maximum 50%. Tariffs 011 47 of the 51 TSUS cotton apparel items were changed, two for the full 50%; 16 of the 28 TSUS manmade fiber apparel items were affected, seven by the 50% maximum authorized; and 16 of the 43 TSUS wool piece goods items were cut, three the full 50%. Tariffs on 66 of the 68 TSUS cotton made-up goods items were reduced, but only six for the full 50%; 23 of the 24 TSUS manmade fiber made-up goods items were reduced, with 13 being given the 50% reduction; and 38 of the 43 TSUS wool made-up goods items, with 22 being authorized the full 50% cut. Finally, 35 of the 38 TSUS cotton miscellaneous goods items were changed, with 12 for the 50% reduction; 21 of the 24 TSUS manmade fiber miscellaneous textile items were reduced, 18 for the full 50%; and all 21 of the TSUS wool miscellaneous textile items were altered, 15 for the maximum 50% authorized. These reductions in the American rates of duty on textiles are to be made, we understand, in five stages over a five-year period, which began this Janu- aryl (1968). To learn whether these Kennedy Round cuts might increase the opportunities for the Japanese to export textiles to the United States, we contacted the several Japanese textile associations directly. It was their unanimous judgment that these rate reductions were not suf- ficiently substantial and significant in terms of the textiles they can ship to this country. They noted that in cotton textiles, where the majority of reductions were made, the Long-Term International Cotton Textile Arrangement (LTA) strictly limits their export capabilities. And, for wool and manmade fiber, as well as silk, textiles, many other factors besides the tariff structure account for their capacity to sell in the American market. In spite of the Japanese view, however, after a re-examination of the modifi- cations achieved in the Kennedy Round for Schedules 3 and 7 of the Tariff Schedules of the United States (TSUS) reminded us that the duties on many textile items remain excessively high, we urge that additional reductions be made in textile tariffs. No cut, for instance, was made on cotton velveteens, so the present 25% ad valorem duty remains in force. As far as we know, only one American company weaves this particular fabric, which because of its labor-intense nature is more suited economically to be woven in countries where labor costs are much lower than in the United States. Moreover, product quotas are imposed on this cloth so that not more than a certain quantity of imported velveteens may be entered each year regardless of the tariff rate. PAGENO="0195" 2501 A few, but far from most, examples of textile imports whose duties will re- main excessively protectionist even after five years of tariff reductions follow. Cotton corduroys (TSUS 346.05 but especially TSUS 346.10), despite tariff reductions of 23.3% and 24%, respectively, will continue to enjoy relatively prohibitive rates after five years of 23% and 38% ad valorem. Certain men's and boys' cotton wearing apparel (TSUS 380.03) were given a 17.6% reduction, but even after five years the duty on these imports will be 35% ad valorem. Certain women's, girls', and infants' lace or net wearing apparel (TSUS 382.03) were similarly treated, with identical results. Certain gloves and glove linings (TSUS 704.50) were given a 37.5% reduction, but even after the complete reduction is realized the duty remains at 25% ad valorem. As a matter of fact, many tariffs on gloves are such that after five years, in spite of reductions ranging from 0% to 44.4%, the duties will be 25% ad valorem. Certain woven manmade woven fabrics (TSUS 338.30) were given a 17.4% re- duction, but the final rate remains a high 13 cents a pound plus 22.5% ad valorem. As a matter of fact, quite a number of manmade fiber textile items were not accorded any duty decreases at all in the Kennedy Round, thereby retaining their full compound specific and ad valorem rates where applicable. Some samples of this lack of action include ornamented body supporting garments (TSUS 376.24) with a 32% ad valorem rate; lace or net underwear (TSUS 378.05) with a 42.5% ad valorem duty; not ornamented knit underwear (TSUS 378.60) with a 25 cents a pound plus 35% ad valorem tariff; knit, not ornamented wearing apparel (TSUS 380.81) with a 25 cents per pound plus 32.5% ad valorem rate; nonknit wearing apparel (TSUS 380.84) with a 25 cents per pound plus 27.5% tariff, etc. Wool textile tariffs also remain uniformly high, with many denied any cuts in the Kennedy Round. Many wool items, too, carry the compound specific and ad valorem rates. Certain wool fabrics retain their 37.5 cents plus 60% rates (TSUS 336.50) others their $1.35 per pound (TSTJS 336.55) ; and still others 37.5 cents per pound plus 38% ad valorem. In apparel wear, knit infants' wear keep their 37.5 cents per pound plus 32% rate (TSUS 372.25) ; embroidered hosiery 50% ad valorem (TSUS 374.20) certain men's or boys' wearing apparel 37.5 cents per pound plus 30% (TSUS 380.57) ; etc. Even this short recapitulation suggests that there are many tariffs that are protectively high. The President's authority to reduce these textile tariffs should be reactivated and used to encourage freer trade in textiles. Worker adjustment assistance The Trade Expansion Act of 1962 rightfully recognized for the first time the principle that the government had an obligation to workers who might lose their jobs because of import competition fostered by national policy by establishing so-called adjustment assistance that would be available to employees of indivi- dual companies or plants adversely affected by imports. Under the Act, workers who qualify for this adjustment assistance are entitled to certain trade adjustment allowances for a certain period of unemployment, specialized training or retaining, and limited relocation allowances to secure reasonable employment in new communities. Unfortunately, the criteria for eligibility has been such that no workers have yet been authorized this special help since 1962. The Administration trade bill, however, does recognize the need to liberalize the eligibility standards, though we would be more generous in providing the various types of adjustment assistance. This adjustment assistance program can be of special significance to textile workers who are notoriously underpaid in comparison with other nonsupervisory employees in the major industries. According to the Bureau of Labor Statistics summary report "Employment and Earnings Statistics for the United States 1909-1967," issued in October 1967, except for a few years, in the decade 1957 to 1966, textile mill products workers and apparel and other textile products workers were the lowest paid of all those employed in manufacturing. The lone exception, and then only occasionally, was leather and leather products workers. S PAGENO="0196" 2502 In 1966. for illustrating, the average hourly wage for all private industry was $2.5~; for milling, $3.06; for contract construction, $3.88; for all manufacturing $2.72, divided into durable goods, $2.90 and non-durable goods $2.45. Workers in textile mill products averaged only $1.96 an hour, while workers in apparel and other textile products averaged even less-$1.89. In durable goods manufacturing, the average hourly wages ranged from $3.33 for transportation equipment workers to $2.21 for furniture and fixture workers. In nondurable goods manufacturing, the hourly wages in 1966 for ten industries ranged from $3.41 for petroleum and coal products workers to $1.94 for leather and leather product workers. Within the average hourly wage of $1.96 paid to textile mill products workers in 1966, those working in the several sectors were paid averages ranging from $2.12 in cotton and manmade textile finishing mills to $1.62 in certain hosiery mills. Within the average hourly wage of $1.89 paid to all apparel and related products workers, those employed in the various operations were paid averages ranging from $2.45 in manufacturing women's and misses' suits and coats to $1.54 in manufacturing men's work clothing. Not only are the hourly wages for textile workers below those for all manu- facturing, but so also are the numbers of hours worked per week for those em- ployed in the apparel and related products lines. The average work week for all manufacturing in 1966 consisted of 41.3 hours, while for apparels and related products it was 36.4 hours, or about five fewer hours a week. For textile mill products, on the other hand, the average work week consisted of 41.9 hours, or 0.5 hours more per week than for all manufacturing Industries. At the same time, industry employment data suggest, despite the outcries of certain textile industry leaders, that total employment has not decreased since 1961. These employment figures, moreover, do not reflect the number of workers laid off or discharged because mills or plants moved from the North to the South to take advantage of the cheaper wages, less stringent working standards, less unionization, and other lower production costs in the new loca- tion. Neither do these charts account for the number of workers who lose out to automation, to increased efficiency of new machinery and equipment, to modernized and even computerized management, etc. And, how does one record the number of workers, probably more than that in any other category, who lost their jobs because of new substitutes for textiles, such as paper, plastics, glass, etc.? And, the new employment created by some imports that stimulate certain kinds of jobs? TEXTILE INDUSTRY EMPLOYMENT Number Average Man-hours Year employed hourly of work (in thousands) earnings peryear 1961 2, 178.9 $1. 66 1, 865 1962 2 242.7 171 1,895 1963 2 250 2 1 75 1 900 1964 2 281 9 1 81 1 938 965 23716 188 1948 1966 2 450 1 1 95 1 949 1967 2 458 8 2 06 1 925 While employment in the textile industry increased only slightly in the past few years, the productivity per man was increasing at a dramatic pace, espe- cially in the newest manmade fiber textile sector. The Monthly Labor Review for February 1968 stresses that, "Some rough indi- cation of overall improvement in recent years, however, is suggested by the sharp rise in output between 1960 and 1965. Various measures of textile output indicate that it (productivity-output per manhour) rose from 30-35 percent during this period. Estimated all employee manhours rose by only four percent. These changes for the textile industry as a whole reflect substantial variation among the individual sectors of the industry. . "Cotton and manmade fiber broadwoven production, for example, was 25 per- cent greater in 1965 than in 1948, but there were 22 percent fewer looms in place and two percent fewer loom hours worked in 1965. Engineering studies of future technology suggest a continuation in the reduction of equipment per unit." PAGENO="0197" 2503 The nature of the textile industry is such, however, that in spite of the greatly increased productivity per manhour, neither the wage increments nor the num- bers employed are properly reflected in the most recent statistics. At the same time, it cannot be overl'ooked that the industry employs a higher number of women than other manufacturing operations and that more and more members of minorities, especiallyy in the unskilled or less skilled categories, are entering into the textile field. In 1966, more than 425,000 women were employed in the mills, or about 45% of the industry's employees, as compared to about 27% ratio in all manufacturing. Negro employment in the industry rose from about 25,000 in 1940 to 44,000 in 1966, or percentagewise from 2.1 to 4.6 of the total workers in the industry. In recent years, according to the Monthly Labor Review, the textile industry has had to compete mostly for male labor with higher-paying enterprises which have also been moving to the South. And in some sections of the country there are acute shortages of available labor for various sectors of the textile industry. If these recent trends continue, and are accelerated by the elimination of uneconomic mills and plants partly through the competition of imports, this new direction will be all to the good of the American textile workers, for we cannot believe that any United States employee would prefer to work for less than $2.00 an hour in some outmoded textile factory when more attractive jobs paying $2.50 an hour is available. If import competition forces the workers in the uneconomic, uncompetitive, marginal, and obsolete sectors of the textile industry to seek adjustment assist- ance, at least in the long run this may prove to be advantageous to these workers. For they may find more productive, better paying jobs in more modern plants and factories. Since import quotas and other protectionists stratagems tends to maintain and subsidize the weaker, more inefficient segments by guaranteeing assured markets, and thereby to continue to "imprison" or "freeze," as it were, relatively poorly paid workers, if freer, nondiscriminatory trade will speed the process whereby these workers may seek and secure adjustment assistance and move on to better jobs, we judge this process to be well worthwhile. Certainly, in an advanced industrial nation such as ours, labor should be recognized and upgraded in dignity and decency. It will be a sad day for America if to find and keep low-paying jobs for the unskilled and the unemployed it becomes settled government policy to subsidize uneconomic work. In a country where labor is in such high favor, the emphasis should be in improving competi- tiveness, not in continuing uneconomic manpower wastefulness. Perhaps what happened in Rhode Island in the past ten years may be instruc- tive, even though their textile workers did not have the advantage of government aid in the form of adjustment assistance. In a special New York Times supplement for May 12, 1968, Adolph T. Schmidt, executive director of the Rhode Island Development Council, recalled that ten years ago, "Rhode Island's economy was seriously depressed. Post-war adjust- ments had cut textile production in half-and textiles were Rhode Island's dominant industry . . . Today, Rhode Island stands on a plateau of prosperity that was far over the horizon in 1958. Total non-farm jobs have increased by 61,900-rising from a total of 276,800 in 1958 to 338,700 in 1967. This latter figure constitutes an all-time high, even exceeding peak employment during World War II . . . The average manufacturing wage has climbed from $69.13 in 1958 to a present mark of $100.94. Per capita income has risen from $2,042 to $3,270, and total personal income has added over a billion dollars-rising from $1,752,- 000,000 in 1958 to $2,943,000,000 at the first of the year" (1958). Company adjustment assistance If a company, or one of its "appropriate subdivisions" if it is a multi-establish- ment firm, is found to be eligible for adjustment assistance, it may be authorized technical and financial assistance under the Administration's legislation. Tax assistance is included as a part of financial assistance. Such adjustment assistance should enable a company or plant or factory to be modernized, to secure the most efficient machinery and equipment, and to find more effective and competitive management. In an industry as widespread and as massive as textiles, there are bound to be many strong and economic segments, as well as some that are weak and un- economic. Moreover, there are bound to be many establishments-some large, PAGENO="0198" 2504 others medium-sized, and still others small. And, among the many enterprises there will be the economic and the uneconomic. With more than 7,104 mills and plants engaged in the manufacture of so-called textile mill products (cotton weaving mills-407, nianmade weaving mills- 355, wool weaving and finishing mills-361, knitting mills-2848, textile finishing mills-621, woven floor covering mills-64, and miscellaneous textile goods- 1,067) and 28,457 engaged in the production of apparel and related merchandise (men's and boys' suits and coats-1,112, men's and boys' furnishings-2,981, women's and misses outerwear-9,740, miscellaneous apparel-1,582, and other fabricated textlles-7,308), there can be little question that the competition be- tween establishments in the United States is more fierce and bitter than the com- petition between American textiles and imports. Nevertheless, if increased imports contribute substantially to the inability of an American concern to compete with such imports, because the national ob- jective of expanding trade is involved, we find it justifiable that the government provide special adjustment assistance in such instances. And, providing such specialized assistance should obviate the necessity for seeking general import protection. Adjustment assistance principle The Administration's liberalized approach to adjustment assistance for firms and workers who may be the unfortunate victims of economic progress as at- tested by increased imports is approved in the first of the recommendations made by the Subcommittee on Foreign Economic Policy of the Joint Economic Com- mittee, in its September 29, 1967, Report on "The Future of U.S. Foreign Trade Policy." According to the Subcommittee Report, "The adjustment assistance provisions of the Trade Ewpa.nsion Act must be liberalized so that the assistance can be more readily available to workers and firms required to make adjustments as a result of negotiated tariff reductions. "The removal of a tariff barrier places an obligation on the Government to grant fair adjustment assistance to injured parties. The use of compensation as spelled out in the Act of 1962 is more appropriately geared to the national in- terest than outright protection or resort to `escape clauses' and quotas. The na- tional interest, in general, lies in the direction of reducing restrictions on inter- national trade rather than applying restrictions on the ground that some partic- ular domestic group might be injured when compensation is a possibility. "This implies that the scale of injury is relatively narrow and is within the reach of limited Government action. Domestic prosperity has reduced the hazards of injury through change of occupation, .although assuredly it has not eliminated injuries. By and large, the high mobility of people and resources in our economy in many cases provide a ready answer to the problem. But where there are no alternatives, and geographical and occupational immobility prevents the im- provement of the lot of the individual or firm, some form of limited, temporary protection may be warranted. In any case our provision for easing the adjust- ment process should be as generous as equity demands." ASP on teistiles The third major objective of the Administration's trade package is the elim- ination of the American Selling price system of customs evaluation for certain designated imports. While the principal effort is to secure the repeal of the 46-year old nontariff import barrier on benzenoid chemical, the only textile item to which the ASP is applied is certain wool knit gloves and mittens (TSUS 704.55). No imports of this item have been recorded since the 1930's and the Tariff Commission notes that "The value limitation (less than 15 cents per pair) pre- cludes any imports under Item 704.55, even if the ASP provision ware not in existence. The current cost of even low-grade wool yarn and the rise in labor costs since the 1930's makes imports of this item most improbable." Even the National Association of Wool Manufacturers recommend that the ASP formula be deleted for these gloves and that the converted rate in the TSUS be applied. Not only since this ASP item has no practical value but also since it is a grim reminder of a most protectionist past, this particular nontariff trade barrier should be repealed. PAGENO="0199" 2505 Other nontariff barriers Because there are a number of other so-called nontariff impediments to the textile trade imposed by the United States, for the sake of freer, nondiscrimi- natory trade and consistency, we urge that-in addition to the ASP glove item- the various "Quantitative Import Restrictions of the United States," as re- ported by the Tariff Commission in April 1968, be abolished. Unless we take the lead, and are fully prepared, to effectively demolish our own nontariff walls, which today are far more potent and effective barriers to commerce than even the highest tariffs, we are hardly in the strongest position to persuade others to destroy their protectionist obstacles, of which there are too many. Insofar as textiles are involved, the Commission listed only (1) the import quotas that have been in effect since 1935 on hard fiber cordage from the Philip- pines, (2) since 1935, on most types of raw cotton, certain cotton waste, and, since 1961, on certain cotton products produced in any stage preceding the spin- ning into yarn, except cotton waste, and (3) since 1962, on all cotton textiles under authority of the so-called LTA. In addition, there is the Buy American restriction, which is applied on the na- tional level but which is being considered by several States and even local juris- dictions. We respectfully urge that the President's authority to eliminate the ASP be expanded ot include all other American nontariff impediments to freer trade. Repeal long-term cotton arrangements Though import quota advocates often cite the LTA (officially the Long-Term Arrangement Regarding International Trade in Cotton Textiles) as the model for "orderly development and sharing of the American market," and emphasize its multilateral character as indicative of a negotiated, mutually satisfactory pact to all concerned, nothing could be further from the truth. To begin with, the LTA was the special objective of the extraordinary political pressure campaign waged by the American cotton textile sector in the Congress for many years and particularly in the presidential election of 1960. Some sus- pect that it was part of the "price" thatthe late President Kennedy paid for the support of the textile industry in his successful bid for the White House that fall. In any event, when GATT convened a special multinational conference in Geneva in the summer of 1961 at the insistence of the United States, none of the participating countries-exporting and importing-had any illusions about the meaning of United States intentions-either the 18 invited textile nations agreed to the LTA, and its predecessor Short-Term Arrangement, or else they faced in- dividually either administrative or legislative imposition of unilateral textile restrictions that could be harsher and iPore protective than the proposed LTA. Even under these circumstances, the United States had to accept the principle of "recognizing the need to take cooperative and constructive action with a view to the development of world trade . . . such action should be designed to facili- tate economic expansion and promote the development of less developed coun- tries . . . (and) to deal with these problems in such a way as to provide growing opportunities for exports of these (cotton) products In actual operation, however, the Department of Commerce, on behalf of the Government of the United States, has implemented the LTA by invoking only the restrictive provisions of the internatiOnal pact. As a matter of record, the United States has invoked Article 3 more often and more unsparingly than all of the 22 other signatories combined. We have called for over 250 separate "restraint levels" under Article 3 or 4, despite our stated promise to use the quota restrictions "sparingly". The United States, without consultation or prior agreement, has interpreted Article 3 in such a manner that, as an importing country, it can and does-on its own-determine what "market disruption" is and when it occurs. As far as the United States has been concerned, this question of "market disruption" is a numbers game; when certain imports are entered in what is believed to be "substantial" quantities by the administering officer, "restraints" are ordered. There has been no uniformity, even, about the quantity that becomes "sub- stantial." With the exception of Japan, the only designated "developed exporting coun- try", and Italy, one of the designated "developed importing countries", we under- stand that restraints have been imposed only against "developing exporting coun- tries". Bilateral agreements too have been "negotiated" with both Japan and Italy, as well as with most of the "developing exporting countries". PAGENO="0200" 2506 * Though certain "developing importing countries" also export cotton textiles to the United States, they have not been subject to restraints, that is with the possible exception of Italy. When the first meeting of the Cotton Textile Committee of GATT was held to review the operations of the LTA in December 1963, many of the participating countries expressed their fears over what they considered to be excessive recourse to Article 3. The United States has also taken advantage of Article 4, which permits bi- lateral agreements "not inconsistent with the basic objectives" of the LTA. Some ntaions believe that the United States has used the Article 3 authority to impose what amounts to unilateral quotas without consent of the exporting countries as a bargaining weapon to "negotiate" a number of so-called bilateral agreements. In most cases, it appears that these bilateral agreements for quotas are far more all-inclusive than if the United States had imposed unilateral restraint levels on actual imports, for these two-country agreements establish groups, cate- gories, and subcatagories, not to mention specific textile items, for the purpose of an all-embracing, overall ceiling. At the same time, the impression is given that the consent of the exporting nation was freely and willingly secured, though the fact of the matter is that the other country had no real choice, for the alternative was American reversion to invoking unilaterally Article 3 restraint levels. The Tariff Commission notes that 30 nations are now signatories to the LTA, with the United States having bilateral agreements with 22 governments. Some 90% of all cotton textiles entered into this country in 1966 were covered by these special quota arrangements and agreements. Although the IiTA was intended only as a temporary measure and was due to expire after five years on September 30, 1967, it was extended for another three years, to September 1970, as part of the Kennedy Round package deal which continued the original LTA with minor modifications. The "deal" also included a few modest reductions on various textiles agreed to in the Kennedy Round, a slight increase in the quotas for cotton textiles to be entered into the United States, and an effort to persuade the European Economic Community countries to liberalize their willingness to accept textiles into their respective nations. As important as the political pressures that forced acceptance of the LTA are the careful structuring of the groups, categories, and subcategories of the various textile imports to prevent the entry in any significant volume of certain textile products in which the American industry has a substantial vested interest. And, to make doubly sure that certain cotton textiles will not be entered in any signifi- cant quantities, certain textiles are limited by specific reference, such as velve- teens, certain fine cloth, and carded ginghams as far as the Japanese are concerned. It is because of this special structuring of the several ceilings that in most years the exporting countries are unable to fulfill their quota allocations, even though their respective industries are aware in advance that the quantity of their exports are severely limited. The record of cotton textile imports during the first LTA years indicates that the pledged five percent annual increase did not-in fact-always take place. Cotton tecotile imports under LTA program Millions of square yards First LTA Year (Oct. 1, 1962 to Sept. 30, 1963) 1,122.6 Second LTA Year (Oct. 1, 1963 to Sept. 30, 1964) 1,035.2 Third LTA Year (Oct. 1, 1964 to Sept. 30, 1965) 1, 232. 4 Fourth LTA Year (Oct. 1, 1965 to Sept. 30, 1966) 1, 724. 2 Fifth LTA Year (Oct. 1, 1966 to Sept. 30, 1967) 1,578. 0 Although the LTA provided for an annual five percent increase in imports, in fact it is not applicable because restraint levels are not taken into account. And the data, though tabulated for each LTA year, really applies to imports under both the LTA and the several bilateral agreements negotiated by the United States. In the Second LTA year, note that imports actually decreased from that of the first LTA year. Also, note that imports in the last, or fifth, LTA year were some 146.2 million square yards less than the import total for the fourth LTA year. PAGENO="0201" 2507 One reason for the increase in fourth LTA year over the third LTA year was the obvious demand, especially for yarns, because of the increased military needs of Vietnam, which carried over into the first part of the fifth LTA year. Moreover, imports from such developed countries as Canada and Belgium were permitted entry without being subjected to "restraints". American im- porters began to ship in cotton textiles from such "developed" LTA members knowing that such imports were not subject to the "restraints" imposed on the "developing" countries and Japan. While the LTA successfully limited exports by foreign governments, it could not prevent American businessmen-importers from moving to new, uncontrolled areas and developing textile industries in these countries, almost always in a lower-cost region than their previous supplies. There are those who believe that because of the LTA textile producing coun- tries proliferated more rapidly than would have otherwise been the case. Regardless of its record, however, we urge that as the most effective nontariff impediment to the trade in textiles, the LTA and its supplementary bilateral agreements be eliminated, and that cotton textiles be considered on the same basis as other textiles for individual, selective consideration if specific imports create unfair economic difficulties for directly competitive United States goods. Abolish buy American restriction At a time when the United States textile industry has been experiencing some difficulties in providing the armed services with its textile requirements and when the cost of local procurement are so high, it would seem that the national interest and the national security both would call for overseas procurement of needed military textiles from our allies nearer the area of hostilities. But, the prohibitions of the Buy American Act severely restrict the ability of the quartermaster corps to purchase military textiles from such Asian allies as Japan, South Korea, Taiwan, Philippines, and Thailand, not to mention New Zealand and Australia, for use in Southeast Asia, particularly in Vietnam. In the light of current circumstances, and for the future promotion of the textile trade, this Buy American nontariff barrier should be abolished. At the very least, as the Subcommittee on Economy in Government of the Joint Eco- nomic Committee recommended in its April 23, 1968, report on "Economy in Government Procurement and Property Management", "The Bureau of the Budget should issue a uniform policy for the guidance of Federal agencies and contractors regarding the use of price differentials under the `Buy American' Act." While the Subcommittee's responsibilities were not in the area of foreign trade policy, it is noteworthy that the Subcommittee devoted a special section to this subject of the Buy American statute, which, though from the viewpoint of gov- ernment expenditures, also affects trade policy as well. "The Subcommittee has expressed its concern during the past several years over the inconsistent application of the `Buy American' Act. The Act provides that materials for public use shall be purchased from U.S. manufacturers, except where it is determined that their purchase would be inconsistent with the public interest or their cost would be unreasonable. Inconsistency in its application continues. "The problem is that while most agencies utilize a six percent differential, and an additional six percent to `small business' or suppliers in an area of substantial unemployment, the DOD (Department of Defense) since 1962 has utilized a 50 percent differential. Thus in the purchase of the same item two agencies of the Federal Government may utilize widely separated differentials. The Bureau of the Budget has conceded that the situation is a `mess', but it has not acted to rectify it. The economic implications of these policies are antagonistic. The six percent differential permits greater purchase of foreign goods and thus operates against a favorable balance of payments. The 50 percent differential protects domestic manufacturers but increases the costs of procurements and therefore militates against a balanced budget. "From the evidence, it appears that the DOD's 50 percent differential raises a protective wall so high that American bidders may be encouraged to take advantage of it. It may also be self-defeating in the long run by pricing the protected items out of foreign markets and thus injuring our balance of payments. Further, the DOD's practice is placing a significant burden on the already extremely high level of defense procurement." PAGENO="0202" 2508 AGAINST IMPORT QUOTAS Most protective device While as a matter of both principle and practice, we are opposed to all protectionist bills pending before this Committee, we are especially opposed to the specific product import quota measures, such as those for textiles, and to the general, omnibus import quota legislation. Aside from total exclusion, prohibition, or embargo, import quotas are the most vicious and "protective" of all protectionist schemes. Probably more than any other restrictionist strategem, they Subordinate the national interest to the vested interest. Whether they are described by proponents as "orderly marketing" systems, or as "fair international trade" programs, or "equitable trade promotion" proposals, or what not, in actual fact and operation they are the most effective trade barrier conceived in the name of world commerce. Some import quota bills require a "rollback" in the quantity of imports and an averaging based on historic performance or market shares over a number of years. Others impose ceilings based on the immediately preceding or record import year. Still other establish ratios of imports to domestic consumption and set limitations when these levels are reached. And others allow nominal increases or decreases dependent upon the upsurge or reduction of domestic use. Of course, there are those which combine various formulas. But the end objective is the same: To place an absolute, arbitrary, and artificial quantitative ceiling on all imports that may be entered in any given period. No matter how inventive or innovative, no matter how efficient nad productive, no matter the comparative economic costs and competitive factors; foreigii producers and exporters may not ship more than certain stipulated in advance quantities. Supply and demand are not considered; neither are reason and equity. In testimony to this Committee on June 4, 1968, the Special Trade Representa- tive summarized the case against import quotas well, pointing out that "A quota policy would have serious effects on our domestic economy and our longer run ability to compete. Import quotas can have only one effect on domestic prices- to make them higher than they would otherwise be. Is any action designed to raise prices at this time a rational one? "An immediate increase in prices would be only the beginning of the damage. As the secondary effects of quotas are felt, they will be different from those of tariffs. A fixed tariff permits competition from those imports that are able to surmount it. Such competition stimulates domestic producers to keep ahead of the foreigner-to improve their efficiency, to lower their costs. A quota, of course, permits none of these effects. The domestic producer knows that no matter how high his costs or selling price he can lose only a specified part of his market to imports. But without the spur of imports, he will eventually lose his ability to compete with the same foreigners for the markets of third countries. In fact, even industries not protected by quotas will find their own costs have risen and their ability to compete diminished because of increases in the cost of materials they use. "On the surface, quotas that simply guarantee domestic producers a fair share of the market may sound attractive. But what is a fair market share? In the American tradition, it is the share anyone is able to win by producing a better or cheaper product. That is why our overwhelming share of the world's com- puter market, for example, is a fair share. The United States has been especially successful in the development and marketing of products involving new tech- nology. We would be the heaviest loser if we should lead the world in freezing present patterns of trade. Such a course means stagnation-higher costs to the consumer, loss of our international ability to compete, and loss of many other qualities that have made us a strong economic force in the world market place." The President, on June 6, 1968, in a message to the Coordinating Council of Organizations on International Trade, outlined the case for his Administration's bill and against protectionism in the form of quotas. "What if the quota bills now pending before the Congress became law? What price would we have to pay for the protection of the American markets? In a word, retaliation. If we break the trading rules-as import quotas would do- we know what the response of our trading partners will be. It would be retalia- tion against our own exports. So the price of shielding one industry would be paid by another. The temporary protection of jobs in one plant would mean the permanent loss of jobs in another. PAGENO="0203" 209 "The American housewife would also pay a price-in the stores where she buys. American industry would pay more for raw materials and intermediate products. The vicious cycle would be completed-as American industries without quota protection would find that higher costs had made them less able to com- pete for export markets. "We would all pay the price of government intervention. Quotas would involve the government more deeply in business decisions. Licensing officials would be added to the Washington bureaucracy. Trade cartels simply can't exist without someone to administer them. "We would pay the price by the absence of competition. There would be fewer incentives to efficiency-less stimulus to innovation-less likelihood that `Yankee ingenuity' would be the standard of business excellence. Growing productivity- the only real guarantee of higher wages `and profits-would `be sacrificed. "Finally, in our relations with other nations, we would pay the price-and it is a heavy price-of loss of confidence in our leadership. The United States would have turned its back on economic cooperation between nations. "I don't believe that industries seeking quotas are just trying to feather their own nests at the expense of others. They have a sincere concern that higher pay and better working conditions put them at a permanent disadvantage. More- over, they resent-and properly so-the erection of barriers to free competition in other nations. "But the establishment of quotas is simply too high a price to pay. This nation -of all nations-cannot set these forces of restriction in motion. I do not believe that we will. We simply will not permit the gains of the past 35 years to be swept aside-not when a better course is available to us." Threatens national economy Textile import quotas threaten the national economic wellbeing. Not only do they increase the possibilities of inflation at a time when we can least afford it, when inflation endangers the very economic foundations of our industrial system, but they provide a protective umbrella under which the in- efficient, the uneconomic, and the obsolescent segments of the textile industry are encouraged to continue operation even at the detriment of economic growth and progress. At the same time, and perhaps paradoxically, the bigger companies, through consolidations and mergers, capture more and more of both production and sales, thereby putting into practice the economies of monopoly and concentrated power. Moreover, as the Special Trade Representative so succinctly explained the crucial problem, ".. . quotas imposed by us are certain to lead to quotas imposed by others on our exports to them-and, in choosing their targets, they are likely to select the industries whose prospects fOr export growth are strongest. This in turn will affect the purchasing power of many of our workers and farmers." This question of retaliation on the part of our trading partners is not hypo- thetical or theoretical, for we need only recall the tragic consequences of the 1930 Smoot-Hawley Tariff Act. By 1933, in three short years, our exports had declined 48% in volume and 68% in value. In other words, by imposing an import quota on textiles, it is quite possible that in the long run the United States will suffer far more in the loss of exports than any benefit we might gain temporarily from limiting textile imports. Take the case of Japan, for instance. In 1966, Japanese textile imports, in- cluding $115 million in cotton items, amounted to $470 million. That same year, American exports to Japan totalled $2,311 million, of which some $600 million was in agricultural products alone. Unfortunately for the United States, the $207 million in soybeans, $138 million in wheat, the $133 in raw cotton, and the $122 in corn, all purchased from us, are available to Japan from other coun- tries, some of which offer these same products for less than we do. We understand that Japan is willing and able to purchase so much from us because we enable her to earn the dollars with which to buy our goods and services by permitting entry to her exports. If we foreclose entry of her export items, we also force her-even against her will-to look elsewhere for her purchases. Though Japan may not intend to retaliate against our action, she may not have any alternative to buying and selling where her exports are welcome. And, once an import quota is imposed on textiles, the demand from other industries for similar privileges will become harder to frustrate. And in this way, an international trade war could easily be provoked, escalating with each PAGENO="0204" 2510 concession to arbitrary restrictive barriers made by our government as our major trading partners reply in kind. Finally, the necessity to discriminate between countries and importers, to assign shares and to determine limitations, and to administer and enforce the ceilings on hundreds and thousands of prospective imports, all add up to ever- increasing bureaucratic supervision and dictation over industry and business, to a speed-up in the centralization of government, and to an ominous challenge to the free enterprise system. Endangers ~Tatjo1?.ai Security Textile import quotas also endanger our national security. By weakening the nation's economy, the national security is weakened too. Beyond this, by alienating our trading partners, most of whom are allies in a tension-filled and troubled world, America's collective security system is jeopardized. And, if by refusing to permit them to trade with us, we force them to trade with our enemies and our potential enemies, we are not only losing our allies but also strengthening our present and future adversaries. Furthermore, an artifically protected uneconomic textile industry, dominated by huge companies, will be in a far less favorable position to provide the neces- sary textiles for national emergencies and for future limited and other wars. And what the government must purchase will be at a higher price, with the specifications subject to the dictates of a monopolistic industry, for only the large companies will be able to supply the requirements of the military. Even in times of crises, textile imports beyond a certain limit cannot be in- creased in order that the domestic combine may concentrate on producing for the emergency, while imports are made available to civilians and textile-consuming industries at reasonable price. Even more crucial, textile imports may not be increased to meet shortages in military demand which the American industry may not be willing or able to supply. Costly to Individuals Textile import quotas are costly to the individual citizen-as a consumer, as a taxpayer, as a businessman, and as a worker. As a consumer, he is forced to pay a higher price for a much more limited selection of textiles for himself and his family, for his home and for his office, for his business and for his industry. With fewer goods, available, he must pay the higher price. With a ceiling on merchandise for export, foreign producers cannot afford to experiment with new fibers, fabrics, and fashions. In the case of the poor and the poverty-stricken, the availability of inexpen- sive clothing may mean the difference between being decently clothed and "going without", or accepting textile substitutes made of plastics, paper, glass, metal, wood, or other materials. Because the anti-inflationary influence of textile imports will be eliminated, the consumer will have to pay more, not only for his textiles but for all other goods and services that he may need and require, for inflation is a contagious infection that cannot be contained or isolated to just textiles. And, once an import quota is granted to the textile industry, it will probably start a chain reaction of similar import quotas for other import sensitive industries. After all, if the Congress accords such privileged status to one in- dustry, it can hardly deny it to others. As a taxpayer, the individual is more heavily taxed to pay for the administra- tion and enforcement of first one and then many import quota laws. He is also taxed to pay for any direct or indirect subsidies that this favored textile and other industries may receive. Unless he himself is an owner of a mill or plant, as a businessman or manu- facturer involved in textiles, an import quota could put him at the mercy of the domestic supplier and his "freedom of choice" would be severely compromised. As a worker, he may be the unwitting and unknowing victim of an uneconomic and uncompetitive sector of the giant textile industry who is being denied and deprived of the opportunity to secure adjustment assistance that will improve his skills and add to his abilities, thereby making him a more qualified candidate for higher-paying jobs in a more competitive sector or industry than the textile "prison" to which he may be confined. PAGENO="0205" 2511 Injurious to Tecotile hutustry If the textile operation would carefully review its current situation and long- range aspirations with the vision and statesmanship that the nation and the industry deserve, its leaders would find that import quotas would be in- jurious to the industry itself. Because import quotas arbitrarily establish guaranteed annual markets for the many products of the textile complex, there will be a tendency for many ele- ments to become complacent and comfortable about their privileged status. Without doubt, such attitude will only encourage the more rapid encroachment of such textile substitutes as plastics, paper, glass, metal, wood, and other materials. The marginal and inefficient individual producers and sectors of the vast op- eration will be encouraged to remain in business, rather than being forced to shift into more competitive activities. As the total industry will be as strong as its most inefficient part, the fabric of the complex will be weakened and sub- ject to continued stress and strain. Already behind most other industries in its competitive productivity, and spending less on research and development than most of the major textile manu- facturing countries and 16 of 17 United States industries, the textile combine will tend to fall further and further behind because the challenge of imports will not be ever-present. According to the Department of Labor, for example, there is a 46% gap be- tween the average and the model plant for a print-cloth mill in 1966. And, the Organization for Economic (OEOD) discovered that the United States textile industry as a whole spends far less (0.2%) for Research and Development (R and D) expenditures than the United Kingdom (0.8%), Canada (1.6%), Sweden (2.4%), and Japan (4.1%). Also, it was found that only the lumber and furniture industry spends less than textiles in this country for R and D. What makes this sum even more incredible is that man-made fiber producers are responsible for about 75% of all R and D funds expended by the total American textile industry. If this industry is so lacking in efficiency and in engaging in R and D without the built-in sanctuary of import quotas, except for cotton textiles, imagine what this mammoth complex would do without the competition of such imports as there are. Then again, in times of acute and huge shortages caused by new developments, such as permanent press; unexpected demand, such as that caused by the Vietnam War; and novel fashion trends, such as the Nehru jacket; quota ceilings will not permit full exploitation of these special situations by calling on foreign sources. Already ill equipped to compete for export markets because of its satisfied domination of the domestic scene and lack of competitive urge to seek out and develop foreign outlets, behind the protective walls of import quotas, there will be even less incentive to sell overseas. And, as Congress provides more and more in the way of such special privileges as import quotas, the government-as the public defender-will have to insist upon more and more supervision and control of all the operations of this nation- wide enterprise. Then again, as import quotas proliferate, the government will have to dictate more and more the policies and practices of every individual com- pany within the industry. As regimentation sets in, the competitiveness of the massive complex becomes less and less. So the government will have to provide more and more in the way of subsidies and special assistance. TEXTILE IMPORT QUOTAS UNJUSTIFIABLE Tecotile industry arguments Even though the massive and privileged American textile complex today enjoys a most favored government status that few other industries-if any-enjoy, its leaders argue its pleas for the most extraordinary protective sanctuary of all- an all-inclusive, all fiber, all stages of manufacture, all categories, all countries import quota-generally for the following, reasons: 1. Imports are increasing rapidly. 2. Exports are decreasing. 3. While profits, production, etc., have shown an upward trend, textiles still lag behind other manufacturing industries in its prosperity, growth rate, etc. 4. Because textiles are a relatively labor-intense enterprise in an advanced in- dustrial country, it requires continued and expanded government favoritism. PAGENO="0206" 2512 5. Technological and market development since the establishment of the LTA necessitates the extension of import quotas to all textiles. Import perspective We do not question-in fact, we happily concede-that textile imports have in. creased substantially over the past decade. At the same time, however, we believe that the national interest requires that these textile imports be put into proper perspective, and not considered in isola- tion by themselves. First of all, one might well ask what imports have not increased rapidly in the past ten years. Are textiles the only ones? The answer is obvious. Secondly, one needs to take into account that the national economy, as well as the population, have grown consistently. As a matter of fact, many economists allege that the continuing prosperity and its resultant inflation have stimulated imports. So too have strikes and threats of labor discontent. Thirdly, even `as the volume of imports `have increased, so too `have our volume of exports. While it may not be so difficult to identify the trade deficit in textiles, one cannot overlook in that context that the overall trade balance has been, and remains, in favor of the United States. Also, in certain exports the United States enjoys the same overwhelming trade advantage that certain other countries may enjoy in textiles. On a world-wide basis, in billions of dollars, the United States share of inter- national exports to foreign markets in 1967, was 23.1% for all manufacturing, broken down as follows: (1) 31.8% for transport equipment, (2) 30.2% for non- electric machinery, (3) 25.7% for electric machinery, (4) 23.7% for chemicals, and (5) 15% for other manufactures, including textiles. Take the case of Japan, for an individual illustration. It has been alleged that certain Japanese textiles enjoy a disproportionate share of the American market. If this in the case, it would seem to us that there are good and sufficient economic reasons for these situations. In reverse, the dominant position of certain American exports in the Japanese import market should not be ignored. 85% of the Japanese import soybean mar- ket is controlled `by the United States, 84% of its electronic computer market, 55% of its coal, more than 50% of its feed grains, almost 50% of its wheat, 47% of its chemicals, 39% of its petroleum, 32% of its cotton, etc. In the field of chem- icals and computers, as in many other industries, Japan is a major producer, so it can hardly be argued that the American share of Japan's import markets is substantial only in agricultural items. Moreover, an American would hardly claim that the United States share of Japan's import market was not a "fair and proper" one. Fourthly, it must be observed that while textile imports increased, United States tex~tile production skyrocketed even more, thereby indicating that there may be a correlation generally between increased imports and increased domestic production. U.S. TEXTILE PRODUCTION VERSUS IMPORTS [In millions of pounds[ Year U.S . production Imports 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 5,962.2 6, 834. 5 6,479.7 6,554.3 7, 035. 6 ~` 239. 7 7, 775. 4 8,488.9 9,000.5 8,976.0 215.6 333. 4 415.7 339.6 486. 0 ~ 491. 3 595.7 756.4 697.9 Not only industry men but economists and investment brokers have categorized 1957-1966 as the golden decade for American textiles, for in this ten year period, in spite of the dramatic and substantial inroads of such textile substitutes as plastic and paper particularly, the total United States textile combine experienced unprecedented growth in production, profits, and other indications of a booming prosperity. PAGENO="0207" 2513 And, while 1967 production showed a decline from that of 1966, the record year, so too did imports. In this connection, it should be recalled that in 1957 domestic textile production reached 6,221.7 million pounds and imports 190.3 million pounds. The next year, 1958, when the tabulation begins, domestic production was down to 5,962.2 mil- lion pounds while imports were up slightly* to 215.6 million pounds. This means that in the one year 1957-58, domestic production dropped 259.7 million pounds before beginning an upward climb which hit its all-time peak in 1966. In the single year period 1966-67, domestic production declined only 24.5 million pounds, or about one-tenth the decrease experienced ten years earlier. Also, in the 1966-67 period, imports dropped 58.3 million pounds, or about twice as much in actual volume than the actual drop in domestic production. Moreover, even though 1967 production was not as high as that for 1966, United States textile production last year was 3,013.8 million pounds more than it was ten years earlier. And, notwithstanding the outcries of the domestic industry, the actual volume increase in imports was only 482.3 million pounds for this decade period, as against an increase in United States prOduction of more than three billion pounds. To sum up, in this ten-year period 1958 through 1967, imports may have in- creased to seven, or eight, or even nine percent of domestic production. But, the actual volume increase in United States textile production was 50%. Now, if what happened some ten years ago repeats itself, the golden decade that began with a drop in American production of more than a quarter of a bil- lion pounds might well bring about another acceleration in United States out- put, as the American industry enters into its second golden decade in what promises to be the golden age for textiles in this country. Fifthly, an examination of the tremendous shift in the use of the three major textile fibers (cotton, wool, and manmade) during the past decade suggests that this inter-fiber competition had more impact and influence on American textile production than the competition from imports. AMERICAN MILL CONSUMPTION BY F1BERS [In millions of poundsi Year Manmade fiber Percent Cotton Percent Wool Percent Total 1958 1,764. 2 29. 6 3, 866.9 64. 8 331. 1 5. 5 5,967. 5 1959 2, 064.7 30.2 4,334. 5 63. 3 453. 3 6. 4 6, 842. 5 1960 1, 877. 8 29. 0 4, 190.9 64.6 411. 0 6. 3 6, 486. 6 1961 2, 060. 7 31. 4 4, 081. 5 62. 2 412. 1 6. 3 6, 561. 0 1962 2, 418. 5 34. 3 4, 188. 0 59. 5 429. 1 6. 1 7, 042. 1 1963 2,787. 8 38. 5 4, 040. 2 55. 7 411.7 6. 4 7,246. 1 1964 3, 174. 3 40. 8 4,244. 4 54. 5 356.7 4. 6 7,782. 1 1965 3,624. 1 42. 7 4, 477. 5 52. 7 387. 0 4. 5 8, 494. 4 1966 4, 002. 2 44. 4 4,630. 5 51. 4 370.2 4. 1 9, 007. 5 1967 4, 420. 4 47. 2 4, 420. 7 49. 3 312.6 3. 5 8, 976. 5 Note: Because other fibers, such as silk, were also consumed during this same period, the totals for each year add up to more than for the three fibers combined. The above data is taken from the Tewtile Organon for March 1968. For 1968, the Tewtile World, February 1968 issue, projects a substantial in- crease in the use of textile fibers by the United States industry over that used in both 1966 and 1967. According to its calculations, the domestic consumption of all fibers in 1966 was 9,006 million pounds and in 1967 9,003 million pounds. For this year, it projects a total of 9,450 million pounds, with 47% of the con- sumption share in cotton, 3.0% in wool, and 50% in manmade fibers. This 1968 estimate is that 447 million pounds more of textile fibers will be con- sumed by the domestic industry than in the previous 1966 high year. Returning again to the Tecotile Organon tabulations, we find that for the 1958- 67 decade cotton remains the major fiber, but its popularity over manmade fiber has narrowed rapidly in this ten-year period. Wool has also lost some of its ap- peal, but not nearly as much as cotton percentagewise. Ten years ago, cotton dominated 64.8% of the fibers consumed by United States mills, with manmade fibers contributing only 29.6% and wool 5.5%. Now, cotton controls only 49.3% of the mill consumption, with manmade fibers contributing almost as much, or 47.2%. Wool's percentage has declined to 3.5%. PAGENO="0208" 2514 In other words, cotton lost 15.5% and wool 2% of its share of the fibers con- sumeci by American mills, while manmade fibers gained 17.6%. In this identical decade, the ratio of imports to domestic consumption increased from about tl1ree percent to about eight percent. Thus, the arithmetic of the situation clearly demonstrates that the direct im- pact of the competition between manmade fibers and the natural fibers in the past ten years was at least double that of imports percentagewise, and many more times that in terms of actual poundage. Manmade fiber consumption in- creased by almost two and a quarter billion Pounds in this past decade, while imports increased by less than 500 million pounds. Finally, imports have only a selective impact on the American industry, and not an overall one. This is because not all textiles produced in a country can en- ter the American market, for a variety of economic and other reasons. Added to the usual trade problems are those that are distinctive to the textile trade. Less than ten percent of the types of fabrics woven in the United States can be exported froni Japan to this country and only specialized types of ap- parels and made-up goods manufactured in Japan can be sold in this American market, according to the sworn testimony of certain importers before the Tariff Commission only last November (1967). The Tariff Commission ten years ago (1957), in response to Resolution 236 of the 85th Congress, of the Senate Finance Committee, made it clear that textile imports have only a selective, and not a general, impact on the products of the United States industry. It is clear that textile manufacturers in Japan (or any other country) do not have an `across-the-board' competitive advantage over the textile manu- facturer in the United States. Such injury (or impact) as may be caused or threatened by increased imports of textiles or textile manufactures from Japan- or any other country-~s bound to be confined, to a limited number of categories, most of which, experience has shown, will be narrow. Investigations of such in- stances of injury (or impact) are, in the Commission's opinion, best conducted on a selective basis as circumstances warrant." (Emphasis supplied). What was so correct and true then is even more applicable today. Though couched in different words, the Tariff Commission reached essentially this same conclusion this past January (1968), when it reported to the President at his direction, in which the Chairman of this Committee joined, that an investi- gation be conducted into the economic aspects of imports, as well as of the do- mestic textile and apparel industries. As the Commission reported this mid-January, `By most broad measures, whether in terms of quantity or in relation to consumption, the trend in the imim- ports has been upward since 1961, as is to be expected during a period of ex- panded econoniy activity. The impact of such imports, however, is clearly un- evenly distributed an ci. varies according to the in aricet conditions for the product concerned. (Emphasis supplied). "An increase in the ratio of imports to consumption is not necessarily indica- tive of the impact that such imports had, or are having, upon particular domestic producers. Some imports, such as yarn or woven fabrics, for example, constitute raw materials of domestic producers of finished products but may be directly competitive with yarn or fabric manufactured by domestic mills for sale to others. To the extent that such imports displace the domestic output of yarn or fabric, they obviously affect the domestic production of raw textile fibers. "The relationship between domestic output and imports is in fact considerably more complex than is indicated by this illustration. Some of the products of the type imported are not produced in great quantity in the United States for a variety of reasons. Many of the imported products are directly competitive, but the impact of imports varies according to whether domestic output is mainly captive of a larger, prosperous, integrated, multiproduct mill or is produced chiefly by a small independent mill which derives its income principally from the sale of fabric to others. "The competitive impact also varies over time. In periods of relatively full employment of domestic textile resources, the imports of such materials fre- quently are complementary rather than supplementary to domestic production. In periods of slack demand, the imports may have a more pronounced economic PAGENO="0209" 2515 effect than when business activity is at a high level, even though the imports be of a lower relative magnitude. "With regard to apparel, the increasing level of imports in recent years re- flects in great part the active efforts of both retail and wholesale institutions in the United States to broaden the variety of their product lines and the price ranges at which they are sold. A large but unknown portion of this merchandise is comparable to the domestic product both in terms of price and quality. A sub- stantial proportion of the total volume and value of the imported merchandise appears to be made up of products which are of low price and are marketed prin- cipally in retail outlets which promotes and sell these products mainly on the basis of price; such products appear to be sold principally to lower income groups or to others for whom cost is a major consideration. On the other hand, still other products are characteristically of high price and style, for which demand and the domestic output may be limited. Thus, the effects of the im- ports of apparel, like imports of fabrics, vary greatly. Imported cotton shirts selling for low prices may have a considerable impact upon a small concern whose output is limited to shirts of the same price range, but have little or no effect upon that of large, `multiproduct producers whose shirts sell at substan- tially higher prices. The quantitative data respecting either the trend of im- ports or the relationship between imports and consumption overall fail to in- dicate the actual effects such imports have either on profits or on employment for particular producers . "By quantity, about two-thirds of the actual increase in imports from 1961 to 1966 was composed of products (such as yarns and fabrics) for which further processing was required in the United States. Most of the remainder consisted of apparel products. Although the volume of imports in each of these broad categories was substantially larger in 1966 than in 1961, the actual Increase in the volume of domestic production was of substantially greater magnitude over the same period." Of particular significance in terms of the selective impact of imports may be the compilations of the Business and Defense Services Administration of the Department of Commerce, described as "Growth in Shipments by Classes of Manufactured Products 1958-1966," published in March 1968. Altogether, 215 different textile products are specifically listed, some with sev- eral additional breakdowns. In 149 of these product listings, an increase in the ratio of the value of ship- ments 1966 to 1958 was indicated. For `39 products, the necessary data was not available. For 27 products, the data was not computed. In this rather detailed compilation, not a single textile product was listed as having decreased in the ratio of its value of shipment in the 11-year period 1958 to 1966. Ba~port perspective Despite the lamentations of the American industry, United States exports of textiles have shown a general upward trend since 1960, both in dollars and pound terms. While it is correct that American exports have not increased as substantially as imports, nevertheless this tendency toward increased exports is most remark- able when certain conditions are recalled. By 1960 the World War II devastated textile industries of Europe and Japan had recovered and were concentrating'~ on developing their export trade. By this time too, American aid to the less developed countries had resulted in the establishment of textile industries where none had previously existed. And, be- cause Japan had imposed "voluntary" export quotas on its cotton textiles des- tined to the United States, American importers were inducing other countries to manufacture for export to this particular market. And the United States textile complex was devoting its attention more to developing domestic markets, than in seeking foreign outlets. According to a tabulation of the American Textile Manufacturers Institute (ATMI) for the Senate Finance Committee, October 20, 1967, the following records American textile exports, by fiber, from 1960 to 1966, with estimates for 1967. 95-159 0-68-pt. 6-14 PAGENO="0210" 2516 AMERICAN TEXTILE EXPORTS [In millions of pounds of fiber equivalents[ Year Cotton Wool Manmade Total fiber 1960 233. 3 4. 7 202. 4 440. 4 1961 239. 2 4. 5 205. 8 449. 5 1962 220.3 4.4 246.1 470.8 1963 207. 8 5. 6 244. 8 458. 2 1964 213. 2 7. 0 283. 1 503. 3 1965 173. 8 15. 6 293. 4 482. 8 1966 189.6 12.7 322.8 525.1 1967 1 190. 0 11. 2 333. 8 535. 0 1 Estimated. According to these figures, as in the case of domestic consumption of fibers, exports of cotton textiles declined during the past six years while manmade fiber exports increased. Unlike domestic consumption, however, exports of wool tex- tiles increased almost three-fold from 19130 to 19136. The Tetvtile World for February 1968 reveals that, even though imports and domestic production dropped last year compared to the previous year, in terms of millions of dollars there was a plus 7.8% increase in United States textile exports in 1967 over 1966-$1,384.2 million as against $1,283.7 million. The big- gest incerase was in manmade fiber broadwoven fabric, which increased 49.8%, from $67.2 million in 1966 to $100.7 million in 1967. Clothing exports also in- creased, from $164.0 million in 1966 to $166.1 million last year. If United States negotiators press hard and successfully the elimination of nontariff barriers to textile imports imposed by other countries, and if the American textile industry seeks to develop foreign outlets as aggressively and as progressively as it does domestic markets, it should be possible for the United States complex to increase its exports substantially. Especially in textiles, American fashions and the "Made in USA" label are popular overseas. Domestic indwstry perspective There is little doubt that during the past ten years the huge United States textile industry enjoyed an unprecedented period of growth and prosperity. Following an extensive investigation, including public hearings, the Tariff Commission makes this point to the President in its Report of mid-January 1968, documenting its finding in this and other matters in a two-volume submission. "Accompanying these significant changes in the production and marketing of the textile and apparel industries (since the early 1950's), the domestic pro- ducers, have, by most broad measures, enjoyed a period of unparalleled growth since the early 1960's. (The footnote reported that, "The Federal Reserve Board Index of production (1957-59=100) shows that the production of textile mill products expanded 33 percent from 1961 to 1966, while that for apparel and related products rose 34 percent. Although production declined in the first half of 1967, a reflection of the recent leveling of the economy as a whole, the Septem- ber 1967 index of output of mill products (141.2) was almost as high as the 1966 average (142.5). The production index for apparel products in August 1967 (146.1) was higher than in immediately preceding months, but still lower than the 1966 average of 150.1.") By and large this growth is attributable to the sus- tained rise in the level of economic activity in the U.S. economy. As the national product, industrial output, and population and disposable incomes expanded, the demand for textiles for both personal and industrial use grew accordingly. "Along with increased output, there was also a marked expansion in sales, employment, and new investment in plant and equipment during this period. Similarly, overall corporate profits (whether measured as a ratio of profits to sales, or on the basis of the rate of return on stockholders' equity) increased. From 1961 to 1966, for example, the value of shipments rose from $29.1 billion to $39.6 billion, or 36 percent. For the producers of mill products, profits as a percentage of net sales rose by 48 percent. The corresponding increase for the producers of apparel and related products was 52 percent. The corresponding gain for all manufacturing corporations over the same period was 21 percent." PAGENO="0211" 2517 While it is true that the textile industry experienced a slight leveling off last year, after a decade of steady increases, Textile World's Index of Textile Manu- facturing Activity for March 1968 noted that, "At 157, the January (1968) Index is seven points over January 1967. This year, the Index should have little dif- ficulty beating last year's record high of 163 in December. All major indicators now support the pinpointing of June as the snap-back month for the textile industry. The industry's economic picture, growing brighter month by month, glowed strongly at year-end. One indicator-shipments of textile mill products- closed out 1967 at an annual rate of $20.8 billion . . ." $tandctrd i Poor's Industry Surveys `on "Textiles and Apparels", for May 2, 1968, showed that, "The S & P index of textile products stock prices has moved up nine percent thus far this year on top of the 32% rise in 1967. Strongearnings gains have been reported recently by leading mill companies and prospects point to a gain of a']rnost 40% in current earnings as measured by the S & P stock index for the group . . . The apparel stock-index has moved up almost 14% thus far this year on top of a 21.5% advance in 1967. Estimated earnings for 1968 would represent a rise of 19% on top of the 13% gain last year . . . An improved market performance appears likely." The "Textile Statistics Section" of America's Textile Reporter, monthly trade journal of the industry, for August 31, 1967, reveals an overall increase in the output of broad woren fabrics, the barometer of industry production, for the last ten years. The total for all broad woven fabric production, except for tire cord and fabrics, increased from 12,117,558,000 linear yards in 1957 to 13,311,990,000 linear yards in 1966, for an increase in production of almost two billion linear yards in the past decade, or almost 100,000,000 linear yards on the average per year. As for sales and inventories, according to Department of Commerce data, textile sales in 1957 amounted to $12,806,000,000 and in 1960 $20,407,000,000, while in 1957 inventories totalled $2,240,000,000 and in 1966 $3,245,000,000. In this last decade, textile sales increased by an average of more than $600,000,000 a year. Douglas Greenwald, chief economist of McGraw-Hill's Economic Department, in McGraw-Hill's Textile World magazine for April 1967, stated that during the last ten years production of textile mill products increased by about 38%, as measured by the Textile World's index of mill activity, and by 42%, as measured by the Federal Reserve Bank's index of textile production. "Thus, output of the industry has grown at an annual rate of, about 3.5% per year for the full 10-year period but has nearly doubled that growth rate in the last three years . . .We expect that the record of the industry over the next ten years will surpass that of the past decade." * * * * * * * Most domestic textile operatives will concede that the golden decade (1957-66) was one of historic production and profits, and that 1967 was a temporary level- ing-off year with prospects for 1968 quite promising. Still, to substantiate their plea for increased protection in the form of import quotas, they emphasize that the textile industry lags behind most other American manufacturing occupations in certain key fiscal areas. While the latter is true, they neglect to indicate how rapidly those differences are being closed. After payment of federal income taxes, as released by the Federal Trade Commission, corporate profits of both the textile mill products industry and the apparel and related products industry increased more than for all manufacturing industries (except for newspapers which were not included in the tabulation), based on per dollar of sales and on stockholders' equity. Although total textile industry corporate profit remains less than the average for all manufacturing industries, the gap is being closed rapidly, especially in terms of stockholders' equity. Expressed in cents, the corporate profit per dollar of sales for all manufac- turing industries was 4.8, for textile mill products industry 1.9, and for apparel and related products 1.3 in 1957. Ten years later, in 1966, these figures were for all manufacturing 5.6, for textile mill products 3.6, and for apparel and related products 2.4. In other words, in ten years, corporate profits, after federal income taxes had increased by less than a penny for all manufacturing industries, but by almost two cents for the textile mill products industry and by more than a cent for the apparel and related products industry. PAGENO="0212" 2518 Again, expressed in cents, the annual increase in stockholders' equity averaged for all manufacturing industries 11.0, for textile mill products 4.3, and for apparel and related product industries 6.3 in 1957. By 1966, the increase had reached 13.5 for all manufacturing, 10.1 for textile mill products, and 13.3 for apparel and related products. In the period from 1957 to 1966, stockholders' equity in all manufacturing had increased only two and a half cents per dollar, while that for textile mills products had increased by almost six cents and apparels and related products by seven cents. The gap between all manufacturing and textile mill products of almost seven cents and all manufacturing and apparel and related products of almost five cents in 1957 has narrowed considerably within the last ten-year period. Labor-intense factor As far as domestic industry arguments regarding the necessity for import protection because it is an allegedly labor-intense enterprise in an advanced industrial economy are concerned, as we have pointed out in a previous section, this very reason attests to the need that those uneconomic and uncompetitive sectors of the vast textile complex ought to be allowed to close down and their workers enabled to seek better paying employment more worthy of their status as citizens of the country with the world's highest living standards, greatest gross national product, and biggest individual average incomes. Those segments of the United States industry-and there are many, if not most-that can compete successfully with imports should be encouraged to modernize and expand their plants and equipment even faster than they are currently doing. This should not only help them maintain the competitive advan- tage in the American marketplace but also to export more to third countries. On the other hand, those relatively few sectors that cannot compete with imports should be permitted to withdraw and, with adjustment assistance, the companies and workers involved encouraged to move into more productive and more efficient operations. The Area Redevelopment Administration of the Department of Commerce in October 1964 issued a publication entitled "Growth and Labor Characteristics of Manufacturing Industries." Among the textile industry sectors classified for "Very High Growth" were Seamless hosiery mills, Tufted carpets and rugs, Not rubberized coated fabrics, Men's and boys' Underwear, Waterproof outergarments, and Curtains and dra- peries. Except for Tufted carpets, all of these segments were listed as only "Moderate" in their labor-intensity use. In the "High Growth" category were Knit fabric mills, Certain finishing plants, Wool yarn mills, Processed textile wastes, Men's and boys' neckwear, Separate trousers, Certain women's outerwear, Corsets and allied garments, Certain house- hold furnishings, and Trimmings and stitching. Six of the ten groups were in the "Moderate" classification and four in the "Low" in terms of labor utilization. In the "Moderate Growth" section, Knit outerwear mills, Synthetic finishing plants, Throwing and winding mills, Men's dress shirts and nightwear, Fabric dress and work gloves, Textile bags, Canvas products, and Certain textile prod- ucts were included. Of the eight textile sectors, only two were in the "Low," while six were in the "Moderate," groupings for labor-intensity. In the "Static" class were 23 generally recognized "industries" of the overall textile complex. Included were such sectors as Cotton weaving mills, Synthetic weaving mills, Cotton finishing plants, etc. 19 of the designated sectors were iden- tified as "Moderate" in labor-intensity, three in the "Low" category, and one (Men's and boys' suits and coats) in the "High" classification. In the "Declining" group, 12 textile sections were listed, including Wool weav- ing and finishing mills, Woven carpets and rugs, and Schiffli machine embroid- eries. Five of these segments were classed as "Moderate" in their labor require- ments, one (Tire cord and fabric) as "Very Low," another (Woven carpets and rugs) "Low," and five as "High" (Full fashioned hosiery, Certain carpets and rugs, Millinery, Apparel belts, and Schiffli machine embroideries). Altogether, 417 manufacturing "industries" were represented in the several tabulations. Contrary to general understanding, no textile "industries" were in- cluded in the 48 which were classed as those in the "Very High" labor-intense group. Of the 78 in the "High" group, only six textile "industries" were men- tioned. Of the 170 in the "lioderate" classification, 41 were textile "industries." Of the 91 in the "Low" section, ten were in textiles. And, of the 26 "industries" in the "Very Low" category, only one in textiles was in this grouping. PAGENO="0213" :2519 Since the government already has determined the labor-intensity of the vari- ous major segments of the textile industry, this may well be the clue to those sec- tors of the complex that, economically speaking, are least adapted to competition with imports. * * * ~* * * * What has and is happening to some individual companies in the United States is also what has and is happening in Japan, among other nations, with other countries in the Far East and elsewhere with cheaper production costs and lower wage scales displacing certain elements of their textile industry. To meet this and other economic challenges, and to better export, Japan has instituted a mam- moth "scrap and build" program which, according to the Tecotile World for March 1968, promises to eliminate the marginal mills with inadequate and un- competitive equipment. As Tecotile World observes, "structural reform may prove painful to some firms in Japan. The goals are ambitious, but they are also costly. Still, most Japanese textile men feel that they are necessary, and most industry leaders applaud the plan." In any event, our position is that American working men and women should not be subjected to exploitation in any: uneconomic sector or uncompetitive plant because of government protectionism and subsidy that encourages such enter- prises to continue in business. The surgery recommended may seem harsh initially, but, before the economic and competitive sectors of the American textile industry become infected by the cancer of inefficiency and protectionism, this sometimes difficult operation should be carried out. Great and many technological and market developments have affected the tex- tile industry in recent years. Technological and market changes Without doubt the most widespread, aside from the tremendous encroachment of such textile substitutes as paper, plastic, glass, metal, wood, etc., has been those associated with manmade fibers. In a previous section, we charted the growth of manmade fiber textiles in com- parison with the consumption of cotton and wool fibers. The Tecotile World now estimates that manmade fibers comprise~ about 50% of all American production of textiles. Due to the aggressive development and promotion of manmade fibers, especially in relation with other segments of the textile industry, this sector is now the most competitive and economic within the giant textile complex both as to domestic uses and as to exports. * * * * * * * As of January 1968, we understand that establishments producing manmade fibers employed about four percent of the textile work force, yet accounted for about seven percent of the value of sales within the complex and almost ten percent of the "value added by manufacture". Expenditures for new plant and equipment amounted to about 30% of that expended by the entire textile indus- try, while the amount spent for research and development was about 76% of the total spent by the whole textile enterprise. The wages paid to its workers were higher on the average than that paid the average textile employee and even higher than that for the average nondurable goods industries, except ordnance and accessories, metals, nonelectrical machinery, and transportation equipment. February 1968's Monthly Labor Review concluded that, "Manmade fiber (eel- lulosic and noncellulosic) is, perhaps, the most important and far-reaching tech- nological factor to have affected the textile industry. The particularly rapid growth of noncellulosics (nylon, polyester, acrylic, spandex, olefin, and other fibers) reflects the chemical industry's outlays for R and D, and for promotion, and the advantages to some processors of lower unit labor requirements, rela- tively stable prices, and less waste . . . Despite considerable research in and promotion of natural fibers, manmade fibers may nevertheless account for as much as 65 percent of all fibers consumed by 1975, with major growth in noncellulosics." * * * *~ * * * The mid-January 1968 Tariff Commission report reached the same general conclusion. "Within the U.S. textile industries, changes of great magnitude were taking place. From 1961 to 1966, the annual U.S. mill consumption of all textile fibers PAGENO="0214" 2520 expanded rapidly, rising from about 6.6 billion pounds to about 9.0 billion. This annual growth rate, amounting to about 6.5 percent, was several times higher than in the previous decade. Virtually all of this increase was attribut- able to manmade fibers, the aggregate consumption of which increased by 1.9 billion pounds from 1961 to 1966. Whereas manmade fibers accounted for about 31 percent of the total U.S. consumption in 1960, this proportion rose to about 45 percent by 1966. The share for cotton declined from 62 percent to 51 percent in the same period, and that for wool from six percent to about four percent. "This dramatic shift in the fiber composition of consumption also bad a pro- nounced effect upon the technology and the traditional structure and organiza- tion of producing industries. With the emergence of large chemical concerns as important producers of textile fibers, sizable and increasing amounts of capital were invested in the development of new products, new processing technology, and market promotion, while the use of manmade fibers often resulted in the simplification, or even elimination, of some processing operations. Modern man- agement techniques, and the introduction of new, sophisticated, high-speed ma- chinery resulted in greater efficiency. New products, such as laminated fabrics, were introduced with increasing frequency and gained wider consumer accept- ance. As these changes occurred, often at an accelerating rate, many small con- cerns, lacking adequate capital resources, found it increasingly difficult to ad- just to new conditions of production and marketing. Partly as a result of this difficulty, notably in the past decade, there was a pronounced tendency toward merger and consolidation within the industry, and larger companies have thus accounted for a greater share of the market." * * * * * * We submit that no segment of the United States textile industry, including cotton, can economically justify the need for protective import quotas. And, because the manmade fiber textile sector is the most progressive and competitive of all the major fiber groups of the huge industry, it seems rather self-evident that of all the many components of the American textile complex, those involving manmade fibers can make the least legitimate claim for import quota protection. Industry future Although United States textile industry spokesmen constantly and consis- tently express fear for the future in discussions with Members of Congress and with Administration officials, a fear they attribute almost exclusively to the threat of imports, most impartial economists, investment brokers, and textile technicians are agreed that the future for the overall complex appears bright and promising. And, most leaders of the industry itself agree with this optimistic forecast when they report to their respective stockholders or seek additional financing. Thus, what started out as the golden decade of textiles in 1957 may well progress into the golden age for the American textile enterprise, for practically every indication of the immediate and even distant future suggests continued growth in demand, in supply, and in profits. In the May 2, 1968, issue of the trade journal, America's Textile Reporter, James S. Parker, Director of Technical Services for the ATMI, predicted that the United States textile industry "will experience unprecedented growth in the next ten years." Barring unforeseen circumstances, he declared that the industry will have to be 50% larger 10 years from now to meet increased demands of the buying public, the military and the government, and the needs of other industries. By the year 2,000, he said that the industry would have to be two and a half times as large as it is today. In the Centennial Issue of Textile World, "The Pace of Change: Textiles 1868- 2068," April 1968, McGraw-Hill's chief economist, Douglas Greenwald, authored a section entitled "An Economic Forecaster: How Has the Past Shaped Up and What's Ahead for 2068?" Specifically addressing himself to "Textiles," the economist declared that, "Within the framework of population and output growth over the next 100 years, textile mill production will grow 2810%, or an average of 3.4% per year, compared with a 3511% growth in the past 100 years, or 3.7% per year. The rate of growth will decline gradually after the next 20 years. In the two, decades PAGENO="0215" 2521 from 1968 to 1988, textile mill output will increase at an average of about four percent per year. But by 2048-2068, textile mill production is projected to rise at an average rate of 2.8% per year." Standard c~ Poor's Industry Surveys on "Textiles and Apparel," dated December 7, 1967, estimated that, "Over the next few years, annual growth may be in the area of four to, five percent, with apparel markets growing at a slightly higher rate, home furnishings at from six to seven percent, and industrial markets from three ot four percent. . . Confidence in future markets is indicated by manufacturers of synthetic fibers, with a leading producer projecting industry shipments in 1972 some 43% greater than 1966. "The ability of the industry to capitalize on the larger potential market was materially strengthened in recent years through the development of more pro- fessional marketing techniques, greater emphasis on product development (creat- ing an obsolescence factor), and expansion of advertising outlays." Goodbody & Company, a major brokerage firm, concluded in April 1968 that, "The industry has learned tQ live with such problems as growing imports and rising wages. The emergence of large integrated mills staffed with professional management has greatly strengthened the textile industry's financial position and enhanced the investment attractiveness of the group. "The outlook is for some increase in imports this year, especially synthetics. However, we believe that the U.S. textile industry's ability to meet competition through quality, service, new technology, and highly efficient facilities will go far to stem the inroads made by imports." JAPANESE TEXTILES Some misconceptions The United States has been Japan's major textile export market since the ends of World War II, just as Japan has been America's largest overseas cash customer for agricultural and industrial goods. But there are a number of significant current general misconceptions regard- ing Japanese textiles shipped to this country that ought to be corrected. Some of the principal ones, though rather obvious, need to be mentioned in the context of these hearings. (1) Almost all of Japan's textile exports are sent to the United States. (2) Almost all of Japan's textile exports have increased every year. (3) Japan manages to fill every group and category of cotton textiles that it is authorized to ship to this country every year under its bilateral agreement. (4) Japan should not concentrate on certain textile exports to the United States, but should diversify its textile exports more. (5) Japan can export any textile item it desires for successful sale in the United States. (6) Japanese textile imports have a tremendously direct and adverse impact on the American textile industry. United States share Of the $1.697 billion in textile exported by Japan to all countries in 1966, only $420 million, or 24.8%, was destined to the United States. Of the $1.642 billion in textiles exported to all the nations by Japan, only $374 million, or 22%, was shipped to this country last year. While Japan depends upon its textile exports to the United States to serve as a major earner of dollars with which it can continue to purchase large quanti- ties of American goods, Japan is trying: to develop and expand export outlets to other countries because its leaders well understand the danger in relying on one or a few nations for its export trade. Eceports decline Just as total textile imports from all sources decreased in 1967 from their 1966 record high, so Japanese textile exports to the United States in 1967 were considerably lower than in 1966. According to the Institute of Textile Trade Research and Statistics, Japan's textile exports to this country were reduced from $419,959,000 in 1966 to $373,- 612,000 in 1967, a loss of $46,347,000. (See table on page 54) Of the 19 export categories listed, only two (rayon fabrics and wool cloth) showed an increase in quantities over the previous year. All 17 of the other categories showed decreases. PAGENO="0216" 2522 Base upon export data available for the first few months of 19(38, Japanese textile exports may be expected to increase slightly from its 1907 level. In this connection, it should be remembered that United States production of textiles is expected to increase by 447 million pounds this year over last, according to the Tewtiie World's projection. JAPANESE EXPORTS TO UNITED STATES OF AMERICA [In millions of dollars] Category 1966 1967 Cotton fabrics Raw silk Spun silk yarns Silk fabrics Rayon yarns Rayon fabrics Rayon staple Spun rayon yarns Spun rayon fabrics Synthetic staple Synthetic yarns Synthetic fabrics Wool materials Wool yarns Wool fabrics Wool specialty fabrics Linen textiles Madeap goods' Textile wastes 39,952 7,670 958 13,062 116 11,613 1,095 033 6,818 16, 372 2,311 30, 302 1,062 10, 892 58, 097 536 2,686 211, 012 3,922 36,213 1,814 518 9,625 52 15,336 531 630 3,360 8,380 1,944 24, 151 459 8,924 65, 030 533 1,530 192, 556 2,026 Total 419,959 373,612 *Madeup goods include knitted goads; toxels, blankets and bedspreads; scarves and handkerchiefs; household goods; wearing apparel; fishing nets and tviine; flosr coverings; hat and hot bodies; and miscellaneous goods. Although cotton textiles are under strict export quotas, cotton fabric exports for the January-April 1968 period were 36.277 thousand square yards as against 36.263 thousand square yards for this same four-month period last year. In 1967, Japan was able to fill only 79% of its cloth quota, so even with this slight increase it can be anticipated that the total for the year will still be considerably under the agreed upon restraint level. For manmade fiber textiles, different computations were provided us. For the first three snonths of 1968, Japanese exports of manmade fiber and silk textiles totaled $13240 million. Projected at this rate for the full year, the amount would be $52.i360 million, as compared to $64527 million for 1967. As for made-up goods, 1968 exports for the January-March period were valued at $39.644 thousand, compared to 1907 exports for the same period of $39.282 thousand. This includes all fibers. Bilateral agreement ewperieioce More than half of Japan's textile exports to the United States are restricted under its current bilateral cotton textile agreement w-ith this country. Previously, Japanese cotton textile exports to this country have been subject to, first, "voluntary" export quotas for 1956 when they covered only a few items; then, "voluntary" export quotas on all cotton textiles from 1957 to 1961; and, lastly, negotiated quotas under authority of the LTA from 1962 to the present. Japan negotiated bilateral agreements with the United States as provided in the LTA. JAPANESE QUOTA PERCENTAGES PERFORMANCE [In percent[ Year Fabrics Made-up goods Year Fabrics Made-up goods 1957 75.4 101.6 1958 92. 1 101. 6 1959 90.8 95.8 1960 80.8 90.9 1961 87.6 79.7 1962 97.2 100.0 1963 88.2 92.0 1964 92. 2 94. 7 1965 100.4 98.7 1966 98.9 97.6 1967 79.0 81.8 PAGENO="0217" 2523 Since there is a proviso that group quotas could not be exceeded by more than five percent, in actual fact, as Hickman Price, former Assistant Secretary of Commerce testified to congressional committees, Japan has "lived up" to her quota commitments and never exceeded any of the many quota ceilings. With the exception of only one year in cotton fabrics and three years in cotton made-up goods, in 11 years Japan has not been able to fill its quota ceilings. Beginning January 1, 1968, Japan and the United States entered into another three year Bilateral Agreement. For this year (1968), Japan may export a total of 373,077,000 square yards equivalent of cotton textiles to the United States- 102,856,000 square yards in fabrics, 204,000 square yards equivalent in made-up goods, 144,040,000 square yards equivalent in apparels, and 12,977,000 square yards equivalent in other cotton textileis. Within the four groups, a number of specific item limitations are included, thereby restricting even more the more popular export merchandise. The actual performance record for the past 11 years clearly evidences that the impact of Japanese cotton textiles is not so strong and compelling that its care- fully rigged and structured quotas can be filled every year. Quite to the contrary, even when importers know that only a certain predetermined quantity of cotton textiles are available, they are not able to import that total because there is not that much demand in the United States for certain goods. Before quota controls, Japan serviced about 70% of the United States cotton textile import market. Now, after 11 years of such artificial lhnitations, Japan's share of this same market is about 17%. And, the number of exporting countries has proliferated tremendously and many economists wonder whether the import market for cotton textiles would have beea so great had Japan been allowed to remain the dominant supplier. Diversificaf ion ecoperience After Japan began to export textiles to the United States after World War II, American textile industry leaders and U.S. government officials urged the Jap- anese to diversify their textile exports in order to avoid charges that it was con- centrating on only a few items. Japanese industry leaders and government officials recognized the wisdom in this suggestion, and acted accordingly. Japan began to export cotton tapes, Wilton carpets, Typewriter ribbon cloth, tubular rugs, etc. But whenever Japanese exports began to substantantially enter such special- ized markets, the United States textile industry reacted strongly and com- plained that the Japanese were threatening to destroy their markets. Economic restrictions on imports While more than half of all Japan's textile exports to the United States are rigidly restricted by import quota agreements, the other half-wool, manmade, silk, and combination fibers-is largely restricted by competitive and economic considerations involving all Japanese textiles. In addition to the usual and customary handicaps and hazards of the inter- national trade in textiles, such as tariffs and nontariff barriers, ocean freight and insurance, long freight hauls, lead time, spot transactions, changes in fashions or demand, as well as domestic supply, and small profit margins, the American importer of Japanese textiles often has to face the additional gambles of communications difficulties, language gap, cultural difference, business prac- tices, and prejudices against the "Made in Japan" label. Moreover, the inexorable economics of comparative advantages dictate that only a relatively few Japanese textile products can be profitably exported to the United States. In piece goods, for example, a sworn witness with more than 30 years experi- ence selling Japanese fabrics testified to the Tariff Commission last November (1967) that, even if all the different constructions of cloth woven in the United States were available in Japan, only about five to eight percent of all the many constructions could be exported to this country and sold profitably. This realistic appraisal defines the very narrow limits of those textile fabrics-cotton, man- made, wool, silk, and mixes and blends-that may be entered economically into American competition from Japan. In made-up goods, another sworn witness, this one with 33 years of experience as an importer and 27 years as an Ameriëan textile manufacturer, testified that many lines are more expensive in Japan than in the United States. He declared that there are "peaks and valleys" as to the merchandise he could import from PAGENO="0218" 2524 Japan, much depending on the status of United States production and demand at the moment. On the other hand, after years of costly trial and error, he has developed a specialty in importing certain types of wearing apparel and household wares for price lines formerly serviced by American industry. Domestic companies deliberately dropped these lines in favor of more profitable items, even though certain consumer demand continued for this price merchandise. So tins importer brings in the less expensive clothing and household goods that are so essential to the poor and the poverty stricken, and which are largely ignored by domestic producers. He explained that for people who need transportation and cannot afford Cadillacs, Fords are part of the answer. He explained further that many people cannot afford "to eat cake, so I provide them with bread". The harsh economics of international trade restricts substantial Japanese textile exports largely to two major categories of textile goods-labor-intense items and occasionally exported products to fill unexpected shortages in supply, such as those created by new innovations, as was the situation involving per- manent press fabrics in 196G. These same competitive factors practically foreclose the American market to significant Japanese textile exports in mass production merchandise in which United States efficiency and techniques are unsurpassed, in certain specialized constructions that cannot be either duplicated in Japan or only at rather pro- hibitive costs, and most items in which fashion is the dictating factor. Unique contributions of Japanese imports Rather than reciting statistics on individual imports, which are more readily available to members of this Committee than they are to us, may we make some general observations regarding Japanese textiles that may help to summarize our belief that an American policy of freer, nondiscriminatory trade in textiles will be in the national interest of the United States. The Japanese textile industry has a longer record of cooperative relationship with the United States than any other Japanese, or probably Asian, industry, for Japan began to purchase American raw cotton in the post-Civil War period a hundred years ago. The Japanese textile industry has never attempted to "destroy" or cripple the market for American textiles. As a matter of record, more than ten years ago when the United States textile complex was suffering in a depression, it was the Japanese who "voluntarily" surrendered part of her import share by imposing export controls in the hope that the American combine might be able to become more competitive and economic through modernization and innovation. More than 50% of Japan's annual total textile exports to this country are severely and completely limited by the Bilateral Cotton Agreement. Most of the remaining half is subject to the direct and indirect controls of the competitive economic marketplace. Japan cannot compete in the area of industrial textiles, for American mass production makes these textiles immediately available for industrial usage at prices Japan cannot match. Certain Japanese imports do not have direct American counterparts. Some of these are purely Japanese goods, such as yukata cloth, kimono, etc. Others simply are not produced in the United States for one reason or another, such as shell sweaters, lightweight habutate silk, and certain rayon filament fabric. Certain Japanese goods cater to different trades or markets than their United States duplicates, such as table damask. The Japanese import is for gift purposes and the American for institutional uses. Lightweight Japanese hand-printed, multi-colored fabrics are not copies in the United States, though some imported dyed fabrics are used for linings, while the American counterpart is used for dresses. Certain Japanese apparel and household wares are brought in to replace price and merchandise lines that were voluntarily dropped by United States producers in their bid to upgrade new lines for bigger profits. Certain Japanese goods have developed their own new markets in the United States, into which American producers have subsequently moved, such as light- weight wool gloves, tubular rugs, tabi slippers, ~udogi sports jackets, kendo pajama sets. etc. Certain Japanese items are imported by American companies, often through unidentified third parties, to fill shortages in supply, such as certain ginghams and more recently polyester-cotton, for the durable press sensation fad only a PAGENO="0219" 2525 year and a half ago. Once domestic production is geared for such specialized output, Japanese imports fall off sharply, 80% in this case in less than a year. Certain Japanese fabrics are imported in the griege state and finished in the United States, such as noncellulosic filament fabrics. Certain other Japanese cloth is imported, further processed in the United States, and re-exported to third countries, usually in Latin America, such as spun yarn fabrics, nylon sheers, etc. Certain Japanese imports are entered after licensing by and the payment of royalties to United States companies, as for certain manmade fiber piece and made-up goods using such as acrylic fiber, licensed by Monsanto. Also, certain Japanese imports compete in the United States with American products made in this country under license to a Japanese, again in the man- made fiber field, such as polyvinyl by Kurashiki Rayon. Certain Japanese articles once dominated the American market, such as Toyo Cloth Caps, and have since almost disappeared. Beyond this, Japanese textile weavers are willing to sell shorter minimum runs than most American mills, so that experimentation can take place on a limited basis. Another example of the extra advantages offered by some Japanese textiles is in multicolored screen printing. The Japanese run such many-colored fabrics in 18 screens at a time, while the maximum American competition is about eight screens. Comprehensive import quotas not warranted When one considers the character of most Japanese textile imports, and their limited selective impact on American competition, one can question reasonably the demand on the part of the United States industry for across-the-board, all-inclusive import quotas that would restrict every Japanese textile import, regardless of fiber, end use, and contribution to the national welfare. Why, for instance, should certain Japanese items that can fill a military requirement in times of national emergency be restricted in advance? Why should certain Japanese textiles that can be rushed in to help satisfy an unexpected domestic shortage or demand be limited by advance ceilings? Why should native Japanese articles not manufactured in this country be placed under quota? Why should certain textiles no longer manufactured in the United States for any reason be curtailed? Why should certain goods that are needed by certain citizens but which were eliminated by management decisions to seek higher profit in other lines be placed under ceilings? Why should Japanese textiles entered for further processing and then re- exported to third countries be controlled? Why should import "ideas" that develop new markets into which American producers later move be penalized with restraints? Why should the American consumer be forced to pay higher prices for United States products made in uneconomic, uncompetitive, and "protected" mills and plants? We cannot believe that these, and similar questions, can be answered with the simple reply of total import quotas on all Japanese textiles. Japanese manmade fiber te~vtiles Since Japanese cotton textiles are under negotiated export quotas, and since the quantity of Japanese manmade fiber textiles to the United States have in- creased over recent years, it may be worthwhile to examine the nature of some of these Japanese manmade fiber textile exports to this country. As a preliminary, however, it may be useful to indicate the ratio of manmade fiber textle imports to United States production, keeping in mind that the fore- going percentages are for all imports from all countries. Thus, the ratio for Japanese exports will be substantially less than the ratio given for all imports from every source. In manmade fibers for 1966 and 1967, the ratios for total imports to American consumption were 13.8% and 11.3% for rayOn and acetate staple, 8.1% and 6.9% for noncellulosic staple, and 9.0% and 7.4% for all imports in this classification. In manmade fiber yarns for 1966 and 1967, the ratios were 0.5% and 1.1% for rayon and acetate yarns, 1.1% and 1.4% for noncellulosic yarns, and 0.8% and 1.3% for all imports in this category. PAGENO="0220" 2526 In manmade broadwoven fabrics, the ratios were 4.4% and 3.0% for 1966 and 1967, respectively, in this class. These percentages demonstrate how little impact all manmade fiber textile im- ports have had on the United States manmade fiber textile combine, which is more efficiently competitive with imports than any other fiber sector of the American textile industry. Its competitive ability has enabled it to dominate the United States textile market so completely that only a trickle of imports are entered under the present policies and tariff rates. There are a number of Japanese manmade fiber fabrics which are not woven in the United States. These include (a) rayon georgette crepe and other similar crepes, (b) rayon habutae and bemfany, (c) rayon fancy weave and other similar weaves, (d) spun rayon gingham, (e) other spun rayon fabrics, (f) synthetic crepe fabrics, and (g) polyester sheers and taffeta. Regarding rayon georgette crepe and other similar crepes, we are informed that almost all Japanese crepes are twist-processed on fine viscose or fine cupra of 30 to 50 denier yarns. Although twist-process equipment exists in this country, such equipment handles the coarser yarns, from 75 deniers and more. Fine crepes are not produced in the United States and integrated processing of such fabric is non-existent here because of the labor costs involved. Last year, Japanese exports of georgette crepe amounted to 21,692 thousand square yards, sheer crepe to 385 thousand square yards, and other find crepes to 27 thousand square yards. As for rayon habutae and bemfany fabrics, we understand that these are woven with fine dupra yarn of about 40 denier, which is not produced in the United States, again because of its labor-intense character. In 1967, Japanese exports of habutae w-ere 1,432 thousand square yards and bemfany 2,396 thousand square yards. Insofar as rayon fancy weave and other similar weaves are concerned, our information is that brocade cloth threaded with metallic yarn and many other kinds of fancy weaves processed in small quantities are shipped to the United States, mostly on special orders. The high labor content involved precludes their American production. Exports from Japan last year accounted for 2,935 thousand yards in the fancy weaves and for 8,957 thousand yards in other similar w-eaves. Spun rayon ginghams are not produced in the United States, which features cotton gingham fabrics and polyester and cotton blended ginghams. The same explanation of labor-intensity and equipment is given for "Other spun rayon cloth". A year ago, Japanese export of spun rayon gingham was 2,493 thousand square yards and of "Other spun rayon fabrics" 2,387 thousand square yards. Synthetic crepe fabrics, of fine twisted yarn, is seldom woven in the United States on account of its high labor requirements. Some 6,080 thousand square yards were exported to this market from Japan in 1967. Concerning polyester sheers and taffetas, the former is woven with 30 denier yarn as against the 40 to 50 denier yarn of the United States, while the latter is woven of 50 denier yarn, of which there is little production in this country. Last year's Japanese exports totalled 5,441 thousand square yards of polyester sheers and 4,534 thousand square yards of taffeta sheers. There are also many Japanese manmade fiber textiles that are imported into the United States for further processing. Of course, such manmade fiber items as staple, yarn, and cloth come in this category. In greige manmade fiber fabrics, however, which are exported to this country for further processing, these were among the exports last year from Japan (1) 100% filament rayon/acetate-5,065 thousand square yards, (2) 11% filament synthetic-37,536 thousand square yards, (3) 100% spun rayon/acetate-8,524 thousand square yards, (4) 100% spun synthetic-6,591 thousand square yards, (5) mixture rayon/acetate-470 thousand square yards, and (6) mixture syn- thetic-1,000 thousand square yards. Imports of manmade fiber greige goods from Japan decreased 38% last year, as compared to 1966. We have also been informed that considerable quantities of Japanese manmade fiber greige goods are imported into this country, further processed, and then re-exported to third countries. Unfortunately, data on these fabrics which are included in the import statistics are not available to us. PAGENO="0221" 2527 Among Japanese manmade fiber textiles which, we have been told, cannot be exported and sold successfully in the United States even after the five-year Kennedy Round tariff reductions are achieved, include such fabrics' as vinylon staple fiber; satin, shioze, and fujiette rayon fabrics; nylon and twill synthetic fabrics; and synthetic fabrics for industrial uses. As we commented earlier, of all United States textiles those of manmade fibers have the least reasonable economic excuse for requesting import quotas, based upon their competitive status in this country and in the world. And Japanese manmade fiber textile exports are such that the justification for asking for import quotas are even less compelling. Of incidental interest in this connection may be the data concerning Japanese imports of American manmade fiber yarns and fabrics. In 1966, the total dollar value of United States manmade fiber yarns exported to Japan was $2,324 thou- sand and in 1967, $1,453 thousand. In fabrics for these same years, it was $489 thousand in 1966 and $749 thousand in 1967. Import quota effect All of the specific import quota bills currently pending to impose absolute limitations on United States imports, and most-if not all--of the general omni- bus import quota measures that would `,include textiles, are based solely upon imports. No consideration is given as to whether these imports have had any adverse or salutary impact on competitive American products or on the overall textile complex generally. Or, any projection as to the future consequences of textile imports. * * * *, * * * Furthermore, although negotiated arrangements and agreements now in force are to be determined subsequently or recognized in these bill's, there is little ques- tion that the textile exporting countries are aware of the speci'al circumstances of these discussions and consequent pacts. They readily understand that what is contemplated is not truly negotiations in the diplomatic sense between "equals" or "near equals." The whole setup is strictly one-sided. Foreign governments find themselves in the somewhat awkward situation that unless they "capitulate" to United States terms, they may suffer such drastic consequences that they are eliminated as factors in the American textile market. In a sense, this may well be described by some as "economic blackmail", by others as akin to having a loaded weapon di- rected against one's head, with the understanding that unless there is a "surrender", one is simply triggering his own demise. * * * * * * * The procedures and other vital matters are not set forth in the proposals definitively. For example, one wonders how the breakdowns for textiles will be accomplished. Will it be on the basis of fibers, or on stages of manufacture, or on commodities, or on end uses? A'nd, as difficult as the specific textile imports quota proposals are to understand, the general comprehensive imports quota measure is even more complicated, un- clear, and confusing. If so many problems as to definitions and administration are to be left to executive discretion, not only would an impossible burden be placed on the Ad- ministration but also tremendous responsibilities, with the potential for in- tensive pressures from both domestic and foreign sources looming as a major factor. * * * * Moreover, based upon their rather grim experiences with the LTA, where uni- lateral United States interpretation of "market disruption" and imposition of "restraint levels" `have indicated `how far `American protectionism may go, tex- tile exporting nations know that such arrangements and agreements, though perhaps intended to be temporary expedients at the time, too `often extend into permanent law. Accordingly, to try to measure what might happen to certain textile imports in general and from Japan in particular if the import ceilings were based on the average of such imports for the 1961-1966 period, as established in the specific textile import quota bills, we attempted to ascertain these averages for the designated six years to compare with 1967 imports. PAGENO="0222" 2528 Without vouching for the accuracy of these projections because there are so many factors that should be taken into consideration that may not have been, we have projected some sample estimates. In manmade fiber imports, there would be about a 26% reduction from all countries, with Japan losing about six million pounds. In manmade fiber yarns, there would be about a 63% loss in imports from all nations, with Japan losing more than two million pounds. In manmade fiber fabrics, there would be about a 33% decrease in imports from all sources, with Japan losing about 51 million pounds. On manmade fiber textile made-up goods, there would be a reduction of about 48% on all imports from all countries. On manmade fiber knitted goods, there would be a cut of some 48% in total imports. On manmade fiber wearing apparels, the reduction would amount to some 68%. And, on manmade fiber floor coverings, the drop would be in the range of about 66%. On a number of specific manufactured items that would be most affected by the proposed ceilings, we have had estimated some sample effects of the imposi- tion of the specific textile quota bills. On not-knit manmade dress shirts, for example, the total imports would be reduced by about 87% and Japan's share by about 83%. On not-knit manmade fiber trousers, total imports would be cut 35% and Japan's share 36%. On not-knit wool suits, total imports would be dropped 50%, w-ith Japan's share also being cut 50%. On manmade bed sheets and pillow cases, total imports would be almost excluded, with total imports being decreased by about 99% and Japan's share by about 98%. On manmade fiber sw-eaters, the total cut would be 80% and Japan's share some 63%. On manmade fiber knitted outerwear and other articles, except sweaters, total imports would decrease by about 67% and Japan's share about 62%. On tutular rugs of manmade fibers, total imports would be 59% of 1967 im- ports, with Japan's share being about the same 59%. On manmade fiber fish netting and fishing nets, total imports would be reduced by about 57%, with Japan's share about 55%. These selected samplings indicate that the depth of cuts for so many textiles, especially in the manmade sector that least warrants any additional protection, are so exclusionary that many countries may be forced to cut back drastically also on their annual purchases of United States goods and services. That textile exporting countries are most concerned about these textile quota bills is witnessed by the report that "more than 60 nations" have already regis- tered official protests with the State Department on these and other import limita- tion legislation, according to nationally syndicated columnist Marquis Childs in The Washington Post for June 17, 1968. That the enactment and enforcement of these textile import quota bills would result in the establishment of a huge bureaucracy should not be ignored. These bills would impose import quotas, which are quite different from the LTA limita- tions w-hich are export controls in that exporting countries supervise and admin- ister the many group and category limitations. And, the imposition of import quotas will not assure that the domestic textile industry will continue to maintain their operations on products it may desire to eliminate for various management reasons. For instance, it has been called to our attention that on May 3, 1968, Congressman Samuel Stratton of New York had to intervene with i\Iohasco Industries to postpone for at least six months its de- cision to shut down all Wilton carpet weaving in Amsterdam that would elimi- nate 500 jobs by the end of the year in that community. In this connection, Congressman Stratton had joined w-ith other law-makers, including Senators, to persuade the President only last fall to reverse a Tariff Commission finding and continue high protective tariffs on Wilton carpets to "protect" American jobs. But, it was not permanent import protection from im- PAGENO="0223" 2529 ports that Mohasco wanted, though it argued for such relief at three different Tariff Commission hearings, but rather other opportunities to engage in more economic and profitable operations. With this recent example in mind, we urge that if these import quota bills are to be enacted in spite of Administration and economic warnings, the least that should be done to assure the government and the people that the textile industry in good faith will attempt to become more efficient and competitive, government inspection of books, facilities, management, and operation should be directed to insure that certain few sectors of the textile complex will not take advantage of the special sanctuary to continue in business without attempting to modernize and rationalize their enterprises and operations. If the American people are to be deprived of the benefits of freer, nondiscrim- inatory textile trade, then it seems only reasonable and logical that the bene- ficiaries of public largess be required to demonstrate continually that they are not violating the confidence and subsidy of import quota protection. * * * * * * * Of course, we do not believe that textile import quotas are warranted by any of the economic facts, especially since there are adequate provisions to help "in- dustries", companies, and workers who need such aid in existing and proposed legislation. For "industries", the escape clause, the countervailing duties, the anti- dumping, and similar statutes remain on the books to provide required import relief when such remedies are needed. And, the Administration's trade bill liberalizes the adjustment assistance procedures to enable firms and workers adversely affected by increased imports to receive certain allowances to "help" in their adjustment needs. Thus, since there is no legitimate economic justification for the imposition of textile import quotas, and since such imposition would not only reverse historic American trade policy but also invite drastic retaliation from other countries that will more than offset any temporary gains that might accrue to the United States textile industry, we urge that this Committee and the Congress act favorably on the Administration's trade measure, and reject-now and for the future-all arbitrary and comprehensive textile import quota legislation. Mr. BURKE. Thank you very much. Are there any questions? Mr. LANDRUM. Mr. Masaoka, it occurs to me that your statement fails to take into account-whether intentionally or unintentionally I will not say-the real problem withwhich this Congress is concerned. We are not unmindful of the value df our exports to Japan. We recog- mze that it is a valuable source of income to our trade picture. I believe that all Americans appreciate that fact. We are not un- mnidful, moreover, of the cold, hard fact that in order for us to have and enjoy that trade relationship there must be some exchange, some reciprocity, but as I listened to your statement it occurs to me that you are completely overlooking the fact that what we are concerned about here is the increase in imports relative to production and consumption. I see no place in your statement where you take that into account. It is this relative position of the output of the industry to the consump- tion that Congress is concerned about. What we are concerned about is where or when do these import ratios reach an unacceptable level. I don't feel that our effort here is as you suggest or as you state, with an impOrt quota bill to put a gun to any- body's head, and certainly it is not putting a gun to anybody's head any more than you have suggested th~tt Japan is putting a gun to our head if we don't keep this market open to her and let her have whatever amount of it she wants. We are perfectly agreeable to have a fair exchange of trade in tex- tiles and other products because, as I said in my opening remark, we recognize the value to this Nation. But we don't accept the fact that we have to turn over completely any segment of our economy and throw PAGENO="0224" 2530 away American jobs just to keep Japan or any other nation from re- taliating against us. I don't enjoy sitting here listening to you say that we are putting a girn to Japan's head and turn right around in the next statement and say Japan is going to put a gun to our head if we don't let Japan have it. That is about the extent of your statement as I see it. Mr. MASAOKA. Mr. Chairman, I am sorry if I misstated it. I thought I made clear that the statement concerning retaliation was suggested by Mr. Freeman last week in his testimony to this committee. Now, as far as the suggestion made about the Japanese coming to this market, we think that it should be definitely a two-way street. We urge this. Mr. LANDRUM. But in establishing a two-way street, Mr. Masaoka, let us keep in mind that the present concern of this Congress is true reciprocity-a real two-way street. What we are concerned about, what this Congress is concerned about, is not preventing the nation of Japan or any other nation from coming in for their fair share of our market.. What we are concerned about is when have we reached this ratio between production and con- sumption that it becomes unacceptable and then a threat to our own employment in this country. We would, I think, appreciate Japan's own concern about our inva- sion of any market that she has. Of course, of the products you men- tioned that we a.re fortunate to sell to your nation, the great majority of them are unavailable to Japan in Japan's own natural resources or in her own economy. I quite understand that and I recognize that the degree of effi- ciency that the Japanese nation has reached in the production of textiles is just about as high as any nation has ever reached. We don't complain about that, but what we are concerned about is that we don't feel that this industry in this Nation that furnishes employ- ment to more than a million people is entirely expendable just to keep Japan satisfied. Mr. MASAOKA. I just wa.nt to clarify this. As far as the textiles are concerned, Congressman Landrum, we think that the overall impact of imports is not bad. The Tariff Commission has examined this. It came to the same conclusion. We are saying that if there are particular imports that do have an impact there are ways to take care of that, but why put a protective cover over the entire industry when it doesn't need it. How does one account for the fact that the industry is domg so well if imports overall have this tremendous impact. I could site statistics if you wish, Mr. Chairman, into the record, but I don't think it is necessary because they are already in my printed brief, but if you will go through the record for the past 10 years you will find the profit margin has increased, the production overall has increased, the dividends have increased, almost every economic factor that we can think of has increased, Mr. Chairman. Under these circumstances we feel that the selective import ap- proach is a proper approach, particularly since by allowing Japan to ship to this country it would allow her to generate the money with which to buy these goods. It is as simple to us as this. We are not threatening anybody. When I say "we" I mean in the context of this particular country. It just PAGENO="0225" 2531 makes sense that a country like Japan, with practically no raw re- sources, if she cannot earn the dollars with which to buy American goods, what is she going to do? She just cannot buy any more and this is the proposition which we present. Mr. BURKE. Are there any further questions? Mr. Battin. Mr. BATTIN. I think I am sorry that you mentioned Secretary Free- man and what we said because he has been wrong so many times that it doesn't hold much weight. Mr. MASAOKA. `Well, all I can say is, after all, lie is the Secretary of Agriculture and if he states this as a fact that he heard and in testimony, I think that I should say that he said it rather than credit it to somebody else. Mr. BATTIN. Let me reverse the situation a little bit if I may, be- cause you talk about textiles but I represent a part of the country which from time to time sells wheat to Japan for dollars. It wasn't too long ago I had the opportunity while in my district to visit with the buyers that were there looking over the area to see what it was they wanted. Mr. MASAOKA. Mr. Congressman, may I interject? Mr. BATTIN. Yes. Mr. MASAOKA. We talked so much about the tremendous increase of imports to the United States of Japan textiles. Could you imagine just 10 years ago that Japan would be eating so much wheat instead of rice? Mr. BATTIN. I am glad they are. Mr. MA5AOKA. And that the wheat imports to Japan have increased so tremendously. In other words, there are economic factors in' there. Mr. BATTIN. Let's not get it out of context because they not only shop here; they shop in Canada. Mr. MASAOKA. That is right. Mr. BATTIN. They shop in Australia, and when they can get what they want for their mills, they buy at the best price they can get. Now, if we can't give it to them, they are going to get it from Australia, they are going to get it from Canada, or some other country that can supply their needs at a price they can afford to pay, which is fine. I mean that is a part of the bargaining. That is part of the trade system. Mr. MASAOKA. If I may make a point there, though, Mr. Congressman- Mr. BATTIN. Before you do, the point I am trying to make is a long way around but I think it `is-unless I misunderstood your statement- you say that the efficiency of the Japanese industry is such that they can produce and sell in our market, taking into account transportation at a profitable rate. and that if we can't compete then maybe we should go into something else. Do I understand you? Mr. MASAOKA. Yes, but I think it should be pointed out that the relative range of Japanese textiles, for example, in fabrics, is relatively small. A witness before the U.S. Tariff Commission last November with some 25 years of experience in selling fabrics said that only about 10 percent of the fabrics which Japan produces can be exported and sold successfully in the United States. 95-159 0-68-pt. 6-15* PAGENO="0226" 2532 In other words, there are things like mass production items and other items in which Japan simply can't compete with the United States. - Mr. BATTIN. If this is true why is it that Japan has such rigid bar- riers on allowing imports into Japan of U.S. automobiles? We can produce them much better and export them at a profit but we are not allowed to. Mr. MASAOKA. I am all with you on that, Mr. Congressman. I be- lieve that Japan ought to break down all the barriers and I think the way to do it is to show the way. I think that Japan and other coun- tries ought to be encouraged in every possible way to get rid of their import barriers because I recognize that the American genius for production and innovation will probably be able to export much more given a fair chance. I am all for that, sir. Mr. BATTIN. Except I think their Government is concerned that we would be earning too much by way of our export market with the net result being an injury to the economy of Japan. After all, if this money is coming out of Japan it could be harmful to that particular country and so they have put up some barriers to at least try to develop their own industry. Whether that is right or wrong the decision has to be made by the Japanese Government, but now I asked this question of another witness a couple of days ago representing I believe the Italian importers: (he too was an American citizen and was familiar with the operation of the Government struc- ture in Italy). What chance would an American exporter have to appear before the Japanese Diet to argue his case as you have argued the case for the people that you represent? What opportunity is there for an American businessman in this area? Mr. MASAOKA. I don't know frankly, but I think here again, sir, because Japan or other countries don't do something should not be a reason for us not to do something. Mr. BATTIN. That is a point which I worry about because if what many have told us is correct-particularly relating to our own bal- ance of trade, as set up against others-and we are not going to be able to redeem dollars for gold, we will either run out of gold or put a moratorium on redeeming dollars. What position does that put Japan in? I think they would be as concerned as we are, realizing their reserve currency isn't necessarily dollars, but sterling. They have to be con- cerned. We do a lot of shipping in Japa.nese bottoms which is an earner of dollars. If you take this whole thing out of context and say you are talking about Japan and the United States or any given country and the United States, we are looking at a whole pattern of world trade, at least the free world. We do have some problems and I don't think you could sit there and say that we don't. Mr. MASAOKA. I would be the first to say that we have problems. I would be the first to say that we ought to do everything we can to eliminate them, but in terms of trade balance with Japan, since the end of World War II, with the exception of only 3 years, has the trade balance been in favor of Japan. PAGENO="0227" 2533 All other years it has been in favor of the United States, the trade balance. Mr. BATTIN. Hasn't Japan recently made some investments in Korea to manufacture textiles and ultimately ship them into the United States? Mr. MASAOKA. I don't know, sir. Mr. BATTIN. I think you will find that they have because if the fig- ures we got this morning are correct, the costs of production, of labor that is, it is much cheaper in Korea than it is in Japan. Actually Japan has to be a high cost producer as far as Asia is concerned and they are looking out for their own interests by investing capital in a country where they can produce cheaply and still remain competitive. Our Government has slapped a freeze on the exports of capital. Our businessmen can't find themselves in the same position. You answer this and I will close with this. Do you know whether the Japanese Government has any restriction relating to the investment in Japan of American industry? Mr. MASAOKA. In terms of textiles? Mr. BATTIN. Or anything else. Mr. MASAOKA. I believe she does have some restrictions, but I think again Japan is trying tO liberalize these as fast as she can. I think, sir, as we tried to explain-perhaps we didn't do it as adequately as we should have-in sum we think that it is in the American national interest not to impose import quotas across the board. On a selective basis on certain items there may be justification on a temporary basis, but overall the textile industry is not an infant industry. As far back as 1812 they were petitioning the U.S. Government for import protection and the question comes up-just as you say, Japan is facing a problem of lower cost production elsewhere, and the ques- tion comes up sometimes why do we in America also try to keep our workers. Isn't it better, even if it is difficult, to try to upgrade them and get them into higher paying jobs with better conditions of work. If this can be done we understand, for example, in South Carolina that the textile industry is having a difficult time finding workers in competi- tion with electronics and other things. We think this is to the good. This is happening in Japan. This is happening elsewhere. So we think that if an item or if a particular industry or company or so on is uneconomic and uncompetitive, whether it is in Japan or here or anywhere else, in the long run it might be better if we allowed them to close down and allowed the others to move on. This is I think the purpose of the adjustment as- sistance provisions. Mr. BATTIN. This would be pretty hard for me to understand in view of past legislation where we recognized the textile industry as being part of our national security. Mr. MASAOKA. I didn't understand that. Mr. BATTIN. I say it would be pretty hard for me to just write off the textile industry in the United States since it has been a finding of the Congress that as a matter of fact the textile industry is a vital par of our national security, the same as steel. Mr. MASAOKA. Mr. Congressman, with all due respect I would say that the textile industry is not near that kind of collapse. As a matter PAGENO="0228" 2534 of fact, if you will go back into the record 10 years ago the textile industry was saying exactly the same thing. They said if imports in- creased they would be forced to shut down. Instead over the past 10 years they have become more productive than they ever were. Mr. BATTIN. Fewer companies, however. Mr. MASAOKA. Yes, some companies have gone down, yes, but over- all the industry is strong. It is a competitive industry. It is an eco- nomic industry. It is the kind of industry America can use, but like all other huge industries, 35 house different units, there are bound to be some segments that are weaker than others and maybe we are help- ing the total industry by letting them get rid of the weaker elements in order to strengthen the whole. You see, this textile industry has grown tremendously during the past 10 years in spite of the inroads of plastics and paper, and these have taken tremendous quantities away, as you know, from the textile industry. For example, paper towels have replaced cotton towels. This alone is tremendous. As a matter of fact, without trying to be facetious, one person told me that if we got rid of the mini skirts and add 3 inches to every skirt in America we wouldn't have a textile problem of any kind. Mr. BATTIN. I would say that might be all right. That is all, Mr. Chairman. Mr. BtTRKE. It would also run into a lot of other problems. Mr. MASAOKA. We might not be able to see them as well. Mr. BURKE. Are there any further questions? I would just like to point out to you a matter of trade balance. In 1961 according to the official figures the exports were $1,837 million and in 1961 the imports were $1,055 million. In other words, the United States has a plus trade balance of $882 million. In 1967 it shifted and we have a deficit balance now of $303 million, which is almost a change of $1,185 million. In other words, the trade balance right now is in favor of Japan. Mr. MASAOKA. I think in three of the years since the end of the war I have acknowledged that. Mr. BURKE. I would like to ask you. Do you think it is impossible to set up a policy whereby we don't rollback imports-in fact they allow a flexible increase to correspond with the gross national product and domestic production-and this could be done without hurting say the textile industry of Japan? How would that hurt the textile industry of Japan? Mr. MASOKA. You are putting on kind of a straitjacket on which they could grow. For example, a Member of the Congress I think, and perhaps a member of this committee, who represents a port area pointed out that if you had this kind of quota, no matter how efficient this particular port city became~ whether they enlarge her port facili- ties and everything else, she could only expand so much and therefore that this would discourage ingenuity. This would discourage efficiency. Mr. BURKE. But Japan today has quotas on many products that we manufacture and, as you say, it is a two-way street. I understand * the suggestion of traveling up one way of the street but the people that you represent, your association, are not traveling back the other way. PAGENO="0229" 2535 How do you make it a two-way street when they have quotas over there and you say it would have such a damaging effect if we estab- lish this type of a system here? Mr. MASAOKA. Simply because, sir, that while textiles are the kinds of products which Japan can export to the United States, we are in an advantageous position in the production of agricultural products, and so on, so we have this kind of economic advantage and this be- comes a part of a two-way street. The different vehicles are going the different ways, sir. Mr. BURKE. Do you think it is necessary for this country here to allow the impo~ts, say, to go up to 30 or 35 percent? Mr. MASAOKA. Pardon me? Mr. BURKE. Do you believe it is necessary for the imports of this country to go up to 30 or 35 percent as they are in some industries without the Congress taking some action? Mr. MASAOKA. In the case of Japan, for example, our exports of chemIcals are much more than 35 percent and Japan is a producer of chemicals. Mr. BURKE. In other words, what you are saying to us is the textile people should forget about what they foresee in the future and allow these imports to come in here without raising their voice and without anyone coming up with any answer? I don't believe that that is true. With the trade picture here the way it is between Japan and the United States, which is beneficial to both sides, and certainly I don't think the Japanese people are going to cut their nose off just to spite their face-I think they are just as anxious for this trade to continue as we are-I can't under- stand why the business people over there can't see the problem that is being created and why they aren't satisfied with a share of the market that allows them to have a flexible increase in expansion and yet doe~n't arrive at a result where they destroy an industry here in its entirety. Mr. MASAOKA. Would the Secretary of Agriculture or Department of Agriculture like that kind of escalating situation with Japan in terms of our products? Mr. BURKE. When you bring his name up you hit a rather sore spot here. I did not agree with his testimony the other day. I happen to represent an industrial area and he said he was in favor of quotas on agricultural products but not on industrial products, so you can see that there is a little difference there in our understanding of what the problem is. Mr. MASAOKA. I think this is exactly our problem too, Mr. Con- gressman. You see it from your light. I see this from my light. Mr. BURKE. That is right and now what I am trying to find out from you is if there isn't some middle ground that can be met upon whereby a solution can be arranged. You have given excellent testi- mony and you have done a marvelous job on behalf of your association and I give you a great deal of credit for the testimony that you have put in here, but you have failed to come up with the answer. Mr. MASAOKA. I think the answer is already in existing law together with the administration bill. We have an escape-clause procedure. Mr. BURKE. This isn't what we hear. What would compel over 200 members of the U.S. Congress to file these quota bills if there wasn't PAGENO="0230" 2536 some reason for it? Do you think that this just comes out of the air, that these Congressmen are just here trying to keep the printing department of the Government going, or do you think that they are looking for some sort of publicity? Mr. MASAOKA. No. I think that as the President himself pointed out, in all fairness you see a certain problem one way. The adminis- tration and some of the others of us see it the other way. Mr. BtrRKE. The textile people and the shoe people favored the trade bill. I voted for the trade bill. I am for expansion of trade, but I am not for putting my head under a guillotine and have my head cut off no more than anybody else is, no more than the Japanese Govern- ment would be. * Mr. MASAOKA. But for the past 10 years the textile industry hasn't been going down the road as an industry. Mr. ~Bu1~KE. It hasnt' been going down the road because of certain conditions that exist, but it can go down the road when those imports start rising up above 20 percent. When they start reaching 20 or 30 percent of the domestic production then they will be in trouble. Mr. MASAOKA. But we have the escape clause procedure. Mr. BURKE. Now, this is what they forsee today and they are not asking for a rollback or a cutback of imports into the country. In fact, they are asking for an expansion, a reasonable expansion. Maybe 5 percent might not be enough. It might have to go to 10 percent. But what they are trying to say I think is to have these imports on a voluntary.basis be restricted so they will not reach a point where they get up to 35 or 40 percent of domestic production. If we lose jobs here, if we lose our buying power, we won't be able to buy the Japanese products. In other words, it is like a round robin. We help Japan and Japan helps us. It is a two-way street. I don't think that you have come in here with the answers as far as how do we solve some of these problems that we see arising. Mr. MASAOKA. We think that the answers are, first, in existing law. We have the escape clause procedures which rely upon economic facts. Then we have the administration's proposals, particularly the adjust- ment assistance proposal. Mr. BURKE. Don't talk about the adjustment assistance proposals because as far as making any adjustments on some of these industries, it is nil. As I said the other day, it would be like giving a patient with cancer an aspirin tablet. That is about the effect it would have. We are faced with some real problems `and I think it is up to associations like your own to get the story back overseas to these people over there. We sent a committee over to Italy a few years ago, and I think it also went to Japan, on footwear problems, and they explained to them what the problem was and they all shook their head and they smiled, and they said, "Yes, we understand." And after the committee returned to the United States instead of stopping an expansion of that particular business they built many, many more factories to direct their imports right into the United States and accelerate them up to astronomical heights. In other words, they ignored what the committee told them, `and I think that this is a big problem today in some of these countries, that PAGENO="0231" 2537 they do not understand that once these imports reach a certain height if we were to go into a decline in our economy and thousands of jobs would be lost, instead* of a quota system you would have another Smoot-Hawley bill enacted here and there would be no business. I don't want to see that. I don't think you want to see it, and I don't think the people over there want to see it, so all we are asking is to have a reasonable adjustment of the policy on imports and to have these industries abroad that are causing these problems realize that there is a certain point that they can reach and when they go beyond that, then not only are they in trOuble, but the entire trade picture is in trouble. Mr. MASAOKA. Mr. Congressman, to the Japanese, to the Britisher, to the Europeans, we have a legal procedure, the escape clause, and other procedures, and industries which feel that they are getting serious injury from imports can apply for it. If these industries do not `apply, then the people overseas almost are reluctantly forced to conclude that the people do not have an economic fact. Mr. BATTIN. Will the gentleman yield? Mr. BURKE. Yes. Mr. BATTIN. I don't have the figure and if you don't recall it I will get it for the record. How many times has an American industry applied to the Tariff Commission and gotten relief under the peril point? Mr. MASA0KA. The escape clause? Mr. BATTIN. Yes. Mr. MASAOKA. I think the last two on textiles they did get relief. Wilton carpets and cotton-type ribbon, ribbon cloth. Mr. BATrIN. How long did it take to get it? Mr. MASAOKA. These are the last two that came up. - Mr. BATTIN. I haven't been in Congress very long, eight years. I used to go down to the Tariff Commission regularly and represent my constituents. I was forced to tell them it was a waste of both of our time to go down there, and I don't, say that facetiously. It just was. When you have people on the Commission who have their own ideas about what should be happening on the trade balance rather than fol- lowing the law as set down by the Congress, we don't have an effective mechanism. That is why these hearings are being held. That is why the industries are coming in and testifying about their problems and recommending to this committee what they should be doing about it. Mr. MASAOKA. The Tariff `Commission is a creature of the Congress. Mr. BATTIN. I know. Mr. MASAOKA. And its members are confirmed by the Senate. Mr. BATTIN. TJnder the Trade Expansion Act, of 25 investigations that have taken place under sect.ion 301, none has been found to- Mr. MASAOKA. This is the adjustment assistance provision. Mr. BATTIN. Yes. Mr. MASAOKA. This is why the administration with that experience is liberalizing those particular rules. Mr. BATTIN. We are talking about two different animals here. We are talking about the workers on the one hand, and industry on the other hand. What you are suggesting, even with workers, is that we just end up in that unique position of having lost an industry and then asking the taxpayers to pay for it. That doesn't seem to be a very good business proposition. PAGENO="0232" 2538 Mr. MASAOKA. I think that, for example, your colleague, Congress- man Stratton, recently called attention to the fact that Mohasco In- dustries in the city of Amsterdam, even though they have this import protection which has completely cut out Wilton carpet imports, for example, just decided to lay off their workers right after the Congress- man and others had gone to the White House, and I think if I recall the Congressman's words, they practically ~persuaded the President to reverse a decision made by the Tariff Commission. In other words, these factories were closed. People will go out of work. These things happen all the time in industry and they happen more due to other factors than imports. Mr. BATTIN. That is all, Mr. Chairman. Mr. BURKE. Thank you very much, Mr. Masaoka. Mr. MASAOKA. Thank you. Mr. BurtKE. Our next witnesses are Mr. Lawrence S. Phillips and Carl H. Priestland of the American Apparel Manufacturers Associa- tion. STATEMENT OP LAWRENCE S. PHILLIPS, THE AMERICAN APPAREL ~ANUPACTURERS ASSOCIATION; ACCOMPANIED BY CARL H. PRIESTLAITh, CONSULTING ECONOMIST Mr. PHILLIPS. Thank you, Mr. Chairman. I am Lawrence S. Phillips, president of the Phillips-Van Heusen Corp. I am here on behalf of the American Apparel Manufacturers Association, a group of over 500 manufacturers in America, the largest group in the world of its kind. And I am joined here before you by Mr. Carl Priestland, our economic adviser. You have been at this for 2 weeks and have heard the figures that I have in the prepared testimony many times. I am not going to impose upon you by repeating them. I have a simple and short story to tell you, and I really don't need to refer to these notes because I know the story by heart. Since May 1961, a.t which time the seven point program was an- nounced, I have decided the only way to come out ahead of this game was to become a stockholder of Eastern Air Lines and take their shuttle to Washington once a week, and we have been down here probably that often between our appearances before all of our Representatives in Congress, the Tariff Commission, most recently, and monthly meetings of the Management-Labor Textile Industry Committee. And I come to you today on behalf of our industry at the point of complete frustra- tion, at the point of complete anger, at the point when our industry is having a meeting today in Atlantic City that I must tell you about because I think it speaks for itself. What is happening today in Atlantic City is that there are accord- ing to today's paper, 10,000 manufacturers and their representatives meeting. The meeting started at 10 o'clock this morning. The subject of that meeting is the pros and cons of offshore production and I was to be a speaker at that meeting because I am constantly asked the question, how, as the president of a publicly held corporation with responsibility to stockholders, can we permit to happen what has happened. PAGENO="0233" 2539 There is a very interesting member of this panel who is talking to a large number of 10,000 people. His subject matter is, a country-by- country critique of apparel production opportunities in Southeast Asia. This gentleman will cover the more important aspects of general investment conditions, including such factors as political stability, tax rates, incentives, freedom to remit~ profits, and repatriate capital and who is investing. I don't know whether or not all the members of your committee, and I am so sorry they are not here, realize how critical and- Mr. BURKE. Before you proceed, there is a debate going on in the House on a expenditure bill that runs into the billions, and the chair- man and the other members of the committee are conferees, and have some problems on a tax bill coming up tomorrow. Everything you say here today will be looked over by the committee, and each member is advised by his staff exactly what is said here, so don't be discouraged about the attendance here because it is just as through the entire com- mittee was here. By the way, would you like to have that put in the record? Mr. PHILLIPS. Yes; I would, sir. If I may I would like to have the morning program of the AAMA convention in Atlantic City inserted in the record. Mr. BURKE. It will be inserted following your statement. Mr. PHILLIPS. That doesn't change the fact that I am sorry because there is a certain kind of critical, almost emotional part of this that gets triggered, gets triggered in me personally, when I listen to the previous testimony. I get very angry. I get angry as an American. I get angry as a manufacturer. I don't like a gun being held to our head. I am sick and tired of their threats. And I am sick and tired of certain members of our administration who have constantly negotiated more as though they were representatives of some other country than repre- sentatives of our own country. It is a combination of this progressive and snowballing depression and frustration which has brought the American apparel industry to the point of decision and that point of decision is now, the decision that won't be discussionable a year from now, and I would like to tell you about what they are doing and why they are about to do it, and I make it urgent before you because, as you know, we have gone through every single alternative open to us not to leave this country. We have appeared, and our association has appeared, the individuals have appeared, and presented the case in detail that would bore you to tears. I don't propose to do that today. It has been done a million times. I propose to show you on this map, gentlemen, the representation of this particular association that I am talking about. Those happen to represent, each one of those dots, a plant facility of one of the 500 members of our organization, or their 200 associates. The point, quite obviously, is that this association which represents in excess of half a million employees, is a terribly crucial one. Apparel is an easy item to manufacture abroad. It is very easy for an apparel manufacturer to move abroad and when an apparel manufacturer moves abroad he takes with him everything that he would normally procure in this country and he procures that abroad. That is linings, piecegoods, but- tops, cartons. The whole kit and caboodile is suddenly purchased from the local suppliers in Japan, Taiwan, Hong Kong, South Korea; PAGENO="0234" 2540 which accounts, incidentally, as you well know, for a very high per- centage of the imports into this country. Now, the problem is a very simple one: the entire apparel industry has the highest labor component in its product of any industry in this ~country. Therefore, labor costs, direct and indirect, is the key issue. I am not going to bore you with statistics but ask you to take a look at this chart for one second which documents very specifically direct labor only in the United States of $2.01 an hour average, the source being the U.S. Department of Labor, and the four major importing countries-Japan at 35 cents, Hong Kong at 20 cents, Tai- wan at 13 cents, and Korea at 8 cents. Gentlemen, when you have a variety of products that have as high a labor component in it as does our industry, the susceptibility to this kind of competition is something which is a simple arithmetic fact. The very devious kind of testimony about what is happening abroad and the cost of fringe benefits and the unproductivity of labor is pure hogwash. On the amount of the increase in labor, mini- mum wage, the last two increases have in themselves been more than the total direct compensatkn in any one of these countries, and this, of course, does not deal in fringes, but you are well aware of what is happening in this industry, what recently happened with the union settlement, the highest in history, of 571/2 cents plus fringes in the clothing industry. And the example of what that is going to set for other areas of apparel is very evident and you cannot relate figures like that and you cannot relate the inflation that is taking place in the domestic economy without widening the gap even further between what the importers can bring in here and what has to be produced domestically. I would like, if I may, to try to present this on a bit more personal basis that I think is very simple. I would like to deal with one of our divisions, our shirt division, that I think I know pretty well. I grew up in this business. My family has been in it for four generations, and they started in this country selling off a pushcart, and there is tremendous affection for the country that has provided the oppor- tunity for our company being what it is today, and I detest the alter- native which is before us today. Let me show you why that alternative exists and is almost manda- tory unless your group takes action. I would like to show you an advertisement which is not unique. It is a very typical advertisement and not a particularly cheap one, run by Alexander's, an important department store group in the New York City area, advertising four shirts for $8.97, or $2.99 apiece. I would like to show you the shirt. The shirt is here. It has been purchased at Alexander's for $2.99, is made of 100 percent tricot. Obviously it is part of a group that has been just referred to that is completely uncontrolled by the LTA, which applies just to cottons. This shirt from Alexander's, selling price $2.99, is advertised by them as being comparable to the two major brands. That happens to be Arrow and Van Heusen, whose identical shirts sell for $6. That is a fact. This ad is absolutely correct. The values are absolutely correct. You can't fault them one iota for this. This is a fantastic value, and there is no question about the fact that that comparable shirt is sell- ing by domestic producers at $6. PAGENO="0235" 2541 I show you a shirt purchased at E. J. Korvette, a shirt made of a hundred percent tricot. It was purchased for $1.99 at E. J. Korvette. I would like to put all of these in the record, if I may. I am sorry. Let me just identify these. The fact that this first shirt from Alexander's was made in the British Crown Colony of Hong Kong. Perhaps that should say with the forbearance of Communist China, who happened to let that colony exist. I show you the next shirt, which was also made in Hong Kong, as was a shirt which is 65 percent polyester, 35 percent cotton. The price on this shirt is three for $4. Not only is the price three for $4, but the printing on the back blocked off identically to the printing on the Van Heusen comparable shirt selling for $5. I show you the brand in Japan, a shirt from Macy's, made of 65-35 polyester and cotton, all permanent press, made exactly as well and by the same standards as ours. This shirt costs $2.62. I show you another shirt from Macy's made in Taiwan, a hundred percent polyester tricot. This shirt, gentlemen, was purchased, sold for $2.99. Every single one of these is a half sleeve shirt very similar to the one advertised here. I show you now the identical item which is the bestselling single half sleeve dress shirt in America. They~ are two identical items, one made by Arrow, one made by Van Heusen. Those shirts sell for $5. These shirts, gentlemen, that sell for $5 around this country are not superior in any way to the shirts before you on the table. The workmanship, the cloth, the quality, the stitching, is no better in the shirt you see before you than it is in these American brand shirts and I show you this comparison. Mr. BURKE. What goes into the makeup of those shirts? Mr. PHILLIPS. The two shirts I am holding before you which retail at $5 are 65-35 polyester and cotton, as are most of the shirts that I have laid before you. I additionally show you a hundred percent tricot shirt which retails in this country for $8, a domestically made shirt. The profit margins enjoyed by ourselves and our chief competitor are of public record and they are far frOm excessive. At least that is what our stockholders constantly tell us. Gentlemen, this is what our country and our industry is faced with. I show you shirts only because it is an example. The exact same set of statistics can apply to any product line. I will show you, if I may, in the case of shirts first what has hap- pened to total imports, and you can see very easily what has happened in the course of the years from 1964 tO the present, and the mix that has taken place between blends, synthetics, and cottons, and all the protes- tations about cotton being down are very legitimate because the cotton industry is off a lot less than it was at, that time. What has happened to the completely uncontrolled polyester and blend industry is there, gentlemen. What this means is that the promise made to us by President Kennedy of a 6-percent level which he thought our industry should cope with, and we agreed we would cope with, 6 percent of total consumption, has been thrown out the win- dow by our State Department negotiators, by the bilaterals that were negotiated. I should also say dictated by the representatives of some of our pub- lic State friends, the net result is that today in this country the 1967 PAGENO="0236" 2542 ratio of imports to garments ranges from 20 percent in women's and children's slacks and shorts, 17 percent in women's and childrens' woven blouses, 17 percent in men's and boys' woven dress shirts, 15 percent for knit outwear. I am not going to read any more figures. I am going to say to you one very simple thing: We cannot permit our business to become eroded. `We have stated before you a.nd your associates many times that the last thing in the world we want to do is to go offshore, but if we must go offshore we will. Our industry as individuals is on the verge of giving up. They are about to say, "Our Government is not our government. Our Government considers our industry expendable and, therefore, if they do that we have no choice. We must import from abroad. We must relocate abroad and we are going to have no further growth in this country, and we will begin now to st.art closing up small, ineffectual production units in this country." I am not going to recite how important this industry is to this country. You know it and it has been said and said over and over again. I say to you tha.t this is not an idle threat. Nobody is putting a gun at anybody's head. We have pleaded, we have begged every com- mittee, every division of the administration of our country, to please take serious note of this before it is too late. When this meeting takes place today, as it is taking place, in Atlantic City, you are beginning to see the erosion of one of the most important industries in the United States, and there is nobody who is going to stop this erosion, gentlemen, if you don't. Our people are sick to death of the doubletalk. They yawn when the subject is brought up. Their blood boils, their temperature goes up, when they hea.r about the administration of the LTA and their refusal to encompass all other fibers and blends and they have asked our association, "Let's stop kidding around. Our Government doesn't care about us. Let's take the path of least resistance. Let's go abroad." That is what this meeting is about today, gentlemen. I am sick that this is the subject matter of this meeting today and I am horrified at the fact that this expansion that should be taking place in the United States is not going to take place in the United States unless something is done and done very soon by you, and I don't know any step after you. You know, we have had our hopes terribly high many times and I can't tell you the depths of depression that took place when the Holl- ings amendment was washed out at the conference. I must say to you in all sincerity tha.t we have a tremendous alle- giance to this country. We have a tremendous allegiance to the over 1 million employees in our field, to the over half million represented by our apparel industry, and they released me from a speech in Atlantic City to say to you this is our last plea.. `We have made the experiments. As a public company we have made experiments. We have located adequate, substantial suppliers in Hong Kong. We are prepared to bring in merchandise. We ha.ve tested it. `We have tested the quality. `We have tested consumer reaction. `We are going to have to do it, and it rankles us to the core to have to do it. Gentlemen, our story is a very simple one. I don't know what is more simple evidence. I refuse to get involved in the kind of histrionics that the preceding gentleman indulged in. I would just lay before you PAGENO="0237" 2543 the facts that this is happening, and beseech you for what I am afraid is really the last time to please ask your associates on this committee to address themselves to this problem on behalf of not only the ap- parel industry but everybody affected by it, which, of course, includes the textile industry, and I thank you very much and I and my asso- ciate will be happy to try to answer any questions you might have. (Mr. Phillips' prepared statement and pamphlet referred to follow:) STATEMENT OF LAWRENCE S. PHILLIPS, AMERICAN APPAREL MANUFACTURERS ASSoCIATIoN, INC. Mr. Chairman and Members of the Committee, my name is Lawrence S. Phillips and I am President of Phillips-Van Heusen Corporation. I am appear- ing before you today on behalf of the American Apparel Manufacturers Associa- tion, headquartered in Washington, D.C. AAMA represents more annual dollar volume in the apparel industry than any other trade organization in the world. Its members employ approximately 500,000 people in 43 States and produce more than $6 billion worth of apparel (at manufacturers' prices). These prod- ucts cover the entire spectrum of apparel-men's, women's and children's, knit and woven, from fashion to staple garments. At the onset, Mr. Chairman, may I congratulate you on the leadership you have shown in initiating these hearings. Your interest in and concern with the impact of imports on American industry and employment could not be more timely as far as the American apparel industry is concerned. The American Apparel Manufacturers Association support your bill, H.R. 11578, because we believe its enactment would result in bringing order into the present chaotic situation in international trade of apparel and textile products. We endorse this bill and believe its large-scale endorsement by many of your colleagues in the House of Representatives to be a significant indication of the interest in our growing problem on the part of the Congress. Underlying my comments on the apparel import problem is a philosophy con- cerning international trade in today's world. We think that in these days of a complex international economy which is influenced by much more than economic conditions alone, it is no longer intelligent to think of completely free trade as outlined by 19th century economists. Today, the interdependence of economic and social structures, both nationally and internationally, makes it necessary to con- sider more than the short run price and profit results of international trade. We must consider the social and economic health of the people affected by the policies we will discuss here today. While it is true that "freer" world trade generally brings economic good times, it is also true that economic dislocations of some magnitude introduced into one country can have remafications through- out the world and offset the benefits of increased world trade. We must balance the consequences of our actions on these two points: the benefits of greater world trade and the economic hardships wrought by this uncontrolled increase in world trade. One of the major problems facing the domestic apparel industry today is rap- idly rising imports. Ever-increasing amounts of foreign-made apparel have been reaching our shores since the mid-1950's when the war ravaged countries of Western Europe and Japan and the developing countries of Asia and Latin Amer- ica began shipping apparel to us. The quantities were small at first. But as these countries developed the capacities of their apparel industries to a size far beyond their own needs, they started to ship to the largest and most affluent market in the world. We accepted these goods, but soon found that markets were being disrupted. Cotton, wool, and man-made fiber apparel imports have grown 84% between 1962 and 1967 in physical volume, and 86% in dollar volume. (See Chart 1 and Table 1.) At first, cotton apparel and textile products were almost the only kind of im- ports. Because of this, our government's initial attempts to provide more orderly international apparel and textile markets were aimed at trade of cotton products. The Long Term Cotton Textile Arrangement (LTA) was initiated in 1962 and has now been signed by 30 nations. Its most unique feature is that it allows for 5% annual growth in exports so that the importing nations are, in effect, sharing their markets with the exporting nations-but on an orderly, clearly understood basis. PAGENO="0238" 2544 Although the administration of the LTA has not always been as strict as had been provided in the Arrangement itself, the instrument has been an effective means of providing orderly access to the markets of importing countries. The manufacturers in countries which export substantial amounts of apparel are able to know the approximate size of their market each year, being fairly sure that almost all they ship within the limits of the Arrangement will be bought in the importing country. This gives stability to markets in underdeveloped countries which would not be possible otherwise. In the last few years the effectiveness of the LTA has become increasingly limited because the trend in fabrics is away from cotton and toward man-made fibers. All synthetic or cotton-synthetic blend fabrics have gained such popularity around the world that an arrangement regulating the international trade of cot- ton products only cannot have the importance it did just a very few years ago. The popularity of synthetics has come about in large part because the permanent press feature of apparel products is usually achieved by the use of man-made fibers in the fabric. In 1962 the United States imported 49 million square yards equivalent (SYE) of man-made fiber apparel. It is estimated that we will import 400 million SYE of man-made fiber apparel this year. This is an increase of 710% in only seven years. There is no doubt in the minds of American apparel producers that these imports are hurting our domestic markets. Had there been an international arrangement, such as the LPA, governing the trade of man-made fiber apparel and textiles, it is very unlikely that we would be facing such tremendous foreign competition today. A major factor in rising apparel and textile imports today is the lack of regulation of all these products except those made of cotton. Let us look at some other reasons for the rise in imports. American retailers find that the cost of foreign-made apparel is generally much lower for comparable goods than the cost of American-made apparel. Mark-up on lower priced imports is usually higher than the mark-up on low priced American apparel. This fact also leads retailers to buy imports rather than domestically produced apparel. At one time the quality of foreign garments was not up to the standards ad- hered to by American apparel producers. This is no longer true in large measure. * Imported apparel is of very good quality and compares favorably with American apparel. The improved quality has brought greater acceptability to foreign goods, thus adding to the rise in imports. * Although economists have tried to discount the "cheap labor" theory relating to economic harm from imports, there is a strong argument in favor of this theory for the apparel industry. Apparel is made of two principal ingredients: fabric and labor. The machine is tertiary. Only recently has any machinery been de- veloped which can take a little manual labor out of certain tasks relating to apparel production. The sewing machine operator is still the most important element. The equipment given sewing machines operators in most countries in the world today is every bit as geod, and in some cases better and newer, as the equipment used in American apparel plants. The quality of foreign-made fabric has improved a great deal in the last decade, and it too measures up favorably with the quality of U.S. produced goods. But the price of the fabric and the wages of the labor which go into making apparel in most other countries of the world are substantially less than in the United States, and this-is the major basis for their competition. The productivity of foreign labor is not so low relative to its wages that the labor cost of the garment equals that of an equivalent American- made garment. To illustrate my point about foreign apparel workers receiving substantially lower wages, let me cite a few examples. In 1966 the average hourly wage of an apparel production worker in Japan was 35ç~, in Hong Kong 20~, in Taiwan 13ç~, and in Korea 8~. (See Chart 4.) In most Asian countries benefit payments are a very high percentage of wages, being, in effect, payment "in kind" to the workers. If we assume benefits to equal these wage payments, which is realistic for Hong Kong, for example, we can see that payment still falls far below that given American apparel workers. The possibly lower productivity of Asian apparel workers is not reflected in their substantially lower wages. They are paid less than Americans for an equal amount of output. I think it would be valuable at this point to take a very brief look at the place of the American apparel industry in our economy and then to see which areas of the industry are being hurt most by imports. Apparel manufacturing in the PAGENO="0239" 2545 United States is carried out by about 25,000 different manufacturing plants, and most apparel companies have just one plant. Almost 1.4 million people work in this industry of which 80% of the employees are women. The industry turned out over $18 billion worth of goods last year, valued at wholesale. We estimate retail sales of apparel last year were $36.2 billion. Almost every state in the Union has some apparel production, and in many states the apparel is produced in "one company towns." While apparel is produced in almost every state, there are large concentrations of production in some of the regions of the United States where unemployment rates as high-Appalachia, inner city areas-and among those groups of difficult to employ people labeled "semi-skilled." When apparel companies go out of business in these places, there is often no other work for the people who have lost their jobs. They are ill-equipped to do other work, and usually there is not much other work to be done in these areas anyway. Since most of the workers are women, they are not free to move in search of other employment. There are six areas of the American apparel market in which imports have a significant share. These are staple items which are necessary in the wardrobes of all people, rather than fashion items or apparel associated with short-lived fads. In 1967, 20% of the women's and children's slacks and shorts sold in this country were imports. Imported woven blouses for women and children took almost as large a share of their market last year. The markets for knit outer- wear and men's and boys' separate trousers and shorts were composed of 15% and 12% imports, respectively, in 1967. Imported foundati'on garments con- stituted 10% of that market in the United States last year. (See Chart 2.) The growth of imports of men's and boys' woven dress and sport shirts has been exceptionally rapid, and these imports constituted 17% of the U.S. shirt market last year. The meteoric rise `of synthetic fiber shirts is a particularly good illus- tration of the unlimited growth possible for man-made fiber apparel. In the last few years, more and more men's and boys' shirts have been made of cotton- synthetic or all synthetic fabrics. Foreign producers were able to get in on this change of product almost at the beginning, and they took advantage of the fact that the LTA does not cover synthetic fabric apparel. Let me illustrate the rapid increase in man-made fabric shirt imports which I have been talking about. In 1964 the U.S. imported 3,400,000 dozen ootton shirts and 196,000 dozen synthetic fabric shirts. This year, only five years later, it is estimated that we will import 2,900,000 dozen cotton dress and sport shirts and 4,300,000 dozen synthetic fabric shirts. There has been a decline in the number of cotton shirts imported because demand now is for shirts containing at least some synthetic fibers in the fabric. The increase in imports of synthetic fabric shirts is 2,100% because the market demand is for this type of product and because ex- porting nations can flood our markets with the product made with substantially lower paid labor. The quality of these shirts is as good as American-produced shirts of the same type but which cost more. (See Chart 3.) There are other areas of the American apparel market which are being hurt by imports, but it is not necessary to mention them all to see that we must act now to keep our industry strong and viable. Let us look at some of the consequences of continuing imports with only the current restrictions now imposed on them. We think there are four main consequences which could result from con- tinuing unrestricted apparel imports. First, we feel that the apparel industry in this country is filling an important econOmic and social need which will not be satisfied if apparel plants are put out of business by imports. The importance of the industry to employment of certain types of people and of those in the par- ticular area which are known for unemployment cannot be overstated. The need for our society to provide work for everyone seeking employment can be met by industries such as the apparel industry which can train the "hard core unemploy- able" in a matter of months. Second, apparel producers have invested several billions of dollars in machinery and buildings in order to make clothing for our people, and they stand to lose a substantial amount of this investment if apparel imports continue to grow at the rate they have been in the past five years. Apparel-producing machinery is not adaptable for use in any other industry, as machine tools or data processing equipment is. The third possible result of limitless apparel imports pertains to military pro- curement. We need an apparel industry in this country to support our military PAGENO="0240" 2546 and war-time needs. The apparel industry always rises to the call of the mili- tary when the time comes, and it has always been prepared to produce the neces- sary clothing. If the industry were to dwindle away, it would not be viable enough to do the job. Other national emergencies also require vast amounts of clothing which can only come from a domestic industry which is equipped to handle the needs. Fourth, balance of payments difficulties, currently a grave problem for this country, must enter into consideration. The contribution apparel imports make to our balance of payments deficit can only be enlarged if imports continue their rapid rise. In 1964, the deficit in our balance of payments attributable to apparel was $347 million. Last year this deficit was $520 million.' As apparel imports continue to increase, our negative trade balance in this area will surely in- crease also. How can the problem of rising apparel imports be solved so that American producers can continue to contribute employment opportunities and income to our economy? We see two possible solutions, one is highly unlikely to be effective, the other is a workable solution. Theoretically, it would be possible to solve the problem of rising imports by a tremendous expansion of apparel exports. As a practical matter, however, this solution is highly unlikely to come to pass, since the American apparel manu- facturers who have attempted to export have, for the most part, met with less than spectacular success. Besides having a product whose labor costs, and there- fore total costs, are usually higher than those produced in the accepting country, American apparel producers have very frequently met with non-tariff trade bar- riers which have absolutely prohibited their even trying to sell their products. And, not all trade barriers are non-tariff. In some Latin American countries the tariff rates are so high that they effectively prevent any imported apparel from entering the country. These prohibitions to trade make exporting difficult, if not impossible. We are not successfully eliminating non-tariff barriers, yet the only barrier we have against a large portion of apparel imports is a low tariff. We think the solution lies not in raising our own tariff rates but in instituting an orderly access program whereby we will continue to share our growing apparel markets with imports but will not stand by and watch a virtual take-over by imports. We believe that an international arrangement, such as the LTA, cover- ing apparel and textile products of all fibers is the way our foreign trade policy can solve the problems of the trade in these products. We would prefer to see the multilateral arrangement which an all-fiber LTA-type instrument would provide. If that were not possible, bilateral agreements with those countries which export apparel and textile products to this country would be a very similar solution. Only if these two approaches failed would we want this country to take unilateral action to regulate the inflow of apparel and textile products. In any case, we are willing to share our markets. We want imports to have orderly access to Amer- ican apparel markets. We want to grow along with overseas producers; however, we do not want them to take all the market growth and some of the market which is already established. This approach is good for all apparel producers because it permits competition and also gives exporters a fairly good idea of the dimensions of the market available to them in this Country. The alternatives open to American apparel producers in the event that no orderly access arrangement is established are not pleasant to contemplate. Initi- ally, at least some of the apparel makers would move their production to those countries where labor costs were at a level which would make their products competitive on the basis of price. I know apparel executives whose firms plan that all new plant and equipment will be added overseas. Some companies would start phasing out their less efficient domestic plants when the foreign capacity is built up. When this happens, a lot of small producers will also be squeezed out. This trend will snowball once it starts, and substantial employment and invest- ment will undoubtedly be lost. This will leave our economy with greater unem- ployment, loss of capital, and loss of income. `Includes all fibers plus leather, rubber and fur apparel but excludes exports of used apparel. PAGENO="0241" 2547 Our foreign trade policy must continue to weight the needs of domestic indus- try against the needs for foreig~i trading partners. We must recognize that American producers have at least as much right to be helped by our foreign trade policy as do foreign producers. The burden to our Nation of economic and social dislocations which could occur if a major portion of our apparel industry was closed down by imports, would be almost unsupportable. The price we would pay in unemployment, lost investment, and social hardships of the workers would be so high that the country cannot afford to continue its current policy toward apparel imports. The future viability and stability of the Amer- ican apparel industry depends on the future of our foreign trade policy. Recluc- tion of tariffs and no institution of an LTA for all fibers will mean great hardship for the industry. On the other hand, an all-fiber LTA will mean a healthier domestic industry and a well defined market with no hidden non-tariff barriers preventing foreigners from bringing their goods to our shores. Such an arrange- ment is an honest way to deal with the problem and at the same time provide a growing market for all our trading partners. Mr. Chairman and Members of the Committee, on behalf of the American Apparel Manufacturers Association, may I express our appreciation for your courtesy and for this opportunity to outline before you our position on this critical problem. I will do my best to answer any questions you may have. TABLE 1.-U.S. IMPORTS OF ALL TEXTILE PRODUCTS AND APPAREL BY SELECTED FIBER IFigures in millions of SYE and dollarsi Percent 1962 ~ 1963 1964 1965 1966 1967 change, 1962-67 Imports of textile products `(SYE): Cotton Wool Manmade fiber Total Imports of apparel (SYE): Cotton Wool Manmade fiber Total Percent of apparel to total Imports of textile products `(dollars): Cotton 1,165 140 213 1,101 143 221 1,058 130 328 1,312 181 566 1,824 175 798 1,486 +28 150 +7 933 +338 1,518 1,365 1,516 2,059 2,797 2,569 +69 382 46 49 384 53 54 415 54 92 457 68 159 485 63 230 475 +24 59 +28 343 +600 477 491 561 684 778 877 +84 31 36 37 33 28 34 $307 $298 $308 $369 $463 $417 +36 Wool 227 265 259 330 328 307 +35 Manmade fiber Total Imports of apparel (dollars): Cotton 72 85 129 193 259 312 +333 606 648 696 892 1,049 1,035 +71 154 149 163 185 208 207 +34 Wool 114 144 149 182 189 185 +62 Manmade fiber Total 33 39 63 92 121 169 +412 301 332 375 459 518 561 +86 Percent of apparel to total 50 51 54 51 49 54 1 Includes apparel. 95-159 O-68--~pt. 6-16 PAGENO="0242" 2548 CHMT 1~ IMPORTS OFCOTTC~ WOOL ,At /0 MAN~MAOE FIBEA' APPAREL 1362-I968~(/nthi7i7ons ofeq'u/kt7/ent~q'uc1iv~prds) MILIJONS 1,000 9001 804 700k 6001 5001 4001 300~ 2001 1001 0I SOURCE: U.S.DEPARTMENT OF COMMERCE CUART4 AVERAGE HOURLY WAGES OFAPI~4REL WORKERS AROUHO THE WORLO +2.25 42.00 +1.75 +1.50 +1.25 +1.00 4.75 4.50 HONG KONG 4.25 204 TAIWAN KOREA 134 _______ 84 O ERTA FOR ALL COUNTRIES IS FOR 1966 EXCEPT U.S. WHICH IS 1967 - 477 AMERICAN APPASEL?MNUFACTURERS ASSOCRJ1ON SOURCE: U~. DEPAPTMENT OF LABOR AMERICAN APPAREL MANUFPCTURERS ASSOCIA11OU PAGENO="0243" WEDNESDAY JUNE 19 THURSDA~. JUNE 20 RttsrR ~s st4 s FtC nts:s1crst:ss, Os:4 tOot 4 sos Csrs~ CPsrs'o ~ AHAII 1~4C PSIPIPLEM C dEn 50 P AAMA C: Mp¼Eoo MANAYMFNTM REOFCNMEILOIEP IN A FOCI OLd WOO APP 024 L LOW OR NI ION. Los P P04 Psdd st PP4I~~5t~ Ins ~` LNspss:Ps 0 sisss* A 0000FRY BY 20042422 CR1 000F OF APPAREL 5R000CTION OPE 22200ITIr3 0 200IIIIEART ~ AOA RosA 0s42 FdP~pI 42 5 42042 0~IC 7000RNMENT 2 P IPAPOINI i y N s ~ 1 1 10:20 AM 11:20 AM. PROP AND 00*2 OF OFF000RC PRODUCTION Ybur ro~dmap to NCP~EASEO PRORTS SEMI NARS 35th ANNUAL MEETING PANORAMA FOR PROGRESS CONVENTION NALL ATLANTIC CITY JUNE 19~22 0:00 A V. 1020 A NI. PR00000IVITS OROVPrT I PIN I P41~ A OF I As'ROACR: Es: oS 2 :s~s::5 A so 4 N:: ~ 22sN :2 ~ 0 N*IRPLTIC AP°ACPL 4* 204L 0MEN4002 C)1 ~ : `:; 5 ~\ ( 0 0 PR000ICINO PM NLL LLIPO PFFPCDVLLY EON N ISP RO0ICINO IMNIOVC000ITP IN lIP P41000 AND *ACOINFRY IN Al PAl LI 0200FR000RINO tI 0 ~ s Co PAGENO="0244" 2IIUAY, JUNE 21 SATURDAY JUNE 22 0:01 AU. - iTf:Jff AU, 0:00 AM, " 10:30 AM. /~: i~+ iL7 ~ "Aft, A ff7771 `i'' 7' , `~ 1 `+r''':cr': : ` . `4 2 7', p ``"~1 2:';." tI',,, * 1 f'7:A''FA; , r I 71' 7.1 77', `f_f"; 7, ` _ , `~f"",,f 7 ,_ 7:1 `1,', ``+11 `1, fl'U 7,11, *17 .fu,ft 10 1' ,`tftp : ` ` P,,' A `p pu'' 20 Au , 7 2,' U `7 71 `7,, ,,, ` f Iftu *`,uy, 1,,*'~ `0 I ``"P7 ~A "p 77,,,. `2 2,7,',,, `````1,1, ```"`Pu' A' " `,~,f',, ``~ `u'''' 7' `~` 1 `7 Au,,' 21 `,f ` 7,; `7 `P 74* A P,' ``7 1 ``f ```,, ,f:,,'~P,f',,:p'f_,7', 1',; +4 , ~7'f1~7' ,,71,71,*'77, 4,1' f',Iu',',Juu" `1~ .`+1''*f'~:~..; "L',".f',',''.'f,," 4' 4 `1 `~`"7''*A `P*4'.74'7, ``A';l''j F' "H ""u'." "uif'r 0,r,f,,y, "~` `7 1','', , , 7'',, Luuc,7'''pt;f.' A ", ` ,, " ` ` . `p Pt U, P.4 L Vu, `p `7'.' ,,` `7 `7 ,`,`,,,`,0',,k'p~ft'p7'p' 77 7 ` 4 `7. `,` ```7+, 7. 71' ` ` If' , , 471 `77 :77777 ``07,1 p47:0 if_f `f_Off! f'f,UIffffUANCC A 772 T'+f''ff.fif,'' 0 `*ff~ `p 0' 0' C `"uf'p, i,*u"2? * ,"`````,, ``, ``u"'',:7,f; 7''' PAGENO="0245" 2551 Mr. Btrrn~. Thank you very much. Are there any questions? Mr. BATTIN. Mr. Chairman. Mr. BtJRKE. Mr. Battin. Mr. BATTIN. I would just like to thank Mr. Phillips. I have never heard him testify before. I think the charts that he presented and the visual aids of actually what has happened are most helpful. I un- fortunately share your same belief as far as some of the actions of our negotiators in the past, and I too am hopeful that we will on this com- mittee take a look at `this whole problem and do something about it during this Congress. Mr. PrnLLn's. We certainly hope so, sir. Mr. BURKE. I would just like to commend you on your statement, and the point brought out that contradicts some of the statements that are being made here that there is no concern on the part of some people in this country about what is happening to some of our industries. As has been pointed out here very graphically by you and the charts and the submission of this type of product, there are some real prob- lems here in the country, and some people have to come up with some answers. The time is running short and your industry is just another one of the industries that is being injured by those who have their blinders on just like ostriches with their heads buried in the sand, and refuse to look at the problems as they exist. You have given excellent testimony here, and the committee wishes to thank you. One question from Mr. Landrum. Mr. LANDRUM. Is it your judgment that the import quota bills intro- duced-I have forgotten the numbers, H.R. 11578 and others-put any particular gun at any of our trading partners' head? Is it that sort of a threat to any of our trading partners? Mr. PrnLLIPs. I don't believe so, sir. My primary hope is that our Government's representatives would be representatives of the people and be a little less concerned about the reaction of some of our trad- ing partners. Their representatives are not the slightest bit concerned about our reaction, as you saw by the previous speaker. Mr. LANDRUM. Would it be your judgment, then, that H.R. 11578, introduced by Mr. Mills, is designed more to bring about an orderly entry of imports so as not to upset our local job economy? Mr. PHILLIPS. It certainly is Our position, sir. We have whole- heartedly endorsed that proposal `and will do everything we can to make it successful, and we have endorsed it completely and that is in our prepared text which has been submitted to you. Mr. BATTIN. I was curious about the difference in price there, aiid you say the quality is comparable. How about, if you know, the profit margin? Mr. PHILLIPS. One of the more difficult aspects of this is that many retailers can get a higher profit margin by importing goods from abroad and by doing it themselves, than by getting involved with the middle man, such as us, as unfortunately, in this day of profit squeeze, it is terribly tempting for many of them to buy foreign items. Mr. CONABLE. If the gentleman will yield, I notice that most of those real bargains came from large New York City department stores. PAGENO="0246" 2552 Therefore, the assumption is that they are importing them directly. Is that it? Mr. PHILLIPS. I know for a fact that E. J. Korvette imports directly, Alexander's and Sears and Macy's import directly. The answer to that is yes. My testimony really was nothing but a repeat of what I have just said before the Tariff Commission. I happened to procure this identical set of shirts from the Hecht Co. and Woodward & Lothrop in `Washington. This exists in every city in the country, and New York is certainly no exception. Mr. CONABLE. As a natural concomitant of this big increase in im- ports, there is some breakdown in the structure of distribution in this country. Is that correct? Mr. PHILLIPS. What is pending before us is a complete breakdown of that happening. If that happens, if this price disparity continues to exist, then some of the major chains are going to make some major moves abroad. The legitimate department stores in this country will then begin to make greater steps abroad, and then, which is happening right now, we and all of our counterparts and associates will make those steps, and everyone who competes with us will follow. Mr. CONABLE. What I meant was that, as a matter of practice, you would normally distribute your shirts through some sort of agency, some sort of middleman. Is that correct? Mr. PHILLIPS. Through a retailer, men's wear store. Mr. CONABLE. Through area representation, and that person, inde- pendent or otherwise, would handle all sales to retailers for you, rather than you selling directly to retailers? Mr. PHILLIPS. That is not the case in our company, but some people do operate that way. We do not. We sell directly to the retailers, as does our branded competition. Mr. C0NABLE. I think that is all. Mr. Buiuc~. Thank you very much, Mr. Phillips. Our next witness is Mr. Fred Bissinger. Mr. Phillips, do you have any of the data that you have submitted in those pamphlets that you wish in the record? Mr. PHILLIPS. I have submitted for the record, sir, the program of this meeting in Atlantic City, the advertising, and all of the shirts, and our prepared testimony covers all of the statistics. Mr. Btmiu~. It won't be necessary for you to leave the shirts. Mr. PHILLIPS. It might be the Representative's size, sir. Mr. BtmuLE. It might be misunderstood. But it is important to leave whatever pamphlets you had there with respect to that meeting, and anything else that might be printed in the testimony. Mr. PHILLIPS. Thank you. Mr. BumLE. Mr. Bissinger, will you please identify yourself for the committee and proceed? PAGENO="0247" 2553 STATEMENT OP FRED BISSINGER, PRESIDENT, A1~ERJGAN ASSO- CIATION OP WOOLEN IMPORTERS, INC.; ACCOMPANIED BY DAVID SMITH, NORMAN LICHTENSTEIN, AND MICHAEL P. DANIELS, COUNSEL Mr. BISSINGER. Mr. Chairman and members of the committee, my name is Fred Bissinger, Jr., president of the American Association of Woolen Importers, Inc., a nonprofit organization of American small business members. I am appearing before you today as their spokes- man. Mr. David Smith, on my right, and Mr. Norman Lichtenstein, on my left, are members of the association. I wish to submit my prepared statement to be included in the record at this time. I would like to preface my remarks at this time by saying I certainly wish the group of very capable, intelligent gentlemen who have pre- ceded me all day at these hearings were members of my group. It would make my job much easier. May I take a small portion of your valuable time to give the fol- lowing personal information, with the hope you will be more under- standing and more receptive to iny observations and opinions dealing with imported woolen and worsted men's wear materials. Beginning March 1918, I became employed in the men's clothing business as a stockboy. Later, as a retail salesman, retail store manager, wholesale clothing salesman, piece-goods buyer, and production man- ager of men's clothing manufacturing. All these positions were in the quality men's clothing bracket. Starting April 1953, I became assistant to the vice president in charge of men's wear sales for the Forstmann Woolen Co. In August 1956, I started selling my current line of quality worsted men's wear, materials from Japan. In addition to contacting the men's wear wholesale clothing manu- facturers the past 15 years, I havemaintained a personal contact with some of my former retail clothing accounts in Los Angeles, San Fran- cisco, Baltimore, Washington, Chicago, Cincinnati, Boston, and New York. For the record, based on the consensus of the opinions of the quality men's clothing wholesalers and retailers, as expressed to the members of the American Association of `Woolen Importers, the market for American-made quality men's wear, including suits, sport coats, slacks, topcoats, and overcoats, is largely: dependent on their being tailored, using imported worsted and woolen materials. Without an adequate supply of. these imported fabrics, the quality men's clothing manufacturers and the quality men's wear retailers would no longer be able to serve~ the clothing needs of the affluent American men. Obviously, the loss of this quality sales volume would result in lower employment in both the American men's wear wholesale and the men's wear retail establishments. In the case of Japanese men's wear worsted-type materials, please let me give you an item for the record. PAGENO="0248" 2554 A few years ago, the Japanese mills developed a silk and worsted sharkskin for men's wear. This fabric requires a special weaving technique. This particular material during the past several years has accounted for approximately 40 percent of all men's wear worsted material im- ports to the United States from Japan. Again, for the record, we know of no American mill to date who is making and selling this silk and worsted sharkskin. Please note, men's wear woolen and worsted imported materials are predominantly worsted fa.brics. As a point of information, worsted materials can only be made from worsted yarns, which can only be spun from virgin wool. In addition to the basic quality of these imported materials, and in many respects more important from a. merchandising standpoint, is the very important style factor. The mills in England, Italy, Japan, Korea, and other countries will make special items, such as the so-called classics and so-called fancy patterns, including special design and special colors, in limited quan- tities. Without these so-called specials, the quality men's wear American wholesalers and retailers would, in my humble but qualified opinion, find it very difficult if not impossible to remain in the quality business. Please note, when I say foreign mills will make specials in limited quantities, I mean specifically four-piece warps, four pieces of a pat- tern in a given color. Average total yardage for a four-piece warp would be approximately 300 yards, which would be sufficient for ap- proximately 85 suits, or 150 sport costs, or 200 pairs of slacks, or 100 outercoats. The smallest weaving warp any of the big three American mill combines are currently weaving, according to reputable market infor- mation sources, is a 27-piece warp. Average total yardage for a 27- piece warp would be approximately 2,160 yards, which would be suffi- cient for approximately 655 suits, or 1,147 sport coats, or 1,530 pairs of slacks, or 765 outercoats, of a pattern in one given shade. My judgment of the market is that the average American price for worsted cloth runs from about $2.80 to $3.40 a yard. This is where the volume business is done by our domestic mills, with perhaps a very minute percentage of production at higher price levels. In contrast, there is very little, if any, worsted material brought in from Japan under $4 per yard, the landed cost. The Tariff Commission found the average landed value of Japanese worsteds was approximately $4 per linear yard, which is believed to be higher than the average wholesale price of men's domestic wool worsteds. The Commission also found: The British imports are usually high-styled, expensive fabrics averaging over $5 per linear yard (duty-paid), and compete with a limited segment of the domestic production of wool apparel fabrics. Whereas imports are confined primarily to the men's suit field, with some imports utilized for high-quality sport jackets, the domestic in- dustry practically has to itself the much more rapidly growing men's slacks field and fabric for the women's trade. PAGENO="0249" 2555 Import data shows that imports of wool fabric have been declining over the last several years. Total imports dropped from 84.9 million square yards in 1965 to 67.1 million square yards in 1966, and 60.6 million square yards in 1967. For the same years, imports from Japan, the major supplier, dropped from ~40.4 million square yards in 1965 to 37.7 million square yards in 1966, with a slight increase to 38.7 million square yards in 1967. Certainly this shows a declining pattern of imports, not the rapidly increasing imports which the domestic industry would have you be- lieve. Imports for 1968 so far are higher than 1967, but are at about the same level as 1966. I am in the market every day, and there is more than ample evi- dence that domestic mills are solidly booked ahead, and in many cases are not able to meet their customers' demands. I participated in the Tariff Commission proceedings on textiles and apparel. I believe that this report has put the entire matter in per- spective. The Commission found declining U.S. production of chiefly wool fabrics. However, it remarked: For the most part, the failure of output for such products to expand appears attributable chiefly to changes either in fashion or style, to technology, or both. In relatively few instances do imports appear to have been a major factor. The Commission continued: The domestic output of woven wool fabrics has, however, also been materially affected by the significantly greater pojmlarity of blended woven fabrics, made in the same plants as all-wool fabrics, particularly for use in lightweight summer suiting and slacks. Quite clearly, as the Commission found, this is an all-fiber industry. If the U.S. production of chiefly wool fabrics is decreasing, but pro- duction of chiefly manmade fiber fabrics blended with wool is increas- ing, and all together there has been an overall increase in production in the same mills, this is certainly no cause for cries of injury or the imposition of quotas. I would like to state that the essence of this business is style and quality. Imports enjoy a favorable market for their high quality, high priced fabrics, to the benefit of clothing manufacturers, retailers, and consumers. The American industry is doing beautifully in its much broader market of lower-priced, mass-produced fabric. I believe that the domestic industry cannot only live with imports, but can, as it has shown, prosper. In conclusion, please note our case in point is briefly that we are pro- viding the basic materials necessary to provide the affluent American men with selective quality, American-made clothing, and in so doing, we are also providing employment for American men and women who make and sell these finished garments. I thank you, Mr. Chairman and members of the committee, for giv- ing our small organization this opportunity to appear before you. I sincerely trust my brief remarks have been informative. (Mr. Bissinger's prepared statement follows:) STATEMENT OF FRED BISSINGER, PRESIDENT, AMERICAN ASSOCIATION OF WOOLEN IMPORTERS, INC. Mr. Chairman, members of the Committee, my name is Fred Bissinger. I appear today before the Committee on behalf Of the American Association of Woolen PAGENO="0250" 255~~ Impcrters, Inc. of New York. The Association is composed of importers of woolen and worsted fabrics from all of the major exporting countries in the world. I am associated with Iwai Co. of New York City. I have been affiliated with the clothing business since March 1918 in practically every phase of the business: retailing, wholesaling, and manufacturing. I have been engaged primarily in the styling and purchasing of woolen and worsted fabric used in men's clothing. Since 1955, I have been self-employed as a broker importing men's wear worsted fabrics from Japan. I maintain my contacts with a number of the better quality retail operations as well as with the wholesalers to whom I attempt to sell merchandise. Based upon a lifetime of experience, I can state that the ulti- mate success of the better grade stores throughout the country in the sale of men's clothing is entirely upon their ability to get special styling, and better' quality fabrics, than they are able to get from domestic mills, which specialize primarily in lower grade merchandise. We are able to make fancy styles in this country and domestic mills are in- creasingly attempting to develop styled fabrics. However, the domestic industry largely destroys the purpose of having a special style because their production methods require longer runs. The foreign mills on the other hand, Japanese, English and Italian, find it profitable to make small warps (as small as four pieces to a style) enabling a large variety of exclusive styles. What is obvious to us in the marketplace, is that foreign worsted and woolen cloths are selling on the basis of style and quality; whereas, domestic production is selling at considerably lower prices and does not offer the clothing manu- facturer the same style features or the variety in styles which are available in the imports. For example, silk and worsted fabric (which accounts for well over one-third of worsted fabric imports from Japan over the last several years) is a unique cloth which is strictly a development of Japanese styling, technique and ingenuity and a cloth which has not been duplicated anywhere else in the world, certainly not by our domestic mills. Imported worsted fabrics are made of the finest grades of virgin wool from yarns spun in very high yarn counts and woven in finer constructions than cloth produced in American mills. My judgment of the marketplace is that the average American price for worsted cloth runs from about $2.80 to $3.40 a yard. This is where the volume business is done by our domestic mills with perhaps a very minute percentage of production at higher price levels. In contrast, there is very little, if any, worsted material brought in from Japan under about $4 per yard. The Tariff Commission found the average landed value of Japanese worsteds was "about $4 per linear yard, which is believed to be higher than the average wholesale price of men's domestic wool worsteds." The Commission also found: "The British imports are usually high-styled expensive fabrics averaging over $5 per linear yard (duty-paid), and compete directly with a limited segment of the domestic production of wool apparel fabrics." Whereas imports are confined primarily to the men's suits field with some im- ports utilized for high quality sport jackets, the domestic industry practically has to itself the much more rapidly growing men's slacks field and fabric for the women's trade. Import data (see attached table) shows that imports of wool fabric have been declining over the last several years. Total imports dropped from 84.9 million square yards in 1905 to 67.1 million square yards in 1966 and 60.6 million square yards in 1967. For the same years, imports from Japan, the major supplier, dropped from 40.4 million square yards in 1965 to 37.7 million square yards in 1966, with a slight increase to 38.7 million square yards in 1967. Certainly this shows a declining pattern of imports, not the "rapidly increas- ing" imports which the domestic industry would have you believe. Imports for 1968 so far are higher than 1967, but at about the same level as 1966. Domestic worsted business has been booming, particularly in the polyester! worsted blends in which they specialize and in which imports can hardly compete. I am in the market every day and there is more than ample evidence that domestic mills are solidly booked ahead and in many cases are not able to meet their customers' demands. I participated in the Tariff Commission proceedings on textiles and apparel. I believe that this report has put the entire matter in perspective. The Commission found declining United States production of chiefly wool fabrics. However, it remarked: PAGENO="0251" 2557 "For the most part, the failure of output for such products to expand appears attributable chiefly to changes either in fashion or style, to technology, or both. In relatively few instances do imports appear to have been a major factor." The Commission continued: "The domestic output of woven wool fabrics has, however, also been materially affected by the significantly greater popularity of blended woven fabrics, made in the same plants as all-wool fabrics particularly for use in lightweight summer suiting and slacks." Quite clearly as the Commission found, this is an all fiber industry. If the United States production of chiefly wool fabrics is decreasing, but production of chiefly manmade fiber fabrics blended with wool is increasing, and all together there has been an overall increase in production in the same mills, this is certainly no cause for cries of injury or the imposition of quotas. In conclusion, I would like to state that the essence of this business is style and quality. Imports enjoy a favorable market for their high quality, high-priced fab- rics, to the benefit of clothing manufacturers, retailers and consumers. The Amer- ican industry is doing beautifully in its much broader market of lower priced, mass-produced fabric. I believe that the domestic industry cannot only live with imports but can, as it has shown, prosper. Thank you. U. S. IMPORTS FOR CONSUMPTION OF APPAREL FABRICS, PRINCIPAL WOOL BY WEIGHT' [Thousands of square yardsj LY WOOL, REPR OCESSED WOO L OR REUSED 1965 1966 1967 Japan United Kingdom Italy Korea Other Total 40,380 13, 160 26, 251 1,587 3, 545 37,749 9, 685 14, 710 1,489 3,430 38,746 8, 089 8, 403 2,160 3, 201 84, 923 67, 063 60, 598 `Includes apparel fabric from Italy in chief weight of wool but in chief value of other fibers. See footnote 1 to table B-3--9, U.S. Tariff Commission report on textiles and apparel. Source: United States Tariff Commission. Mr. BURKE. Thank you very much. Are there any questions? Mr. Landrum. Mr. LANDRUM. The last sentence in your statement, Mr. Bissinger, "I believe that the domestic industry cannot only live with imports but can, as it has shown, prosper." This committee has no dispute with that. The industry has no dispute with that. That is so obvious that I am a little bit surprised that you would make it in this situation. The true fact is that what we are trying to find here is at what point, relatively speaking, production to consumption, does it reach the point where we can't live with it. That is what we are concerned about. Your statement overlooks that, as I have said earlier, that I believe Mr. Masaoka's statement did. I think what you are really doing, rather than thinking in terms of the overall consequences to the American economy, particularly the American job economy, is that yOu are making what I am afraid is somewhat of a self-serving statement, and particularly when you cap it with that sentence. Mr. BISSINGER. Well, I am sorry I gave you that impression. PAGENO="0252" 2~58 I mean I came here specifically to speak of our own industry, with which I am familiar, and I am not prepared to discuss an overall picture. Mr. LANDRUM. I believe you have to agree, from the statistics that are available, that the imports of the products that you are talking about from Japan are about 50 percent of the American consumption today. Is that about right, according to the Department of Commerce statistics? Japan, the principal source of imports of wool apparel fabrics, in recent years supplied nearly two-thirds of the total yardage imports. Now, in terms of square yards, imports of worsteds from Japan in 1967 were probably equivalent to more than 50 percent of the domestic production of men's wear wool worsteds. I want to ask you if that is true-and I think we can't argue with whether it is true or not, unless we have other statistics, but, if that is true, how much beyond that can we go and still have jobs in this in- dustry in America? That is the point we are trying to find out.. Mr. BISSINGER. Before I answer the second point of your question, may I ask our counsel to verify the first part of your statement? I refer to the 50 percent statement. Mr. Btnu~. Have you been identified? Mr. DANIELS. My name is Michael P. Daniels. There has been a great deal of legerdemain with the figures, par- ticularly in this field. When they talk about 50 percent, they talk about 50 percent of the fabric used in fall-weight suits for men, and it is narrowly defined. Although this might be true, I don't know what the exact percentage is. It is very high. What they leave out of these statistics are the production of all- woolen and worsted fabrics for use in winter-weight suits, fall-weight suits, slacks, sport jacketings, and in the women's wear field. Now, it is an experience that we have often had in this field, that, if you define a market narrowly enough, you can come up with some of the fantastically high percentages that you are talking about. We do not believe that those figures are meaningful figures, nor are they descriptive of what is happening in actual plants and fac- tories, and what is happening to employment for particular workers. Mr. LANDRUM. Just hold that just a minute. - The question I presented to Mr. Bissinger, which you have attempt- ed to answer, was this: In terms of square yards, imports of worsteds from Japan in 1967 were probably equivalent to more than 50 percent of the domestic production of men's wear wool worsteds. You were supposed to come around and speak to that, and now you speak of the whole industry. Mr. DANIELS. We think this is the whole industry. Mr. LANDRUM. Wait just a minute. You say that we deal in legerdemain in statistics. Let's look at these. Again, in 1961, percent of imports to production was 9.7, and that has gone up: 11.1 in 1962; 12.8 in 1963-talking about all of them, not just the men's fall clothing-1964, 13.3; 1965, 20.6; 1966, 16.8. Average for 1961 to 1966, 13.9, and in 1967, 16.9. PAGENO="0253" 2559 What sort of legerdemain is that? Mr. DANIELS. I believe those are Commerce Department figures, which are computed on the basis of consumption of fibers, and this is overall on the entire wool sector, if I am not mistaken. We have disputed these figures. We do not believe that these figures accurately portray what has happened. Mr. LANDRIIM. Which figure wOuld you suggest we believe? Mr. DANIELS. I think the Tariff Commission has done the best j~b on this, by taking out a comparison of imports in fabrics, imports in yarns, imports in apparel, separately, and then computing the ratio, and I refer you particularly in the Tariff Commission report to table C-27, where the figure for wool is 14.4 percent in 1966-these are fabrics-dropping from 17.1 percent in 1965; 11.8 percent in 1964; 11.3 percent in 1963. I think what you actually see in the wool field, and this, by the way, is wool fabric against wool fabric, not wool fabric or imports of all fabrics competing with wool, which would include cheap-value wool and cheap-value manmade fiber containing wool, which would show an increasing domestic production, and as the figures have shown, you actually have had a decreasing importation over the last few years of these chiefly wool fabrics. This is a cyclical industry, and we don't mean to represent that they are not going up in 1968, but available figures indicate that the 1968 imports will be at about the 1966 level. So we certainly do dispute these figures that you read, Mr. Con- gressman. Mr. LANDRUM. I want to ask you one question that I asked Mr. Bissinger, and you just give me one answer, please. How much beyond this level do you think we can go and still main- tain jobs in America? How much more do you think we can import and still prosper, as Mr. Bissinger has suggested? Mr. DANIELS. The point is not a specific number. It would vary. That is to say, a given amount of imports would have a varying effect on employment, depending on the product and depending on a lot of other figures. There are no magic numbers in this field. However, it seems to me that when one looks at the overall figures for the industry, you have, in 1966, 6.5 percent of imports in the fabric field; that is, imports were 6.5 percent of domestic consumption. If that went up to seven or eight or nine or 10, I don't think it makes any difference, as long as domestic production is going up like this, as it has. Take one field. You will hear frOm Mr. Korzenik, who will tell you about sweaters and knitwear. Mr. BURKE. When you are talking about consumption, on what are these figures based, 6 percent of what? Mr. DANIELS. That is what we call apparent domestic consumption. Mr. BURKE. The American selling price? Mr. DANIELS. Imports plus domestic production, minus exports, which means what disappears in our market, what is apparently con- sumed in our market. Mr. Buaici~. What selling price? The wholesale price as it arrives in this country? PAGENO="0254" 2560 Mr. DANIELS. No. We never use value figures, because we don't believe they are fair. You have to take physical units, so that we are talking yards or pounds or units of one sort or another. Mr. Btm~. But to me, I have to take the figures of the retail price in this country. `What is the percentage. of the retail selling price for this product, whether it is by pounds or yardage, or by what method? I would like to know what the percentage is of the selling price here in America. There is a lot of difference. When you quote a percentage, you can be quoting a percentage of the wholesale price at the point where it arrives, or you can quote the value of it as it is sold in the retail market. Is this the wholesale market, or the retail market, or before it is shipped over here, or when it arrives? Mr. DANIELS. `We believe that the most accurate measure is to meas- ure physical volume. Mr. BURKE. I know you believe that, but I would like to know for my information what the percentage is of the retail price. Mr. DANIELS. I suggest that you ask somebody with access to a bank of computers, because it is almost impossible to figure out, first of all, the retail prices. Mr. Bu1~E. You have given us a percentage, and I would like to know how that percentage lines up with the percentage of the Amer- ican selling price. Mr. DANIELS. I don't really understand your question. You are saying that the imports as a percentage of the retail price of the same goods sold in America at retail? Is that what you are say- ing? Is that the total sales of all these goods, and what is imports as a percentage of that? I think it would be impossible to compute. I do submit that the physical measurement is a superior measure, because there are varying price differentials among imports, and among domestic production, and I don't see what you come out with. Mr. BuinIE. Let's just take the dollar value, the percentage of what it represents in the dollar value, and whether the dollar value is the wholesale price, or the retail price that you are quoting to me.. I can understand that. I can't go into the rest of this discussion, be- cause I don't understand what you are saying. I can understand when you say that something is shipped into this country, say, at a wholesale price of $5, and it retails at $9. If you say it is 6 percent of the $5, or 6 percent of the $9, of the retail price, I will understand what you are talking about. I am merely trying to get some information. You people represent the industry. You are the attorney here, and I should hope that some- one here could come up with the answer. Mr. DANIELS. As Mr. Bissinger says, you are comparing prices, the price of the landed duty-paid wholesale price. That is, the price at which these fabrics we are talking about, as found by the Tariff Com- mission, is about $4 per linear yard. The price for domestic worsteds, which we maintain are not com- parable in quality, are selling for about $2.80 to $3.40. PAGENO="0255" 25.1 The domestic fabrics are much cheaper, are of much poorer quality, are mass produced, and made for a mass market. The fabrics that Mr. Bissinger is describing, which comprise practi- cally all the imports, are high-quality fabrics for quality suits and quality clothing, and the main point is they are moving in different markets. Mr. BURKE. I don't think there is any argument before this com- mittee about high-priced, high-quality merchandise. I think what we are concerned about here, more than anything else, is the general merchandise that is coming into the country that is hav- ing such an impact, and will have an impact on employment and on business. A country can produce a certain type of tweed, a little country like Ireland, the wonderful suits that they produce, we can understand when those suits come over that they are not in competition with any- one. They have a special, unique type of suit. We are not talking about that high-priced type of clothing. Mr. DANIELS. That is what Mr. Bissinger and these gentlemen are bringing in, and that is our point. Mr. BURKE. I don't think they will be affected by any of this legis- lation. I don't think they have to wOrry about it. Mr. BISSINGER. I am glad to hear you say that. I wanted to be sure that you understood we fill a quality niche in the American market. Mr. BURKE. I think you are overly concerned about this type of product, because I don't think that this is what we are discussing, and what this committee is concerned with. I think we are concerned with the. flooding of the market with the general type of goods that is purchased around the country, and not the very expensive type that Miss Betty Furness talked about the other day. She said that many women liked to buy Italian shoes, and she was wearing a very expensive pair of Parisian pumps. I don't think that there is any concern on this type of product, and I would hope that you would leave here with that understanding. I think that we are discussing something else. Mr. BISSINGER. Thank you very, much. I am glad to be relieved of the concern. Mr. SMITH. If I may, Mr. Chairman, I would like to clear up one point with Congressman Landrum. If I may, Congressman, you brought up the subject about the 50- percent wool production, imports were 50 percent of the domestic wool production. I appeared before the Reciprocal Trade and Federal Trade Com- mission in behalf of this association at the time when I was president, and U.S. Commerce statistical records proved, and these were official records, that the domestic `industry, who produce primarily 55-percent polyester and 45-percent wool, that is the main production in the do- mestic industry today, they do not classify that production as wool production. They classify it as synthetic production. Mr. BURKE. We want to thank you gentlemen for your testimony. You have added a great deal to the record. Mr. BISSINGER. Thank you very much. PAGENO="0256" 2562 Mr. BuuxE. The committee is going to be in recess for about 12 minutes, because there is a roilcall going on. Our next witness will be Dr. M. K. Home, Jr. (Brief recess.) Mr. LANDRUM (presiding). The coimnittee will resume. Dr. M. K. Home, Jr. Dr. Home, for the purpose of the record, will you identify your- self and proceed with any statement that you have. STATEMENT OP DR. M. K. HORI~TE, JR., CHIEF ECONOMIST, NATIONAL COTTON COUNCIL OP AMERICA; ACCOMPANIED BY ROY B. DAVIS, PRESIDENT; THOMAS 0. MURCHISON; AND DR. CHARLES R. SAYRE Dr. HORNE. My name is M. K. Home, Jr. I am chief economist of the National Cotton Council, and I live at Memphis, Tenn. The gentle- men sitting here are three outstanding cotton producer leaders from three of our important cotton-growing States: Mr. Roy B. Davis, pres- ident of the National Cotton Council, of Lubbock, Tex.; Dr. Charles R. Sayre, of Greenwood, Miss.; and Mr. Thomas 0. Murchison, of Coy, Ark. Mr. LANDRtTM. We are glad to have you, gentlemen. Dr. HORNE. The National Cotton Council is the central organization of this country's raw cotton industry. It exists to represent and serve the seven branches of this industry, reaching as they do across the whole length of our country from east to west. They are the cotton- growers, the ginners, the merchants, the warehousemen, the coopera- tives, the manufacturers, and the cottonseed crushers. Our prepared statement, Mr. Chairman, would require more time than you have been able to allot to us so that we would like to submit the full statement with the hope that it will have your attention and that you will include it in the printed record. Mr. LANDRUM. We will receive the statement as it is printed to be placed in the record, and you may proceed to narrate or improvise as you desire. Dr. HORNE. Thank you, sir. In this allotted time that I have of 15 minutes I would like to skim through this statement, read a few selected sentences, try to touch on some of the main points that we have in it. I hope I can do this in a fairly coherent and intelligible way. Mr. LANDR1ThI. Very well, sir. Dr. HORNE. Our cotton economy depends vitally upon both its do- mestic and its export markets, and one of our foremost concerns is the export market which has been on a downward trend for the past 10 years. There could be no sound future for cotton unless this export trend is checked and turned upward. A large part of the cotton coun- cil's energy is directed toward that export market objective. Now it is likewise essential that the domestic market for cotton be saved and expanded. That usually takes on an average roughly two- thirds of our total production. One of our greatest problems is this domestic market is the rapidly rising trend of textile imports which displace the consumption of cotton in our domestic mills. PAGENO="0257" 2563 It is sometimes argued that when we ask for reasonable restraints on textile imports, we are doing unreasonable harm to cotton exports. Now, those arguments are largely fallacious we feel and we would like to deal with them in the latter few, minutes of this statement. Now, with respect to textile imports, it is logical for cotton people to talk in terms of the raw cotton contained in these imports, that is the amount of cotton required to manufacture the yarn or fabric and end products imported into this country. We have submitted to you at the back of this statement a number of charts and the one marked "Exhibit A," which I hope is available to you, has this information that I just mentioned for each of the last 15 calendar years and a projection for the present year at the rate that prevailed during the first 4 months on which we have figures. This chart in exhibit A makes it plain enough that these imports of cotton in manufactured form are in a powerful upward trend through the years. They have gone from less than 100,000 bales in 1953 to a million bales or more today. They. have had. several temporary reversals, that trend has, but the trend nevertheless always reasserts itself and heads on up. There is no sound reason to expect that this rising trend will level off or slow down or even stop accelerating in the foreseeable future unless our govern- mental policy toward these imports is significantly improved. These imports have reached a level where they must be looked upon as one of the greatest and most fundamental threats to the whole fu- ture of American cotton. They now represent almost one bale of cotton for every seven that American farmers produced in this country last season or one for every 12 produced on average over the past 5 years. Now, in the chart marked "Exhibit B," which we have submitted, there is an upper curve representing domestic mill consumption and a middle curve is our raw cotton exports, and there is a lower curve for our cotton imports in the form of textile products. Now, for the current year domestic consumption is placed at 9.1 million bales, exports at 4.2 million and imports at 1 million bales. For a long time there was a tendency in some quarters to belittle our concern about these imports on the ground that the then current vol- ume of them was quite small in relation to our total market, but surely nobody could belittle the problem Of these imports today. Already the imports represent one bale of cotton for every four that we export and one for every nine bales consumed by domestic mills, and the imports are trending strongly upward while the exports are trend- ing strongly downward, and the domestic market has no real trend one way or the other. Our failure to expand or even maintain the total market for Amer- ican cotton is at the very source of this problem, our failure to expand and maintain these markets. Now great efforts are being made to solve this problem by methods that are sound and beneficial to our country and to the whole world. Both Government and private enterprise are necessarily involved in these efforts. To a very considerable degree our Congress has recognized the im- portance of cotton to millions of people, to the economies of 18 or 19 States, to consumers everywhere, to the country's balance of payments, 9~-i~9 0-OS--pt. 6-17 PAGENO="0258" 2564 and to all the farm people who would be hurt if our cotton lands were converted to other farm enterprises. For these reasons, the Government has programs aimed at sustaining farm income while supply is being adjusted to demand and in helping us bridge the gap from where we are to where we need to be in a world of intense fiber competition, but it is inconsistent for the Government in another arm of its policy to permit a tremendous upsurge of im- ports which are undermining the very markets that have to be built up. Our cotton textile imports which are already at a million bales a year and pointed upward have become a very major contributor to all the acreage cutbacks, all the hardships and dislocations throughout our industry and all the taxpayer expense which the Government program entails. Now, the private producers of cotton have been tackling their own responsibilities in a manner that ought to be widely recognized and appreciated. They have voted upon themselves an assessment of a dol- lar a bale for research and promotion programs which go to the heart of their competitive problem against manmade or synthetic fiber. The collection of this money from each one of the country's some 325,000 cotton growers is essentially voluntary, but the number of them who have declined to bear their share of this load is just minimal, just about 3 percent. This year for the first time now this greatly expanded cotton re- search and promotion effort is underway. It will require vision and faith and patience for all these people to maintain this effort across the years. They will be looking for results in their domestic market. The re- sults should not be eaten up by continued rapid expansion of textile imports. In this effort our producers have a fair fighting chance to meet their synthetic fiber competition, but they have no chance whatever to meet the rising competition of imported cotton which has been manu- factured abroad into textile products at wage rates that are just a small fraction of our own. Efforts were made both in 1960 and in 1962 to get action on these imports under section 22 of the Agricultural Adjustment Act. But the Tariff Commission, in finding unfavorably for cotton on both those occasions by split decisions, put great stress on the fact that the textile industry is also involved, and it appeared to be swayed strongly by the thought that a favorable ruling for cotton would also give relief to the textile industry and that that would be outside of the intent of the legislation. It should be made clear that raw cotton itself is vitally concerned with this import problem. This is over and beyond the fact that the tex- tile industry is also concerned. Both industries, both of which are mainstays for millions of people and for billions of dollars in invest- ment, are vitally concerned here. But even if it were possible today to get a section 22 action, this would no longer solve the problem because of the enormous upsurge which has occurred in the imports of textiles made from manmade fibers just in the last few years. These textiles compete with cotton products on our home market and in exhibit C that we have submitted to you we have repeated the curve showing cotton imports in textile form and for comparison there we have a curve for the raw cotton PAGENO="0259" 2565 equivalent of the imports of manmade fiber in manufactured form. Just within the past 4 years our imports of these manmade fiber products have had a net increase, in 4 years, a net increase of nearly half a million cotton bale equivalents. The long-term arrangement for international trade in cotton tex- tiles provides a certain amount of restraint upon cotton textile import, but experience has proven that this device is very, very inadequate. Actually the biggest increases have come since this arrangement was adopted. The trend of these imports as shown on a moving aver- age that I have inserted there in exhibit A has risen 55 percent in the last 4 years with the long-term arrangement in force throughout. Now, the reasons why this system permits such increases may be argu- able, but the fact that it actually does so is not arguable. It is just a fact. It is documented in exhibit A. Now, the terms of each quota arrangement as well as the decision whether there shall be a quota or nOt in each case are essentially matters for individual negotiation. While the negotiators are governed by a stipulated minimum increase, a minimum increase of 5 percent each year for each country in which the quota applies, they work under no stipulated maximum whatever, and then the manmade fiber imports are just outside of the long-term arrangement. They come under no quota restraints whatever. Against this background of experience, gentlemen, the national cot- ton council recognizes the very urgent need for new legislation which will place all these textile imports under a reasonable degree of re- straint. The cotton council favors the principle that the increases in such imports should be limited to a reasonable and clearly defined share of any growth which actually does occur in the domestic market for textile products so that our own raw cotton people will be able to plan and work and invest for future production with some confidence that their efforts will not be undermined by unfair import competition and that they themselves will participate equitably in any future ex- pansion of their domestic market. Now, then, a word finally on the relationship of all this to our export market for raw cotton. It is sometimes said that the cotton which we import in textile form is actually our own cotton which has been ex- ported in raw form and made into textiles abroad and reshipped to us. Now, this is just largely untrue today. The 10 countries which sent us the largest amount of textiles last year get less than 14 percent of their cotton from the United States. The most striking of all our increases in cotton textile imports during recent years have come from countries which grow their own cotton. Our biggest imports of cotton textiles have come from the countries which grow the raw material right within their own boundaries: This fact is set out graphically in exhibit D which I have submitted. It is also argued, and you have been reminded of it right recently, that if we place greater restraints on textile imports, the exporting coun- tries will retaliate by refusing to buy our cotton. Such arguments would hardly seem to come from people who realize that over the past 15 years we have allowed cotton textile imports to rise tenfold to a million bales or more. These arguments sound as if we want to cut back all these imports rather than placing them under a PAGENO="0260" 2566 system that gives the foreign textile exporters a share of the future growth. Who would really have a right to be offended at that? In actual fact, many of the raw cotton importing countries have bought less and less of their fiber from us, of their cotton from us over the very period when out textile imports have been rising so very rapidly, and they have bought more and more of their raw cotton from countries which just have incomparably stricter controls on their own textile imports than we have on ours. Cotton is a basic raw material upon which a great deal of the world's industrial employment turns. As long as countries need and can pay for it, they are going to buy it, and it seems very likely that in the future and in the past the foreign manufacturers will place their orders where they find it most advantageous to place them. Rather than spending our time on theoretical and imaginary fears, we ought to be looking at our real problems in the cotton export market, and in my concluding half-minute I will mention what we look on as the biggest and most basic of them all. We have quite a few problems in export, but the biggest one of all is this: We need fair protection against textile imports so that we will have a fair chance to show here in this country that cotton can meet the competition of synthetic fibers. If this can be demonstrated on oiu~ domestic market, it can by our leadership and example be done also in the foreign cottorn importing countries, Western Europe, Japan, Canada, and so on, so that our ex- port market can begin growing aga.in. I developed that in considerably more detail in our full statement. Mr. Chairman and gentlemen, we thank you for the the opportunity to be heard, and we respectfully urge that this great problem have your careful consideration. (Mr. Home's prepared statement follows:) STATEMENT OF M. K. HORNE, Jn., CHmF EcONOMIsT, NATIONAL COTTON COUNCIL OF AMERICA The Nationai Cotton Council is the Central organization of this country's raw cotton industry. It exists to represent and serve the seven branches of this indus- try, reaching as they do across the whole length of our country from east to west. They are the cotton growers, the ginners, the merchants, the warehousemen, the cooperatives, the manufacturers, and the cottonseed crushers. Accordingly this testimony will be from the standpoint of American raw cotton. Cotton, as you know, is a great world commodity, and this country has long been the world's leader in the amount produced, the amount consumed domesti- cally and the amount sold in exports. Over the past ten years, on average, about two-thirds of our cotton has been sold for use in our domestic mills and about one-third of it has moved into exports. Our industry depends vitally upon realistic policies toward both markets. One of our foremost concerns is the export market. It has been in a declining trend for the past ten years. There can be no sound future for cotton unless this trend is checked and turned upward. A large part of the Cotton Council's energy is directed toward that objective. We certainly appreciate our export customers. It is essential that our export market be saved and expanded. It is likewise essential that the domestic market for cotton be saved and ex- panded. One of our greatest problems in this market is the rapidly rising trend of textile imports which displace the consumption of cotton in our domestic mills. It is sometimes argued that when we ask for reasonable restraints upon textile imports we are doing unreasonable harm to cotton exports. Those arguments are largely fallacious, and I would like to deal with them in the latter portion of this statement. As a matter of fact, as I shall undertake to show, if we do not get reasonable restraints upon textile imports, we are very likely to lose our cotton PAGENO="0261" 2567 export market also. We must maintaii~ and expand both markets (the domestic and the export) or give up on both of them. It is very important that we keep them both-not only to cotton people, but to the whole nation. This is particularly apparent in a time of great stress upon the balance of payments and upon the federal budget. THE VOLUME AND TREND OF COTTON TEXTU~E IMPORTS From the standpoint of cotton people, it is logical to talk in terms of the raw cotton which is contained in these textile imports. The U.S. Department of Agri- culture has a detailed system for converting the various classes of imported yarn, fabric, and end products into the amount of cotton which was required for their manufacture. In the attached chart, marked "Exhibit A", we have the Depart- ment's figures for the total amount of cotton which was imported in manufactured form during each of the last 15 calendar years. These amounts are indicated along the heavy black curve in Exhibit A. We have similar figures for the first four months of 1968, and these have been simply multiplied by three to get the very tentative projection for the year. This comes almost exactly to one million bales. This chart makes it plain enough that these imports are in a powerful upward trend. They have gone from less than 100,000 bales in 1953 to a million bales or more today. It is also apparent that the imports fluctuate considerably. We see that even on an annual basis there have been several temporary reversals of the trend, but that the trend always reasserts itself and heads on upward. There was a drop-off in 1967, but it was less than half as steep as the record increase of the previous year. Now there are indications that we are in another sharp upward movement of the imports, which may carry the actual total for 1968 far above the rate of recent months, which is shown in Exhibit A. The trend is made a little more vivid in Exhibit A by the use of a three-year moving average, which is shown in the finer of the two curves. When three-year averages are used, all temporary reversals of the upward trend disappear en- tirely, and it becomes consistently upward, with some tendency to accelerate. We have heard assurances in the past that somehow this basic trend was about to level off, but the assurances have all proven false. There is no sound reason to expect that it will level off or slow down or even stop accelerating in the fore- seeable future unless our governmental policy toward these imports is signifi- cantly improved. Now that these imports have reached an annual volume of a million bales or more, with a trend pointed strongly upward, they must be looked upon as one of the greatest and most fundamental threats to the whole future of American cot- ton. These imports now represent almost one bale of cotton for every seven that American farmers produced in the latest season, or one for every 12 produced on average over the last five years. In the chart marked "Exhibit B", we have the import record in the perspective of our entire market. The upper curve represents domestic mill consumption, the middle curve our cotton exports, and the lower curve our cotton imports in the form of textile products. The import curve appears much lower here than in the previous chart, because a different scale was used in order to accommodate the other figures. Again the period covered is the last 15 years.1 For the current year in each case, domestic consumption is placed at 9.1 million bales, exports at 4.2 million, and imports at 1 million. For a long time there was a tendency in some quarters to belittle our concern about these imports on the ground that the current volume was quite small in relation to our total markets. But surely no one could belittle the problem today. Already the imports represent one bale of cotton for every four that we export, and one for every nine consumed by domestic mills. And the imports are trending strongly upward while the exports are trending strongly downward and the domestic market has no real trend one way or the other. "GROWTH" IN THE DOMESTIC MARKET From time to time we hear claims that the foreign exporters are merely sharing in the "growth" of our domestic market. But in Exhibit B we have the record of 1 The import figures are for calendar years, while the consumption and export figures are for crop years, which go from August 1 to August 1. Therefore the import figures are plotted on the time scale at the center of each calendar year and the other figures are the center of each crop year. PAGENO="0262" 2568 domestic mill consumption over the past 15 years-and where is the growth? None of it is to be found there. The American people do consume more cotton today than they did at the first of this period. But all of the increase has gone to the imported textiles. They have taken all the growth. No industry can have economic health in the dynamic world to today unless it can share in the economic growth that is going on everywhere. These textile imports have denied us the growth that we otherwise would have had in our domestic market. There is no doubt that American cotton is in real trouble and that the trouble stems from our competitive situation. Great efforts are being made to solve the problem by methods that are sound and beneficial to our country and to the whole world. Both Government and private enterprise are necessarily involved. THE GOVERNMENT PROGRAM In battling to meet a broad range of competitors, our producers are obliged to push forward toward greater efficiency and productivity. They are doing just that, but this kind of progress means that surpluses will be built up unless cotton can share in the expanding consumption of fibers. But you see in Exhibit B that our total market has not only failed to expand, but has declined. To a very considerable degree, our Congress has recognized the importance of cotton to millions of people, to the economies of some 18 states, to consumers everywhere, to the country's balance of payments, and to all the farm people who would be hurt if our cotton lands were converted to other farm enterprises. Accordingly the Government does have quite expensive programs aimed at sustaining farm income while supply is being adjusted to demand and at helping us bridge the gap from where we are to where we need to be in a world of intense fiber competition. But it seems inconsistent for the Government, in another arm of its policy, to permit a tremendous upsurge of imports which are undermining the very markets that must be built up. Our cotton textile imports, which are already at a million bales a year and pointed upward, have become a very major contributor to all the acreage cut-backs, all the hardships and dislocations throughout our industry, and all the taxpayer expense which the Government cotton program entails. THE GROWERS' NEW RESEARCH AND PROMOTION PROGRAM While the Government has its essential role, the private producers of cotton have been tackling their own responsibilities in a manner that should be widely recognized and appreciated. They have voted upon themselves an assessment of a dollar a bale for research and promotion programs which go to the heart of their competitive problem against man-made or synthetic fiber. The collection of this money from each one of the country's 325,000 cotton growers is essentially voluntary, but the number who have declined to bear their share of the load is quite minimal-about 3 per cent. This year, for the first time, this greatly ex- panded cotton research and promotion effort is under way. This is the realistic way for these thousands of farmers to meet the challenge of modern science and advertising. The results are bound to be good for all mankind. But it will require vision and faith and patience for all these people to maintain this effort across the years. They will be looking for results on their domestic market. The results should not be eaten up by continued rapid expansion of textile imports. In this effort our producers have a fair, fighting chance to meet their synthetic fiber competition. But they have no chance whatever to meet the rising competition of imported cotton w-hich has been manufactured abroad into textile products at wage rates that are only a small fraction of our own. Our cotton growers deserve a better chance than this. The whole idea that cotton can survive and serve mankind in the modern world deserves a better chance than this. FRUSTRATED EFFORTS UNDER SECTION 22 We have tried for a long time to get Government action that would bring these imports under better control. Hearings were held on two occasions by the Tariff Commission to consider action under Section 22 of the Agrictiltural Adjustment Act, as amended. We have had quotas on imports of raw cotton under this provision since 1939. The imports of cotton in the form of textiles are far greater and more damaging to the Government's cotton program than the imports of upland raw cotton have ever been. This was true even back in 1960 and 1962. But the Tariff Commission, in finding unfavorably for cotton on both occasions PAGENO="0263" 2569 by split decisions, put great stress on the fact that the textile industry was also involved, and appeared to be swayed by the thought that a favorable ruling for cotton would also give relief to the textile industry and that this would be out- side of the intent of the legislation. It should somehow be made clear that raw cotton itself is vitally concerned with this import problem. This is over and beyond the fact that the textile industry is also concerned. Both industries, both of which are mainstays for inilliops of people and for billions of dollars in investment, are vitally concerned. Even if it were possible today to go back once more to the Tariff Commission and get a reversal of its earlier positions, this would no longer solve the problem for American cotton, because of the enormous upsurge which has occurred in the imports of textiles made from man-made fibers just in the last few years. These textiles compete with cotton products on our home market. In Exhibit C we have repeated the curve showing cotton imports in textile form, and for comparison we have a curve for the imports of man-made fiber in such form. The Department of Agriculture publishes figures for the imports of these man-made fiber products converted into the pounds of fiber which they contain, and we have converted those figures by a crude method into their estimated cotton equivalent. Again the figure for the present year is a simple projection based on the first four months. Just within the past four years our imports of these man-made fiber producth have had a net increase of nearly half a million cotton bale equivalents. These imports plus the cotton product imports are already at a level of nearly 13% mil- lion cotton bale equivalents, and rising very steeply. This new development of man-made fiber product imports is also weighing down upon us in our efforts to increase the domestic consumption of cotton. It adds a terrific new dimension to the whole cotton problem that we have been reviewing here. The whole prob- lem clearly goes beyond what we can hope to solve under the provisions of Sec- tion 22. It needs to be looked upon in its entirety, as your Committee is doing. THE LONG TERM ARRANGEMENT The Long Term Arrangement for international trade in cotton textiles provides a certain amount of restraint upon such imports, but experience has proven this device to be very, very inadequate, for three reasons: First, the Arrangement itself provides a minimum increase of 5 per cent each year, which is virtually automatic, in each import quota. This in itself seems highly excessive when we consider that our domestic mill consumption of cotton has had no upward trend at all. Second, the import increases which have actually occurred have been far in excess of that 5 per cent figure. We saw the record in Exhibit A. The actual trend of these imports, as shown by the moving average, has risen 55 per cent in the last four years, with the Long Term Arrangement in force throughout. The rea- sons why this system permits such increases may be arguable, but the fact that it actually does so is documented in Exhibit A. The terms of each quota arrangement, as well as the decision whether to have a quota at all, are essentially matters for individual negotiation. While the nego- tiators are governed by a stipulated minimum increase of 5 per cent each year, they work under no stipulated maximum whatever. Under this system it is hardly surprising that the exporting countries gain one concession or another again and again. One of the most striking examples came in connection with the latest ex- tension of the Long Term Arrangement, which occurred last year. As a price for getting quite a few countries to agree to the extension at all, our country gave them special "bonuses" or sweeteners in the form of additional quota increases. But it was only a three-year extension. Now within another year or so we pre- sumably will be negotiating for the next extension and bargaining off additional parts of our market as the price of cooperation. The third reason is simply that the man-made fiber product imports are entirely outside the Long Term Arrangement. They come into the country under no quota restraints whatever, and this clearly explains the remarkable upsurge of these imports in the last few years, which we observed in Exhibit C. THE NECESSITY FOR NEW LEGISLATION Against this background of experience, the National Cotton Council recognizes the very urgent need for new legislation which will place all these textile im- ports under a reasonable degree of restraint. The Council favors the principle that the increases in such imports should be limited to a reasonable and clearly defined PAGENO="0264" 2570 share of any growth which actually does occur in the domestic market for textile products, so that our own raw cotton people will be able to plan and work and invest for future production with some confidence that their efforts will not be undermined by unfair import competition and that they themselves wifi partici- pate equitably in any future expansion of their domestic market. THE EXPORT MARKET Now let me turn finally to the relationship which all this holds to our export market for raw cotton. It is sometimes said that the cotton which we import in textile form is really our own cotton, which has been exported in raw form, made into textiles abroad, and reshipped here. There was merit to this argument years ago, but it has little merit today. For decades we have seen the ratio of our cotton exports to the foreign consumption of cotton trend down and down. Today foreign cotton consumption fluctuates around 40 million bales or so, but our exports this year will be only about a tenth of that figure. For the ten countries which sent us the largest amount of cotton textiles last year, we have analyzed the figures on the sources of their raw cotton supplies, and we found that as a group those countries get less than 14 percent of their cotton from the United States. If our cotton textile imports actually provided any significant boost for raw cotton exports, we might expect to find some evidence in the trend of such exports. But we certainly find none in Exhibit B. While the imports are trending strongly upward, the exports are trending strongly downward. That is a kind of "help" that our exports could do without. As a matter of fact, the most striking of all our increases in cotton textile im- ports during recent years have come from countries which grow their own cotton. This is set out graphically in Exhibit D and in the accompanying table giving figures for individual countries. (These figures are only available in terms of equivalent square yards.) To summarize the recent trends, we have consolidated the last nine years into three-year periods, and we have grouped certain countries together. Notice especially the heaviest line in Exhibit D. Here we have the imports from ten cotton-growing countries: Brazil, Colombia, Greece, India, Israel, Mexico, Pakistan, Portugal (which has its colonial supply), Spain, and the United Arab Republic. Here we have the most important sources of the increases which have occurred in recent years. The average annual increases across the period of this chart came to 6.9 percent for Japan, 7.8 percent for Hong Kong, and 8.5 percent for the group of six European countries; but they were 25.6 percent per year for the ten countries which grow all or most of their own cotton. Clearly this is where the greatest threat for the future lies, and there is nothing but sheer market loss for us in imports from this source. "RETALIATION" AND REALITY It is also argued that if we place greater restraints on textile imports, the exporting countries will retaliate by refusing to buy our cotton. Such arguments would hardly seem to come from people who realize that over the past 15 years we have allowed cotton textile imports to rise ten-fold to a million bales or more. The arguments sound as if we want to cut back all these imports rather than placing them under a system which gives the foreign textile exporters a share of the future growth. Who would have a right to be offended at that? In actual fact, many of the raw cotton importing countries have brought less and less of their fiber from us over the very period when our textile imports have been rising so rapidly, and they have bought more and more of their raw cotton from countries which have incomparably stricter controls on their own textile imports than we have. Cotton is a basic raw material, upon which a great deal of the world's indus- trial employment turns. As long as countries need and can pay for it, they are going to buy it, and it seems very likely that in the future as in the past the foreign manufacturers wifi place their orders where they find it most advantage- ous to place them. THE BIGGEST EXPORT PROBLEM Rather than spending our time on theoretical and imaginary fears, we ought to be looking at our real problems in the export market. Cotton has plenty of them, but the biggest of all is the one that I would like to mention in conclusion. PAGENO="0265" 2571 In recent years our biggest trouble hi the export market has been the same one that we face here at home-namely, the rising competition `of synthetic fiber. The synthetics have invaded so many of cotton's markets that cotton consumption has had virtually no improvement at all in the foreign importing countries, taken as a whole. The synthetic competition has to be met effectively if our export market is to have a real future, and this has to be done with a realistic effort, involving all the tools of modern fiber competition-not only price, but also research and sales promotion. Programs of research and promotion are being pushed forward in Western Europe and Japan by the newly formed International Institute for Cotton. They can succeed, but they are bound to take their main guidance, as well as their leading support, from the United States. There is no other cotton-gr'owing country which can even compare with our own in its capacity for progress through research and modern merchandising. If the way to meet synthetic com- petition is going to be demonstrated, it has to be demonstrated here. If we succeed, the programs in the foreign importing countries are likely to succeed also by using the same techniques and example. If we fail, they are almost sure to fail. So the future of our exports, as well as our domestic market, hinges vitally on the success of the bold new effort in research and promotion which our cotton growers are now launching through their Cotton Producers Institute. As we have already noted, they have a real chance to succeed against their synthetic fiber competition, but no chance at all against rising textile imports unless they are brought under better control. So the whole future of cotton, not only here but in the foreign world, is at stake on whether the Congress takes new and realistic action upon textile imports. We thank you for the opportunity to be heard and respectfully urge that this great problem receive your careful consideration. Exhibit A U.S. IMPORTS OF COTTON 114 MANUFACTURED FORM Actual 3~T.ar ~~`ia* PAGENO="0266" 2M2 Exhibit_B ~LUioss U.S. COTTCN of Ial.. 11 Exhibit C PAGENO="0267" 0- _J ~0 o~ => .a ~ c3 Ok -~ ~4 ~LU 0k ~ J~ *0 ~ * ad *(.~ k&' 0~a 0= ~. 5,- ~1 `-~ 0< 0~0-0- 0 0~* 4JkW 0= =0 cr~ S~ * (/)5 ;~ ~0 ~ )c_ ;~r. ~- - ~ Ui 0 8k~ d,,~ 0< !u~ ~ ~~**0 ~ * U, *~ ;~ *c ~O ~P CD -C~CDOO C~ Ct) CO CO~ CO ~ ~ waa~~ C~ - E ~ 2 ~ aaar~a~c7c t) c:~ ~ )< ~C ~. c~5 ~ ~ ~ ~ ~! ~ ~ C~J~ ~ ~ ~ ~ ~~3~23 ~E ~c.) -* ~ ~ =~*5< ~ ~v) C)~ z~~*- ~E .~ II U ::::::: ~LtO ~ ~ .~ C) * flU! c:~ ~ ~E ~ ~ ~ c,)C,-C~*, E t ; 4 ~ g ~ 2 ~ It *d! ~ ~ ~ .`~ *It CS PAGENO="0268" 2574 U.S. COTTON IMPORTS IN MANUFACTURED FORM-DATA USED IN EXHIBIT D ATTACHED TO TESTIMONY OF M. K. HORNE, JR., NATIONAL COTTON COUNCIL BEFORE THE COMMITTEE ON WAYS AND MEANS OF THE U.S. HOUSE OF REPRESENTATIVES, JUNE 19, 1968 [Thousands of equivalent square yards] 1960-62 annual average 1963-65 annual average 1966-682 annual average 10 Cottongroviing countries: Brazil Colombia Greece India Israel Mexico Pakistan Portugal' Spain United Arab Repub,ic Subtotal Japan Hong Kong 6 European countries: Belgium Italy Switzerland United Kingdom WestGermany Yugoslavia Subtotal All other countries Grandtotal 3,029 5,757 1, 375 33,241 6,488 5,554 13, 120 72,849 31,320 32,095 22,215 16,913 4, 160 65,028 8,752 8,886 33, 673 51,964 25,821 28,688 54,768 38,975 14, 409 71,838 23,580 99,436 49, 810 88,654 51,512 26,630 204,828 289, 168 247,351 266, 100 344, 375 271,889 519,612 409, 296 363,139 22,600 19,342 9,732 11,927 14,321 5,052 29,448 14,092 6,638 11,959 17,291 13, 550 37,246 26,534 12,172 15,332 20,302 13, 633 82,974 155, 170 92,978 181, 822 125,219 268, 514 979,491 1,157,164 1,685,780 Portugal's colonies, Angola and Mozambique, grow cotton. Data for 1968 represent simple projections based on imports during 1st 3 months (or 1st 4 months where available) Source: U.S. Department of Commerce, Office of Textiles. Mr. Buaitio (presiding). Thank you. Are there any questions ~ Mr. LANDRtTM. I wonder jf I could sum up in one short sentence what I feel is the most salient thing in your statement. That is that we are not oniy importing textile goods, manufactured products to the extent that it is detrimental to our own American cotton, but that the great majority of the texile products that we are importing that are of the cotton variety are manufactured from cotton that was not grown in this country. Dr. HORNE. Yes, sir; the overwhelming majority. The foreign world consumes about 40 million bales of cotton a year. This year we export about 4 million or maybe slightly more. We have only a relatively small participation in the supplying of raw materials to these foreign manufacturers as a whole. Mr. LANDRUM. Did I understand you to say, Dr. Home, that the majority of the cotton-supplying countries to our competitors in the textile field have a very highly restricted quota system on textiles going into their countries? Dr. HORNE. Yes; you could sa.y that. I suppose you are talking in terms of the major part, in quantity? Mr. LANDRu~t. Yes. Dr. HORNE. You see, the biggest increases are coming from these countries that are categorized as less developed which even under G-ATT have a carte blanche permission to have complete restrictions PAGENO="0269" 2575 on their textile imports and generally they have practically just in effect almost total limitations on imports of textiles. In many cases, of course, they even subsidize the exports. The GATT itself has documented the fact that they actually subsidize these exports in some cases and then we have heard a lot of discussion of Japan this afternoon, saying that its import policy is very, very restricted, and so on. Mr. LANDRUM. Is it your feeling, Dr. Home, that if H.R. 11758 were enacted or became a part of some bill that is enacted, that that could have an adverse effect on our agricultural exports other than cotton? Do you think it could? Dr. HORNE. Well, I haven't analyzed that as closely as I have the cotton portion, but I would be skeptical. I certainly think this idea is greatly exaggerated. I wouldn't set myself up as an expert on the effect that it would have on all our agricultural exports. Mr. LANDRUM. We have the broad general statement made to us that if we enact such legislation as is proposed in these bills it will result in retaliation insofar as our agricultural exports from this country are concerned. I wonder if you have a view on that. Dr. HORNE. Of these agricultural exports, cotton is a great example, and we don't fear it in cotton, but I would say in general among agricultural exports is the fact that these things are necessities. We don't fear restrictions on imports of cotton because it is a necessity. You look all over the world and find virtually no limitations on the importation of cotton because it is such a basic raw material that people have to have. A lot of their survival of the country depends on getting this basic raw material. Food is the very last thing that people would want to put under great restriction as to imports. Foods have to be imported. Mr. BURKE. Do any one of you other gentlemen want to make a statement? Mr. Conable.? Mr. CONABLE. Doctor, the Soviet Union is a major producer of cotton and cotton goods. Does much of its produce find its way into the world market? Dr. HORNE. Yes, it does. Mr. CONABLE. And it becomes a competitive factor abroad. Al- though probably very little of it finds its way indirectly into this country, it does go to markets that might otherwise potentially be American markets, is that correct? Dr. H0RNE. Yes. I wouldn't even say that a substantial amount doesn't enter this country because look at Japan. Japan has now begun importing a great amount of Russian cotton, and numerous other countries from which we import textiles are buying from Rus- sia, so that the cotton that we buy in New York in a shirt may have been grown in Russia. Mr. CONABLE. Does Russia now purchase or otherwise acquire a large part of the Egyptian cotton crop? Dr. HORNE. Yes, sir. This is a thing dictated, I am sure, less by economics than by other considerations. They seem to import more of this very special type of cotton grown in Egypt than they need, and I am informed that they in turn place a lot of it back on the market, on the export market. They do buy extensively. PAGENO="0270" 2576 Mr. CONABLE. In other words, Russia grows most of what she needs for her own purposes? Dr. H0RNE. Yes. Russia has a net export balance of cotton. Mr. CONABLE. Thank you. Mr. Bimun. Thank you, Dr. Home. Thank you very much. Dr. SAYRE. Mr. Chairman, may I comment on the question of the effect on agricultural exports in general? I think obviously price, availability, and quality in how we have to compete with our agricultural exports in world markets whether it be cotton or food. I think Dr. Home is completely correct that where they need our various food items certainly if they have the funds or other- wise can provide currency or credit to get them, that they will continue to buy. I think, too, that in the future expansion of our agricultural exports that the principle that is being outlined here in terms of cotton imports to this country is related to providing still for those imports to share a portion of our growth, but not take all of our growth. In reverse, if we can share a part of the growth in food markets around the world with our farm products, then I don't believe our farm products will get in trouble from that standpoint, so that I think this principle that is being worked toward here is a very sound one and obviously will not affect our farmers in general. Mr. Buaun. I think that you are correct, and I believe that the wrong impression is in the minds of some people who are apparently laboring under the illusion that somebody is asking for a cut in the imports. None of the industries that have testified here have asked for that. They have merely asked for a quota set on a flexible growth and percentage of the American market and not cutting down in their production overseas. All we are asking, I believe, is just to stop the acceleration that seems to be taking place and for the life of me I cannot understand where the objection is. I can't understand it. If we were trying to set up high tariff walls and everything else, I could understand why they were using all these epithets about protec- tionism and all these other things that they are saying, and massive retaliation. Massive retaliation about what? About allowing them to have a share in the market with an expansion that will go along with both without destroying our industries here? I think this is a fair proposal to make, and for the life of me I can't understand any of these witnesses who seem to indicate that, if we try to set a fair formula in existence, that there is going to be massive retaliation. If we were setting up high tariffs and reverting back to 30 years ago when they did set up these tariff walls, I could understand this feeling and the statements that they are making, but I don't think anyone has a gun at anyone's head here. I think we are trying to be fair and help these countries out. I know that I would say that the Jnpanese people should feel very happy that this is the type of proposal that is being made here, not the type that could be made if conditions got progTessively worse. I want to commend you gentlemen for your statements here, PAGENO="0271" 2577 Mr. DAVIS. As a member of the trade mission that want to the Orient, we find that importers were always scared of just what you and Dr. Sayre have been talking about, but as you explained to them the real position that we wanted to export, they became a lot more friendly. I rather think we have just got a sales job. Mr. BURKE. I think there is a lack of dialog apparently with these people overseas in letting them know what the feeling of Congress is, that we are not asking for rollback, we are not asking for cutback, we are not asking for high tariffs, but are merely asking for an orderly procedure which to my mind, if I were in the busines, I certainly would listen to, where the danger flags are up. Thank you very much. Our next witnes is Sidney S. Korzenik, executive director and coun- sel, National Knitted Outerwear Association. Would you identify yourself for the record and then, if you wish to skip any of your testimony, your entire statement will appear in the record. STATEMENT OP SIDNEY S. KORZENIK, EXECUTIVE DIRECTOR AND COUNSEL, NATIONAL KNITTED OUTERWEAR ASSOCIATION; ACCOMPANIED BY JAMES MeEVOY Mr. KORZENIK. Mr. Burke and gentlemen of the committee, my name is Sidney S. Korzenik. I am `accompanied by Mr. James McEvoy of our association. I appreciate even this brief allOtment of time for presenting a few highlights in our industry's experience with imports since World War II. We shall file a more detailed written statement for inclusion in the record. 1 appear in behalf of the National Knitted Outerwear Association, which consists of 825 firms engaged in manufacturing and selling knitted outer apparel and knitted piece goods, and an additional 369 firms which are engaged in `auxiliary trades. The knitted outerwear industry produces a variety of end products, including sweaters, knitted dresses, suits, `swimwear, infants' and chil- dren's wear, and other types of outer apparel. Its plants are located in over 30 States of the Union. It is one of the several segments of the textile apparel complex that has experienced severe and increasing pressure from imports. Now, the distinctive and differentiating character of the Nation's textile and apparel import problem arises from the operation of at least two special factors. First, it is one of the most labor-intensive of the manufacturing industries of the country. According to the study of the Joint Eco- nomic Committee of the U.S. Congress by former Budget Director Charles L. Schultze and Joseph L. Tryon, labor costs in their cumula- tive effect represented 88.7 percent of the unit price of apparel-a figure close to the very top of the list of all manufacturing industries covered by this authoritative study. A second distinguishing factor is that the first type of manufacture which underdeveloped and low-wage areas of the world have entered or are most likely to enter in the initial phase of their industrializa- tion is the production of textiles and apparel. PAGENO="0272" 2578 Both these factors have operated with special force in knitted outer- wear. In consequence, the rise in imports of knitted outerwear has been swift and continuous. While domestic production and shipments rose and fell with good and bad years, total imports of knitted outerwear in every year throughout this period were higher than in the previous year. In 1956 the total of such imports in all fibers amounted to less than 3 million pounds. We estimate that it then represented less than 2 percent of our market on a poundage basis. But in 1967 this total rose to 64 million pounds; and though figures on domestic production for last year are not yet available, we estimate that imports represented close to 18 percent of our total apparent consumption of knitted outer- wear in all fibers. But this overall comparison between imports and domestic con- sumption represents a mere statistical generalization. It offers only an average for a broad variety of products. Not in all sectors of the market has the influx been held to 18 percent of consumption. In some areas the penetration has been considerably deeper. Imports of cotton knitted outwear have been held to approximately 10 percent of the domestic consumption, thanks in part to the Geneva long-term cotton arrangement. In wool knitted outerwear, where no controls exist, the ratio of imports to consumption in 1965, 1966, and 1967 has hovered between 30 and 32.8 percent. In manmade fibers the ratio in 1967 slightly exceeds 20 percent, but the rate of increase has been so precipitous that at its present pace the extent of market penetration is likely in a short time to exceed even that for wool. But even within these fiber groupings, some product classifications have been affected more severely than even these averages by fibers indicate. In the case of women's sweaters of wool, imports in 1965 came close to 50 percent of our total consumption-that is, one such sweater im- ported for nearly every sweater manufactured in the United States. Now, Mr. Masaoka has made much of the contention that the textile import problem is a selective problem and does not yet affect all classes, he claims, of such goods. Now, let me make it clear that if the same effects have not yet been apparent in other classifications of knitwear, it is not because foreign producers lack the capacity to enter those other areas of our market. They clearly possess the same advantage of labor cost in knitwear of all types and fibers and in other types of textiles. But they cannot as yet invade on all fronts at the same time. Given time for further ex- pansion, they can surely capture other sectors of our market with the same detrimental effects upon domestic production as in the case of women's sweaters. They are building bigger plants and will make new inroads. The initiative is theirs. We are exposed and vulnerable in all sectors. Mr. Masaoka, in stressing selective treatment of imports, asked the avoidance of quotas across the board. It should be pointed out that any exporting nation under H.R. 11578 can avoid quotas across the board by simply negotiating and even under the long-term cotton arrangement made at Geneva, although all cotton goods are covered by the agreement, quantitative limitations have been only selectively PAGENO="0273" 2579 applied. But even there the right is given if bilateral negotiations should fail, to resort to unilateral action within the framework of the agreement. So far as negotiation is concerned, let me make it clear that this committee is being called upon to act with respect to H.IR. 11578 only after our Government has made repeated efforts at negotiating agree- ments of this nature with Japan and other countries. I was personally a member of the mission that was sent by our Government to Tokyo in 1965 to try to work out a reasonable bila- teral agreement with the Japanese with respect to our imports of wool textiles, and I regret to say that negotiations were never actually begun because our Japanese friends who are ordinarily notable and conspicu- ous for their great courtesy rejected any possible negotiation in so summary and brusk a fashion that that conference ended before its appointed time. So let me make it clear and let the record leave no doubt on the point that every effort was made to negotiate and to achieve a reason- able degree of mutuality. When Mr. Masaoka-I will not repeat his ugly metaphor-talks about the undesirability of coercion, it must be abundantly clear that we have reached a point where, in the face of such coercive refusals, some additional incentives are needed for negotiation. Otherwise we will continue to have none. What, then, of our future? We submitted to the Tariff Cormnission a projection of knitted o~iterwear imports over the next few years. The Tariff Commission, which had been specifically requested by the President to develop estimates on future import trends, chose totally to ignore this aspect of the subject as well as others. The data we submitted showed that the average increase in imports of knitted outerwear from year to year over the past decade has been 29 percent per year. That is the average margin by which the total for each year rose over the total of the preceding year. On the basis of an annual increase no greater than this, we project that total imports, which today approximate 64 million pounds per year, will by 1971, merely 4 years hence, be three times the present volume, and that imports which today represent 18 percent of con- smription will then represent 30 to 40 percent of our market. Now, it is not necessary to pretend such precision in clairvoyancy as to fix the exact proportion which our domestic production will repre- sent to total consumption in 3 to 4 years. We do not anticipate that an industry like ours employing nearly 100,000 men and women in knitted outerwear and knitted fabrics alone will be wholly reduced to extinction in that time. But the residual group which can survive such a battering of low- priced competitive merchandise would bear little resemblance to what the industry has been or still is today. The one basic reason for this unbroken upward trend of imports is the radical difference in labor costs and the determining effect of labor costs in international competition. . We in the United States have a highly protectionist policy in our labor market. For an industry as labor-intensive as textiles and ap- parel, it is impossible to impose protectionism in the labor market without providing some means for limiting exposure of the products of such protected labor to the onslaught of competition from low-wage 95-159 0-68--pt. 6-18 PAGENO="0274" 2580 areas of the world. In textiles and apparel, product competition is labor competition. In the face of such extreme differences of conditions, we submit that it is irrelevant and worse to discourse on the philosophical merits of the principles of free trade. The President's special trade repre- sentative, Ambassador William M. Roth has chosen to ignore the dan- gers confronting industries like ours by condemning our requests for relief as "protectionism" and as "turning back the clock." Such diatribes contribute nothing to a solution of the problem but a false notion of the true alternatives. As for turning back the clock it must be observed that Mr. Roth still msists upon carrying on at this late date a quarrel he had appar- ently had with the late Senator Smoot, Congressman Hawley, and mdeed the late President William McKinley. Times change, condi- tions change. But the doctrinaire never changes, never changes, and never notices changed conditions around him. The old debate over the philosophy of free trade is stale and passé. Yet Mr. Roth, I respectfully suggest, is quixotically still tilting at old windmills and, worse, at windmills that are no longer there. Most of us today advocate trade liberalization. But we want fair trade, as Congressman Curtis himself acknowledged. What we in the textile industry are seeking, therefore, is an accoimmodation, an ac- commodation of a generally accepted policy to the distinguishing facts and circumstances of a special case. To proceed in a maimer which is unyielding, in a manner which refuses all accommodation and which, therefore, must entail serious hardship and inequity for many, will ultimately cast disrepute upon the cause of trade liberalization itself and will render it politically and economically unsupportable. That which will not bend will break. In a very real sense, therefore, it is we who seek reasonable accom- modation of policy for the orderly growth of imports, it is we who will in the end prove to be better preservators of trade liberalization than the rigid and doctrinaire economic theologians who refuse to recog- nize special and differentiating circumstances. Mr. Roth has always referred to quotas as if they necessarily will destroy all present imports of textiles and apparel. In truth, nothing of the sort would be involved in a system of reasonable limitations. Indeed orderly growth would rather be assured. He has fostered the impression that any such system of limitations would be destructive of trade liberalization and that under GATT exporting nations would apply retaliation. But it must be clear that retaliation by another government could only aid, even if it were re- sorted to, one of its industries other than textiles and that the foreign textile industries affected, which export to our market, could not gain by retaliation but would find it more clearly in their interest to come to terms with the United States and enjoy a limited rate of expansion here instead of countering with retaliatory measures that at best can only help some other foreign industry, not textiles. It is most unlikely tha.t the powerful textile industries abroad would themselves favor retaliation. They would prefer negotiation and they have indeed negotiated with other nations which have arranged for quantitative limitations. PAGENO="0275" 2581 They have discriminated against us by refusing us the same consideration. it is significant that remedial measures taken by other Western na- tions to curb imports of textiles and of knitted outerwear in particular have incurred no retaliatory action whatever. These measures have been in some cases unilateral and in other cases bilateral. Numerous of our trading partners have instituted special restramts on imports of textiles and apparel in various categories. Some have been long standing. Some have recently initiated restrictions on im- ports of knitted outerwear in particular. The United Kingdom has had quotas for several years; to soo Italy, France and others. Within the past year Sweden found it necessary to inaugurate spe- cial restrictions on imports of knitted outerwear. Canada has done the same. West Germany, we understand, has negotiated a bilateral agreement with Hong Kong, restraining imports of kni'twear, though the actual terms of that agreement are classified and are not available. So, too, have other nations protected their domestic industries from the swelling tide of knitwear shipments from the Orient; and only within the last few months Australia has granted relief by similar measures to its knitted outerwear industry on the basis, mark you, not that the domestic industry had yet `been injured, but that it ought not to be placed in jeopardy and exposed to future injury that will follow from a continuation of present `trends. How much more serious is our case. Yet these nations that have imposed these restraints are no less committed to GA'TT, no less dependent upon foreign trade, and no less devoted to trade liberalization than we are. But the effect of the multitude of restraints used by other countries to curb imports of tex- tiles and apparel from the Orient and other low wage areas, the effect has been to aggravate our import problem by funneling and sluicing into our markets the excessive quantities that are barred elsewhere. We have a justifiable grievance under GATT. We have never properly acted upon it. We do not complain that others have taken reasonable steps to shield their own industries from disruption but that we have been denied the same reasonable consideration. As for knitwear, exporting countries that have been enjoying free access to our market have each been victimized in turn by still lower wages `and lower priced knitwear of lower wage areas. &reat Bri'tain, Italy, Japan and then Hong Kong succeeded one an- other in first place among exporters of wool knitted outerwear to the United States and today Hong Kong's position is being challenged by still lower wages of South Korea and Taiwan. Each in turn has been led down the primrose path of a promise of a market here only to invest capital and training of help and to `be undermined in turn, as we were originally, by lower wage imports from other countries. International competition in `the United States knitwear market is a price war with rewards to the lowest wage country. If there should be any doubt on this point, it will be dispelled by `the statement I would like to bring to your committee's attention. It was issued by a mill in South Korea producing competitive knitted outerwear for the U.S. market and it was designed to `attract business from American retailers. PAGENO="0276" 2582 It can leave no doubt as to the nature of the foreign competition with which the U.S. Imitted. outerwear industry has been waging a losing battle. While we wifi be submitting the entire five-page state- ment for the record, we quote the following as particularly worthy of note: For some time, manufacturers in U.S.A. have been discovering new places in Southeast Asia and Asia as new sources of supplying the American market with hand-detailed sweaters to be retailed at reasonable prices due to the East's unlimited sources of cheap labor. It has taken three Americans from widely diverse backgrounds, and three Koreans in the hotel business in South Korea, along with the cooperation of the South Korean government, to come up with the means for the American retailers that takes all the gambling out of importing The sweaters are designed in the U.S.A. for American women, produced in South Korea in Westar's-the name of the South Korea mill-own mill under strict quality controls, shipped to Westar's own warehouses in Boston, Massa- chusetts and Nashua, New Hampshire, and permits Westar, Ltd. to offer quality conformity of production at prices far below imports from Japan, Hong Kong, Okinawa or Taiwan The results have been electrifying . . . on August 25th, a shipment of 80,000 hand-loomed, hand-crocheted fall sweaters for women arrived at the Boston warehouse. By September 6th, every single sweater had been bought up by the first few chains and department stores to see the merchandise. The new spring line of fine gauge knits, novelty knits, and bulky knit sweaters opened last week. One chain confirmed an initial order of 2,700 dozen. It is now certain that 10,000 dozen will be sold by October 15th, and by November 30th, over 30,000 dozen will be confirmed for delivery from January through February 1st. It is expected that the capacity of 50,000 dozen sweaters will be fulfilled before Thanksgiving. It goes on to say that the new plant is being built to 50,000 square feet, the present mill has more than 150 hand knittng frames and employs 450 South Koreans. The plant output will be increased to a minimum of 2,000 dozen sweaters per week. The labor costs range from 3 to 7 cents per hour to 21 cents, Dr. Tyler said- He is one of the principals in the mill- but living costs are scaled proportionately, and South Korea does not have the galloping inflation problems of other countries. The United States and South Korean governments are fostering investment in Korea . . . the American Embassy was especially helpful . . . in initiating so large a venture. Now, importers are rarely as candid as this in declaring the basis for their competitive advantage and their apparel to our market. This testimony directly from the mouth of our foreign rival suffices to pierce all the elaborate rationalizations with which importer spokes- men here have sought to mask the problem but the problem is critical. The problem cannot be masked or avoided, nor can a solution be deferred. The U.S. industry has been efficient. It has been a leader in innovation and technological advance. It has nourished comparable industries elsewhere in the world with the concepts it has originated and which others have adopted. But it cannot contend against such competition as this. Such evidence as this and the record of the domestic industry under the im~pact of the low-wage foreign competition makes the conclusion unavoidable that in the absence of restraint upon imports of knitwear, the trend demonstrated by the figures furnished here will continue and will operate to the serious detriment of American Labor and PAGENO="0277" 2583 management in the knitted outerwear industry of the United States and in the auxiliary supply industries dependent upon it. I respectfully submit this, and 1 thank you. Mr. Bunxi~. Thank you very much. Mr. Korzenik, the record is being left open for you to submit any other statement you have. Mr. KORZENIK. Thank you, sir. I propose to submit a written statement elaborating these points in greater detail. (The following statement was received by the'coinmittee:) STATEMENT OF SIDNEY S. KORZENIK, EXECUTIVE DIRECTOR AND COUNSEL, NATIONAL KNITTED OUTERWEAR ASSOCIATION The manufacture of knitted outerwear is one of the several segments of the textile-apparel complex that has experienced severe and increasing pressure from imports. As with all apparel, its products are generally labor-intensive, and it has been particularly vulnerable to competition from rival producers in low-wage areas of the world. Its difficulties are illustrative, therefore, of the impact and danger which imports present to the textile and apparel industry in general. The kniteted outerwear industry is ordinarily defined to include those firms which knit yarns into a variety of end products, including sweaters, knitted shirts, knitted swimwear, knitted dresses and suits, knitted infants' and chil- dren's wear, knitted headwear, and other types of knitted outerapparel. Unlike the woven apparel industry, its raw materials consist of yarns, not woven fabrics. It is thus textile in character and is ordinarily so classified. But it turns out ready-to-wear. The annual output of knitted outerwear was valued at about $1.3 billion in 1966, the last year for which official data are available. We estimate it to be no more than that, possibly less in 1967. The knitted outerwear industry, like other branches of the apparel Industry, is substantial in the aggregate, but consists of numerous small-business enter- prises. Approximately 1,175 firms éonstitute the nation's knitted outerwear industry. Plants manufacturing knitted outerwear are concentrated primarily in the eastern part of the country from New England down through New York, Pennsyl- vania and southward through the Carolinas. Other centers of production are in Cleveland and on the Pacific Coast. The industry conducts manufacturing opera- tions in thirty-two states of the Union. The industry is not limited by its equip- ment or by its marketing organizatiOn to any particular fiber. It uses all fibers interchangeably. The shift from one type of yarn to another is effected as simply as doffing one core from the knitting machine and mounting another. The distinctive and differentiating character of the nation's textile and ap- parel import problem arises from the operation of at least two special factors. First, it is one of the most labor-intensive of the manufacturing industries of the country. A second distinguishing factor is that the first type of manufacture which un- derdeveloped and low-wage areas of the world have entered or are most likely to enter in the initial phase of their industrialization is the production of textiles and apparel. Both of these factors have operated with special force in knitted outerwear. In consequence, the rise in imports of knitted outerwear has been swift and con- tinuous. While domestic production and shipments rose and well with good and bad years, total imports of knitted outerwear in every year throughout this period were higher than in the previous year. In 1956 the total of such imports in all fibers amounted to less than 3 million pounds. We estimate that in that year it represented less than 2% of our market on a poundage basis. By 1967 this total rose to 64.4 million pounds, or more than 20 times what it was in 1956, and about 31/2 times the total of only 5 years ago, as shown in Table 1. The quantity of imports has continued to Increase in every month thus far reported in 1968 over the corresponding month of the previous year. PAGENO="0278" 2584 TABLE 1.-U.S. IMPORTS FOR CONSUMPTION OF KNITTED OUTERWEAR OF WOOL, MAN-MADE FIBERS, AND COTTON un thousands of poundsJ Year Quantity Wool Man-made Cotton Total 1956 1957 1958 1959 2, 535 2,690 3,135 4,838 6,532 7,399 11,486 16, 918 19,275 26, 673 24, 954 23,757 70 (1) 59 (1) 85 23 174 85 4170 308 4,518 387 4 550 ~1,581 6 671 2,383 6 003 4, 583 6, 152 10, 519 9, 801 16, 131 14, 381 27,373 13,296 (1) (1) 6 394 9093 11 358 12 336 19 738 25 304 30 010 46, 993 55, 466 64,426 1960 1961 1962 1963 1964 1965 1966 1967 (Index 1958=100) 1956 80. 9 1957 85.8 1958 100. 0 1959 154. 3 1960 208. 4 1961 236. 0 1962 366. 4 1963 539.6 1964 614. 8 1965 850. 8 1966 796.0 1967 757. 8 82. 4 (1) 69.4 (1) 100. 0 100. 0 100. 0 131. 4 362. 4 142. 3 455. 3 143. 3 1,860. 0 210. 2 2,804.7 189.1 5, 392. 9 193. 8 12, 387. 1 308. 8 18,978.8 453.1 32, 203. 5 418. 9 (1) (1) 100. 0 142. 2 177. 6 192. 9 308. 7 395.7 469. 3 735. 0 867.5 1, 007. 6 Not available. 2 Includes other vegetable fibers. 3 Estimated. Source: U.S. Department of Commerce, Bureau of the Census, U.S. Imports of Merchandise for Consumption, reports FT-hO, FT-125, FT-246, and IM-146. To appreciate further what this import total means, an attempt may be made to relate it to the total domestic production. But in doing so it should be noted at the outset that we have included in domestic production not only the output of knitted outerwear mills, which is to say integrated producers who begin with yarns and do their own knitting, but we have also included the products of knitted outerwear fabrics sold to apparel cutters; and, in order to allay any possible question, we have assumed that such types of knitted fabric sold in the piece have all wound up in knitted outerwear end products. We know at the outset that this is not the case-that not all did go into domestic knitted outer- wear, and we know that the figure used to measure the domestic output should be somewhat less because certain types of knitted fabric, such as overcoating, though thus included in the production of knitted outerwear in the United States, actually went into products not included in knitted outerwear imports. We have chosen thus to proceed in order to avoid too many estimated premises for our conclusions. The details of the study have been set forth in detail in Appendices A-E, so that your Committee may be fully informed of the procedures we have followed. The point to be emphasized here is that on this basis the ratios of imports to domestic production and to domestic consumption resulting from this study are understated. But even on this basis imports are found to represent 21.4% of domestic production or 17.7% of consumption of knitted outerwear of all fibers. Moreover, imports have been rising at such a rate as to occupy an ever-greater portion of our total market, as the following figures indicate: PAGENO="0279" 2585 TA.I3LE 2.-Ratio of imports of knitted onterwear of all fibers to consumption Ratio Year: (percent) 13.0 1964 13.2 1965 14.1 1966 15.2 1967 117.7 1 Estimated. Source: Appendix E. But these over-all comparisons of Imports with domestic production and do- mestic consumption are merely a statistical generalization. They present only an average covering a broad variety of products. Not in all sectors of the market has the influx been held to 17 or 18% of consumption. In some areas imports have penertated the market to a considerably greater extent. In 1965, 1966 and 1967 the ratio of imports of wool knitted outerwear to con- sumption has hovered between 31.2 and 32.5% even on the conservative basis of our calculations. TABLE 3.-Ratio of imports of knitted onterwear wholly or in chief value of wool to consumption Ratio Year: (percent) 1963 26. 7 1964 25.2 1965 - 32. 5 31.2 1967 132 3 1 Estimated. Source: Appendix E. In cotton knitted outerwear the ratio, though it rose considerably since 1961 when the Provisional Geneva Agreement on Cotton Textiles first took effect, is estimated currently to be slightly less than 10%. TABLE 4.-Ratio of imports of knitted outerwear of cotton to consumption Ratio Year: (percent) 1963 7.4 1964 6. 1 7. 1 1966 .-- 9.2 1967 __ 18. 4 1 Estimated. Source: Appendix E. In the third major fiber area, man-made fibers, the ratio is estimated in the current year to be 20.7~%. Here the rate of increase has been so great that it is likely soon to exceed the ratio for wool. TABLE 5.-Ratio of imports of knitted outerwear of man-made fibers to consumption Ratio Year: (percent) 1963 ~. ~ 1964 9.2 1965 ~ 1966 12. 5 1967 120. 7 1 Estimated. Source: Appendix E. PAGENO="0280" 2586 It is obrious that in the area of man-made fibers the rise has been most swift and continues unabated. Imports of knitted outerwear of man-made fiber in 1964 were less than one-quarter of the total for wool. They amounted to about 4.6 million pounds, as against 19.3 niifflon for wool. But last year the volume of imports of man-made fibers reached 27 million pounds, greater than the highest annual total ever achieved in wool and six times what the man-made total was in 1964. But even these ratios by fiber type are generalizations and averages. Within these fiber groupings some classifications have been affected by imports even more severely than these averages indicate. Foreign producers do not invade on all fronts at the same time. They tend to concentrate on certain product areas because it is easier for them to do so. Sweaters, for example, represent a major classification of knitted outerwear imports. And in this classification, importers have thus far concentrated in women's sweaters. In the case of women's sweaters of wool, imports in 1965 came close to 50% of the market, as will be seen in Table 6, and were not far from that point last year. TABLE 6--COMPARISON OF IMPORTS TO DOMESTIC SHIPMENTS OF WOMEN'S WOOL SWEATERS [Quantity in thousands of dozens[ Year Imports 1 Domestic shipments 2 Apparent consumption Ratio of imports to apparent consumption (percent) 1963 1964 1965 1966 1967 (3) 1, 160 1,849 1,493 1,109 1,629 1, 691 2,140 4 2, 200 41,700 (3) 2, 851 3,989 3,693 ~2,809 40. 5 46.7 40. 4 139~4 1 Includes women's and girls' sweaters and only infants' ornamented sweaters. All infants' outerwear not ornament- ed, is separately classified as TSUSA No. 382.48-00 and amounted to only 84,000 lbs. in 1964 and 196~. The infants' sweaters here included are believed insignificantly small. 2 No breakdown of wool sv,eaters is available for girls' and teenage girls' or children's. They are believed to amount to less than 50,000 dozen. Not available. Estimated. Source: U.S. Bureau of the Census, U.S. imports of merchandise for consumption, IM-146. Current industrial reports, apparel survey, series M23A. The trend in women's sweaters of acrylic fiber reflects the sharp increase in the general total in all man-made knit-wear, though the extent of the market penetration is much deeper as seen in Table 7. TABLE 7.-COMPARISON OF IMPORTS TO DOMESTIC PRODUCTION OF WOMEN'S, GIRLS' AND INFANTS' ACRYLIC SWEATERS [Quantity in thousands of dozensi Year Imports Domestic shipments Apparent consumption Ratio of imports to apparent consumption (percent) 1963 1964 1965 1966 1967 (1) 208 445 1 226 2 101 5 266 4:771 5, 209 25200 2 4 200 (1) 4,979 4.2 5, 654 7. 9 26 426 219.1 2 6:301 2 33~ 3 1 Not available. 2 Estimated. Sources: U.S. Bureau of the Census, U.S. Imports of Merchandisef or Consumption, IM-146. Current Industrial Reports, apparel survey, series M23A. PAGENO="0281" 2587 Women's sweaters have enjoyed great popularity in recent years. Consumption has been increasing in the past decade. But under the competitive pressure of imports, the production of women's sweaters in the United States has not only failed to share in this growth, but has in fact declined. Domestic shipments of women's sweaters in 1966, the last year for which data have been published, was still below the level of 1957. TABLE 8-DOMESTIC SHIPMENTS OF WOMEN'S, MISSES' AND JUNIORS' SWEATERS OF ALL FIBERS Thousands Index, of dozens 1957=100 Thousands Index, of dozens 1957=100 Year: Year: 1957 7,537 100.0 1963 5,880 78.0 1958 7,314 97.0 1964 5,932 78.7 1959 7,299 96.8 1965 7,225 95.9 1960 6,533 86.7 1966 7,394 98.0 1961 6,464 85.8 1967 15,753 76.3 1962 6,125 83.7 1 Estimated. Source: U.S. Bureau of Census. Current industrial reports, appeal survey, series M23A and M23H. Our estimate is that the 1967 total, based on monthly shipments of women's, misses' and juniors' sweaters for 1967 published by the Bureau of the Census, was well below 1966, and approximated 76% of the output of eleven years ago. Imports of men's and boys' sweaters, though not yet of the proportions of women's sweater imports, are serious and have been rising. As shown in Table 9, they have increased in every year for which import data by dozens are available. TABLE 9.-COMPARISON OF IMPORTS TO DOMESTIC SHIPMENTS OF MEN'S AND BOYS' SWEATERS OF ALL FIBERS [Quantity in thousands of dozens] Year Imports ~ ~ Domestic ship- ments Apparent con- sumption Ratio of imports to apparent con- sumption (per- cent) 1963 1964 1965 1966 1967 (1) ~ ~ 272 440 504 656 4 114 4376 4,633 4,683 24,200 (1) 4,648 5,073 5,187 4,856 5.9 9.5 9.7 13.5 INot available. 2 Estimated. Source: U.S. Bureau of the Census, Current Industrial Reports, Apparel Survey, series M23A and M23B. Another illustration of market penetration in depth is the case of knitted outerwear shirts (excluding T- and sweat shirts) of man-made fiber. The quantity was substantial in the first year for which data are available, 1964. The import total that year was 212,000 dozen. The 1967 total was, therefore, thirteen times the 1964 total, or 2,855,000 dozen. TABLE 10.-U.S. IMPORTS FOR CONSUMPTION OF KNIT OUTERWEAR SHIRTS (EXCLUDING T AND SWEAT SHIRTS) OF MANMADE FIBERS [Quantity in dozens] Type 1964 1965 1966 1967 Men's and boys' 148,773 878,722 1,190,232 1,391,719 Women's, girls' and infants' 63, 040 131, 762 909, 795 1, 462, 987 Total knit outerwear shirts of manmade fibers 211, 813 1, 010, 484 2, 100, 027 2, 854, 706 Source: U.S. Bureau of the Census, "U.S. Imports of Merchandise for Consumption," IM-146. PAGENO="0282" 2588 Data on domestic production of comparable articles of man-made fiber are un- fortunately not available, but it is our opinion that imports in this classification are now not far behind domestic production and at the present rate of increase are likely to exceed it next year and would thus represent over half the domestic consumption. It is not necessary to multiply instances demonstrating the extent of the import invasion in different parts of the knitwear market. If the same effects have not yet been apparent in other classifications of knitwear that we have observed in the foregoing cases, it is not because foreign producers lack the capacity to enter those other areas of our market. They clearly possess the same advantage of labor cost in knitwear of all types and fibers. But, as stated above, they cannot as yet invade on all fronts at the same time. Given time for further expansion, they can surely capture other sectors of our market with the same detrimental effects upon domestic production as in the case of women's sweaters. On the basis of the data submitted here, the Committee may itself project how much more of the knitted outerwear market will be occupied by imports by 1070 and thereafter. If the forces presently at work continue to operate freely and without the intervention of any new restraining action on the part of the govern- ment, it cannot be reasonably doubted that U.S. sweater production will con- tinue to decline in absolute terms, and surely in relationship to mounting imports. It is not necessary to pretend to such precision in clairvoyancy as to fix the exact percentage which domestic sweater production will represent to total consumption in three or four years. But in view of all the evidence before us it is so overwhelmingly probable as to leave no room for reasonable doubt that ha- ports of sweaters will continue to rise, that domestic production will continue to decline, and that sweaters made in the United States will supply less than half the total domestic demand for such knitwear by 1970. In the case of women's sweaters it will probably be no more than 40%, and the balance will be imports. In the case of knitted outerwear shirts of man-made fiber, the rate of increase in imports is such that within the next year or two imports may, as `stated above, constitute more than half of the total supply. In those specific areas where our foreign rivals have already invaded in force, their take-over will be more complete in the next few years than in the newer areas which they are presently only prospecting. But there is no apparent reason why their rate of growth in those newer sectors should not be as swift as it has been in those we have examined above. To estimate on an over-all basis the future imports of all knitted outerwear of all fibers measured in pounds, it may be noted from Table 1 that the average in- crease from year to year in the past decade has been 29%. That is the margin by which the total for each year rose over the total for the preceding year. On the basis of an annual increase of 29% we may project the following import trend during the next five years: TABLE 11.-Projection of imports of lrnitteZ outerwear in afl fibers [Quantity in millions of pounds] Total Year: imports 1967 1968 83 1969 107 1970 138 1971 178 In contrast, the total domestic production of knitted outerwear, as shown in Appendix E, rose by 6% between 1965 and 1966 and declined by about 4% between 1966 and 1967. (Figures prior to 1965 are not directly comparable for statistical reasons explained in the note to Appendix E.) But prognostication need not be pressed to the point of absurd exactitude. Even if we assume a modest increase- though on the basis of what we have seen in the case of sweaters a further decline is more probable, total imports by 1971 will rise from 17.7% of consumption in the previous year to something between 30 and 40% in three to five years. And this, be it noted, is an average for a great variety of classifications, some of which are likely to approach liquidation and their future contribution will be minor. We expect that in discussing the future import trends you will hear a great deal from the import interests about inherent factors which will come into play to retard the future rise of imports. But are there any built-in factors that should arrest this proiected trend? If there are, nothing of the sort ha~ manifested itself PAGENO="0283" up to this point. Thus far, factors appear to be merely the conjedtu.re oi~ ad- vocacy and are wholly outside of the factual evidence here presented. True, an industry like ours is not likely to be wholly reduced to extinction only because some domestic manufacturers may take refuge in producing specialties of high price or in exploiting proximity to the market by filling immediate hand-to-mouth requirements. But a residual group of this character and dimension would bear little resemblance to what the industryhas been or is today. Such inherent factors as might conceivably alter our straight-line projection of the probabilities would, so far as we can discern, operate to increase the im- port trend. After fighting a rear-guard action a point is reached when the re- treat becomes a rout. As our rival manufacturers abroad take over a larger part of our market, there is greater discouragement to improvements and investments. Withdrawal from the domestic industry tends to accelerate and correspondingly, investment in mills abroad increases, as does the exportation of knowhow. un- ports are further aided by greater knowledge of our market, by the facilitation of basic arrangements through agents, brokers, credit resources. The difficulties that attend the establishment of the first commercial bridgehead at the inception of an import trend no longer impede the development of such trade once begun in volume. Once the pipelines have been laid, the flow can be readily increased. Not least of all the disadvantageous comparison between labor costs in the United States and those abroad are likely to be aggi~avated. The gap in labor costs which undermines our present capacity to compete will be widened. Apart from the fact that our duties on cotton knitwear were reduced beginning January 1, 1968, the wage rates in the knitted outerwear industr~y are rising at such a pace that between the year when the Trade Expansion Act was proposed and the year when the Kennedy Round took effect, the average hourly wage in the knitted outerwear industry increased by over 30%, and this is equivalent to a de facto tariff cut of substantial proportions. Foreign sources of knitted outerwear im- ports are embarrassed by no comparable increases. On the contrary, as I ~hall presently point out, importers have been constantly shifting their purchases to lower wage countries, and investors are seeking out areas with wage standards lower than those which supplied our imports a few years ago-and they are finding them. We submit that all the discernible factors that would affect our projections are those that will augment imports beyond our straight-line prog- nosis, and not arrest them. The basic factor underlying and explaining the unbroken upward trend of imports over the past decade is the radical difference in labor costs. This factor will certainly not change in the predictable future. While it is true that some other American industries are faced with these same wage differences, the salient and distinguishing fact here is that the apparel and textile industricu are labor-intensive in character. What renders the apparel industry particularly vulnerable to low-wage competition from other countries is that its labor costs represent so high a proportion of total costs. On this point I wish to cite a study made by the former Director of the Budget, Charles L. Schultz (with Joseph L. Tryon), Study No. 17 prepared for the Joint Economic Committee of the U.S.~ Congress, January 25, 1960, entitled "Prices and Costs of Manufacturing In- dustries," U.S. Government Printing Office. There Mr. Schultz undertook to rate the cumulative labor costs in various manufacturing industries not limiting himself merely to the manufacturing process that turned out the end product but including prior processing. He found total compensation represented 88.7 per cent of the unit price of apparel-a figure virtually close to the very top of the list of all manufacturing industries covered by this Study (page 21). This is particularly pertinent to a consideration of the cumulative effect of labor costs in textiles and apparel. In the knitted outerwear industry, the grave differences between our wage levels and those of our rivals abroad can no longer be overcome by superior technology. The American knitted outerwear industry is superior in efficiency and has contributed many advances to the production technology of the world. But if we are two, or three, or even four times as efficient as mills abroad, this today is no longer enough because our wage levels are ten to fifteen times greater than those of competitors overseas. Nor can we any longer depend on improved machinery or organization to overcome the gap in labor costs. Foreign producers are now using American management, know-how, and modern machinery. Their advantage in labor costs is sUch that investment in mOdern machinery is sometimes not even necessary. I personally visited a large knitting plant in Hong Kong in June 1965 which was then producing sweaters for R. H. Macy & Company in New York. The factory had about 1,000 operatives and was man- PAGENO="0284" 2590 aged by an engineer who had been educated at a university in the United States. Knitting machine operatives were, when first hired, employed at $1.00 per day for a ten-hour day and after an introductory period they were put on piece work (incidentally, knitting machine operators are among the most highly paid craft in a knitting mill, well above the minimum.) These Hong Kong knitting machine operators worked at hand knitting frames. The machine parts had been manu- factured and imported from Japan, and to reduce costs further still, they were assembled in Hong Kong. Each, when fully set up, cost, we were told, about $100. We asked why the management did not use automatic full-fashioning machines instead of relying on hand machines. Such automatic machines of twelve sections cost $33,000 to $35,000 each in the United States. In response, the manager ex- plained that he had just completed an engineering study on the relative ad- vantages of such a capital investment, and the results showed that because of low labor cost, it was not worth investing in automatic machinery. Wages were so low that the economic advantage was on the side of the regressive technology. To illustrate further that labor costs and labor costs alone are the determining factor in our competitive contest with imports, your Commission is asked to note how retailers and other importers in the United States have been con~ stantly turning to sources of supply in countries with lower and lower wage standards. Detailed tables are furnished in Appendices G, H and I. It will be seen that in 1953, 55.8% of all wool knitted outerwear imports were contributed by the United Kingdom. Low though British wage standards are compared to our own, they were high compared with others and could not prevail against competitors in other parts of the world. In 1967 the British contributed but 5% of total imports of knitted outerwear of wool. In 1957 Japan was in first place among exporters of knitted outerwear of wool to the United States, accounting for 47% of our total. For special reasons affect- ing her commercial policy on man-made fibers, Japan turned from the production of wool knitwear to that of synthetic materials. Italy, low-wage area of Europe, held first place among exporters of wool knit outerwear to the United States in 1964, but could not hold that position in the face of rising imports of wool knitted outerwear from Hong Kong. Italy's con- tribution has declined both in absolute and relative terms and will continue further to decline in the face of new competitors from the Orient. Considering the total exports of wool and man-made fibers (cotton need not be included because the major component of these totals is sweaters, and few sweaters are made of cotton) Hong Kong now holds first place, with 30% of our total imports of wool and man-made fibers. And now Hong Kong's position, though her wages are lower than Italy's or Japan's, is being challenged by South Korea and Taiwan whose wages are lower still. The latter two countries have come up during the past three years from virtually nothing, and today account together for nearly a quarter of all our imports of knitted outerwear of wool and man-made fibers. Just how far international competition for the United States knitwear market has become a price war with the rewards going to the lowest wage country- and how far the price pressure of American buyers has been successful in bring- ing down prices of foreign knitwear, may be seen from the declining trends of prices per pound of imports of wool knitted outerwear in Table 12. And all this has continued in the face of rising manufacturing costs in the United States. TABLE 12.-AVERAGE VALUE PER POUND U.S. IMPORTS FOR CONSUMPTION OF WOOL KNITTED OUTERWEAR 1957-67 [Dollars per poundi United Year Kingdom Italy Japan Hong Kong All countries 1957 1958 1959 1960 1961 1962 1963 1964 1965 $15. 07 11. 94 12. 38 11.97 10. 92 9. 86 9.09 9. 39 9. 59 9. 54 9. 49 $9. 17 8. 20 7. 30 7.14 6. 79 6.74 6.15 5. 91 5. 49 6. 79 7. 52 $6. 94 6. 04 5. 69 7.09 6. 29 5. 37 5.22 5. 14 5. 48 5. 02 5. 09 $5. 25 5. 92 6. 56 5.98 5. 71 6. 28 5.53 4. 90 4. 20 4. 35 4. 43 $9. 55 7. 92 7. 33 7.65 7. 16 6. 85 6.37 6. 08 5. 43 5. 97 6. 15 1966 1967 Source: U.S. Bureau of the Census U.S. Imports of Merchandise for Consumption reports FT-hO, FT-125, FT-246, and IM-146. PAGENO="0285" 2591 Against this general background, in order to put before you the relative labor costs, it is not necessary to analyze the trend of wages in other countries ex- porting to our market knitted outerwear competitive with our own. It should suffice to place in the record the statement issued by a mill in South Korea pro- ducing competitive knited outerwear for the United States market. It is a state- ment designed to attract business from retailers to whom it is primarily ad- dressed. It can leave no doubt as to the nature of the foreign competition with which the United States knitted outerwear industry has been waging a losing battle. While submItting the entire five-page statement for the record (see Appendix J), I should like to stress by quoting these significant passages in~ tended for the store buyer in the United States: "For some time, manufacturers in the U.S.A. have been discovering exotic new places in Southeast Asia and Asia as new sources of supplying the American market with hand-detailed sweaters to be retailed at reasonable prices due to the East's unlimited sources of cheap, labor. It has taken three Americans from widely diverse backgrounds, and three Koreans in the hotel business in South Korea, along with the cooperation of the South Korean government, to come up with the means for the American retailers that takes all the gambling out of importing "The sweaters are designed in the U.S.A. for American women, produced in South Korea in Westar's own mill under strict quality controls, shipped to Westar's own warehouses in Boston, Mass. and Nashua, N.H., and permits Westar, Ltd. to offer quality conformity of production at prices far below imports from Japan, Hong Kong, Okinawa or Taiwan * "The results have been electrifying. * * on August 25th, a shipment of 80,000 hand-loomed, hand-crocheted fall sweaters for women arrived at the Boston warehouse. By September 6th, every single sweater had been bought up by the first few chains and department stores to see the merchandise. The new spring line of fine gauge knits, novelty knits, and bulky knit sweaters opened last week. One chain confirmed an initial order of 2,700 dozen. It is now certain that 10,000 dozen will be sold by October 15th, and by November 30th, over 30,000 dozen will be confirmed for delivery from January through February 1st. It is expected that the capacity of 50,000 dozen sweaters will be fulfilled before Thanksgiving. "According to Dr. Tyler (one of the company principals), a new plant is al- ready being built in Seoul consisting of 50,000 square feet and will be ready early in 1967. It will increase employment by 825 people, which will include 200 additional hand-crochet knitters. The present mill has more than 150 hand kniting frames, and employs 450 South Koreans. Planned output will be in- creased to a minimum of 2,000 dozen sweaters per week in full-fashioned styles * The labor costs range from three to seven cents per hour to 21 cents, Dr. Tyler said, but living costs are scaled proportionately, and South Korea does not have the galloping inflation problems of other countries. The United States and South Korean governments are fostering investment in Korea the American Embassy was especially helpful * * in initiating so large a venture." The foregoing statement is particularly noteworth because rarely are im- porters so candid in declaring the basis of their competitive advantage. We agree with this statement's conclusion, and we are satisfied to rely on the testimony of our adversaries In asserting that the outcome of this economic struggle will depend on the advantage in labor costs. While this South Korean knitted outerwear plant is boasting to its prospective United States customers of wages from 50 to 70 to a high of 210 per hour, it should be noted that the average wage in the knitted outerwear industry of the United States in the most recent month for which data has been made available by the Bureau of Labor Statistics, March 1968, was $2.26 per hour (see Appendix F). In the face of such extreme differences of conditions, we submit that is ir- relevant and worse to discourse on the philosophical merits of the principles of free trade. For Mr. William M. Roth, the President's Special Trade Negotiator, to multiply speeches against the dangers of protectionism contributes nothing to a solution of the problem but a false notion of the true alternatives. He has referred to quotas as if they were necessarily destrictive of all present imports of textiles and apparel when nothing of the sort would be involved in a system of reasonable limitations. He has created the impression that any such system of limitations would be destructive of the progress of trade liberalization under GATT. PAGENO="0286" 2592 Not only is that not the case, but it should be pointed out that our so-called trading partners in Europe have had recourse to various types of limitations and quotas on their imports of textiles and apparel. All of this has apparently been ignored. Indeed, public information on these limitations has been difficult to obtain. We deem it essential to your study that your Committee should obtain from the State Department the fullest information with respect to quota arrange- mens on textiles and apparel now in force in European countries and in Japan; and, further, how such restraining measures have not in some of these countries prevented some increase in imports consistent with orderly marketing and the survival of domestic industries. The Canadian Government whose policy has been no less committed to liberal trade, has nevertheless instituted quota ar- rangements with Japan and even with the British Crown Colony of Hong Kong. ments on textiles and apparel now in force in European countries and in Japan; Great Britain has done the same. West Germany has such arrangements with at least Hong Kong, but the details have never been made public and we have never been able to obtain them. Similar limitations apply in France. They have been instituted, we have been advised, in some of the Scandinavian countries. And all these are not limited to cotton but apply to other fibers as well. And only within the last few months Australia has granted relief by similar measures to its knitted outerwear industry on the basis, mark you, not that the domestic in- dustry had not yet been injured, but that it ought not to be placed in jeopardy and exposed to future injury that will follow from a continuation of present trends. How much more serious is our case. We urge that this study by your Committee include a complete examination of these arrangements. Too much of the public debate has been carried on in terms of abstract prin- ciples. It is only by examining the distinguishing realities in the difficulties of the apparel and textile industry that a solution appropriate to this special case can be found. The old dialectic between free trade and abstract protection- ism is dead. The arguments are stale. The realities are far more complicated and more severe than can be treated through vague generalities. The facts which the industry is placing before you cannot but demonstrate the basis for a pro- gram of reasonable limitations of imports such as has been adopted by other GATT nations and such as will permit the survival and growth of our own textile and apparel industry. APPENDIXES APPENDIX A Ecoplanatory Note on Met hod of Developing Ratios Between Domestic Produc- tion and Imports of Knitted Outerwear in Pounds.-Because classifications of imports do not correspond with classifications of knitted outerwear reported in surveys of domestic production, it is not possible to make complete comparison in units. It is necessary to make the comparison on a poundage basis. Domestic production, however, is not specifically reported in pounds, and poundage must, therefore, be derived from other data. The sources used are two: (1) Data published by the National Cotton Council of America in its annual survey, entitled "Cotton Counts Its Customers," covering all classifications of knitted garments constituting "knitted outerwear" and thus comparable to the total of import categories included in this general term. Such data provide, first, the total fiber weight of materials used for producing each classification of end product, and; second, the portion thereof consisting of cotton. They do not show what portion was wool or what portion man-made fiber. To obtain figures on the weight of wool knit outerwear a second source was used. (2) Data on wool yarns consumed in the manufacture of knitted outerwear, as derived from the "Apparel Survey, Series M23A" of the Bureau of Census of the United States Department of Commerce. This report shows the total consumption of yarn in the production of knitted underwear, nightwear and knitted outer- wear (but not broken down). These figures were supplemented by a further re- port, Series M22K, "Knit Cloth for Sale." In the first of these two' Bureau of Census reports, the figures showing wool yarn consumed for underwear, nightwear and knit outerwear are assumed to be nearly entirely absorbed in knitted outerwear (except for a smnli percentage). But since these figures reflect consumption of yarns only in integrated knitted outerwear mifis, it is supplemented by data in the survey of Knit Cloth for Sale, showing the quantity of wool cloth sold to cutters for fabrication into garments- PAGENO="0287" 2593 and here we have assumed that all such knitted cloth of wool went into knit outerwear, though some part of it must have been consumed in other non-knit- outerwear use. Domestic production is thus somewhat overstated. The only further adjustment of these two wool figures from the Department of Commerce sources is to diminish the yarn poundage by a waste factor of 20 per cent to derive the net weight of finished garments. With (a) the total weight of all knitted outerwear production based on the data of the National Cotton Council, and with (b) the total portion thereof consisting of cotton given in the same source, and with (c) the weight of wool knitted outerwear derived from the Department of Commerce reports in the manner in- dicated above, we have then been able to subtract (b) and (c) from (a) thus to obtain (d), the remainder which represents the man-made component. The 20 per cent waste factor applied to yarn consumption represents a general- ization of industry experience. APPENDIX B ESTIMATED END USE CONSUMPTION OF GRAY YARNS OF ALL FIBERS IN THE PRODUCTION OF KNITTED OUTER- WEAR 1960-67 [In millions of poundsj Type of product 1960 1961 1962 1963 1964 1965 1966 1967 1 Sweaters 95 97 101 102 102 113 114 92 Knit outerwear shirts 56 54 55 52 72 89 96 100 Sweatshirts 32 35 42 39 48 55 66 64 Knit swimwear 6 7 8 7 12 14 14 15 Knit dresses Knit dress suits i Knit play garments Knit skirts Knit slacks Knit headwear4 Total grayyarns consumed in the produc- tionofknittedouterwear Adjusted 20 percent for waste 2 7 7 (3) (3) (3) (3) 3 3 8 (3) (3) 3 9 (3) (3) 3 j 2 51 1. 8 8 10 (3) 8 (3) 12 3 3 2 56 8 11 10 14 3 59 9 10 10 15 3 201 205 219 214 25 363 392 377 160.8 164. 0 175. 2 171.2 200. 0 290. 4 313. 6 301. 6 1 Estimated. 2 Adjusted to exclude dresses of tricot not ordinarily classified as knitted outerwear, amounting to 19 million pounds in 1965 and 20 million pounds in 1966. 3 Not available. 4 Estimated by National Knitted Outerwear Association based on production of knit headwear reported in the "Apparel Survey." Source: National Cotton Council of America, "Cotton Counts Its Customers." APPENDIX C ESTIMATED END-USE CONSUMPTION OF GRAY COTTON YARNS IN THE PRODUCTION OF KNITTED OUTERWEAR 1960-67 [In millions of poundsj Type of product 1960 1961 1962 1963 1964 1965 1966 1967 1 Sweaters I" 4 4 4 3 4 6 4 Knit outerwear shirts 51 50 50 45 63 70 78 80 Sweat shirts 32 34 41 37 46 53 62 64 Knit swimwear 1 2 2 1 2 2 1 1 Knit dresses 1 1 15 15 16 Knit dress suits j 1 1 1 1 11. 2 2 3 Knit play garments 6 6 7 7 6 8 8 7 Knit skirts (2) (2) (2) (2) (2) 2 3 2 Knit slacks (2) (2) (2) (2) (2) 5 5 5 Knit headwear3 Total, gray cotton yarn consumed in the production of knitted outerwear 95 97 105 95 121 161 180 182 Adjusted 20 percent for waste 76 77. 6 84 76 96. 8 128. 8 144 146 o Estimated. 2 Not applicable. . 3 Estimated by National Knitted Outerwear Association based on production of knit headwear reported in th~ Apparel Survey. Source: National Cotton Council of America, "Cotton Counts Its Customers," PAGENO="0288" 2594 APPENDIX D DOMESTIC CONSUMPTION OF WOOL YARNS IN THE PRODUCTION OF KNIT OUTERWEAR, 1960-67 [In millions of pounds[ Year Dcmestic co nsumption of wool production of- yarns in the Total wool yarn consumed in knit outerwear Weight of finished knit outerwear (adjusted for 20 percent waste) Knit underwear, nightwear, and outerwear Knit outerwear 1 Knit cloth for sale to others for fabricating into garments 1960 31. 8 30. 0 11. 8 41. 8 33. 3 1961 32.9 31.0 11.8 42.8 34.2 1962 38. 5 36. 0 12. 0 48. 0 38. 4 1963 45. 9 44. 0 14.3 58. 3 46. 6 1964 53.0 51.0 20.7 71.7 57.4 1965 50.5 48.5 121.0 9.5 55.6 1966 59. 0 57. 0 12. 1 69. 1 55. 3 1967 1 47. 0 1 45 0 17. 4 1 62. 4 1 49 9 I Estimated. Source: U.S. Department of Commerce, Bureau of the Census, Current Industrial Reports, Apparel Survey, series M23A, and Knit Cloth for Sale, series M22K. APPENDIX E RATIO OF IMPORTS OF KNITTED OUTERWEAR OF ALL FIBERS TO DOMESTIC PRODUCTION AND TO APPARENT CONSUMPTION 1960-67 Domestic Year production (pounds) Imports (pounds) Exports (pounds) Apparent consumption (pounds) Ratio of im ports to- - Apparent consumption (percent) Domestic production (percent) ~960 160,800,000 11,358,000 2,000,000 170,158,000 6.7 7.1 961 164,000,000 12,336,000 3,000,000 173,336,000 7.1 7.5 1962 175,200,000 19,738,000 2,000,000 192,938,000 10.2 11.3 1963 171,200,000 25,304,000 2,000,000 194,504,000 13.0 14.8 1964 200,000,000 30,010,000 2,000,000 228,010,000 13.2 15.1 1965 290, 400, 000 46, 993, 000 3, 000, 000 334, 393, 000 14. 1 16.2 1966 313, 600, 000 55, 466, 000 3, 000, 000 366, 066, 000 15. 2 17. 7 967 `301,600,000 64,426,000 `3,000,000 `363,026,000 `17.7 121.4 `Estimated. PAGENO="0289" 2595 RATIO OF IMPORTS OF KNITTED OUTERWEAR BY TYPE OF FIBER TO DOMESTIC PRODUCTION AND TO APPARENT CONSUMPTION, 1960-67 Ratio of imports to- Domestic Imports Exports Apparent Type of fiber production (pounds) (pounds) consumption Apparent Domestic (pounds) (pounds) consumption production (percent) (percent) Knitted outerwear of wool: 1960 33, 300, 000 6, 532, 000 200, 000 39, 632, 000 16. 5 19. 6 1961 34,200, 000 7, 399, 000 223, 000 41,376, 000 17. 9 21. 6 1962 38, 400, 000 11,486,000 183, 000 49, 698, 000 23. 1 29. 9 1963 46,600, 000 16, 918,000 227, 000 63,291, 000 26. 7 36. 3 1964 57, 400, 000 19,275, 000 314, 000 76, 361, 000 25. 2 33. 6 1965 1 55, 600, 000 26, 673, 000 244, 000 82, 029, 000 32. 5 48. 0 1966 55,300,000 24,954,000 255,000 79,999,000 31.2 45.1 1967 `49, 900 000 23, 757 000 1 200, 000 1 73, 457, 000 1 32. 3 `47. 6 Knitted outerwear of cotton: 1960 76,000,000 4,518,000 1,000,000 79,518,000 5.7 5.9 1961 77,600,000 4,550,000 924,000 81,226,000 5.6 5.9 1962 84,000,000 6,671,000 1,011,000 89,660,000 7.4 7.9 1963 76, 000, 000 6, 003, 000 1, 103, 000 80, 900, 000 7. 4 7. 9 1964 96, 800, 000 6, 152, 000 1, 529, 000 101,423, 000 6. 1 6. 4 1965 128, 800, 000 9, 801,000 1,364, 000 137, 237, 000 7. 1 7. 6 1966 144,000,000 14,381,000 1,361,000 157,020,000 9.2 10.0 1967 1146, 000, 000 13, 296, 000 `1, 300, 000 1157,996, 000 1 8. 4 19~ 1 Knitted outerwear of man-made fibers: 1960 51, 500, 000 308, 000 1, 000, 000 50, 808, 000 0. 6 0. 6 1961 52,200,000 387,000 1,515,000 51,072,000 0.8 0.7 1962 52, 800, 000 1, 581, 000 708, 000 53, 673, 000 2. 9 3. 0 1963 48, 600, 000 2, 383, 000 631, 000 50, 352, 000 4. 7 4. 9 1964 45, 800, 000 4, 583, 000 558, 000 49, 825, 000 9. 2 10. 0 1965 2 106, 000, 000 10, 519, 000 1, 202, 000 115, 317, 000 2 9~ 1 9. 9 1966 114,300,000 16,131,000 898,000 129,533,000 12.5 14.1 1967 1105, 700, 000 27, 373, 000 1 900, 000 1132, 173, 000 1 20. 7 1 25. 9 1 Estimated. 2 The sharp increase between 1964 and 1965 in the figures reflecting domestic production of knitted outerwear of man- made fibers does not actually indicate an expansion in the U.S. industry, but rather a correction in the data of the National Cotton Council. Not included in 1964 or the earlier years were the following classifications: knitted dresses and suits (included only are those made in integrated knitting mills; those made of purchased knitted fabric were not included); knit skirts; and knitted slacks. All the omitted classifications were included for the first time in 1965, and the total for that year, as in the case of the succeeding year, ic therefore not directly comparable to the figures for the preceding series. Consequently, the ratio of imports of knitted outerwear of man-made fibers to apparent consumption of such articles is somewhat overstated for the years prior to 1965. But they are bellieved to bevalid for the last 3 years shown. Sources: Appendix B, C, and D. APPENDIX F AVERAGE HOURLY EARNINGS OF PRODUCTION WORKERS IN THE U.S. KNITTED OUTERWEAR INDUSTRY, 1957-67 AND MARCH 1968 Period Amount Period Amount 1957 $1.51 1958 1.53 1959 1.55 1960 1.60 1961 1.66 1962 1.69 1963 $1.74 1964 1.82 1965 1.88 1966 1.99 1967 2.12 March 1968 2.26 Note: Not seasonally adjusted. Source: U.S. Department of Labor, Bureau of Labor Statistics. 95-159 O-68--pt. 6-19 PAGENO="0290" 2596 APPENDIX G PERCENTAGE OF TOTAL QUANTITY OF U.S. IMPORTS FOR CONSUMPTION OF WOOL KNITTED OUTERWEAR BY LEADING COUNTRIES OF ORIGIN, 1953-67 Year United Kingdom Japan Italy Hong Kong All other countries 1953 1954 55.8 50.1 2.4 6.0 7.1 10.4 0 0 34.7 33.7 1955 1956 1957 35.9 20.6 17.3 19.4 45.5 46.5 14.4 13.8 15.7 0 .4 .8 30.3 19.7 19.7 1958 14.7 45.0 21.2 1.8 17.3 1959 11.6 43.4 27.1 3.4 14.5 1960 8.8 31.4 39.7 5.5 14.6 1961 8.6 19.9 48.7 7.6 15.2 1962 7.8 14.4 52.3 10.2 15.3 1963 6.8 6.2 64.9 10.0 12.1 1964 5. 5 3. 5 62. 4 17. 5 11. 1 1965 4.6 3.3 48.7 33.4 10.0 1966 5.3 3.7 39.8 38.4 12.8 1967 5.1 2.6 36.1 42.6 13.6 Source: U.S. Department of Commerce, Bureau of the Census, "U.S. Imports of Merchandise for Consumption," Re ports FT-hO, FT-125, FT-246, and IM-146. APPENDIX H U.S. IMPORTS FOR CONSUMPSION OF KNITTED OUTERWEAR OF WOOL AND MAN-MADE FIBERS BY LEADING COUNTRIES OF ORIGIN, 1959-67 KNITTED OUTERWEAR OF WOOL [In thousands of poundsj Year Italy Japan Hong Kong South Korea Taiwan Total 1959 1,314 2,101 166 4,839 1960 2,592 2,053 359 6,532 1961 3,606 1,473 563 7,399 1962 6,011 1,657 1,170 11,486 1963 10,996 1,050 1,687 16,918 1964 12,025 675 3,382 19,275 1965 12,977 867 8,917 26,673 1966 9,939 932 9,586 636 24,954 1967 8,587 610 10,110 41 784 23,757 KNITTED OUTERWEAR OF MAN-MADE FIBERS 1959 50 3 85 1960 216 308 1961 237 1 3 387 1962 149 936 163 2 1,585 1963 171 1,314 281 208 2,384 1964 260 2899 354 489 4,584 1965 409 5 762 2 068 768 761 10,519 1966 569 9 069 2,273 1,913 1,404 16,131 1967 892 9, 966 5, 325 5, 703 4, 493 27, 373 Source: U.S. Department of Commerce, Bureau of the Census, U.S. Imports of Merchandise for Consumption, Reports FT-hO, FT-125, FT-246 and IM-146. PAGENO="0291" 2597 APPENDIX I U.S. IMPORTS FOR CONSUMPTION OF KNITTED OUTERWEAR-TOTAL OF WOOL AND MAN-MADE FiBERS AND SHARE OF TOTAL HELD BY LEADING COUNTRIES OF ORIGIN, 1959-67 Year Italy Japan Hong Kong South Korea Taiwan Total 1959 1960 1961 1962 1963 1964 1965 1966 1967 1959 1960 1961 1962 1963 1964 1965 1966 1967 In thousands of pounds 1 314 2,592 3,606 6,160 11,167 12,285 13,386 10,508 9,479 2 151 2,269 1,710 2,593 2,364 3,574 6,629 10,001 10,576 169 359 564 3 1,333 2 1,968 208 3,736 489 10,985 768 761 11,859 1,913 2,040 15,435 5,744 5,277 4,924 6,840 7,786 13,071 19,302 23,859 37,192 41,085 51,130 As a percent of total 26.7 37.9 46.3 47.1 57.9 51.5 36.0 25.6 18.5 43.7 3.4 33.2 5.2 22.0 7.2 0 19.8 10.2 0 12.2 10.2 1.1 15.0 15.7 2.0 17.8 29.5 2.1 2.0 24.3 28.7 4.7 5.0 20.7 30.2 12.3 10.3 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: Appendix H. APPENDIX J FIRST JOINTLY OWNED KOREAN-AMERIcAN KNITTING MILL IN KOREA HAS IMMEDIATE IMPACT ON SWEATER INDUSTRY A new company has made the American scene all the way from Seoul, South Korea; and it seems destined to change the thinking of American retailers, manu- facturers and consumer buying patterns of women's knitwear here in the U.S.A. The arrival of Westar Ltd., the very first Korean~American venture into the American sweater industry, is causing everyone to take a closer look at the quality and marketing concepts of imported, full-fashioned, hand-loomed, hand- crocheted sweaters from South Korea. For some time, manufacturers in the U.S.A. have been discovering exotic new places in Southeast Asia and Asia as new sources of supplying the American market with hand-detailed sweaters to be retailed at reasonable prices due to the East's unlimited sources of cheap labor. It has taken three Americans from widely diverse backgrounds, and three Koreans in the hotel business in South Korea, along with the cooperation of the South Korean government, to come up with the means for the American retailers that takes all the gambling out of importing. Westar Ltd. is the only jointly owned Korean-American knitting mill-a direct source to the finest hand-knitters in the world. The sweaters are designed in the U.S.A. for American women, produced in South Korea in Westar's own mill under strict quality controls, shipped to Westar's own warehouse in Boston, Mass. and Na shun, N.H., and permits Westar Ltd. to offer quality conformity of pro- duction at prices far below imports from Japan, Hong Kong, Okinawa or Taiwan. The formation of Westar Ltd. is as unusual as its product and the back- grounds of the principles of the company. The President is Dr. Arthur Tyler, a world renowned Nuclear Physicist, a former U.S. Olympic Bobsledder champion, and a rare combination of business- man, scientist and human being. Dr. Tyler was one of the original founders of Itek Corp., specializing in information, storage, and retrieval systems and equip- ment. Jltek is now an SO million dollar company and on the New York Stock Exchange. Dr. Tyler is also the founder of Tyco, Inc. and its subsidiary. Tyco Laboratories which specializes in the manufacturing of electronic equipment for the U.S.A. Government. He is one of the three founders and organizers of the Komy Corp., which produced electronic devices In the Republic of Korea for export to the U.S.A. PAGENO="0292" 2598 While involved in transistor and eelctronic production in Korea, and the development of mineral deposits in conjunction with the South Korea Govern- ment, Dr. Tyler became interested in finding ways to achieve further develop- ment of the vast human resources and talents of the South Korean people, and to attract investment by American businessmen into Korea. The greatest asset seemed to rest in the unusual high quality workmanship of a most willing, in- expensive and vast labor market which was readily available. The first to join him were two close friends from New Hampshire: Isay Friedman, who operated a shoe manufacturing business in Boston; and Murray Samels, President of Kimmerick Discount Stores in Nashua, and formerly with Brookshire Knitting Mills in Manchester, New Hampshire. They found their way through the three Suh brothers who own the Ambassador Hotel in Seoul, and who had purchased a knitting mill two years ago that had been operating for seven years previously for the European market. The three Americans formed a joint American-Korean enterprise under the name of Pan- Korea Industrial Ltd., and they, with the principals of the South Korean company received official recognition from the government as a means of aiding the country economy. Westar Ltd. is the U.S.A. company with warehousing, design and selling facilities set up in this country. Herbert Riiidenow was ap- pointed as General Sales Manager of Westarknits-the sales division of Westar Ltd., located at 1407 Broadway, New York. Mr. Rindenow, heavily experienced in the knit business, was formerly with Globe Knitwear of Philadelphia for 14 years. Mr. Samels became Executive Vice President of Westar Ltd., and Mr. Friedman, the Treasurer of the company. The entry of these American business- men, together with the large influx of ready capital, enabled the company to invest in machinery and yarn which had been difficult to bring into South Korea. The results have been electrifying. Mr. Rindenow reported that on August 25th, a shipment of 80,000 hand-loomed, hand-crocheted fall sweaters for women arrived at the Boston warehouse. By September 6th, every single sweater had been bought up by the first few chains and department stores to see the merchandise. The new spring line of fine gauge knits, novelty knits, and bulky knit sweaters opened last week. One chain con- firmed an initial order of 2,700 dozen. It is now certain that 10,000 dozen will be sold by October 15th, and by November 30th, over 30,000 dozen will be confirmed for delivery from January through February 1st. It is expected that the capacity of 50,000 dozen sweaters will be fulfilled before Thanksgiving. According to Dr. Tyler, a new plant is already being built in Seoul consisting of 50,000 square feet and will be ready early in 1967. It will increase employment by 825 people, which will include 200 additional hand-crochet knitters. The pres- ent mill has more than 150 hand knitting frames, and employs 450 South Koreans. Planned output will be increased to a minimum of 2,000 dozen sweaters per week in full-fashioned styles. This is feasible because of the abundance of quality hand labor. The mill will also make cut and sewn sweaters and co- ordinates. Over $500,000 has already been invested, which is equal to 135 million won in South Korean currency. The labor costs range from three to seven cents per hour to 21 cents, Dr. Tyler said, but living costs are scaled proportionately, and South Korea does not have the galloping inflation problems of other countries. The United States and South Korean governments are fostering investment in Korea, according to Dr. Tyler, and the U.S. Operations Mission in the Ameri- can Embassy in Seoul was especially helpful in ironing out the rough spots in initiating so large a venture. Westar has already opened up distribution facilities and offices in Canada, and is exploring the possibilities of warehousing in New York and California in the near future. The company claims to have unlimited production potential, and is offering full-fashioned, hand-crocheted, and hand-loomed sweaters at incredibly low wholesale prices, considering the detail and quality offered, to retail from $3.98 to $12.98. The hand-crocheted sweaters are wholesaling from .$4.75 each in $7.75 each in 100% acrylics, and hand-loomed sweaters from $36.00 to $91.00 per dozen, all full-fashioned. Mr. Rindenow believes that the company's policy of offering the highest quality sweaters to retailers will ultimately benefit the consumer, while permitting the store higher retail mark-ons. Orders are now being taken on the spring line for December/January delivery. Mr. Bm~xE. Our next witness is Mr. Charles I. Rostov. Will you iden- tify yourself? PAGENO="0293" 2599 STATEMENT OF ROBERT E. HERZSTEIN, COUNSEL, FLOOR COVER- IN+ GROUP, AMERICAN IMPORT ASSOCIATION; AND WILTON AND VELVET CARPET AND RUG IMPORTERS Mr. HERZSTEIN. Mr. Chairman, my name is Robert I-Ierzstein. I am a partner in the Washington law firm of Arnold and Porter. We are counsel to the floor covering group of the American Import Associa- tion, and also to the Wilton and Velvet Carpet and Rug Importers. I informed the committee staff earlier that both of my clients are out in Chicago this week. This is one of the 2 weeks in the year when they write most of their orders, and so they all felt it would be a great penalty on their business to appear~ Mr. Buiiuu~. If you want to skip any part of your statement, you may, and the entire statement will appear in the record. Mr. HERZSTEIN. Thank you. My plan was, in fact, just to orally summarize it, especially in view of the hour. Mr. Buiuu~. Do you want Mr. Rostov's entire statement submitted for the record. Mr. HERZSTEIN. Yes. We also submitted an appendix A. Mr. Bum~i~. The statement and appendix will be received for the record. Mr. HERZSTEIN. Thank you. Mr. Chairman, as we indicate in the statement, we don't believe any quota on textile imports is needed, but out facts and arguments are set forth in the statement, and you heard a great deal on that topic today, so that I won't go into that at this point. Our particular interest is in making clear to this committee the spe- cial circumstances of the carpet and rug industry. There has been little or no mention of the carpet and rug industry or carpet and rug imports in the Senate Finance Committee import quota hearings that were held last fall or in the lengthy and numerous con- gressional speeches that have appeared on this subject. We believe it is a fair inference that the proponents of textile im- port quotas do not view them as encompassing carpets and rugs. We also feel it likely that they would not care to have carpets and rugs associated with their testimony, because of the phenomenal pros- perity that the domestic carpet and rug manufacturers have been enjoy- ing in recent years. In essence, we feel we have a particular specialty situation, which we think it is important for you to know about. We feel that carpets and rugs are in issue here only because the draftsman of the textile quota bill used an unduly broad pen when re- ferring to something called textile products, which happens to include these things in a tecimical way. We feel that economically the considerations are quite different. Whatever considerations this committee may feel are applicable in the textile industry, it is fair to say they don't govern the carpet and rug industry. The health of this industry, the domestic part of it, in recent years, is little short of phenomeiial. The industry has enjoyed record sales and profits, and imports have been ahn~st insignificant. - PAGENO="0294" 2600 There are two principal reasons for the health of the domestic indus- try. The first is the revolution in manufacturing techniques which has come into the carpet and rug industry in the last 8 or 10 years. For approximately 100 years before that, since the middle 19th cen- tury, carpets were made on a machine-powered loom by a weaving pro- cess very similar to the way other woven products were made, although it was, of course, a special kind of loom for handling the heavier work involved in carpets. There was little change in the teclrnique until the first tufting ma- chine was introduced in this country in 1946. Tufting didn't really catch on. It started out in 1946, after the war, in bathrnats, and that kind of product. It didn't really catch on until the late 1950's. In the tufting process, quite distinguished from the weaving proc- ess which had been used before, a prepared backing, a special backing that looks somewhat like burlap is rim through a machine which has hundreds of needles which operate simultaneously, and at great speed, to insert individuai tufts through that burlap backing. The backing is then run through other machines which put on a rubberized substance on the back, to hold those tufts in, and then adds other layers of burlap and other things to give the carpet the necessary body and other qualities. This tufting process has tremendous economic advantages over the old weaving process. A tufting machine can produce 20 to 30 times as many square yards of carpet as a weaving machine, what we call a Wilton machine. It uses only a fraction of the labor. The labor cost on a square yard of carpet comes out to a few cents, 5 or 6 cents. But apart from this economy in the manufacturing process itself, the tufting process permits other very substantial economies. Woven carpet produced by the old method has to be made out of colored yarns, and in the design that one wants. One has to use red and blue yarns, if he wants a red and blue carpet. The design has to be woven into the rug. If a manufacturer wants to produce carpet in 30 colors, he has to produce each color on his machine, and keep it in stock, which, of course, is very expensive. With the tufting process, he produces carpet in gray goods, produces it in the natural color of the ya.rn, undyed. The carpet is made that way and stocked in rolls, then as he sells it, he runs the completed carpet, as it were, through a vat which puts dye in it, and there are now dyes which can, because of different kinds of yarn, already built into the carpet, cause the carpet to come out with several different colors in it. There are also techniques recently being developed which permit designs to be printed on these tufted carpets. All of these techniques have established, as we referred to earlier, a revolution in the manufacturing of carpets, and the result of this has been that tufted carpets now constitute some 90 percent of domestic carpet and rug production. The second reason for the tremendous health of the domestic carpet and rug industry is the expansion of the domestic market, which has taken place in recent years. PAGENO="0295" 2601 I will mention a few of the factors that have accounted for the expansion, which we document more fully in our written statement. One is the increasing affluence of the American homeS owners. The second is the fashion trend toward wall-to-wall carpets. A third is the trend in commercial and industrial uses to putting carpets into office buildings, department stores, hotels and motels. Even 25 percent of the new schOols being built in this country are being carpeted wall to wail. This is not for reasons of luxury, but because of the lower installa- tion and lower maintenance costs that carpet permits. Another new development which is accounting for a substantial part of this expansion in the domestic market is the development of indoor- outdoor carpet, which can be put on patios, kitchens, bathrooms, even athletic fields. In the face of this technological revolution in domestic manufactur- ing, and this tremendous expansion of the domestic market, imports constitute only a trickle of specialty products. Imports simply do not have a significant place in the domestic carpet and rug industry. The develo}?ment of tufting has been an American phenomenon. Tufting machines are made in the United States. They were developed here. The United States is well ahead of other countries in the manu- facture of tufted carpets. The dynamic, lucrative, growing U.S. market for large volume sales, both commercial and residential, Of carpets is served almost entirely by the domestic manufacturers. What is it that is being imported ~ I will describe a few of the spe- cialty products. One is a. very small quantity of the old fashioned machine woven carpets and rugs. This amounted to some $6 million worth in 1966, which was clown to less than a fifth of what it had been in 1961. This is a declining market. There are still a few importers, some of my clients, who make a good business out of it, but what they import are high priced speciality items which do not really compete in any significant way with domestically made carpets. Another specialty product coming in, of course, is handmade Ori- ental and Persian rugs, which are not made in this country at all, which appeal only to the prosperous family with a special taste for that kind of floor covering. Another is the so-called tubular braided rug, which came in in rela- tively small quantities over recent years, compared with the tre- mendous size of this booming U.S. carpet and rug industry. These tubular braided rugs also have a very limited appeal, because they have an oval shape. They are not a pile kind of floor covering, but are a flat surface, and look like the old American colonial rug. They are widely advertised in the department stores, largely on a price basis, and sell to the householder who seeks a serviceable rug at the lowest possible cost, but they cannot compete with the do- mestically macic carpets and rugs in any of the vast applications which have accounted for the prosperity of this industry. A total of $16 million worth of these rugs came in in 1967, and that was down 26 percent from the previous year. PAGENO="0296" 2602 There is pending in this committee a special bill on these rugs, these tubular braided rugs, to reclassify them in a category which would increase the tariff. I am not going into the details of that now. As I say, it is a very specialty item compared with the rest of the carpet and rug industry. Mr. Chairman, before these hearings end, we would hope to submit a separate statement on that, addressed to that bill that is pending. Mr. Bun~. We will keep the record open for you to submit the statement, but submit the statement as soon as you can. (See p. 2618.) Mr. REIIZSTEIN. Thank you. Then there are miscellaneous other rugs which are really so insig- nificant that they are not worth describing at this point. Well, in terms of economics, the results of the above teclmical deveJ- opments and market growth can be summarized as follows: The domestic manufacturers are going through a period of rapid growth. U.S. production in 1966 was 441 million yards, about $1.4 billion worth of carpets and rugs. This was double the national pro- duction in 1961. Profits of the domestic carpet and rug companies are at record levels. The appendix A which we have submitted for the record contains summaries of earnings statements of a. number of the domestic com- panies, and articles that appear in the trade journals, describing the condition of these companies, and their market. Prices are lower than in 1932, at the depth of the depression, be- cause of these new manufacturing techniques, and yet, in spite of these low prices, the companies are achieving record levels of profits. Future growth for this industry is estimated at 8 to 10 percent a year. In the face of all this, imports account for approximately 3.4 per- cent of the TJ.S. market. In conclusion, imports don't, and can't conceivably, pose a threat to the dynamic and growing U.S. carpet a.nd rug industry. The United States has the largest, strongest, and most efficient carpet industry in the world. Through automation and mass production, it has conquered the problem of high labor costs `that bothers many other American industries. Through new and even better products, and more effective marketing techniques, it has opened up expanding markets, and the end is cer- tainly not in sight. Mr. Chairman, as I indicated earlier, we don't believe there is any need for quotas on any textile products, but in your determinations concerning the textile industry, we respectfully suggest that you should first exclude the carpet and rug industry, as being irrelevant to these determinations. Thank you. (Mr. Rostov's prepared statement and appendix referred to follow:) PAGENO="0297" 2603 STATEMENT OF CHARLES I. Rosi'ov, FLOOR COVERING GROUP, AMERICAN IMPORT AssÔaiATIo~ Mr. Chairman and members of the committee, I am Charles I. Rostov, repre- senting the Floor Covering Group, affiliated with the American Import Associa- tion, an organization of United States businessmen engaged in importing various types of floor coverings. During the most recent hearings on quotas before the Senate Finance Commit- tee and in Congressional speeches on the textile quota question, little mention has been made of carpet and rug imports. It is a fair inference that the pro- ponents of textile import quotas either do not view the quotas as encompassing the soft floor-covering industry or wish to disassociate the manufacture of car- pets and rugs from the rest of the domestic textile induStry because of *the phenomenal prosperity which domesitic carpet and rug companies are enjoying. Nevertheless, despite this reluctance on the part of domestic manufacturers, the broad terms of the various textile import quota bills pending before this Com- mittee would seem to encompass carpets and rugs. Therefore, we have decided that it is imperative for us to appear before you and present our views concern- ing the imposition of quantitative reStrictions on the import of textiles and apparel in general-~and on the import of floor coverings in particular. 1. The state 01 the tecotile a'nd apparel industry Mr. Chairman, our organization is opposed to the enactment of legislation plac- ing quotas or ceilings on the import of textile and apparel goods. Such quantita- tive import restrictions are simply not needed. In January 1968, the United States Tariff Commission completed a comprehensive report on the state of the textile and apparel industry. Its conclusion was that "domestic producers [of textiles and apparel] have, by most broad measures, enjoyed a period of unparalleled growth since the early 1960's." The Commission made numerous findings in sup- port of this statement. For example, from 1961 to 1966, the value of textile and apparel shipments in the United States rose by over $10 billion, an increase of 36 percent. Profits as a percentage of net sales went up even more rapidly: by 48 percent for textile mill products and by 52 percent for producers of apparel and related products. This increase was more than twice the corresponding gain for all manufacturing corporations over a comparable period. At the same time, the annual rate of profit on stockholders' equity in manufacturers of apparel and related products increased by about 53 percent, while the rate of profit for investments in textile mills grew by 74 percent. Finally, during this six-year period, total investment in new plant and equip- ment by the mill products industries increased by 170 percent, and such invest- ment by the apparel and related products industries increased by more than 250 percent. While imports rose over the period, the Commission found that "the actual increase in the volume of domestic production was of substantially greater magnitude." The conclusions to be derived from all of this data are clear: the domestic textile and apparel industry is both prosperous and growing and has little need for protection from imported products. 2. The state of the rug and carpet industry Nevertheless, as the Tariff Commission recognized, general statements about the textile industry, while indicative of the health of the industry as a whole, may conceal the State of particular Lextile products such as carpets and rugs. It is therefore important that we look at the floor covering industry in order to determine the necessity or desirability of quantitative import restrictions for such articles. It is fair to conclude that during the past few years the domestic carpet and rug industry has been little short of phenomenal. Domestic rug and carpet manu- facturers have been enjoying record sales and profit levels. Floor covering im- ports-when compared to this vast and growing state of American production- appear insignificant. In short, no case can be made that domestic carpets and rugs are experiencing economic difficulties due to imports or that quotas or ceilings should be applied to floor coverings. In order to illustrate these conclusiOns, we should like to outline certain basic facts about the U.S. carpet and rug industry: (a) The tufting revolution.-TJp through World War II, the most efficient way to make carpets and rugs by machine was on a mechanical loom which pro- duced a floor covering by a slow weaving process. In 1946, the first tufting machine PAGENO="0298" 2604 was put into commercial operations. These machines follow an entirely different production principle and manufacture floor covering by punching individual tufts, in huge numbers and at great speed, through previously prepared backings. Such machines can produce rugs and carpets from twenty to thirty times faster than they can be produced on mechanical looms and with a small fraction of the labor required to attend such looms. In the first years of tufting, the process could produce only floor coverings of uniform pile height and of uniform color, and they were generally somewhat inferior to those made by the traditional processes. Recent technological develop- ments, however, have permitted the manufacture by a tufting process of almost any quality or style of floor covering that was previously made on the Wilton and velvet looms. Furthermore, tufted floor coverings, unlike Wiltons and vel- vets, can be produced from undyed yarn and maintained in gray goods inven- tories, to be piece-dyed prior to sale in the colors demanded by the markets. This piece-tying process permits tremendous savings in inventories and great flexi- bility in meeting market demands quickly. Quite recently, processes have been developed to permit printing of designs of several colors on the finished tufted carpets; previously, such designs were the exclusive province of Wilton and Axminster carpets. The result of these innovations has been that tufted floor coverings are both cheaper and of equal quality or. in some cases, of better quality than Wiltons, veJvets, and Axminsters manufactured by traditional processes. As a consequence, tufted floor coverings now dominate the LTnited States market, representing some 90 percent of the volume of domestic production. The manufacturers who have gained from this revolution in floor coverings are American manufacturers. The technique of tufting was invented aad first put to use in this country. The most sophisticated tufting machinery is made in this country and is controlled by American manufacturers. Furthermore, the development of even newer tufting techniques by domestic producers is just around the corner. Processes are being refined for using new and radically dif- ferent yarns, cheaper and more serviceable backing materials, and, most impor- tantly, faster and finer gauged tufting machines. It is little wonder that domestic industry spokesmen, such as the president of B. T. Barwick Mills, have been stating that "the tufted carpet industry has every reason to be proud of its accoin- plishments"; a "$1.3 billion industry" has been built "literally from scratch," and it is expected to triple in volume and dollar value of shipments within the next fifteen years. (b) Expansion of domestic carpet market-In conjunction with the revolution in manufacturing techniques, there has come an enormous expansion in the domestic carpet market. Rising affluence has permitted increasing numbers of home-owners to purchase carpets. This development has been accentuated by fashion trends in favor of wall-to-wall carpets and by the lower installation and upkeep costs of carpets as compared with hard-surface floor covering. At the same time, a growing demand has developed for contract carpets for institutions and commercial buildings. Twenty-five percent of newly-constructed schools are being completely carpeted. Department stores and supermarkets, as well as hotels and motels have found carpets necessary to improve the comfort and luxury which have become one of their principal competitive selling tools. Vehicles and conveyances of all sorts are being equipped with increasingly durable and easy- to-clean carpets. Finally, carpets and rugs are also being used in areas previously reserved for hard-surface floor covering. This has been made possible chiefly by the development of the "indoor-outdoor" carpet, which is not only of unprece- dented durability but is easy to maintain and therefore well suited for use in kitchens, bathrooms, patios, and even athletic fields. (c) Growth and profits of domestic carpet manufactnrers.-As might be expected from the foregoing account of the technological developments in carpet and rug manufacturing and of the wider markets for floor coverings, domestic manufacturers are going through a period of rapid growth marked by expanding sales and profits. United States carpet and rug production reached a total of 441,564,000 square yards in 1966, double the total of 1961. In the words of the American Carpet Institute: "Yardage has increased [since World War II] at an annual average rate of approximately 10 percent per year and dollar value at approximately 6.5 percent. In recent years, however, the rate of growth has been much higher. By way of comparison, over the same period gross national product and personal consump- PAGENO="0299" 2605 tion expenditures of U.S. consumers increased by approximately 3.5 percent per year." The profits of domestic carpet and rug manufacturers are at record levels and are still climbing (see Appendix A), despite the fact that the average carpet price today is lower than it was in 1932, at the depth of the depression. Most predictions for future industry growth estimate the probable rate to be between 8 and 10 percent per year. Clearly, this is a booming industry with a very bright future during the coming years. 3. U.$. carpet and rug imports With these basic facts in mind, we can now turn to an examination of floor covering imports. To describe the situation briefly, imported floor coverings do not have a meaningful share of the dynamic, growing, and lucrative U.S. market for large volume sales, either for residential or for contract installations. This market is served largely by tufted floor covering, and tufted technology is far more advanced in the United States than abroad. Moreover, even if foreign tufters could develop a comparable technology, they would have great difficulty competing in the United States market. Labor costs are such a minute factor in the pro- duction of tufted floor coverings that any advantages which foreign manu- facturers may obtain from reduced labor costs will be far outweighed by high yarn and shipping costs, plus the substantial U.S. tariff. Even more importantly, no foreign manufacturer or U.S. rug or carpet importer is equipped with either a sufficiently large and specialized natiOnwide sales force or adequate warehouse facilities or the capability to make the necessary inventory investments in order to compete effectively in the American market. The evidence to support these s~atethents is clear. In 1966, imports of tufted rugs were responsible for slightly over 1 percent of domestic consumption, and according to the Tariffi Commission, "consisted largely . . . of types not pro- duced domestically in significant quantities." As for those types of floor coverings in which imports play any role, the key descriptive term is specialty items. This category consists of the following kinds of rugs and carpets: (a) Machine-woven and machine knitted pile floor covering.-In 1966, imports of these types* of machine-made ruge-consisting of Wiltons, velvets, Axminsters and chenilles to name just a few types-were valued at $6 million. The quantity of these imports was 1,700,000 square yards which was less than 5 percent of the machine-woven and machine-knitted pile floor coverings manufactured in the United States. Moreover, it was less than 20 percent of the quantity of ma- chine-made floor coverings imported into this country during 1961. (b) Handmade oriental and Persian rugs.-In 1966, about $15 million of im- ports or some 850,000 square yards consisted of handmade pile floor coverings, predominantly oriental rugs. As the Tariff Commission reported: "There is little or no commercial production of handwoven or hand-knitted floor coverings in the United States. . . ." In short, these are specialty rugs which sell in this coun- try on the basis of novel designs, color, and prestige. They retail at relatively high prices-more than $18 a square yard for many oriental rugs-and obviously serve only a limited number of fashion-conscious and prosperous customers who want and are willing to pay for the handmade products. (c) Tubular braided rugs.-In 1967, some 12.8 million square yards of tubular braided rugs were imported into the United States, with a total value of these rugs of $16.1 million. This represents a decrease in value of 26.8 percent from the 1966 level. Tubular braided rugs appeal only to a very small part of the resi- dential market. They sell-essentially on a price basis-to the householder who seeks a serviceable rug at the lowest cost. Their distinctive oval, flat-surface style limits their use in many applications and makes them only marginally com- petitive with other kinds of rugs and carpets. (d) Miscellaneous rugs and carpets.-A few miscellaneous types of floor coverings-such as druggets, which are woven on hand looms and usually have filling yarns of various colors, and numdahs, which are felt rugs ornamented in most cases with embroidery-are imported into the United States. The quantity of such imports has declined from 1.4 million square yards in 1964 to less than 1.1 million square yards in 1966. These imported rugs take up less than 7 per- cent of the United States market for miscellaneous carpet and rug products'. PAGENO="0300" 2606 4. Conclusion It is the belief of the Floor Covering Group that a careful examination makes clear that rug and carpet imports do not pose a significant threat to the dynamic and growing floor covering industry. The United States has the strongest, larg- est, and most efficient carpet industry in the world. Through automation and mass production techniques it has conquered the problem of high labor costs. By creating new and ever better products and by developing more efficient mar- keting techniques it has opened up expanding markets, and the end is not in sight. Imports consist almost entirely of novelty items which are not manufactured in this country in significant quantities, along with a few low-priced items which are sold primarily to families with very limited incomes. On a quantitative basis, imports take up 4.3 percent of the market; on a value basis they take up only 3.4 percent of the market. Mr. Chairman, while the Floor Covering Group believes that no quantitative import restrictions should be imposed on any textile and apparel articles, my organization feels strongly that in your determinations concerning the textile and apparel industry, you should first exclude the carpet and rug industry. For whatever problems may exist regarding the domestic textile and apparel industry, they simply are not present when a careful examination of carpet and rug production in the United States is made. APPENDIX A [From the Home Furnishings Daily, Aug. 24, 1967] BooM PUTS THE BLooM ON TUFTERS (By Ron Gunter) DALTON, GA.-Boomthg business and rising prices characterize the floor cov- ering manufacturing scene in this tufting capital. Carpet manufacturers here are raising prices on certain lines following re- cent price hikes in nylon carpet yarns by major producers. And they are also witnessing booming business-and predicting that the fall season will be one of the best despite (or because?) of prices in fibers now on the upswing. M. B. Seretain, president, Coronet Industries, Inc., said. "We will raise our prices immediately to reflect the price increases on continuous filament nylon. We're still studying other prices in our line." Peter R. Spirer, general manager, Painter Carpet Mills, noted, "We are tak- ing a look at our revised costs based on the increased fiber price coupled with increased labor costs and operating cost with an eye toward coming out with new selling prices within the next week or ten days. "Although not all carpets will be affected to the same degree," he pointed out, "all products which we make have been subject to increased costs and we anticipate the price rise will be of a general nature, although varying in amounts." The higher prices in nylon were confirmed Monday when Du Pont made its announcement. It increased prices on all bulked continuous filament nylon carpet yarns: Antron, cationic cross-dye yarn, three types of BCF styling yarns (light, medium and dark) and also color-sealed solution-dyed black yarns. The upswing of nylon yarn prices was triggered a week ago by American Enka, Allied Chemical and Monsanto. When Du Pont made its move, carpet executive could no longer play it cool, and had to reevaluate all existing price levels im- mediately. Paul Kamens, president, Imperial Carpet Mills, Inc., commented: "August has been the best month we have had since we started in the business. And we look forward to a very strong fall even with our across-the-board increases on all continuous filament nylon numbers." Mr. Kamens did not give specific details. I. V. Chandler, president, Patcraft Carpet Mills, said: "Our business for the past 30 days has been the best we've had in the past 18 months. And I feel the price increases on continuous filament nylon will make for a healthier market. We're looking forward to an excellent fall." PAGENO="0301" 2607 J. P. Turner, president, carpet and rug division of West Point-Pepperell, says: "We think the outlook for business is bright. We expect good business this fall and feel this will be true for the industry. We are currently running at an ex- cellent rate of production activity." Virgil Hampton, president of Cavalier Carpets, Inc., says "business has in- creased phenomenally during the past six weeks, and I personally expect the entire industry to enjoy the best fall in its history." Pete Lewis, vice-president of Atlantic Carpets, Inc., of Calhoun, Ga., says, "We've been real happy all year with our advance order position and in the past month we've started working overtime. Our current business is far ahead of last year." From Regent Mills, Inc. in Calhoun comes the report from Martin Greenwood, vice-president, manufacturing that it is currently running "pretty good" and that business for the fall looks real good. He says scatter and room-size rug business has been good all year. Regent is also planning another expansion program. Jim Hoclge, president of Eagle Carpet Mills, Cartersville, Ga., says, "Our `busi- ness is very good. We're running about~30 per cent ahead of last month and our projected fall shipping schedule looks even better." Eagle Carpet Mills is cur- rently doubling the size of its plant. Jim Jorges, president of Masters Carpet Corp., Chattanooga, Tenu., says his firm's `business is up more than 30 percent over last year and `that he has had a nice pickup in orders during `the past month. "We have every reason to expect a phenomenal pickup in business by the first of the month." J. 0. Smith, vice-president o'f sales, B. T. Barwick Mills in C'hami lee, said: "It is apparent that with the increase there will be changes in prices and in pro- grams. There is no question but that the industry will have to increase prices, probably around Sept. 1." Speaking for Monarch, J. B. Quirk, vice-president of sales, echoed Mr. Smith's comment. A. B. Edge, III, vice-president of manufacturing for the floor coverings division of Cal1aw~ay Mills at Lagrange, Ga., said: "We are also making a study of the situation and hope to be able to illcrease our prices." Meantime, in Philadelphia, Hardwick & Magee's sales manager, Norman Klein, said: "Someone's going to break, I'm sure, now that Du Pont has announced a 7 percent increase. "I venture to say the industry increases will range anywhere from 0 to 9 per- cent, depending on `the type of carpet. I know we are going to be giving the situa- tion a lot of hard study. There's every justification for a price increase. With one boost in the cost of manufacture after another, the situa'tion has grown very serious." As previously noted, Bigelow-Sanford~has indicated it expects to raise prices in excess of 6 percent next month. (N0TE.-Celanese, Wednesday, increased the price of nylon carpet yarn by about 7 percen't.) [From the Journal of Commerce, Dec. 11, 1967] NEARLY DOUBLE 1900 TOTAL-CARPET INDUSTRY SEEN HITTING $2 BILLION MAnK There is no such thing as a flying carpet but the rug industry seems to have taken off into the wild blue yonder, according to the TJ.P.I. Latest industry estimates indicate sales for 1907 will reach almost $2 billion, nearly double those of 1900. "In the last five years, the carpet industry has expanded at an average of about 13 per cent a year, or at a growth rate of more than double that of the gross national product," Herbert Barg, `president of Aldon Rug Mills, Inc., one of the nation's largest makers of tufted broadloom carpets, said recently. "By 1970, retail sales are expected to top the $3 billion mark." WALL TO WALL Mr. Barg said the industry has prospered because of the popularity of wall- to-wall carpeting. He said about 40 per cent of the nation's living rooms have wall-to-wall carpets, compared to only 12~ per cent in 19~. New synthetic fibers have made it possible for carpet makers to reduce whole- sale carpet prices substantially. PAGENO="0302" 2608 And a rule by the Federal Housing Administration permitting the cost of carpeting to be included in mortgage financing also has pushed carpet sales. SYNTHETIC USE RISING The carpet industry uses more than 800 million pounds of natural and man- made fibers yearly. Synthetics flow account for about 80 per cent of the total while the old standbys-wool and cotton-account for only about 10 per cent. Mr. Barg said commercial carpeting may open new markets. "Within 10 years most of tbe nation's supermarkets will have wall-to-wall carpets and they will be found in schools, churches, convention halls and depart- ment stores," Mr. Berg said. `The supermarket field alone offers the carpet in- dustry a potential $450 million market in the next 10 years." Manufacturers of weatherproof outdoor carpets also are accounting for the boom in the rug industry. [From the Floor Covering Weekly, Jan. 29, 1968] NEWS FROM THE MARKETS (By Benn Oilman) ATLANTA.-ThiS market has plenty going for it: the weather is Spring-like and retailers all through the southeast are racking up the strongest January many of them can recall. Coming off a very active last quarter of `67, dealers attending this show re- flect confidence in the period ahead. This confidence is enhancecT by the expanded list of exhibitors here and space after space laden with attractive, salesworthy merchandise. With the public more carpet conscious than ever, it's easy to perceive why the southeast's dealers are optimistic at this point. According to Peyton Randolph, president of Vol T. Blacknall Co., one of the area's key distributors: "Buyers at this market are doing what buyers are sup- posed to do-buy. It looks like a very strong first quarter is shaping up. Dealers I have spoken to see the demand for consumer goods extending well into nev~. Summer. After that? We'll have to cross that bridge when we come to it." [From the Floor Covering Weekly, Feb. 5, 1968] WALTER CARPET MILLS NEW TUFTING PLANT IS NEARING COMPLETION IN CALIFORNIA CITY OF INDUSTRY, C~&LIr.-What bids to be the newest, most modern, most up to date, most efficient and most highly automated carpet tufting plant in America is in the final stages of completion here by the newest carpet manufacturer in the industry, namely Walter Carpet Mills. FCW's editor was taken on a guided tour of this new facility during his visit to the recent Los Angeles market. Our guide was Sol Moss, vice president and general manager of Walter Carpet Mills and the man mostly responsible for the overall planning of the physical layout and blueprinting of the big new- plant. We were accompanied on the tour by Fred Gemperle, executive vice president of the company. The plant will be a completely automated operation, and will have yarn mov- ing in at one end of the building and coming out as finished carpet. Here, so far as we can recall, are some of the details of the new Walter facility as given to us by Mr. Moss: Because of the great efficiency accomplished in layout of the plant, the 200,000 sq. ft. area will equal the floor capacity of a 300,000 sq. ft. plant of lesser efficiency. Inventory storage will be in a vast area with a 34-ft. clear high ceiling, equal to about a three-story high building with rolls stored 10 ft. high. Because of this height, special fork-lift trucks have been ordered. About 7,000 rolls of carpet will be stored in the area. The company owns an additional six acres of ground adjoining the plant for future expansion. The plant will have 13 machines for custom fabrics in the custom tufting area, in addition to three automatic pass machines. All Departments throughout the plant will make use of a pneumatic tube sys- tem for immediate transmission of communications. Continuous cascading water PAGENO="0303" 2609 down both sides of two walls on the front exterior of the building will be a fea- ture for decorative as well as for practical purposes in cooling water which goes through the latex ovens. This use of cascading water will also take the place of the need for a water tower. For further decorative effect, a fountain will shoot water upwards from the cascading water and this whole view will be exposed to employees in their dining room, where~ a tremendous window permits an unob- structed view of the water and fountain. Cost of equipment and machinery will run about $3 million, excluding the cost of the building itself. About 12,500 sq. ft. is being devoted to a sample room, which is being built on a high mezzanine diredtly over the shipping area. Adjoining the sample room will be a computer room and also throughout this mezzanine area a number of executive offices, conference rooms, a showroom, and so on, all air-conditioned. Hot meals will be available to employees in an up- stairs lunch-room through a battery of vending machines. A combined conference and educational room will make use of projection machines, screens and other equipment designed to make the room useful for sales seminars and so on. Also high, upon the mezzanine, an observation platform is being constructed for visitors as well as civic and social groups on planned tours, with telescopes on the observation deck so that visitors may use them to get close-ups of some of the various manufacturing operations going on through- out the plant. Movement of certain types of equipment will be made via use of in-floor eon- veyors, employing cables very similar to those used by the San Francisco cable cars. A 100-ft. single pass drying oven, with a total running length of o'v~er 300 ft. for the drying process, will be used not so much to provide heat as to give the fabric ample drying time. No part of the plant will use less than 75 ft. candlelight power and no natural light will be employed because the plant will operate around the clock and, accord- ing to Mr. Moss: "We want goods looking the same at 2 p.m. as 2 a.m." Along the executive suite offices "in use" lights will be used on all doors to indicate that an important conference is in session or, in other words, "Do Not Disturb." Other areas on the mezzanine will be devoted to an important contract office, a spacious showroom for sales training groups and designers' offices. Initial production is expected to get under way by March 15. Everything in the plant will be color-keyed, even including long carts for the movement of carpet rolls. Each cart will handle from six to 15 rolls at a time, depending on weight. Rolls will be made from 600 to 1,500 ft. long, which will be folded into the carts for movement into other areas. The shipping area will accommodate 12 trucks and there are two railroad sidings alongside the plant. The tufting room will be fully enclosed and temperature and humidity con- trolled at all times for pre-conditioning of the yarn. Some tufting machines will be employed initially. The sealed tufting room is being created to maintain steady consistency of humidity and yarn on creels will be kept in the room two days to pick up the temperature and humidity levels of the room before being put to use. The objective here is to get better pattern definition and less streaking. Trucks will move into and out of the tufting area through rubber doors which contain some kind of transparent plastic. Trucks will simply push right through the doors. Yarn on creels will be some 10 ft. from the floor and about two stories high in the air. "This whole system of temperature and humidity control in a carefully sealed room is a very unusual technique in the carpet industry," says Mr. Moss. All tufters will be 15 ft. wide. About 300 to 350 people will be employed `and many of them will be transferred from Walters' old plant. All lighting throughout the entire plant is color corrected. A substantial amount of greige goods will be kept in the storage area and tufted goods will be stored in cantilever racks four high and will be conveyed to and from the racks by overhead bridge cranes, very much like those used in a steel plant. This crane will carry containers holding anywhere from six to 15 rolls of goods. About 3,500 rolls in greige goods will be kept in the storage area. Even the color of the walls throughout the plant has been carefully selected for morale and decorative purposes, but more so to offer `as little conflict as possi- ble with the continuous exposure of colors in the processes of production of carpet by workers. The color: grey. Fourteen dye becks will be totally enclosed to insure even water temperature for the purpose of minimizing side match problems. The first four becks will be PAGENO="0304" 2610 automatically programmed or, to be more specific, each will go through cycles somewhat similar to a home washing machine. This automatic programming will be supervised by remote control in an overhead laboratory with huge plate- glass windows in a high mezzanine area, which will look right down on the main floor dye becks. Mr. Moss is of the belief that no manufacturer is the carpet industry today has a system of automatic programming in the dyeing operation. This area also utilizes automatic conveyors in the floor a la the San Francisco cable cars. Immediately adjoining the dyeing operation is a large area for a printing operation. A water storage area will hold 400,000 gallons of water, since the plant requires at least 800 to 900 gallons of water a minute in its operation. Near the six acres of adjacent ground, the company expects to erect an addi- tional building in the next three months. The company will process its own latex. Somewhat unusual is the use of screens far up near the ceiling to maintain zone temperature. Exerything in the plant has been created and designed, including all working areas, with an eye toward attracting the best people obtainable," says Mr. Gemperle. An interesting note is the fact that someone came up with the idea that it would be simpler and quicker and more practicable to use a helicopter to locate the air-conditioning units on the roof of the building rather than a crane. The plant will make use of two maintenance departments for different areas of operations and is installing two 1,750 H.P. boilers. Mr. Gemperle is of the opinion that the western area alone will absorb the plant's entire capacity and he ventures a figure of around $35 million as the company's immediate sales goal, once the plant is in full swing. He further indicated that it might be somewhat illogical to attempt to compete for business in the east, freight charges being what they are, and hinted that it might become necessary for Walters to build a new plant somewhere closer to the east if the company intends to invade the eastern market. These are some of the brief, and what must be somewhat vague, highlights of this newest of carpet mills and its impressiveness can only register upon a person by seeing it. Whether it's Sol Moss, or Fred Gemperle, or president Stanley Sinton, they are all so justifiably proud and enthused over this new facility that any one of them is only too happy to take you on a guided tour almost at the drop of a hat. But the man who can intrigue you with the actual descriptions of what goes where and the reasons for why this is here and why that there is Sol Moss. [From the Floor Covering Weekly, Apr. 1, 1968] MAND COMPLETES PLANT ExPANsIoN Los ANGELEs, C~iir.-Mand Carpet Mills has just completed a 120,000 sq. ft. expansion, it was announced by president Emery (Mac) Mand. "While the expansion project was at its peak late in 1967 the dramatic increase in Royalweve sales nationwide actually forced production on existing equipment to over 100% of capacity," Mand stated. "Our increased capacity has come just in time because the success of our new fabric introductions at winter markets, especially our new multi-colored shags Painted Desert and Samoa, have resulted in orders far beyond even our most optimistic expectations." In detail, Mand said, the mill's expansion consists of these major items: Buildings-two new warehouses, dye house, sample department. Modifications-four tufting machines have been rebuilt. Cut-order equipment has been modified to make the process more automatic and speedier, especially in handling and wrapping larger rolls resulting from increased production of heavy shag plush qualities. New equipment-three new tufting machines have been installed, (and a third shift activated) which have brought production volume up to demand. Two new dye beeks have been installed in the expanded dye house. In addition, various pieces of equipment have been added to materials handling, sample department and back-sizing facilities to increase volume and quality. Also, the Royalweve bi~hway-haUler fleet of semi's began service nationwide, transporting Mand Carpet Mills' fabrics to the company's warehouses in Chicago, New York and Dallas. PAGENO="0305" 261,1 Already ordered or in process of actual installation are more tufting machines, a new vacuum extractor to speed-up drying, and improved area-rug equi-~rn.ent. "This huge expansion program is our statement of faith in our judgrn3nt of what the consumer wants in floor-covering fabrics, outstanding California styling, unique colorations and textures, and obvious quality and value. We have been creating such fabrics. The consumers of America are responding. The growth of Mand Carpet Mills is the result." [From the Floor Covering Weekly, Apr. 8, 1968] ~\TEST POINT STARTS MAJOR EXPANSION FOR CARPET DIVISION WEST POINT, GA., March 28.-A major expansion program designed to double capacity by 1973 was announced today for the Carpet & Rug Division of West- Point Pepperell by Jack P. Turner Jr., Dalton, Ga., division president. Initial phases of the program, representing an investment of $2,100,000 at the company's Springdale Plant in Dalton, will include: major building additions of 144,000 sq. ft., an enlarged carpet dye house with fully automated equipment, an expanded product development department, and the addition of broadloom carpet printing equipment. "These carpet printing facilities will provide great flexibility in color and design, giving us maximum ability to respond to market needs," Turner pointed out. Work on all projects will begin immediately. [From the Floor Covering Weekly, Apr. 22, 1968] BARWICK REPORTS RECORD SALES OF $135 MILLION ATLANTA, GA., April 11.-E. T. Barwick Mills Inc. will achieve record sales of approximately $135 million in the fiscal year ending April 30, 1968, it was an- flounced today by Eugene T. Barwick, president and founder of the company bearing his name. (The sales figure includes Monarch ~Jarpet Mills volume as well.) Mr. Barwick also estimated that the company would reach $164 million in sales in the upcoming year, an increase of some 20% in volume. The sales projections were made public here today on the occasion of the premiere of "Spring Into Action," Barwick's latest and most elaborate presenta- tion of carpet merchandising and display ideas in the grand ballroom of the Regency Hyatt House here. The carpet extravaganza, accompanied by a reception and dinner was staged by Barwick for Southeastern dealers and members of the press this evening. For the event, the company completely carpeted the huge 13,000 sq. ft. ballroom of the Regency Hyatt House, and created room setting vignettes and displays-all for the purpose of impressing retailers with the full scope of the Barwick product line. Following its Atlanta debut, "Spring Into Action" will be staged Similarly for dealers in a number of other major~ regional market areas across the nation in the next six months. The "road show" is typical of the imaginative marketing techniques which have helped spark the growth of Barwick Mills, the pacesetter of the nation's tufted carpet industry and the biggest company in the business. The company has 3,300 employees and produces over 40 million sq. yds. of carpet yearly in six American plants (four of them in Georgia) and in England and Holland. In 1950, Barwick Mills grossed $2.5 million, a figure which doubled a year later, reached $14 million by 1953, and has since grown at an average annual rate of about 25% to reach the $135 million mark in the year now ending. [From the Floor Covering Weekly, Apr. 29, 1968] MASLAND REPORTS SHARP GAINS IN 1ST Qu~&m~na SAi~us AND EARNINGS CARLISLE, PA., April 23.-C. H. Masland & Sons had sharp gains both in sales and profits for the first quarter of 1968 compared with a year ago, it was reported today by F. E. "Mike" Masland UI, president 95-159 0-68--pt. 6-2() PAGENO="0306" 2612 First quarter 1968 sales amounted to $13,658,925 compared with $10,371,871 for the comparable quarter in 1967, an increase of 32%. Net profits for the first quarter of 1968 came to $257416, equal to 23~ a common share compared with $17,076 or 1~ a share in the like quarter in 1967. Mr. Masland said that 1968 earnings were effected to the extent of 10ç~ `a share in non-recurring start-up costs involved in the company's new tufting plant in Atmore, Ala. The regular quarterly dividend of 10~l per share was declared payable June 7 to stockholders of record May 24. MonAsco REPORTS SHARP FIRST QUARTER GMN5 IN SALES AND EARNINGS NEW YORK CITY. April 30.-Mohasco Industries Inc. today reported `to share- owners at the company's annual meeting that net sales in the first quarter totaled $47,697,889 compared to the $43,409,811 reported in the same period in 1967, an increase of 10%. Net earnings were $1,897,369 or 490 per share after allowing for preferred dividends versus the $725,200 or 180 per share in the 1967 quarter. President Herbert L. Shuttleworth II commented that both carpet and furni- ture were in strong demand and the company's operations were at favorable levels, malting possible these important gains in both sales and earnings over the similar 1967 period. Mr. Shuttleworth pointed out that the operations in the first quarter confirmed the favorable outlook projected in the recent annual report to shareowners and stated, "We continue to feel that, barring a serious downturn in the economy, our operations for the full year 1968 will record a worthwhile improvement over the prior year." Mr. Shuttleworth told the stockholders that 1967 was the fourth successive year that `the company's carpet divisions used more acrylic fibers than wool. He said that the tufting process continued its growth in the carpet industry last year and reached an all-time high of 90% of the industry's total output and accounting for 80% of the industry's dollar volume. He pointed out that the average square yard price of carpet continued its recline-a steady progress of decline since 1952-hitting a new low of $3.59 in 1967 against $5.78 in 1952. "I think the fact that this industry has been able to give a better product to the consumer at continually declining prices so many years is an outstand- ing example of our industry's performance pattern when compared with other industries in their economic battle and their increasing prices," Mr. Shuttle- worth commented. Mr. Shuttleworth stated that Mohasco would further expand tufting facilities at its Laurens Park Mill in Dublin, Ga., this year. Stockholders voted approval of an executive' incentive plan and a stock option plan. [From the Floor Covering Weekly, May 6, 1968] OzITE's KIMMEL SEES CONTINUED INCREASES IN SALES, EARNINGS CHIcAGO, ILL., April 25.-Ozite Corp. expects first quarter net to rise about 20% on approximately a 17% sales increase, and projects a 40% rise in both categories for the full year, shareholders were told today. Speaking at the annual meeting here, Richard Kimmel, president, also revealed a new multicolored, outdoor/indoor carpet. Made of the same polypropylene needlebondeci textile with which Ozite pioneered the outdoor/indoor market four years ago, the floor covering offers a rich floral combining three separate colors, he said. The development follows an Ozite breakthrough, announced in January, in which the company revealed its Fiesta line of patterned outdoor/indoor carpet with a single-color design overlaid on solid color background. Until then, poly- propylene carpets, because of their non-absorbency and resistance to stain, could not have patterns applied without "burning in" the design. "Through further refinement of our screened printing process," Kimmel said, "we can now offer for the first time the type of colorful designs available only in expensive woven carpets, combined with outdoor durability and an economical price." The new line, called the Fiesta "Garden" series, has a suggested retail price of $5.50 per sq. yd. Shipments will begin soon, Kimmel said. PAGENO="0307" 2113 At the meeting, shareholders voted to increase the company's authorized com- mon shares from 2 million to 5 million. Although first quarter results are~ not yet final, Kimmel said, indications are that sales for the period ended March 31 rose to a record total of approx- imately $12.5 million from $10.8 million for last year's quarter, a gain of about 17%. Net income, he said, is estimated at a record of more than $520,000, up approximately 20% from $435,647 last year, not including results of Foremost Processing Co., acquired late in 1967. Kimmel said that current trends indicate a total 1908 performance increase of 40%, in both volume and earnings. He based the belief on the broadening market acceptance of Ozite's new needlebond carpets-representing about two- fifths of total current volume-and on rapid increases in capacity through the firm's $5.5 million facilities expansion program now underway. In 1967, Ozite had reported sales of $51,674,000-up 53% from the prior year- and net of $2,467,000 or $1.02 per share, up 21%. Looking beyond year end, Kimmel pointed out that the needlebond process, a major change in carpet construction developed by Ozite in 1963, presently accounts for only 31/2% of the more than $1.8 billion volume of hard and soft floor coverings in the U.S. With continued acceptance in both commercial and residential mar- kets, he said, the needlebond share of the field could well rise to 20% of the total within the next five years. INTRODUCES `GARDEN' CHICAGO, ILL.-OZite has announced the introduction of its first multi-color carpet suitable for outside use. A new development in dyes and techniques by Ozite now allows them to market an outdoor carpet that blends several colors in a gay floral pattern. Called "Garden," each carpet in the line has three colors and is manufactured using an exclusive sill~ screening process developed by Ozite, "Garden" represents a major breakthrough in the area of outdoor carpet, says the company. "Garden" is an addition to Ozite's "Fiesta" line of outdoor patterned carpets in- troduced last January. It is being introduced in two color combinations. One has an avocado background with rust and charcoal green. The other comes in two tones of rust plus avocado. The synthetic Vectra fibers used in the "Garden" Fiesta carpet are not only among the strongest but also the most soil and stain resistant yet developed by modern science, says Ozite. The fiber is unaffected by moisture, direct sunlight, and mildew; it will not rot or shrink. Moreover, it is nonallergenic and virtually nonstatic. Outdoors it may be laid loose, semi-permanently with double faced tape or permanently with Ozite AP-400 waterproof adhesive. Maintenance is simple; the carpet may be hosed down or scrubbed when used outside. It is also an ideal floor covering for indoor areas, "Garden" offers new design possibilities for kitchens, bathrooms, dining rooms, hallways, bedrooms, dens, even utility areas and basements. Indoors, the carpets may be installed loose, with double faced tape, the conven- tional tackless strip method over carpet cushion, or permanently laid with Ozite AP-400 adhesive. Maintenance consists of routine vacuuming, prompt attention to spills as they occur and periodic overall cleaning as required. It may be cut with scissors, a razor or sharp knife, making it easy to install wall-to-wall in any room or shape it to cover irregularly-designed patios. It requires no binding, lies flat and will'not curl. The carpet is also recommended for commercial installations including res- taurants, motels, hotels, schools, theaters, supermarkets, and industrial applications. Available in 12-ft. widths, the suggested retail price of the carpet is $5.50 per sq. yd. [From the Floor Covering Weekly, June 10, 1968] MARKET LOADED WITH NEW OFFERINGS BUT ADVANCE INFORMATION Is MEAGER From what we understand the `Chicago market-which opens next Sunday `and is then followed by Newr York, Dallas, Seattle, Atlanta, Los Angeles and finally San Francisco, which `takes us into the third week of July-is going to be loaded with new introductions by manufacturers. PAGENO="0308" 2614 But, just as happened a year ago, up to the moment of going to press with this pre-market issue of FCW, the supply of information from manufacturers is quite meager, to say the least. When we ask "Why?" the usual answer is that most mills don't know until the last minute exactly WHICH new fabrics they actually want to introduce or are READY to introduce, at the Chicago market, and thus cannot provide us with any concrete information in time to make our issue a week before the market. Retailers attending the markets can be certain of one thing: when a salesman shows them something new, his sales pitch will quickly identify the fiber, and like it or not, fiber is the name of the carpet game today and probably will be for a long time to come. Retailers won't have to ask "What's it made of?" That will come almost automatically. Did we hear that there's a "move" afoot by manufacturers to stop using the widely advertised and promoted trade names of fiber producers on the labels of their carpet and replace same with their own, such as "Barwick approved acrylic" or "Bigelow approved nylon" and so on? Yes, we did, in several quarters. Is this a good idea? Perhaps not. Fiber producers have a tremendous stake in the carpet industry and taken together with their own advertising had coupled with co-op advertising allowances to manufacturers as well as retailers, they still outspend carpet manufacturers for advertising by some pretty tremendous odds and prob- ably do more to make America carpet conscious than anything carpet manufac- turers ever did on their own. These are simple basic truths and some of this malarkey about giving the carpet industry back to carpet manufacturers is plain cockeyed nonsense. Sure, tufting was greatly responsible for seeing the carpet industry zoom to record-breaking heights both in production and sales, but it was the fiber producers who did practically the total job in telling Mr. and Mrs. America tbat there WAS such a thing as tufted carpet, regardless of whose fiber that carpet happened to be made of. Let's face it: when in the memory of the oldest oldtimer in the carpet business did anyone ever see the Wool people advertise wool carpet? And it so happens that the wool people will be around at the Summer markets making some noise about all the new fabrics that will be shown made of Wool. Funny thought: are there any manufacturers around who are going to use their own label saying ". . . approved WOOL"? Item: at this stage of the game there is hardly a manufacturer left who hasn't gone into the so-called indoor-outdoor business with a carpet or carnets that supposedly can "take it" when it comes to rain and snow and bail and soot and dirt and everything else you have to contend with outdoors. The fact is that even some manufacturers who labeled indoor-outdoor carpet as little more than a "gimmick" had to move in to this business once they began being "impressed" with sales figures. Be that as it may, it could be that this indoor-outdoor or inside-outside carpet IS a gimmick because when it comes to the outdoors, an awful fraction of all this carpet actually DOES go outdoors, which only goes to prove something, and that something is that such a thing as carpet doesn't have the "guts" to stand up with any degree of longevity in fighting the elements. Item: Kitchen carpets. Is there a manufacturer in the house w-ho hasn't gotten on this bandwagon? No question about it but Jim Marcus and his Viking Carpets really got something started in THIS department. But what with all the compe- tition Viking has created for itself, it continues to get the fattest slice of this kitchen business-or what there IS of it-If only by virtue of its hard-hitting and consistent program of advertising, merchandising and promotion. As yet no other manufacturer of kitchen carpet has come close in matching Viking in these departments. But the tough baby in this kitchen carpet business is Mrs. Housewife, most of whom will look at you like a nut when you mention putting carpet in her kitchen. This is one area where the lady really has to be given a high-pressure sales pitch. The soft-sell just won't do it in convincing Mrs. Housewife that carpet belongs in her kitchen. Item: Contract carpet. Best labeled as commercial carpet. What is it? ANY carpet sold and installed for other than residential use. Just as simple as that. Many commercial jobs call for carpet specifications. An expert in commercial carpet-Sid Schwartz of Trend Mills-recently gave out with some pretty strong language-and a virtual condemnation-of the whole area of commercial car- peting so far as specifications are concerned. But that belongs in the technical PAGENO="0309" 2615 section and we are more concerned with the present and future POTENTIAL of commercial carpet. We don't need the so-called experts in this industry to tell 135 about the future of carpet for commercial use. The industry hasn't scratched the surface in covering floors with commercial carpet and here is where the in- dustry can look ahead to years of fruitful business. Add to the above the carpet that is going to be needed when the nation begins catching up with the demand for new housing, for multiple apartments, for replacement of worn-out carpet, and you can readily see why the hard surface boys have all come into the carpet business and why so many giant outfits have bought into the carpet industry. All told it continues to look like a boom and growth industry for some years to come. Hold it, now. Don't go away. There's more. Carson's president Virgil Martin made quite an observation at the recent convention of the Tufted Carpet and Rug Institute in the Bahamas. He said that if it ever comes to reality that the nation can do something in the way of better housing and better living condi- tions for the millions of people who live in sub-standard housing, the carpet industry with ALL of its fantastic productive capacity would scarcely be able to grind out enough of its products to fill the nation's needs. So now that you've seen everything through rose-colored glasses, what are some of the negatives facing the industry, fiber producers, carpet manufacturers, wholesalers, retailers? Now, now, don't crowd Genett. He~ doesn't like to be pushed. But we do every- thing right, so let's take them one at a time. THE INDUSTRY As a whole, the negatives are not too serious, not too disturbing. The world situation still continues to be a muddled, mixed-up, messy case. You read it all in your daily papers, hear the news on your radio, see it on your TV. The world can blow up in 24 hours. If it ever does, the industry won't have a thing to worry about. FIBER PRODUCERS They're going to bring out MORE fibers, better fibers and no one knows what their R&D (that stands for Research and Development) people might discover 24 hours after this is written as they fool around with their ions and molecules and nodes and structural hydromagicalicoluses. Who expected Allied Chemical to suddenly hit the industry with SOURCE? You just can't tell what might come tomorrow. CARPET MANUFACTURERS Despite the fact that there's more of them than ever before, they never had it so good. Just go and try to buy a carpet mill in "distress." Nobody's "dis- tressed." Every mill is making money, big and small alike, and the best answer is this: if you can't make money in this day and age, in this prosperous and affluent society, when people want the good things of life-including carpet- then WHEN are you going to make it? So we see more and more of our friends in the industry starting up with new carpet plants although here and there some of them just "don't make it" when they discover they niight have been great sales executives but lousy businessmen. WHOLESALERS Off and on you've heard talk that the day of the wholesaler is over. Like high button shoes and the horse and carriage, they were going to become extinct. Wholesaler after wholesaler across the nation has built bigger, finer, better and more modern warehouse complexes than at any time in the history of the industry. And if anything, wholesalers have become even MORE important in the marketing complex, as witness time and again where manufacturer after manufacturer has come up with "special" lines created just for the distributor, especially the distributor who has dropped ALL key resources to go in for his own private label lines. This, of course, does kind of remove the right for a dis- tributor to CALL himself a distributor when he no longer works under a manu- facturer-distributor relationship as we know it. Be that as it may, the distribu- PAGENO="0310" 2616 tor's role has assumed a much more meaningful posture in today's fast-paced carpet industry and the truth is that good, sound, aggressive distributors are not easy to come by, and are ardently wooed by many manufacturers seeking to expand their markets. RETAILERS Their future seems to be paved with gold. The retail business is so good that for the past 10 years it has attracted fast-moving, fast-talking, unscrupu- lous, unsavory characters of all kinds preying on gullible suckers looking for bargains in carpet. Only an industry where sales come fast, quick, easy and profitable do these characters move in, and move in they did in the carpet business. However, the kind and amount of business they get you can stick in your right eye. We only point to these scoundrels to prove that the retail busi- ness in carpet is good and it will continue to be good, and get better in spite of inflation, the high cost of living, taxes and what not. People want carpet and they're going to buy it when they want it. WHAT they buy is up to the salesmen on America's retail selling floor. It is they who will call the shots and sell what they want to sell and that's a basic truth that fiber producers and carpet manufacturers had better learn and learn soon. All their fancy and beautiful advertising won't do a thing in selling any specific product. It will do a magnificent job in making people more aware of carpet and what it means. But it's the salesmen on the retail selling floor who will swing the customer over to the carpet that he wants to sell and push, or what his boss wants him to push. Now what about the new things that manufacturers are bringing out at these Summer markets? Like we said in our opening paragraph, we have it that there will be lots to look at but unfortunately as this issue of POW goes to press there is very little we can tell you in advance. Mohawk's information comes to us by way of its advertising in which it says that in introducing 17 new grades in plushes, twists, random shears and contract qualities in Antrons (with copper wire) and wools (with Brunsmet) and Source (Allied Chemical's newly introduced bi-constituent fibers). Philadelphia Carpet lets us know that it has three new offerings which are described elsewhere in this issue. Masland will be in the market with at least six new fabrics, also described in this issue and World Carpets gives us information on three new- introductions. Likewise, Monarch and Barwick simply announce that they will have quite a few new things for dealers to look at, but no specific details are forthcoming. ARMSTRONG CORK Co. (E. & B. CARPET MILLS) The B. & B. Carpet Company has sustained over six years of rapid growth, as set forth in the chart below, from less than $4,000,000 in sales in fiscal 1961 to almost $24,000,000 in sales in fiscal 1966. Year Net sales Net earnings 1961 1962 1963 1964 1965 1966 3, 926, 436 6,069,262 8,708,439 9,882,028 15,949,676 23,956,729 $6, 874 104,687 116,545 231,040 489,260 754,614 Note: The growth continued into 1967, when the company was acquired by the Armstrong Cork Co. (Armstrong Cork Co. annual report 1967). Source: From E. & B. Carpet Mills, Inc., annual report 1966. PAGENO="0311" 2617 BIGELOW-SANFORD, Iwo. From 1962 through 1966 the Bigelow-Sanford Company has shown dramatic increases in net sales and net earnings, as set forth in the Table below: [In millions of dollars] 1962 1963 1964 1965 1966 Net sales 78. 54 87. 60 88. 38 96. 26 102. 62 Net earnings 2. 42 3. 01 3. 78 4. 52 5. 08 Note: From 1965 to 1966, alone, the company showed a 6.6 percent increase in net sales (1966 annual report). Source: From Bigelow-Sanford, Inc., annual report 1966. CORONET INDUSTRIES Year Net sales Net earnings 1960 8,933,300 1961 11,805,834 1962 18,365,561 1963 21,043,913 1964 28,620,686 1965 33 540,719 1966 48,516,649 1967 52,859,975 311,376 600,439 1,222,499 1,255,387 1,654,209 2,221 645 3,246,228 3,344,752 Source: From Coronet Industries, Inc., annual report 1967. DAN Rivna MILLS (DAN Rivan CAIu'nr, WUNDA-WEAVE) The Carpet Division of Dan River Mills, the largest part of which is the recently acquired Wunda-Weave Company, has shown and is expected to show significant growth. In 1964 Wunda-Weave's sales were $13,000,000. In 1965 the Carpet Division of Dan River sales were 17.5 million and the 1966 sales were projected in March of 1966 to be $23,000,000. (Goldman, Saehs & Co. Report, March 3, 1966) As the report w'ent on to say: "[The acquisition of Wuncla- Weave] put Dan River into tufted carpeting, the fastest-growing area in textiles." (Ibid.) In a 1965 report by Mitchell, Hutchins & Co. the following statement on Dan River Carpets was made: "Acquisition of Kingston Mills and Wunda-Weave within the past 15 months has given the Company a $17 million tufted carpet operation in the current year. We expect this Division's volume to reach $20 mililon next year and become a growing percentage of total sales and profits over the longer term." (Mitchell, Hutchins & Co. Report, Dec. 1965) Referring to the acquisition of Wunda-Weave, one analyst stated that: "The above average growth expected for the carpet and rug industry certainly creates a favorable environment." (L.F. Rothschild & Co., Internal Memorandum, July 30, 1965, p. 6) ______ WORI.D OAicPx'rs, INc. This Company is the outgrowth of a business started in 1953 by Shalieen Shaheen, its President and chief executive officer, with $80,000 in capital. The Company's present assets are almost $12,000,000, with 1965 sales of $25,000,000, 1966 sales of $30,00,000 and 1967 sales of $35,000,000. Sales volume has rapidly expanded and operations are profitable. Business has been so good that an ex- pansion of assets has been accomplished primarily with funds generated irsiernally. In February 1068 the Company announced the start of construction of a new manufacturing plant to be completed by June 1968. Again, financing reportedly will be handled internally. In March 1068 the `Company announced that it is currently constructing a new warthou~e in Ohicago. PAGENO="0312" 2618 (The following supplemental statement was received by the committee:) ADDITIONAL STATEMENT OF THE FLOOR COVERING GROUP OF THE AMERICAN IMPORTERS AssocIATIoN The recent testimony of the Floor Covering Group of the American Importers Association dealt only with the reasons why quotas should not be imposed on foreign rugs and carpets. Included within the Floor Covering Group, however, are the principal United States importers of tubular braided rugs. HR. 6959 proposes to increase almost threefold the U.S. tariff on these rugs. We are opposed to this bill and would therefore like to offer a short summary of our reasons for believing that this tariff increase would not serve the national interest. The purpose of HR. 6959 is to change the tariff schedules so as to classify tubular rugs in the same category as true braided rugs in the Tariff Schedules of the United States. The effect of this reclassification would be to increase the tariff from approximately 15 percent ad valorem to 42.5 percent ad valorem. There is no technical or practical reason for such a change. Tubular braided rugs are entirely different in construction and market price from true braided rugs. True braided rugs are made by braiding strips of fabrics and sewing the resultant braid into an oval shape. Tubular braided rugs are made by an entirely different process: a machine wraps multicolored threads around shredded fiber material and thus produces a long tube with a core of fiber material and a covering of threads. This tube is then sewn into an oval shape to produce the finished rug. This process does not involve braiding and thus the tubular braided rugs have quite properly been held by the U.S. customs courts as distinct from the true braided rugs for tariff classification purposes. The only thing the two types of rugs have in common is their oval shape. True braided rugs normally sell at a price ranging from $150 to $200 for a rug of approximately 9 feet by 12 feet. A tubular braided rug of the same size commonly sells for $30 to $70. It is obvious that there is no possibility of sig- nificant competition between these two types of rugs and that customers pre- ferring one of them will do so for reasons which will not lead them to consider the other as an alternative. For these reasons, the U.S. manufacturers of true braided rugs will not benefit from an increase in the tariff on tubular braided rugs. To the extent that support for H.R. 6959 comes from U.S. manufacturers of tubular braided rugs, we believe that the proposal also lacks any sound justi- fication. Our belief is based on the following reasons: 1. On a production cost basis, no reason exists which would prevent domestic manufacturers of tubular braided rugs from competing effectively with their foreign counterparts. Although direct labor costs are somewhat lower abroad, the labor component in the manufacture of tubular braids is not substantial. Any cost saving resulting from wage payments are more than offset by other charges incurred in bringing these rugs to the American market. For example, foreign producers and domestic importers must add to their direct production costs the following charges: Indirect labor costs resulting from high fringe benefits and retirement payments; Ocean freight payments amounting to between 15 and 30 percent of pro- duction costs and marine insurance costs which add several more percentage points to production costs; and The current United States tariff rate. When these additional expenses are coupled with basic manufacturing charges, all foreign cost savings have more than vanished. In fact, with these additional costs, foreign tubular braided rugs are able to compete with domestic goods only because of superior purchasing and designing methods, and because of a wiffingness by foreign manufacturers and importers to accept a reduced profit ratio on each sale. 2. Thus, it is clear that on a production cost basis, the granting of new benefits to domestic braided rug manufacturers `through a tariff increase is not justifiable. New import restrictions will only enable those domestic producers of tubular braided rugs who have failed to modernize their production facilities to maintain a share of the rug market. In this guise, the tariff increase serves PAGENO="0313" 2619 as a bonus to inefficient manufadturers-a result which is not consistent with our traditional economic concepts regarding the survival in the market place of efficient manufacturers. On the other hand, those domestic manufacturers who are efficient and who have kept pace with technological developments are not at a cost disadvantage. They therefore do not need a tariff increase to maintain their share of the domestic market. 3. An increase in the tariff will work to the detriment of both American con- sumers and reiailers. The most significant group to suffer will be low-income consumers who now constitute the major purchasers of these rugs. If higher tariffs are imposed, the retail price of tubular braided rugs will rise sharply. The inevitable effect will be to squeeze low-income consumers out of the buying market because as the Tariff Commission recently found in its comprehensive survey of the textile and apparel industries "cost is a major consideration" for these "lower income groups." 1 The second group to suffer from this contraction in the buying market will be those retailers who specialize in low-cost rugs and those importers who have developed the tubular braided rug market. The market which they succeeded in creating will have shrunk drastically under the pressure of stringent new import restrictions whose justification is sorely lacking. 4. Added to the domestic detriment that will result from new import re- strictions is the harm that will accrue to foreign producers who make virtually all of their tubular braided rugs for export to the United States. For example, in Japan-the largest exporter of tubular braids-approximately 20 times as many persons are directly supported by the tubular braided rug industry as in the United States. As a result, the ratio of jobs relating to the production of tubular braided rugs to population is over 30 times as great in Japan as it is in the United States. If tariffs on tubular braids increase, the inevitable result will be an increase in rug prices, a constriction of the American buying market, and a loss of hundreds of jobs in Japan and other foreign countries. In short, a tariff increase will only exacerbate the present problems of foreign tubular braided rug manufacturers, whose exports to the United States declined sig- nificantly during 1907-dropping by some 26.8 percent. 5. Finaily, the proposal for a threefold increase in the tariff on tubular rugs is obviously contrary to the entire U.S. position on foreign trade and the strenu- ous efforts made in recent years to expand foreign markets by reciprocal tariff reduction. At a time when foreign trade policy is the subject of such broad dis- cussion as at present, there is obviously no need for us to elaborate on the disruption of U.S. foreign trade that would result from this tariff increase. Tubu- lar braided rugs-little known in the vast and prosperous U.S. economy except among low-income families and the stores who serve them-are extremely im- portant to the economies of the countries from which they are imported. These countries are important U.S. trading partners and political allies, and the United States constitutes by far their principal market for these articles. The burden is clearly upon the supporters of H.R. 6959 to demonstrate clearly and conclusively strong public interests (as distinguished from their own self interests) which justify sacrificing the important national interests described above. No such ground have been shown to date and we believe any careful investigation will show that they do not exist. Sincerely, Cu~&icucs I. Rosrov. Mr. BURKE. Thank you. Mr. CONABLE. That is a very interesting statement, sir. Of course, this technology that you mentioned will be transferred abroad eventually. 1U.S. Tariff Commission, Textiles and Apparel 10 (1968). It would appear that the Braided Rug Manufacturers Association of the United States has little concern for the plight of the low-income consumer. As its executive director recently stated before the Senate Finance Committee: "Another justification for increased imports is the lower prices they provide consumers. Consumers, being the beneficiaries of our economic system, are not entitled to bargains at its expense." Hearing before the Senate Committee on Finance, 90th Cong., first sess. 696 (1967). PAGENO="0314" 2620 I take it that labor is such an insignificant factor in the tufting process that you still feel that acquisition of the technology abroad will not constitute any threat to the American market. Is that correct? Mr. HERZSTEIN. That is precisely right. In fact, this is already beginning to happen. There is tufting begin- ning in Germany, now, very frequently being started by some of the American companies, or licensees. Mr. CONABLE. You didn't say much about exports. Is carpeting exported substantially? Mr. HEnzs~rEIN. There are some exports, but I wouldn't character- ize them as substantial, compared with domestic production. I think the reason for this is that the shipping costs on carpet are rather high, and as tufting has come in in this country, the foreign companies who used to supply woven carpets to this country have concentrated more on their home markets and tended to take care of them, so that there wasn't too much of an export market. That took care of things for a few years. Now tufting has begun to come into the foreign markets, also, and I think that the economies of it will be such that one will tend to find tufted carpets produced locally, and not shipped great distances. Mr. CONABLE. This industry that you are representing here today is not concerned about retaliations in the event of some restrictive legislation affecting other parts of the imports? Mr. HERZSTEIN. Since I am representing importers, I think that they are not themselves directly concerned about retaliation by other countries against U.S. exports. I think that is true in terms of each individual's business. They are generally men devoted to trade. They have earned their livings on trade, and I think generally it can be said that they believe that the future lies in the direction of liberal trade. But I wouldn't say that any one of them would be directly affected by retaliation. Mr. CONABLE. That is all I have, Mr. Chairman. Mr. BuRKE. Thank you very much. Our next witness is Mr. Alvin Hayim, Wilton and Velvet Carpet and Rug Importers. Mr. HrnzsThnT. I was delivering my statement on his behalf, too. We consolidated the statements. Mr. BURKE. They will both be in the record. Mr. HERz5ThIN. He was not able to come, either. Mr. BURKE. Mr. Howard Johnson. In the interest of conserving time of the committee, Linen Thread Co. has canceled its appearance, but requests that its prepared state- ment be inserted at this point in the record. Without objection, it is so ordered. (The following statement of Howard Johnson, was received for the record:) STATEMENT OF HowARD JoHNsoN, SALES MANAGER, LINEN THREAD Co. Mr. Chairman and members of the committee, my name is Howard Johnson, and I am Sales Manager of the Netting Division of the Linen Thread Company of Blue Mountain, Alabama, which is the largest manufacturer of fish netting in the United States. The Linen Thread Company is a Division of Indian Head Mills, Inc., of New York. I am making this statement on behalf of eight manu- PAGENO="0315" 2621 facturers of fish netting in the United States which comprise perhaps 85 percent of the domestic production of fish netting. Although we are a relatively small industry, we believe we have problems which will be of interest to you and we appreciate this opportunity of presenting them. FISH NETTING: DESCRIPTION AND METHOD OF MANtFACTURE The nets made from the netting which we produce are used by the commercial fishing industry for catching menhaden, shrimp, salmon, tuna, and other species. The netting we make varies in size of mesh and in the weight or strength of twine of which the netting is made. Single or double knots are used to make the webbing and some netting is made knotless. Netting may also be dyed and some- times treated with a preservative. These days, over 90 percent of our netting is made of synthetic yarns. Netting used to be made of cotton, but unless properly dried right after use, the cotton mildews and rots. The synthetic textiles are largely impervious to these condi- tions and so outlast cotton 4 to 1. Even at somewhat higher prices, the synthetic textile nettings have pushed cotton right out of the running. The industry still makes some cotton netting used as a base for camouflage netting for our Armed Forces in Southeast Asia. Shortly after the Korean War, the Department of Defense considered the availability of supply of this item so essential that it stockpiled looms for its manufacture. Fortunately, our industry today can meet requirements, but in view of the steadily mounting import pres- sure we strongly doubt that we will be able to guarantee a supply a few years hence. Fish netting is made on specialized knitting machines. The newest equipment comes from Japan, embodying the latest designs and we have a number of these looms. Although we have little funds available for research and development, we have endeavored to obtain the latest improvements available commercially and tn innovate where possible with our own ideas. HIGH LABOR COST EVEN OF MACHINE OPERATION One important problem in the operation of these knitting machines is the cost of replacing bobbins which have run out of twine. Since the number of bobbins equals the number of twines in the warp and the latter are but small fractions of an inch apart, the size of the bobbin and the amount of twine which a bobbin can contain are limited. Thus the bobbins have to be replaced frequently. On some netting there may be several hundred bobbins in use on a machine at one time. As the twine on a bobbin runs out, the loom automatically stops. A full bobbin is inserted in place of the empty one and the end of the new twine is twisted together with the old end to make a continuous thread. This results in inefficiency, high labor costs and machine down-time ex- pense. On the finer meshes, the machine may be operating much less than half time. As the splices have to be well distributed over the length of the netting, in order to maintain its strength, all the splices obviously cannot be made at one point. There appears to be no remedy for the situation. This problem is particularly significant to us now, because labor costs in Japan-the chief source of imports-are so much lower than ours, that the Jap- anese can afford to cut their prices sharply below ours, particularly in the smaller meshes. It is interesting to note that even the Japanese are sensitive to labor costs. Some of the Japanese netting manufacturers have established netting plants in South Korea where, with the newest equipment and lower labor costs than in Japan, these manufacturers can afford to undersell some of their Japanese competition. For example, in the U. S. market, the average unit foreign value of imports of synthetic fish netting from Japan in 1907 was $1.45 per pound; corresponding imports from Korea were valued at $1.02 per pound. IMPORTANCE OF~ COMMERCIAL FISHING Commercial fishing is big business. In 1966, United States fisheries provided 2.0 billion pounds of human food and 1.8 billion pounds of industrial (including animal food) products, primarily meal and oil. Contrary to the belief of some people, the population's appetite for fish is not declining. U.S. per-capita consumption of fish, at about 10 pounds in 1966 was PAGENO="0316" 2622 the same as it was in 1940, notwithstanding sharply higher prices. However, our fish netting market, though not declining, is not growing at the present time. GREATLY EXPANDED USE OF FISH FOE FOOD FORESEEN IN FUTURE DECADES If we are able to survive the probable deluge of Japanese (and Korean) imports of fish netting during the next few years, we might be in a position to contemplate and prepare for greatly expanded markets for fish netting in a decade or two. The distant future appears bright. Under Secretary Black of the U.S. Department of Interior at the Commercial Fish Exposition in Boston last October said in part: "With the land in many underfed countries already producing at levels of near-maximum yield, it is natural that we turn our attention to the sea. As population pressures mount in these countries, they are being backed up against the oceans. We can count ourselves uncommonly blessed that the oceans are so full of food. "Experts vary in their assessments of the food potential of the seas, but we do know that the present world marine catch is approximately 52 million metric tons per year. At the Law of the Sea Institute meetings at the University of Rhode Island in June, experts presented exciting estimates of potentials ranging from 200 million to 4 billion metric tons or nearly 100 times the present world catch." INDUSTRY SUFFERING FROM IMPORT COMPETITION Right now, our industry is in trouble because another country-Japan-is vying for our presently stagnant market. U.S. imports (mostly from Japan) of synthetic fish netting-our chief product-within the last three years have increased over 200 percent, and now supply nearly 21 percent of U.S. apparent consumption (recorded imports plus domestic shipments; exports are negligible as explained below). JAPAN'S EXPORTS POSE D~E THREAT TO INDUSTRY'S EXISTENCE Of even greater concern to us is the vast export capacity of the Japanese fish netting industry. In 1960, only 5.2 percent of Japan's exports of fish netting came to the United States, although we were in sixth place among the world's fisheries, having been barely nosed out of fifth place by Norway. Only about half of this amount actually entered the United States; part of the difference could be accounted for by shipments to the U.S. Free Trade Zones-New Orleans and Seattle. The half that did enter trade in the United States accounted for 15 percent of the total U.S. apparent consumption of fish nets and netting. In 1967, incidentally, this market share jumped to nearly 20 percent. Expressing this towering strength of the Japanese fish netting industry in another way, Japan could have supplied the entire U.S. market in 1966 with only 18 percent of her exports that year (See Chart). In many commodities, the U.S. takes the bulk of Japan's exports. Is our industry going to be next? Drastically reduced prices (in spite of upward pressures on costs) at which Japanese net- ting is now being offered indicate that Japan is looking to this country where she can make up for her sales declines in other areas that are becoming saturated. Japanese nylon shrimp netting delivered ex-duty at New Orleans was $1.25 per pound in January 1907. By January 1968, prices had dropped 12'/2%. Another indication that Japan is turning her attention to sales in the United States is the fact that the share of Japan's exports of synthetic netting that went to the United States increased from 3.1% of the total in 1965 to 6.3% during the first eleven months of 1907, and for cotton netting the share increased from 36% to 65% in the same period. Thus, whereas Japan's world exports of fish netting declined from 7.7 million kilograms in 1965 to 6.8 million kilograms in the first 11 months of 1967, her exports to the United States increased from 307 thousand kilograms to 522 thousand during the same period. INDUSTRY MAY SOON BE CANDIDATE FOR RELIEF If the present trend continues, we will be candidates for tariff adjustment and/or adjustment assistance. Already we are feeling many of the symptoms of serious injury. During the first quarter of this year, we at Blue Mountain were forced to lay off some 50 employees in our fish netting division, representing PAGENO="0317" 2623 about a third of our normal employment in that operation. We have already re- ferred to the increasing imports and declining prices of Japanese netting and of even lower prices for South Korean netting, as well as increasing penetratiern of our markets by imports. PROPOSED "TRADE EXPANSION ACT OF 1068" We have read with interest the provisions of H.R. 17551 which would liberalize the criteria of eligibility of individual firms and workers to apply for adjust- ment assistance. But frankly our company and workers are much more interested in pre- serving the jobs we have rather than "adjusting" them out of existence and then attempting to create new jobs which in turn would be subject to predatory foreign competition, in a never-ending cycle. I think, from the standpoint of cost to our federal budget and national economy, it would be most interesting if this Committee were to obtain a computation of the actual cost of creating a stable job as against preserving one that already exists by way of tariff adjuStment. I believe you would find that with an equitable law, the cost of preserving jobs would be much less in the long run than paying adjustment assistance and attempting to create alternative employment. We therefore would hope that this Committee would liberalize the tariff adjustment provisions of the law to no less an extent than the Administration is asking that it liberalize the adjustment assistance provisions. All we ask is a fair chance to fight the low-cost foreign producer with a workable escape clause provision. Clearly, the present one is not workable, as the record shows. Of course there is a fallacy to the theory that American industry must keep "adjusting" to low-cost foreign competition. At first blush this may seem plausible from an economic standpoint. But what happens when the foreigner has run the domestic industry completely out of business with its low prices? Once the domestic plants are dismantled, it is clear that the foreign competitor can then raise his prices to a point just short of the expensive threshold where the domestic industry would be reconstructed *or reassembled and production resumed. Furthermore, we believe it would not be in the national interest to have the important U.S. commercial fishing industry-as well as our military establishment-entirely dependent on foreign supplies of fish netting. We ask only that we be given as good a chance to stay in business as we are given to "adjust". SUPPORT FOR QUOTA LEGI5LATION Another and more definitive form of relief to us, of course, is the protection afforded all segments of the texitle industry by HR. 11578, a bill to provide for orderly trade in textile articles. The provisions of this bill afford us absolute and immediate protection against the mounting threat of inundating imports from the Far East, particularly Japan. Our~industry thus strongly supports H.R. 11578 or its equivalent. _______ LIST OF FISH NET PRODUCERS The Linen Thread Company, Blue Mountain, Alabama 30004. Koring Brothers, Inc., 2050 West 10th Street, Long Beach, California 90013 Nylon Net Company, Seven Vance Avenue, Memphis, Tennessee 38103. A. M. Starr Company, Inc., Box #38, East Hampton, Connecticut, 00424. Fish Net and Twine Company, 933 First Street, Menominee, Michigan 49858. Bayside Net and Twine Company, Inc., Sea Garden Sales, Brownsville, Texas 78521. First Washington Net Factory, Inc., Fourth Street, Blame, Washington 98230. Hope Fish Netting Mills, Hope, Rhode Island 02831. Mr. BURKE. At this point, I ask unanimous consent to have inserted ni the record a telegram from the National Footwear Manufacturers Association, 342 Madison Avenue, New York, N.Y., addressed to the Honorable Dean Rusk, Secretary of State, Washington, D.C. (The telegram follows:) PAGENO="0318" 2624 NATIONAL FOOTWEAR MANUFACTURERS, ASSN., New York, N.Y., ,Tnne 13, 1968. Hon. DEAN RUSK, ~eeretary of $tate, Washington, D.C.: As representatives of domestic footwear manufacturers, we are aghast at your statement before the House Ways and Means Committee. Your comment that in the case of shoes, imports represent only 7.3% of total U.S. consumption by value is grossly deceptive and inconsistent with the standards of full dis- closure that the Ways and Means Committee assuredly deserves. We cannot help but believe that you are not receiving the full story about the impact of imported footwear on domestic producers from the office of trade repI~esentative Roth. While it is true that in terms of dollar value imports represent only 8% of domestic shoe consumption, that 8% of dollars represents close to 30% of foot- wear consumption. Nothing could more dramatically point up the domestic foot- wear manufacturers plight. Foreign labor is able to produce over 14 of all our shoes and sell them for less than Mo of all the money paid for shoes. The Amer- ican consumer purchases and wears shoes not dollars. I strongly urge that you submit to the Ways and Means Commitee an amended statement pointing out that in terms of shoes sold, the percentage now is running close to 30%, not the 7.3% figure misleadingly presented to the House Ways and Means Committee. Very truly yours, MARK E. RICHARDSON, President. Mr. BmuVE. The committee stands adjourned, to meet at 10 a.rn., Friday, June 21, when the hearings will resume. (The following letters and statements were received, for the record, by the committee:) STATEMENT OF HON. DAN K. MOORE, GOVERNOR OF NORTH CAROLINA Mr. Chairman and gentlemen of the committee, I am Dan Moore, Governor of the State of North Carolina. I wish to thank you for the privilege of appearing before the House Committee on Ways and Means to discuss a matter of major importance to my State and to other states in this nation. I have discussed this with other governors of textile producing states, including the Governor of Delaware, the Governor of Virginia, the Governor of South Carolina, the Gover- nor of Georgia and the Governor of Alabama. They concur, generally, in the position of this paper. Let me begin by saying a healthy, viable and dynamic textile industrial com- plex is not only essential for the economies of our respective states, but it is absolutely essential for our national economic and military survival. Any factors which impinge upon this industrial complex beyond the capacity of the industry itself to resolve, merit th~ careful consideration of all elements of government-local, state and national. In those states in which the textile industry is primarily situated, our economy is dependent upon the health and welfare of the industry. The textile industry is the leading manufacturing employer in the States of North Carolina, South Carolina and Georgia, supplying 52 percent, 65 percent and 41 percent of the manufacturing jobs, respectively. In Virginia, the textile industry provides 28 percent of the manufacturing employment; in Alabama, 28 percent; in Tennessee, 30 percent and in Delaware, 15 percent. The textile industry means a great deal to my State. In 1066, the textile in- dustry became the first and only industry in North Carolina's history to have an annual payroll in excess of $1 billion. North Carolina produced almost 25 percent of the nation's man-made fiber fabrics and 10 percent of our woolen and worsted goods. The State's spinning mills turn out nearly one-half of the country's cotton yarns. Our knitting mills produce one-half of the country's hosiery. The valtie of textile products made in North Carolina is $5 billion a year. North Carolina's textile and apparel industries pay more than $40 million to the State in various taxes, not including sales and income taxes paid by the industry's employees. PAGENO="0319" 2625 It is easy to see that the welfare of the textile industry and its ability to grow and expand ig a key factor in the ability of my State to grow and expand. The story is similar throughout the textile-producing states of the Southeast. I am certain that this committee is aware of the impact of textile imports into the United States over the last 10 years. For a number of years, the Southern Governors' Conference has been con- cerned about the steady buildup of textile imports which is holding back the ability of our states to realize their full potential for growth. In fact, the Conference again last week approved a resolution calling for Congressional action to stem the flow of textile imports. I have already forwarded a copy of that resolution to the Chairman. Mr. Chairman, your committee has heard the case for reasonable restraints on imports. I hope you agree with me~ that textile imports have reached serious proportions. This trend must be reversed if we are to have a growing, viable tex- tile industry in this country. The difference in economic factors between the United States and the rest of the textile producing world has been called to your attention. It amounts to a situation whereby the domestic industry is at an unfair advantage in competing against unrestrained imports of foreign textiles. Practically every factor that enters into the finished product in the United States costs more than the same item does in some foreign textile producing area. We' pay higher wages. We pay more for equipment, supplies, utilities and transportation. We pay more for items that enter into the competitive ,consideration of putting into the market- place our end-product as compared with an end-product that is prepared, by way of illustration, in Hong Kong. The argument which has been presented to you-that by permitting uncon- trolled imports to enter into the United States, we are thereby providing the consuming public with products costing less than the equivalent domestically produced article-carries little persuasion with it when the textile worker is offered in the retail store a shirt produced in the Orient for a dollar less than a domestically produced one if he has lost his job and doesn't have the resources to buy a shirt at any price. As Governor of North Carolina, I am concerned first and primarily with the welfare, livelihood and future of our own citizens. All the theories and philoso- phies `about the desirability of providing absolutely no protection to American industry from foreign imports are of no benefit if their practice results in the economic collapse and massive unemployment among our citizens. I do not come here contending that imports should be barred. I do assert without reservation, however, that a system of orderly controlled imports must be established or the economy of this nation may well be wrecked. What I would like to emphasize, Mr. Chairman, is the impact of this rising level of imports on our states in terms of jobs and our ability to create new employment. The textile industry is the lifeblood of many communities throughout the Southeast. In many cases, the textile mill or man-made fiber plant is the largest or a major employer in a community. During the past decade, textile employ- ment has played a particularly important role in the transition of tens of thou- sands of people from farming to manufacturing. Communities have grown around textile facilities. As Governor, I am constantly concerned with providing more jobs for our people. Here, again, a growing textile industry can provide part of the answer. The textile industry has always been concentrated in smaller towns, in the communities that are in or near areas that once were basically farm communities. Many textile employees still live on farms and commute to their jobs. A textile mill offers opportunities for advancement and training, so employees can move up the ladder to better and better jobs. One of the reasons the United States has such a liberal trade policy is that we want to help some of the underdevelOped nations become first-class citizens in the community of nations. This certainly is a praiseworthy goal, and it would be a good thing if that were what was happening. But in the case of textiles, we find today that about one-third of our imports come from Japan, which has the fourth-largest gross national product in the world and is anything but an under- developed nation. PAGENO="0320" 2626 It is high time we started paying more attention to the effect import trade policies are having on the underdeveloped areas within our own country. The Appalachia Regional Development Area is a case in point. The textile industry complex, apparel, textile mifis and man-made fiber production provide one out of every four jobs in the counties designated as Appalachia. During the past 25 years, textile and apparel employment in this region has increased by some 100,000 jobs. As you gentlemen know, the Federal Government is spending millions of dol- lars in Appalachia, and our states are making an additional contribution, to build highways and stimulate industrial development. It just does not make sense to undercut all of this effort by exporting more and more textile jobs to Asia every year. Textile product imports last year reached a level of some 2.0 billion square yards. It has been estimated that this amounts to the equivalent of some 200,000 textile jobs in this country. In spite of this, our trade negotiators agreed in Geneva last year to reduce textile tariffs further. As a result, imports during the first quarter of this year have set new records. I cite these figures to illustrate the fact that the textile import problem is not going away. In fact, it is getting worse month-by-month. No one is suggesting that imports should be stopped or rolled back. But it is obvious that the continuing upward trend must be reversed. It is for this reason that we are appealing to Congress for legislation which will bring about orderly trade in textiles; legislation which will provide for a reasonable amount of imports, but at the same time safeguard the hundreds of thousands of people in this country who depend upon the textile industry for a livelihood. At the rate imports are entering the United States, we are approaching the point where all of the future growth of the textile industry will be taken over by products from foreign countries. It borders on the ridiculous to take one of the three basic incredients for survival-food, clothing, and shelter-and turn it over to foreign interests. Our country is faced with tremendous problems at home and abroad. These problems have taken on new dimensions which require new solutions. As elected officials, all of us, in state offices and in Congress, must be attuned to the needs of our country and our people. The people are asking us for answers to these problems. We must provide the leadership and the programs which will help turn our country around and get it back on the track. Our relations with overseas countries need to be reassessed. We must take the necessary steps to bolster our economy at home. We cannot do this by undercutting one of our basic industries which provides employment for more than two million people. Passage of legislation as outlined in the Mills Bill would be a major step toward restoring confidence and building a sound future for one of our basic and most important industries. CONGRESs OF THE UNITED STATES, HOUSE OF REPRESENTATIVES, Washington, D.C., June 20, 1968. Hon. WILBUn MILLS, Chairman, Committee on Ways and Means, House of Representatives. DEAR MR. CHAIRMAN: Mr. James Utsey of Selma, Alabama, President of the Alabama Garment Manufacturers Association, has asked me to convey the en- closed resolution to you. I would respectfully ask that you enter this resolution in the testimony concerning textile import legislation which your Committee recently heard. Thank you very much for your consideration of this important matter. With best wishes, I am Sincerely, BILL NICHoLs, M.O. PAGENO="0321" 2627 ALABAMA GARMENT MANUFACTURERS ASSOCIATION, Montgomery, Ala., June 18, 1968. Hon. WILBUR MILLS, Chairman, Ways and Means Committoc, House of Representatives, Washington, D.C. Dns~n CONGRESSMAN MILLS: On behalf of my Association, the Alabama Gar- ment Manufacturers Association, I respectfully transmit to you a resolution recently adopted by our Board of Directors by a unanimous vote. We request that this be incorporated into the record of the hearings for the Textile and Apparel Industries being held on June 19, 1968. Sincerely, JAMES UTSET, President. A RESOLUTION Whereas, the relatively uncontrolled flow of textile and apparel imports into the United States has done and is doing grave damage to our industries and endangering the jobs of thousands of Americans working in these industries, and Whereas, this dangerous situation is a major contributor to the unfavorable trade balance of our country and to its balance of payments problem and is deserving of the attention of the Congress and of all those interested in the economic stability of our country: now Be it unanimously Resolved by the Board of Directors of the Alabama Garment Manufacturers Association, That the Ways and Means Committee of the United States House of Representatives and the House itself be urged to adopt legislation to impose meaningful quantitative controls on~ imports of textile and apparel into this country and that firm enforcement of these controls be required; and be it further Resolved, That copies of this resolution be sent to Hon. Wilbur Mills, Chairman of the House Ways and Means Committee and to all Alabama Members of the United States House of Representatives. I certify that this resolution in this exact form was adopted by the Board of Directors of the Alabama Garment Manufacturers Association on June 14, 1968, in the City of Montgomery, Alabama. CHARLES MCDONALD, E~vecutive secretary. NATIONAL ASSOCIATION OF SECONDARY MATERIAL INDUSTRIES, INC., New York, N.Y., July 10, 1968. Re Hearings on Textile Import Taxes or Restrictions. Hon. WILBUR MILLS, Chairman, House Ways and Means Committee, Washington, D.C. DEAR CONGRESSMAN MILLS: The Textile Devision of the National Association of Secondary Material Industries, representing the country's exporters of textile secondary materials from the United States wishes to record our strong opposi- tion to any legislation to enact a tax on textile imports or otherwise restrict their importation. Legislative proposals currently being considered by the House Ways and Means Committee would impose oppressive and unwarranted import burdens on textile materials. Secondary textiles largely move in international commerce and the industry is dependent on the ability to market these materials to other nations without the duress of trade barriers. The only way our segment of the United States textile industry maintains its economic lifeline is through continuous existence of overseas markets for our textile exports. Millions of dollars of these secondary materials are sent annually to overseas manufacturers who, in turn, through the application of various processes, create new textile end-products which they re-export to many other international manufacturers. Thus, if Congress takes restrictive action on textile imports, there will cer- tainly be disastrous results for our segment of the domestic industry as other countries similarly impose import restrictions and/or duties in retaliation. Many textile exporters will lose their historical overseas marketplaces- markets which our own Government encouraged them to develop as part of its export expansion policy. Secondary textile exporters, many of whom have large plant investments and labor forces, will surely have to curtail their operations as they lose their competitive position in the world economy. 95-159 0-68-pt 6-21 PAGENO="0322" 2628 In addition, since other important segments of the textile industry depend on the services performed by this industry for the disposal of their textile by- products, the adverse results we fear will not be limited to the exporters and their employees alone. A chain reaction will be initiated which will be felt throughout the entire domestic economy. Far from protecting American business and assisting the U.S. balance-of-payments problem, the proposed legislation will only set off a restrictive cycle that will limit exports and seriously damage U.S. business interests. The utilization of secondary textiles is an important factor in the country's solid waste disposal network. Erosion of secondary markets only breaks down the collection system on which the industry-and public-depends and com- pounds the problems of finding sufficient economic usage of the nation's indus- trial and household by-products. Protectionist measures will disturb efforts to expand international trade at a very time when such international marketing is vital. It has been a basic policy of the Government to foster American competition in world markets. The need for improvement in our balance-of-payments position with other coun- tries cannot be overstressed. The passage of this proposed import tax will lead to violent inter-actions in textile markets here, and abroad, and eventually will result in an undesirable economic backlash for American industry and prove detrimental to our best interests as a nation. We believe there is no need to support the imposition of such import restric- tions at this time, and for all these reasons we urge the Ways and Means Committee to disapprove any such legislative proposals. We ask that the preceding statement be placed in the record of the hearings. Respectfully submitted. TExTILE DIvIsIoN, IIAROLD KURTIN, Presiden~t. STATEMENT OF GEORGE flALDANZI, INTERNATIONAL PRESIDENT, UNITED TEXTILE WORKERS OF AMERICA, AFL-CIO In lieu of personal appearance by the United Textile Workers of America, AFL-CIO, I am herewith submitting a statement of our position on International Trade. First of all, we would call to the attention of the Committee that the AFL-CIO has submitfed the position and the action of the 1967 Convenion on the entire question of International Trade, Tariffs, etc. and our union is in agreement with the basic principles. We desire, however, to emphasize sections of the statement directly applicable to the textile workers and the textile industry. Quote: "The AFL-CIO cannot ignore the fact that rising imports have disrupted some domestic markets and resulted in adverse impacts on some industries. These developments have im- posed severe hardships on thousands of American workers. Agreements with other countries, like the International Cotton Agreement, should be concluded, covering trade in textiles and apparel of wool and man-made fibers. The Cotton Textile Arrangements should be effectively enforced and no erosion permitted in its safeguards against disruption." The AFL-CIO continues "that it is a matter of growing concern to note the sharp rise of imports of non-durable goods such as textiles, apparel, shoes, toys, etc. from low-wage countries for sale at U.S. prices in this market. This relation- ship may be controlled by a relatively few integrated firms with international subsidiaries or other investment and sales arrangements. To look at aggregate country data in the United States and determine that the U.S. Textile Industry is thriving because some large firms are Ihaking big profits,-or to determine that the United States shoe industry as a whole is doing well,-is to ignore the specific impact on United States production and employment in many parts of the country." The United Textile Workers of America, AFL-CIO, would call and ask for the particular attention of the Congress to the following resolution adopted by the unanimous vote of the delegates at our International Convention held last month. This resolution embodies the desires and struggles of men and women who are striving to hold their jobs against those-many in high places who are willing and ready to sacrifice the~ workers in the textile and garment industries. They PAGENO="0323" 2629 attempt to scare the American people and intimidate the Congress with the cry of higher prices of which they cannot prove, `but in their own willingness to expend our domestic industry, they are against a reasonable control of excessive, harmful and injurious imports. This resolution is a brief summary of all of the things we have been saying to the Congress for several years in appearing before the House and Senate corn- mi'ttees in complete detail, and in this year we have witnessed our position justified by large majorities in the House and Senate. And still our opponents are serving up the same old shibboleths. They attempt to pacify the jobless with promises of compensation if imports terminate `their employment. The United Textile Workers of America finds no solace or solution in the adjustment provisions of the 1962 Trade Expansion Act, whereby American firms and workers adversely effected by imports, would be safe-guarded and assisted. I believe that I can speak for all import-effected industries, durable and non-durable, and the list is constantly growing, when I say that the "se-called" escape clause has been proven absolutely useless. In support of this, I again quote from the AFL-CIO testimony before the Ways and Means Committee on June 13, 1968. Quote: "As a result of the Tariff Commission's interpretation of that law, all petitions for trade adjustment and assistance have been rejected. The record of these 14 cases in six years is a shameful mockery, a fraud on the American people and the American wOrkers." We note the amendment in the 1968 Bill substituting `the Executive for the Tariff Commission, and this brings me to other Bills `before the Committee. One of these, the "so-called" Omnibus Bill, covering all effected industries, calling for ceilings after investigation by the Tariff Commission. We favor legislation for any and all industries injured by excessive imports, and we would suggest the same amendment substituting the Executive or the Congress. In fact, the Tariff Commission is the creature of the Congress, and there should be a measure of supervision, and, if necessary, correction of its decisions. We also have noted that under certain conditions the Administra'tion's Trade Expansion Act of 1968 does allow the President to order quota import curbs. On the other hand, the President's special trade message to the Congress states that new restrictions on imports are undesirable and the Administration favors spe- cial Federal tax aid for the employers, and adjustment for the workers. We cannot speak for the employers, but `the workers are still faced with Pariff Com- mission fact-finding. Our unions and membership has and will continue to peti- tion the President for the establishment of quotas in the textile industry, and we urge our supporters in `the Congress to continue this objective, and for favorable action at this session of the Congress. The opponents of "quotas" have raised another scare balloon, this one has to do with retaliation by importing countries, or what they called negative reci- procity. Of course, `they know that reciprocity is a two-way street. Perhaps they don't know that no less than 70 Nations restrict imports from the United States. If they do know, the retaliation balloon is punctured before it gets off the ground. Would our opponents say: "This is free trade." It should be known that while textile and apparel imports into the United States are rising, exports are static at a relatively low level. According `to the U.S. Department of `Commerce, in 1967 textile and apparel imports were valued at $1,461 billion compared with $695 million for exports. In `the first quarter of 1968 imports were at a record $387.6 million while exports were at $169.3 million. And, according to the same source, imports of the three major textile fibers, Cotton, Wool and Man-made totalled 274.9 million equivalent square yards in April `of this year-an increase over the previous month and April a year ago. The January-April cumulative `total this year was 582 million square yards, compared with 541.6 million square yards a year ago. In addition, we find that the countries of the World that have cried the loudest and threaten retaliation if the U.S. sets up controls over word and man-made fiber, and apparel imports, have set up their own barriers in a secure network of quotas, tariffs and licensing procedures. We hear much about hard-core unemployment and the millions of poor mainly from the South, as well as the Appalachian region. Our program is a humane measure. We are trying to save any appreciable erosion of the textile and apparel industries, and all others victimized by excessive and uncontrolled imports. Finally, we know that the Committee has all necessary information on low and cheap labor in importing countries. PAGENO="0324" 2630 We rest our case on the report and recommendations of the Special Subcom- mittee of the Senate Committee on Interstate and Foreign Commerce, back in 1959. "Since the wages of textile workers in foreign countries range down to as much as one-tenth of the earnings of American textile workers, foreign mills have a pronounced competitive advantage over domestic mills and can dispose of their products in our markets at prices substantially below which American mills must receive. Therefore, we recommend that quotas be established which will permit foreign producers of textile products to sell in our markets within limits which will not further endanger existing textile capacity. We also recom- mend that quotas be established by specific categories of textile products." Time is running out; the situation is far more serious `today than it was in 1959, and we respectfully urge the Congress to act now in support of the workers in our domestic industries deprived of their livelihood by unfair, unjust import regulations. STATEMENT OF GEORGE PERKEL, DIREc~roR OF RESEARCH, TEXTILE WoRKERs UNION OF AMInUcA, AFL-CIO On behalf of the 200,000 workers represented by our organization who are en- gaged in the production of synthetic fibers and textile mill products in the United States, we welcome this opportunity to present our views on the need for import quotas on synthetic fibers and all textile products. The Committee has heard testimony from industry representatives concerning the growing volume of textile and apparel imports. We do not intend to recapi- tulate the figures. It should be evident from the record that the present tariff and trade practices of the United States permit foreign textiles to enter this country at a rate which threatens the survival of the domestic industry. The annual rate of imports in the first quarter of 19(E~8 (3.1 billion square yards) is more than double the volume of 19f~4 (1.5 billion). Continuation of this trend can only mean the destruction of the textile and apparel industry. NEED FOR ACTION TO SAFEGUARD DOMESTIC JOBS Our concern for the survival of this industry stems from the special character of the labor force. The personal characteristics of the workers and the geo- graphic distribution of the plants strongly militate against an orderly transition to new jobs for displaced textile workers. The contraction and liquidation of hundreds of textile mills in the fifties resulted in untold hardship for many thousands of textile workers. The lot of these displaced workers was persistent and long-term unemployment, the loss of savings and homes, and the utter despair of facing a future without hope. Our memory of these sufferings in the fifties is too strong to permit complacency in the face of the ominous threat of rising imports. It is inconceivable that the United States Government would fail to take action to safeguard the jobs of the millions of Americans whose livelihood is threatened by the massive influx of textile product imports. THE SPECIAL CHARACTER OF THE TEXTILE LABOR FORCE The nature of `the textile work force makes it imperative that effective govern- ment action be taken to prevent the continued erosion of the industry by im- ports. The history of this industry clearly demonstrates the serious difficulties encountered by textile workers in finding reemployment after being displaced. The fact is that these workers face severe distress in the event of a major contraction of the industry. The impact of such a development on the social and economic condition of the communities which are dependent on the industry would be catastrophic. Geographic Distributicnv The 21/2 million employees engaged in the manufacture of manmade fiber, tex- tiles and apparel are distributed among 33,000 establishments located in 45 states. The industry is so widely distributed that the injury caused by sharply rising imports cannot be gauged simply in local or regional terms. However, the concentration of employment in particular localities and regions make them es- pecially vulnerable to the harmful effects of a decline in the industry. PAGENO="0325" 2631 The region which would be most serious1y affected is the Appalachian Region. According to a study made by the Man-Made Fiber Producers Association, Inc., the manmade fiber, textile and apparel industry accounts for 452,957 of the total of 1,709,844 manufacturing employees in the 373 counties of Appalachia.1 Inas- much as others have testified on this subject we shall not enter into further dis- cussion, except to note that a decline in the industry which accounts for more than a quarter of the industrial jobs in this depressed region would strike a devastating blow at the efforts being made to restore it to prosperity under the Appalachian Regional Development Act of 1965. It should also be noted that while this region employs more than 20% of the workers in the manmade fiber-textile- apparel complex, it accounts for approximately one-half of the jobs in the man- made fiber producing segment (50,300 out of 104,000). The outstanding geographic characteristic of the textile mill products seg- ment of the industry is the fact that a large majority of the plants are located in small towns or rural areas where they comprise the major source of industrial employment opportunities. This fact is vital to an appreciation of the importance of the industry to the areas in which they are located. It is also a key to under- standing the difficulties faced by workers who lose their jobs as a result of mill curtailment or liquidation. In most cases they have no where to `turn for alternative employment in the area. The limitations of available statistics make it impossible for us to furnish the Committee with a comprehensive picture of the distribution of the industry's establishments by size of area. Regulations restricting the publication of employ- ment statistics which might disclose information rel'ating to an individual reporting unit preclude us from `access to the necessary information. The following data clearly indicate tl1e predominant location of the textile industry in small labor areas `where the mills comprise the major source of employment. 1. Tewtiles and Major Labor Areas The Bureau of Employment Security of the United Sta:tes Department of Labor compiles monthly statistics on employment for 150 Major Labor Areas for purposes of analyzing the adequacy of their local labor supply. These areas are defined as follows: "Major" labor areas usually have at least one central city with a population of 50,000 or more, according to the 1960, Census. In most instances, boundaries of major labor areas coincide with those of Standard Metropolitan Statistical Areas, as determined by a Federal interagency committee chaired by the Budget Bureau.2 These areas comprise the principal centers of industrial employment in the United States. In 1966 they accounted for 68% of the nation's manufacturing employees (13,035,000 out of 19,186,000). However, only 34% of the textile mill employment is located in the 150 major labor areas (326,000 out of 961,500). Almost two-thirds of the textile labor force is employed in areas outside of the major labor areas. (Table 1.) 2. Teatiles and r~tandard Metropolitan ~Statistical Areas Another indication of the predominant location of textile employment in small areas is afforded by a statistical breakdown of production workers in the major subdivisions of the industry. These are available from wage surveys conducted by the Bureau of Labor Statistics of the United States Department of Labor in recent years. They show that 70.5% of the production workers in five divisions of the textile mill products industry were employed in establishments outside of Standard Metropolitan Statistical Areas.2 (Table 2.) The proportions of workers located in nonmetropolitan areas vary from a low of 53.0% in Textile Dyeing and Finishing to a high of 78.6% in Children's Hosiery. These proportions are representative of the textile mill products indus- 1 Impact of Imports on American Industry and Employment, Hearings before the Gen- eral Subcommittee on Labor, House Committee on Education and Labor, 90th Session, Part 2, 1967, P. 1042 if. 2Directory of Important Labor Areas, Bureau of Employment Security, 11.5. Department of Lnbnr, July 1. 1965. r ~ Defined by the U.S. Bureau of the Budget as an area containing "at least one city of at least 50,000 inhabitants," and including "the county of such central city, and adjacent counties that are found to be metropolitan in character and economically and socially late- grated with the county of the central city." (Standard Metropolitan Statistical Areas, 1967, pp. vu-vu!.) PAGENO="0326" 2632 try as a whole. The production workers in these 5 divisions accounted for 71% of the industry's total in 1966. - 3. Tewtiles in ~out1t Carolina Because of the availability of detailed tabulations in the annual reports of the Department of Labor of the State of South Carolina, it is possible to analyze the distribution of textile employment data for this state in a more comprehen- sive manner than for the other states. Inasmuch as South Carolina is one of the leading textile states (accounting for 145,800 of the nation's 961,500 textile jobs in 1966) and its locational characteristics are representative of the industry as a whole, we have made a study of the distribution of the state's textile mills and employees to determine the importance of this industry to the industrial structure on a local area basis. The basic unit for analyzing local labor areas outside of Standard Metropoli- tan Statistical Areas is the county. Consequently, our study is based on an analysis of the distribution of textile mills and employees among the counties in the state which contain textile esta~1ylishments (Table 3). For counties whose textile employment is not disclosed by Caunty Business Patterns (U.S. Depart- ment of Commerce), estimates of employment were made on the basis of non- salaried employment reported by the South Carolina Department of Labor. The counties with textile establishments were distributed by size of manu- facturing employment (Table 4). The following locational characteristics of the textile industry are evident from these data: (a) More than half of the textile mills and employees are located in counties with less than 15,000 manufacturing employees (175 of the 345 mills and 72,749 of the 143,959 textile employees). (b) In counties with less than 15,000 manufacturing employees, textiles ac- counts for 43% of total manufacturing jobs. Clearly, the textile industry is the predominant industrial employer in the smaller counties in which textiles are located. (e) In the larger counties with textile employment (i.e., those with 15,000 or more manufacturing jobs) the predominance of the textile industry is even greater than in the smaller areas: textile employment comprises 57% of all manufacturing jobs in these counties. (d) A large majority of textile employment is located in counties in which textiles accounts for more than half of manufacturing jobs: 69% of the textile workers are employed in counties with a ratio of textile to total manufacturing employment of 50% or more. Personal Characteristics The textile labor force is highly immobile. The age, sex, education and skill distribution of textile workers all conspire to prevent them from taking ad- vantage of opportunities for reemployment in other industries and areas. Con- sequently, the theoretical means of adjusting to the dislocations caused by in- creased imports-retraining and relocation-are no solution to the problems confronted by textile workers in the event of a contraction in file industry. It is obvious that women are handicapped by their sex and family status in utilizing relocation as a means of adjusting to the loss of employment. The ratio of women to total employment in textiles is exceptionally high (45% compared to an average of 27% for all manufacturing industries). In appraising the geographic mobility of American workers, the United States Department of Labor has found that "older workers, the unskilled and the un- educated are those least likely to move and those who fare the worst when they do." The particular difficulties faced by older workers are described as follows: Migrants 45 years old and over have a more severe unemployment problem after they move than men 25 to 44 years old. They have less education and face age discrimination. And since community and family ties are stronger among older persons, migration is probably a last resort for this greatly disadvantaged group.5 The textile labor force has a disproportionately high ratio of workers aged 45 and over. The latest available census shows that 40.1% of the males employed in the textile mill products industry were 45 years old and over compared with 35.9% for all manufacturing industries in 1960. Similarly, the proportion of ~A Report on Manpower Rcquirement8, Resources, Utilization and Training. Transmitted to the Congrens March 1965, p. 146. ~Ibid., p. 149. PAGENO="0327" 2633 female employees 45 years and older in textiles was 37.2% compared with 34.2% for all manufacturing.6 These disparities have worsened since 1960 as a result of the greater increase in employment of young people by other manufacturing industries than by textiles since 1960. The educational attainments of textile workers tend to be appreciably below the averages for all manufacturing industries and the civilian labor force as a whole (Table 5). The median years of school completed by textile workers run between 2% and 23% below the corresponding medians for workers in the same occupational groups in manufacturing and the civilian labor force, with the most numerous textile occupation (Weavers) falling 12% below the median for Operatives in the case of males and 9% below in the case of females. Moreover, * the high proportions of textile workers employed in unskilled and semiskilled occupations reinforces the tendency of textile workers to suffer from educational handicaps to mobility. The importance of education to labor mobility is evident from the following findings of the aforementioned Labor Department appraisal of the geographic mobility of American workers: "In general, migrants have an above-average level of education. Of the 25- to 29-year-old men who migrated between 1955 and 1960, for example, 25 percent were college graduates, as compared with 9 percent of the nonmigrants. And a lower proportion of the migrants than of the nonmigrants in this age group had completed only 8 years or less of school (14 and 23 percent, respectively). To look at the figures a different way, 55 percent of all male college graduates 25 to 29 years old lived in a different county in 1960 than in 1955, compared with only 29 percent of the men who had completed but not gone beyond high school. It is apparent that geographic mobility drops off sharply with decreasing education," ~ The proportions of textile workers employed in unskilled and semiskilled occupations are much higher than for manufacturing as a whole. In 1960, 66.6% of textile employees were in semiskilled occupations (Operatives and Kindred Workers) compared with 42.6% for all manufacturing employees (Table 6). The addition of unskilled occupations brings the total for semiskilled and unskilled groups to 72.4% of total employment for textiles compared with 50.1% for manufacturing as a whole. The heavy concentration of textile workers in the unskilled and semiskilled occupations is a Jiighly significant barrier to the mobility of textile workers. As noted in the aforementioned Labor Department study of geographic mobility, unskilled and semiskilled workers "have much lower rates of migration because they usually lack information about job opportunities, seldom have the resources for moving, and have limited employment opportunities in other areas, as well as locally. The barriers to migration of unskilled workers make it very difficult for them to move even from the worst depressed areas, where their competitive difficulties in finding jobs are compounded by the presence of jobless workers with higher qualifications." 8 It is especially significant that the Labor Department found that Operative and Kindred Workers (the predominant occupational group in textiles) had the lowest rate of out-migration of all groups in the ten areas of high unemploy- ment whose migration experience was studied. While 9.0% of all male employees in these areas migrated out of the areas in the period from 1955 to 1960, only 6.2% of the male Operatives and Kindred Workers did so.° The distinctive character of the labor force which militates against the mo- bility of textile workers has long been recognized. Numerous studies over the years have confirmed the existence of this special problem. Gladys L. Palmer conducted an intensive analysis of the experience of 862 weavers in three cities during the decade of 1926-35 for the purpose of ascertain- ing the transferrability of their skills to other industries.10 The following findings are relevant: 1. The experience of the weavers in all three cities (Manchester, N.H., Paterson, N.J., and Philadelphia, Pa.) "was highly specialized in character. For 0 Computed from U.s. Census of Population: 1960, Vol. I, Characteristics of the Popula- tion, Table 212. 7lbid., p. 147. ~Ibid,, p. 148. O Ibil., P. 152. 10 "The Mobility of Weavers in Three Textile Centers, "Thd Quarterly Journal of Eco- nomic8, May 1941, pp. 460-487. PAGENO="0328" 2634 most of the workers it was concentrated in one industry. For a significant pro- portion of the weavers in two of the cities, the work experience was confined to one" 2. "Less than a third of the weavers in the three cities had changed occupation or industry in the ten years prior to 1936. Many of the changes which occurred * represented movement into or out of the textile industries, or between various textile industries, only (i.e., not involving movement to other industries) ~ 12 3. "The degree of industrial mobility reported by weavers was likewise small. Almost as many weavers in the three cities reported no changes in industry as had reported no changes in occupation in the years 1926 to 1935." ~ 4. "Weavers, and other textile workers, too, for that matter, areusually mem- bers of families where other workers are customarily employed in textile mills, frequently in the same mills * * *. Studies made of the post-lay-off experience of textile workers, including weavers, from shut-down mills indicate that a high proportion of women workers drop out of the labor market after shut- down * * ~. Dropping out of the labor market, in this instance, is a reflection of a very high degress of immobility among married women weavers."14 5. "The relative immobility of weavers may be considered representative of that of most textile workers. Although some occupations are less specialized in character than weaving, others are more highly specialized from the point of view of possible transfer of skills to other kinds of work * * 15 6. "Geographic mobility for weavers is a distinct function of industrial mo- bility within a region. There is no evidence that weavers have moved from one region to another, as, for example, from New England to the South, when New England mills were declining and southern mills expanding."° 7. "The social implications of what has been rightly called the `stickiness of the job relationship' in the textile industry are far-reaching.~ Mute evidence abounds in the `ghost' towns of old New England cotton centers, the economic chaos of such centers as Paterson, and the idle mills scattered throughout the country." 17 In study after study these findings have been confirmed. The United States Department of Labor found in 1946 that "like the coal miners of Wales, who all through the desperate 1920's and 1930's suffered, yet stayed amid the shut-down collieries, and like many miners in this country during the great depression, textile workers show a strong attachment to their trades and their communi- ties * * * Workers' attachments have not only been solidified by family tradi- tions, but also by the fact that community life has to a large extent centered on mill employment. In some towns the textile mill is the only source of jobs while in larger communities with greater diversification, such as Fall River, New Bedford, and Lewiston, the mills exert a dominant influence. Since people are generally hesitant and reluctant to change homes, friends, and manner of life, the high degree of economic homogeneity of the community is a force directed toward retaining the status quo."18 It is noteworthy that the major New England textile centers which lost their pre-eminence in the twenties as the industry expanded in the South have still not recovered from the blow to their economies. New Bedford, Fall River and Lowell, Massachusetts, are still classified as areas of substantial unemployment, having suffered from exceptionally high unemployment rates continuously over the past decade and a half. In February 1968, when the average unemployment rate for the United States was 4.2%, these old textile centers had unemployment of 7.9% (New Bedford), 6.4% (Fall River) and 6.1% (Lowell). The impact of mill closings on New England textile workers was the subject of intensive study by several investigators during the fifties. A study sponsored by the New England Textile Committee (appointed by the Governors of the New England states) is typical.'5 Six mills were selected for study as "repre- sentative cases under varying labor market conditions." The following findings are pertinent: ii Ibid., p. 476. 12 Ibid., p. 476. 13 Ibid., p. 482. ~~Ib4d., pp. 484-485. 18 Ibid., p. 485. 16 Ibid., p. 486. 17 Ibid.. p. 487. 18 "Work aud Wage Exnerience of Skilled Cotton-Textile Workers," Monthly Labor Rcvi~w- U.S. Department of Labor. July 1946. p. UI. 18Wihiam H. Miernyk, Inter-Industry Labor Mobility, Northeastern University, Boston, 1955. PAGENO="0329" 235 1. "Of the total group contacted (1,705 workers) . . . only 45% were at work at the time of our survey. (1 year to 2'/2 years after displacement.) Another 12 per cent had withdrawn from the labor Ce2° 2. "Men were more successful than women in finding new jobs. Fifty-eight per cent of the male workers in the sample were employed compared to 35 per cent of the ~ 3. "More than half of the workers that found new jobs after their displacement were under 45 years of age. By way of contrast, only 29 per cent of the unem- ployed were 45 years of age or under." 4. "In all but one of the labor market areas, textile employment was declining during the period covered by our survey. In spite of this, however, textile mills provided a largei~ number of jobs to both male and female workers than any other industry or occupation. Thirty-six per cent of all employed sample workers were once again at work in textile mills, more than five times the number who found jobs in any other manufacturing industry"~ 5. "To some extent the relative immobility of textile workers in New England may be related to age. The average textile worker is older than the average in- dustrial worker and often the textile worker has not had experience in other occupations. Having grown old in one kind of work he may have neither the inclination nor the ability to seek and find employment in another industry. One might expect textile workers to remain with their trade in times of stable or ris- ing employment, but the most striking result of the present survey, and th'i& is supported by earlier studies, is the continued attachment to the industry (whether Voluntary or involuntary) during a period of declining employment."23 6. "We also attempted to discover the willingness of the displaced workers to move from the area if they knew of a job (or a better job) elsewhere * * * 58 per cent of these (responses) replied that they would not be willing to leave the area. Many said they were too old to consider changing their place of residence, and others felt that they could not move because other relatives (usually parents) were dependent upon them. While we have some reservations about answers to hypothetical questions, they are at least consistent with the actual behavior of the sample workers. Women showed a greater unwillingness to leave the area than men, but even among the men almost half said they were unwilling to move." 24 7. "It is evident that workers displaced by the liquidation of textile mills in New England are not being absorbed in large numbers by the industries which have been expanding in this area. * * * the highly aggregative comparisons of re- cent employment trends in New England conceal the fact that industrial growth and decline do not always coincide in the same areas. And the displaced textile worker is unwilling, or sometimes unable, to relocate to other areas where there might be a better opportunity to find work. Perhaps the greatest barrier to inter- industry mobility is the advanced age of many of the displaced workers. Although not all of the younger workers had found jobs, those under 40 were relatively more successful than those past this age. Many of those between the ages' of 40 and 65 felt they were being prematurely forced out of the labor market." ~ 8. "The protracted decline in textile employment and the relative immobility of the displaced workers have produced a considerable amount of persistent unemployment in many textile centers in New England. The problem is not being solved by the growth of new industry in the region, `although obviously it would be much worse if employment had not increased in other industries. Aggregative comparisons which show that more jobs have been added than lost in the region, during a given time period, while accurate indicators of overall employment trends, conceal the short-run problems created by changes in the industrial struc- ture of the regional economy. Nor can this unemployment be regarded as a tem- porary phenomenon if there is to be a further exodus of mills from New England. There is no reason to expect a larger proportion of displaced workers to be ab- sorbed by other industries in the future than has been true in the past. Indeed, if total textile employment in New England continues its secular decline, the level of persistent unemployment may be expected to rise as opportunities for re-~absorption by other mills through normal turnover are diminished." ~ 2°Ibid., p. 16. 1~Ibid., p. 17. 22Thid., ~p. 18-19. 2~Ibid., p.20. 24lbid., p. 27. 25Ibid., p.144. ~Ibid., p.155. PAGENO="0330" 2636 - The difficulties of displaced textile workers in finding reemployment have continued in the sixties. The United States Department of Commerce sponsored a study, Economic Effect of Teatile Mill Closings, ~clected Communities in~ Middle Atlantic ~States, published in 1963. This study examined the experience of six communities resulting from textile mill liquidations and found the same basic story as earlier investigations: "Much evidence of hardship and suffering. Many older workers were unable to find new jobs; many younger men left their home communities to find employment elsewhere. Long periods of unemployment were common, and many displaced textile workers were forced to seek assistance from relatives or public relief agencies, or eventually to take lower paying jobs in other industries. Emigration and lower paying jobs for women had the effect of changing the character of the labor force in some communities, raising the average age of workers and increasing the proportion of women."27 The latest in the series of these studies was published by the United States Department of Labor in 1966. "The Post-Layoff Experience of Displaced Carpet- Mill Workers," by N. Arnold Tolles, examines the workers' experience following layoff from a carpet mill which halved its employment between mid-1960 and mid~1962.m The following excerpts from the Summary of the report are relevant: "In April 1963, at the time of the case study of carpet-mill workers who were laid off when the mill halved its employment between mid-1960 and mid-1962, 1 of every 12 had ceased to look for work and 1 of 4 of those still in the labor force was unemployed. The unemployment rate among these workers was over 5 times the national rate at the time. It was 21/2 times the rate prevailing even in the small, economically depressed northeastern community where the carpet mill was located. "The unfavorable employment situation of the carpet-mill workers, compared with other local workers, epitomizes problems confronting jobless workers in areas such as this. There were no other carpet mills within 150 miles of the community, and although manufacturing industries dominated its economy, few of them utilized skills of the kind these workers had acquired at the mill. Most of the workers were middle aged and older persons with comparatively little education or training that would equip them for other kinds of work. These characteristics were especially pronounced among the fairly small number of women in the group studied. "Moreover, many of the carpal-mill workers had spent most of their lives in the community, to which they were tied by extensive home ownership and, frequently, the local employment of a husband or wife. More than three-fourths of them expressed unwillingness to accept a job beyond commuting distance of their homes, even if such a job should be offered." ~ PRESERVATION OF TEXTILE INDUSTRY IS IN THE NATIONAL INTEREST Measures to preserve the textile industry in the face of growing erosion by imports are clearly in the national interest. The importance of this industry to the nation goes beyond the fact that its 21/2 million employees comprise 13% of the country's manufacturing workers. The essentiality of the industry to our national defense is so clear and pressing that it hardly needs elaboration. In addition to providing clothing for our armed forces the industry produces thousands of articles which are indispensable to the defense establishment. The highest priorities have been assigned to textile products during national emergencies. They are a prime necessity in wartime, both for military and for essential civilian uses. The textile industry has a potention role of particular importance to play in helping to meet the critical manpower problems confronting the nation. The vast technological changes in American agriculture have displaced millions of farm workers. The migration to the cities of millions of people with relatively little education and no industrial skills has created the basis for the current urban crisis. 27Econ~mic Effect of Textile Mill Closings, Selected Communities in Middle Atlantic States. 1963. p. 2. ~ Weafherinq Layoffs in a Small Community!, Case Studies of Displaced Pottery and Carpet-Mill Worl7ers, June 1966, pp. v-47. ~°Thid.,p. 1. PAGENO="0331" 2637 The Department of Agriculture has estimated that "average farm employment in 1980 will be about 3.6 million workers, a 36 percent decrease from 1965 * * Decreases in farm employment are expected to occur in all regions but will be greatest in the Northeast and the three southern regions, where declines from two-fifths to almost one-half are anticipated. Most of the declines will come from continuation of large reductions in farm operators and family labor in the southern areas." 3° The geographic distribution and the types of jobs required by the textile industry make it especially suitable as a major source of employment for the workers who will be displaced from the farms. More than 95% of textile mill products employment is located in the regions which face the greatest reduc- tion In farm employment. (Table 7) In the textile-apparel-manmade fiber com- plex, the Northeast and South comprise 88% of the industry's total. Because of its relatively low educational and skill requirements, this in- dustry has historically served as a~ means of entry into the industrial labor force for people with little or no industrial experience. As noted by Professor Donald B. Osburn, "The textile mill industry may serve as a training ground for Negroes in the future as it has for whites in the past * employment in this industry teaches skills to workers who have previously engaged in un- mechanized agricultural production, thus allowing them to participate in an industrial or at least non-agricultural society, and perhaps to move on to higher paying jobs as the opportunities present themselves." °~ The rapid increase in employment of nonwhites in the textile mill products industry in recent years provides clear evidence of the great potential in this industry for helping to meet the need for expanded job opportunities for Negroes. The ratio of nonwhites to total employment in the industry increased from 4.6% in 1962 to 5.3% in 1964 and 8.0% in 1966. (Table 8) Both males and females have participated in the sharp rise: Males boosted their ratio from 6.4% in 1962 to 10.0% in 1906 while females rose from 2.5% to 5.3%. While later statistics are not yet available, our observations indicate that the ratio of non- whites to total employment in the industry now exceeds 10%. SUMMARY AND RECOMMENDATIONS Import quotas on synthetice fibers and all textile products are ueeded to pre- vent the crisis confronting textile workers from causing the destruction of thousands of jobs and creating severe distress in many textile communities. The Government has recognized the special vulnerability of the textile and apparel industry to disruption from imports from low-wage countries. A system for regulating imports of cotton products through international arrangement has been effectuated but no controls have been instituted for manmade fiber and wool products. Oonsequently, import of these articles are threatening to engulf the domestic market. The tariff mechanism is inadequate to deal with this situa- tion. Adoption of import quotas is essential to safeguard the jobs of 21h million textile and apparel workers in the United States. The special character of the textile work force makes government action imperative. The industry is predominantly located in small to~ns, where alternative employment opportunities are not available. The age, sex, educational and skill characteristics of the labor force all militate against mobility. eon- sequently, the dislocation of textile workers would lead to persistent unemploy- ment `and human suffering. Preservation of the textile industry is clearly in the national interest. The industry is essential to the national defense. Moreover, it has a major con- tribution to make in helping to meet the critical manpower problems confronting the nation. It should be encouraged to fulfill its historic role of serving as a means of entry into the industrial labor force for people with little or no in- dustrial experience. 3° Report on Manpower Requirements, Resources, Utilization and Training, U.S. Depart- ment of Labor. April P967. p. 106 °~ Negro Employment in the Textile Industries of North and Sottth Carolina, Equal Employment Opportunity Commission, November 1966, pp. 49-51. PAGENO="0332" 2638 Number of workers Percent in nonmetro- Industry division Date of survey Metro- politan areas 1 Nonmetro- politan areas Total politan areas Cotton textiles September 1965 Synthetic textiles do Wool textiles: yarn and broadwoven fabric September 1966 mills. 50, 888 31, 545 13, 161 168, 589 68,808 28,604 219,477 100,353 41,765 76. 8 68. 6 68. 5 Hosiery: Women's October 1964 Men's do Children's do Textile dyeing and finishing Winter 1965-66 Total of above 14,872 7,479 3,721 25,761 29,453 13,774 13,643 29,013 44,325 21,223 17,364 54,774 66.4 64.9 78.6 53.0 147, 427 351, 884 499,821 70. 5 TABLE 1.-Distributiom of employment in tecvtile mill products in~dnstry by size of labor area, 15966 Area Employment Area Employment United States 961,500 Major labor areas-Continued - New York: Areas outside of major labor Albany-Schenectady- areas1 635,500 Troy 4,100 Major labor areas' 326,000 New York City 41, 000 Utica-Rome 1.300 Arkansas: Little Rock- North Carolina: North Little Rock 1, 600 Asheville 3, 500 California: Charlotte 8,300 Los Angeles - Long Greensboro-High Beach 5, 800 Point 17, 700 San Francisco 800 Winston-Salem 10,400 Connecticut: Hartford_ 3, 200 Durham 3,200 Delaware: Wilinington~ 1, 400 Ohio: Cleveland 5,600 Georgia: Oregon: Portland 2,300 Atlanta 7, 100 Pennsylvania: Augusta 10, 100 Allentown-Beth- Columbus 10, 100 Easton 6,600 Macon 2 700 Lancaster 2,100 Illinois: Chicago 3, Ø~J(J Philadelphia 28, 100 Maryland: Baltimore__._ 1 800 Reading 9,700 Scranton 2, 700 Massachusetts: Wilkes-Barre- Beston 6,200 Hazleton 3 400 Fall River 3, 300 York 3 800 Lawrence-Haverhill - 3, 300 Altoona 1' 700 Lowell 4, 100 South Carolina- New Bedford 3, 200 Greenville 2A 200 Springfield-Chicopee- Pawtucket .~______ 22' 600 Holyoke 3, 300 South Carolina: Greenville 24,200 Worcester 2, 600 Tennessee: New Hampshire: Man- Chattanooga 11,000 chester 3, 000 Knoxville 4, 900 New Jersey: Nashville 2,900 Jersey City 5, 200 Texas: Newark 3,700 Dallas 800 Paterson-Clifton- Pas- Houston 800 sale 13, 500 San Antonio 700 Perth Amboy - New Wisconsin: Milwaukee 1,440 Bruswick 1,400 Puerto Rico: San Juan_._ 800 1 Major Labor Areas are descignated by the Bureau of Emp1oyiment Security for monthly classificaüon according to the adequacy of their local labor supply. Soiirce: United States Department of Labor. TABLE2.-DISTRIBUTION OFTEXTILE PRODUCTION WORKERS BYTYPEOFAREA AND INDUSTRY DIVISION, 1964-66 I Refers to standard metropolitan statistical areas as defined by the U.S. Bureau of the Budget Source: Bureau of Labor Statistics, U.S. Department of Labor. PAGENO="0333" 00 ~ ~ 0 .~ I _~E E ~ E E 0000 C)(000~ CC)0 ~ r~ ~c'~o~-< I- = S 0 C) = 0 CC) CI) 0 C) (Li -J 00 I- T ~-~0 CC) ~ CON. (0 * 0 S >- 0 (0 a. C) * C) C 0) .E ~ 0) <~ *~ ~ C- .0 ~C) ~ 5= 0) ~ ~ o >~u~ 0< 0) 0~ 0 0~J C)Q. ~ E >-~ ~ E ~ o oC) z~ 0)*9 W~ -J 5~ = >.I- o OC) 0) a0 o~4 ~o `~ *E 0) u.- C ~C) ~ ~.0 0 o ~0 E ~ 2 ~ .~ ~ C) C) E 0 C) Cd, E -E C) E 0 C) 00 CC) -J~ E E S .0. *00~ *~~< ~ ~o~= ~ ~ ° .~ ~ 0 E = >C C. CC) Cl) PAGENO="0334" 2640 TABLE 5.-EDUCATIONAL LEVELS OF TEXTILE MILLWORKERS AND PERSONS EMPLOYED IN ALL MAN- UFACTURING INDUSTRIES AND IN THE CIVILIAN LABOR FORCE BY OCCUPATIONAL GROUP, 1960 Median Occupational group Textile mill products industry years of school completed Ratio of textiles to all manufacturing or civilian labor force (percent) All manufacturing industries Civilian labor force Craftsmen, foremen and kindred workers: Male 18. 1 10. 5 77 Operatives and kindred workers: Male 9.6 Dyers 8.7 91 Knitters, loopers, and toppers 9. 0 94 Spinners 8. 1 84 Weavers 8.4 88 Female 9.4 Knitters, loopers, and toppers 9. 2 98 Spinners 7.7 82 Weavers 8.6 91 Operatives and kindred workers: 2 Male 8.2 9.4 87 Female 8.8 9.3 95 Laborers NEC:2 Male 8.0 8.7 92 Female 8.4 9.3 97 1 Loom fixers. 2 Not elsewhere classified. Source: U.S. Census of Population, 1960, vol. PC(2) 7A, Occupational Characteristics, table 9. TABLE 6.-PERCENTAGE DISTRIBUTION OF EMPLOYED PERSONS BY OCCUPATION, MANUFACTURIN6 AND TEXTILE MILL PRODUCTS INDUSTRY, 1960 Occupation Manufacturing Textilemill products Professional, technical, and kindred workers Managers, officials, and proprietors Clerical and kindred workers 7. 6 5. 1 12. 0 1. 8 2. 8 7. 6 Salesworkers 3. 8 1. 2 Craftsmen, foremen,and kindred workers Operatives and kindred workers Service workers 19. 6 42. 6 1. 6 11. 9 66. 6 1. 8 Laborers 5.9 4.0 Occupation not reported Total 1. 8 2. 2 100.0 100.0 Source: Computed from U.S. Census of Population, 1960; vol. I,"Characteristics of the Population," tab le 209. PAGENO="0335" 2641 TABLE 7.-REGIONAL DISTRIBUTION OF TEXTILE EMPLOYMENT, MARCH 1966 New England Maine New Hampshire Vermont Massachusetts Rhode Island Connecticut New York New Jersey Pennsylvania Delaware Maryland Virginia West Virginia North Carolina South Carolina Georgia Florida Kentucky Tennessee Alabama Mississippi Arkansas Louisiana Oklahoma Texas Other 96,300 10.4 180,878 7.6 1,189,090 49.8 1,639 16,605 2,773 129,220 40,072 191,180 1,537 19,356 246,000 1316,542 141, 199 1190,469 104,988 1168,573 1,932 124,423 2,793 128,364 30,832 117,201 38, 875 180,837 6,464 39,180 3,360 16,278 306 16,901 595 6,913 6,971 57,048 145,181 4.9 1285,917 12.0 NEW YORK, N.Y., June 14, 1968. Hon. WILBUR D. MILLS, Chairman, Committee on Wars and Means, House of Representatives, Washington, D.C. DEAR MR. MILLS: This statement is filed with your committee in lieu of per- sonal appearance by the International Ladies' Garment Workers' Union, AFL- ClO, and the Amalgamated Clothing Workers of America, AFL-CIO (hereafter referred to respectively as ILGWU and ACWA) in connection with the hearings on the balance of trade between the United States and foreign nations. Textile mill Employment products Percent Textile, apparel & fibers man-made Employment Percent United States 927, 432 Northeast 251,915 100.0 2,389,761 100.0 27.2 914,754 38.3 Mid-Atlantic 155:675 12,140 15,967 10,633 12,723 705 2,286 37,746 194,648 21,848 `25,875 13,228 129,379 South 630, 336 68. 0 16.8 733,876 30.7 58,772 1375,453 27,933 106,795 68,910 1251,628 1 Partially estimated. Source: Bureau of the Census, U.S. Department of Commerce, except where otherwise indicated. TABLE 8.-RATIOS OF NONWHITE EMPLOYEES TO TOTAL EMPLOYMENT, TEXTILE MILL PRODUCTS INDUSTRY 1962-66 [In percentj 1962 1964 1966 Males 6.4 6.8 10.0 Females 2.5 3.6 5.3 Total 4.6 5.3 8.0 Source: Bureau of Labor Statistics, U.S. Department of Labor. PAGENO="0336" 2642 The apparel industry plays a unique role in the American economy as a major source of employment of women workers in widely scattered localities through- out the nation. At the same time, it is an indigenous industry that supplies essential commodities to the American public. It is the industry that has demon- strated to the world that ready-to-wear garments can be produced at low com- petitive prices and, at the same time, meet the highest standards of fashion. It is highly competitive, with narrow margins of profit on its sales dollar. De- spite the presence of some larger garment companies, the industry continues to be a mainstay for the small enterpreneur. It is one of the very few industries in the United States in which the intensity of internal competition is sufficiently strong to eliminate the need for imports as a discipline to assure best values to the consumer. As a result of the peculiar characteristics of the apparel industry, it is urgent, in the national interest, that it be safeguarded against the impact of cut-throat foreign competition, much. of which originates in the lowest wage areas of the world, and against the destructive consequences that would follow as some irresponsible domestic firms yield to the temptation to produce garments abroad for export to the United States. A detailed discussion of the economics of the apparel industry and the many problems it faces in the domestic market, in- cluding those caused by the recent avalanche of imports, are presented in Exhibit 1: "Domestic Apparel Industry: Economic Background and the Impact of Im- ports", attached herewith as an integral part of our presentation. In view of the high degree of import penetration, which approximated 16 percent of domestic production in 1967 (and which continues to grow even higher) as compared with only four percent a decade earlier, prompt action by the United States is essential to prevent market disruption and insure orderly trade. Unless the executive branch of our government can negotiate satisfactory international arrange- ments-with or without the assistance of a congressional mandate-to regulate all trade in apparel and textile products, irrespective of the fiber from which they are made, there is no alternative to legislation by the Congress to safeguard the industry and the jobs of workers employed by it. It is most unfortunate that the Tariff Commission, in its two volume report on apparel and textile industries prepared at the request of the President and the Chairman of the Ways and Means Committee of the House of Representa- tives, missed the opportunity to explore in depth the special problems and char- acter of the apparel industry. It is the considered judgement of the ILGWTU and the ACWA that the Commission's report failed to present a comprehensive unbiased picture of existing conditions and prospective developments in the apparel industry, as can be seen from Exhibit 2: "A Brief Appraisal of the Tariff Commission Report on Textiles and Apparel", attached herewith as an integral part of our presentation. The concern of the ILGWU and ACWA and their respective membership is expressed in the resolutions introduced and adopted at their recent conventions and attached herewith as an integral part of our presentation as Exhibits 3 and 4. The two organizations urge your committee to take account of the special nature of problems facing the apparel and textile industries in the United States and to act promptly to safeguard them from future erosion. A vast number of manufacturing jobs are at stake, jobs that are vital to the economy of the United States if it is to assure a broad spectrum of employment opportunities essential for the health of our complex industrial society. Unless there is de- cisive government action, the tendency of domestic firms to transfer their oper- ations abroad will grow, adding to the already increasing stream of imports. The trend is irreversible. It can only be checked by government action to safe- guard the domestic apparel and textile industries against unfair competition from substandard labor conditions in foreign countries. MILTON FRIED, Director of Research, Amalgamated Clothing Workers of America, AFL-CIO. LAZARE TEPER, Director of Research, International Ladies' Gai4ment Workers' Union, AFL-CIO. PAGENO="0337" EXHiBIT 1 0 UN N P D 0 MILTON FRIED Director of Research, Amalgamated Clothing Workers of America, AFL-CIO LAZARE lEPER Director of Research, International Ladies' Garment Workers' `Union,. AFL-CIO (2643) DOMESTI C APPAR E L ECONOM I C BACKG N DUS T RY R THE IMPACT AN 0 O~ F R TS 95-159 0 - 68 - pt.6 -22 PAGENO="0338" 2644 This analysis of the apparel (knit and woven) industry, including a review of the present and prospective impact of imports on the domestic industry and its workers, is offered on behalf of the Amalgamated Clothing Workers of America (referred to hereafter as ACWA) and the International Ladies' Garment Workers' Union (referred to hereafter as 1/ ILGWU). The two labor organizations represent over 850,000 workers engage~I in the production of men's, boys', women's, misses', girls', children's and infants' apparel and apparel accessories made by cutting and sewing woven and knit textile fabrics, by knitting from yarn, or by cutting, sewing, cementing or fusing related materials such as rubberized fabrics, plastics and leather. These members work in every state of the Union in which apparel (knit and woven) is produced in significant amounts, as well as in the Commonwealth of Puerto Rico and the Virgin Islands. The apparel (knit and woven) industry is an indigenous industry. Mass production of ready-to-wear garments was developed in this country. 1/The industry referred to in this analysis as the apparel (knit and woven) industry is made up of establishments and firms producing garments end accessories for men, boys, women, misses, girls, children and infants by cutting and sewing woven and knit textile fabrics, by knitting from yarn, or by cutting, sewing, cementing or fusing related materials such as rubberized fabrics, plastics and leather. It does not include such items as hosiery, hats, caps, furs, handbags and similar items. The 1k-digit S.I.C. classifications or portions thereof that correspond to this definition are listed in Annex A. The available statistical information, it should be noted, does not al~iays strictly conform to the definition of industry given above, but the definition conforms closely to the industry with which the ACWA and the ILGWU normally deal and in which their members work. Yet in view of the substantial similarity in the characteristics of the different branches of the industry, the minor differences in coverage and definition do not affect the validity of the analysis as applied to the industry defined above. PAGENO="0339" * 2645 From the latter part of the 19th century, the industry grew steadily over the years, supplying the apparel needs of the American people, both civilian and military. By developing the science of pattern making which made mass production possible, by helping to standardize sizing, by offering a large variety of designs and styles to satisfy a broad spectrum of consumer taste and by promoting the acceptance of ready-to-wear garments as distinguished from made-to-order clothing, the industry built up the existing mass market for apparel. Moreover, it demonstrated to the world that ready-to-wear apparel could be produced economically and, at the same time, meet the highest requirements of fashion. The industry is currently the world's largest producer of ready-to-wear garments. The bulk of its production is sold to domestic consumers. In 1967, the industry's dollar volume of sales approximated $14 billion at wholesale. From the March 1968 data compiled by the Bureau of Labor Statistics, employment in the apparel (knit and woven) industry can be estimated at 1,400,000 production and non-production employees. For the most recent picture of the distribution of theindustry's employment in the various areas, the only available statistics are data complied in County Business Patterns by the Bureau of the Census from Social Security records. In mid-March 1966, as can be seen from Annex B, the industry Was made up of some 29,000 establishments employing approximately 1,600,000 persons in 2/ production and non-production jobs. Its plants were located in every 2/Variations in data applicable to the apparel (knit and w~ven) industry arise occasionally because of the unavailability of statistics which conform precisely to the definition of this industry. To approximate the correct figure, data were either combined for SIC 23 and SIC 225 or else data for SIC 239 were subtracted from the total for SIC 23 and SIC 225. PAGENO="0340" 2646 State, Puerto Rico and the Virgin Islands, with only a handful of areas having employment of under 1,000. Typically, however, the plants of the industry were concentrated either in a relatively small. number of urban centers in which the industry provided a major source of jobs for the type of workers it employed, or else. they were located in the smaller scattered communities in which not infrequently the garment manufacturing plant provided the only or key source of jobs. Over 660,000 apparel (knit and woven) workers, or 40 percent.of the number of them working throughout the nation, were employed in 42 Standard Metropolitan Statistical Areas in which they represented at least,ten percent of manufacturing employment. While the relative importance of apparel (knit and woven) employment varied in these standard Metropolitan Statistical Areas up to 54 percent, for the 42 Areas as a whole apparel (knit and woven) workers accounted for one-fifth of manufacturing jobs. The remaining 970,000 workers in the industry were erhployed elsewhere throughout the country, to a considerable degree in small communities (for details, see Annex C). There are three types of firms in the apparel (knit and woven) industry. Some firms are manufacturers. They purchase raw materials, employ production workers in their own plants to produce apparel and otherwise perform all the manufacturing functions. Others are jobbers or converters (the term "jobber" as used in the apparel industry is entirely different from the term used in wholesaling where the word "jobber" is used to describe firms or persons assembling job lots of merchandise from different sources solely for the purpose of resale). PAGENO="0341" 2647 Jobbers or converters in the apparel (knit and woven) industry perform all the er~trepren.eurialfunctions of a manufacturing company. They buy raw materials, develop designs for the products that are to be mánu- factured, may do some processing of the raw materials in preparation for the manufacture of the final product, and sell the finished product to wholesalers or retailers. The actual making of the garments or processing of raw materials such as yarn, in whole or in part, is done for them however by firms known as contractors. These contractors provide the facilities and personnel needed to produce garments to the specification of the jobbers from materials owned by the latter. Contractors may also receive work from manufacturers in the industry seeking to supplement their own capacity to meet temporary or permanent demands on their firms. The contracting system, at times referred to as the "outside system of productioni, is a basic characteristic of the garment industry not only in the United States but elsewhere. It makes for great flexibility in increasing and decreasing the supply of garments. It permits firms in the industry to expand output easily by spreading production over a large number of relatively small producing units. On the other hand, when these firms have no need for the additional production assigned to contractors, the costs of carrying the resulting idle capital equipment are, in effect, transferred to the contractors. The operation of the contracting system as an essential component of the nation's apparel-producing machinery has been the source of many of the evils which have historically beset and continue to plague the PAGENO="0342" 2648 garment industry and its workers. It has been a mechanism for shifting production from one area to another in quest of competitive advantage, particularly labor cost advantage, and has thus been a factor in the geographic instability of the industry. It has had the effect of lowering the capital investment required for going into the apparel business by making it unnecessary for entrepreneurs entering it to own their own plant and equipment and hire their own workers. This has facilitated the flow into the industry of small investors, contributing to the cut- throat competition and instability traditionally associated with the industry. The contracting system, moreover, has stimulated strong downward pressures on wages and working conditions by permitting jobbers and manu- facturers to play off against each other the contractors, who typically are more numerous and economically weak and ready to underbid each other to get work. Then, in order to produce the garments at the reduced bid prices, the contractors, in turn, shift the pressure to their workers by reducing wages and cutting labor standards. "When work is scarce, as it usually is, except for a few weeks in the season," stated a report of the Governor's Advisory Commission investigating the women's coat and suit industry of New York, "the workers are told that in order to meet the exigencies of price competition and to bring some work into the shop they must enter into secret arrangements contrary to the minimum labor standards which have been agreed upon." The average establishment in the industry is small. This can be readily seen from Annex B which shows that in mid-March 1966, the average PAGENO="0343" 2649 establishment had only 57 production and non-production employees (including those employed in executive, administrative or professional capacity), and this at the peak of~the spring season when employment is normally higher. While the average size of establishments varies between the several areas, in all cases the average is below the lowest level used by the Small Business Administration in defining small business. Although these statistics provide information on an establishment rather than on a company basis, they are significant because the number of establishments operated by the average company in the apparel (knit and woven) industry is only fractionally greater than one. This can be seen from Annex D, which provides information on the average number of establish- ments per company based on the latest Census of Manufactures. It showed that the average number of establishments owned by an average company in the industry in 1963 ranged from a low of one to a high of 1.53, depend- ing on the branch of the industry. Were more recent `figures available, they would not be materially different. As might be expected, the smaller firms predominate numerically in the industry. This is apparent from Annex E which provides Census data on the distribution of companies in the different branches of the industry classified by the number of persons on their payrolls. Depending on the branch of industry, the number of companies with less than 50 employees ranged from a low of 29.8 percent to a high of 97.9 percent, while the number of companies with less than 100 employees ranged from a low of Lf8.l percent to a high of 99.1 percent. A somewhat different perspective on the size of the individual firms in the apparel (knit and woven) industry is provided by data compiled by PAGENO="0344" 2650 the National Credit Office, which periodically collects information on the number of jobbers and manufacturers in the industry clnssified by their dollar volume. The latest available tabulation is for 1963. It shows that in that year 62.1 percent of companies in the apparel (knit and woven) industry did an annual volume under $1,000,000 while companies with business ranging from $1,000,000 to $2,500,000 represented 22.6 percent of those in the. industry. Only 9.0 percent of the companies were in the $2,500,000 to $5,000,000 range and 6.14 percent did a volume in excess of $5,000,000. All of these figures attest to the predominantly small business character of the industry. As a result of the small size of the typical undertaking in the industry and the large size of the nationwide market for which it is producing, establishments in the apparel (knit and woven) industry of the United States tend to be highly specialized. The typical establishment either produces a single generic product, or else a small number of closely related ones. Thus, an establishment which manufactures ladies' coats is not likely to produce blouses or skirts, while another establishment engaged in the production of men's suits does not make men's shirts or ties. This high degree of specialization characteristic of the industry in the United States is not paralleled abroad, where it is much more usual for establish- ments to produce a wide range of garments, switching from one to another. The extent of specialization in the United States is indicated by data collected in the course of the 1963 Census of Manufactures which are summarized in Annex F. Depending on the branch of the industry, primary products represent 79 to 98 percent of the total value of shipments or production in the particular branch of the industry. PAGENO="0345" 2651 Specialization is not limited to individual establishments or even companies. Similar specialization exists at the retail levels, where buyers tend to specialize in the purchase and handling of a limited line of products. ~n many cases, specialization is not even as broad as a generic product, but is narrowed further by United States buyers and producers of apparel (knit and woven) who specialize in handling specific ranges of quality or price ranges of a given product. This makes it difficult to switch production, whether it be to the same item in a price range distinctly different from the ones they have been producing, or to entirely different items. The switch involves not only formidable produc- tion obstacles, but the need to develop a new network of personal retail relationships because the people with whom they are accustomed to deal 3/ are not the ones in the market for the other types of goods. The small size of the average firm in the apparel (knit and woven) industry is related to the industry's relatively simple technology. Most of the machines in actual use are fundamentally mechanized tools, the handling of which can be mastered within a relatively short period of time. The basic piece of equipment is the sewing machine, the design of which has remained substantially unchanged throughout this century. At the same time, the addition of auxiliary equipment and increased subdivision of labor has simplified operations, in garment production. The same is true for most other equipment utilized 3/Even the larger apparel companies~, which produce and market a wider range of products, tend to have their individual establishments specialize in the production of a single product or a small number of very closely related products, and tend to maintain separate sales organizations to handle the distribution of different products. PAGENO="0346" 2652 in the industry. Most of it is worker-paced rather than automatic, and does not require substantial capital investment. This makes it possible to set up 9arment production with relatively little capital resources, a phenomenon that is furtherfacilitated by the existence of specialized contractors who provide service on such work as may require pleating, curing permanent, press garments, or other specialized tasks. The fact that apparel manufacturing equipment can frequently be purchased on an installment plan or rented, and, in the case of contractors, the fact that they have no need to invest in *inventory *since they obtain the bulk of their raw material from jobbers or manufacturers, helps to keep low the amount of capital required to enter the apparel (knit and woven) industry. Dun & Bradstreet shows, for example, that net worth- required by jobbers and manufacturers in the industry ranges, on the average, from 9.6~ to 27.6~ per each dollar of sales. A similar study made by the National Association of Bank Loan Officers and Credit Men showed that in the case of companies with assets under $250,000 average net worth per dollar of sales ranged from l2.3~ to 2l.3-ç~ depending on the branch of the industry; from lO.9ç~ to 23.8~ in the case of companies with as~ets of $250,000 to $1,000,000; and from l7.9ç~ to 29.1-~ç~ in the case of the larger companies (for details see Annex G). A small firm in the apparel (knit and woven) indus.try has a reasonable chance of success, irrespective of the size of its capital assets, in the competition with larger companies. Much depends on the ingenuity of its principals in meeting market demand, in anticipating fashion developments and in providing the ultimate consuriiers of their PAGENO="0347" 2653 products with good value. The road is, of course, risky. There are many firms in the industry competing for the same business. Even in the absence of low wage competition from abroad, many companies succumb in the process. We estimate business turnover in the industry today (including discontinuances and transfers) at approximately 18 percent per year. The comparatively simple.technology, the modest capital and skill requirements and the ability of smaller firms to compete successfully against larger ones serves to make relatively easy the entry of new firms into the industry and, at the same time, to stimulate the competitive environment in which the individual firms in the industry function. One of the consequences has been the tendency of the industry to suffer from chronic overcapacity. At the same time, these characteristics have permitted the industry to increase its output very rapidly, virtually overnight, either in response to changes in demand, or as a result of the constant search for competitive advantage, and without attention or regard to the resulting disruption of markets. This has been a constant source of instability in the domestic industry, which has been intensified in recent years by the ease with which large quantities of imports are turned on and off. The characteristics previously mentioned simple technology, modest capital and skill requirements, ease of entry, small firms producing for a potentially large market have made the apparel (knit. and woven) industry one of the most competitive in the PAGENO="0348" 2654 nation. The large number of small, privately owned or controlled firms, each seeking to outdo the other, intensifies rivalry for business. Competition is not confined to producers manufacturing the same type of products, but extends to firms making other types of garments which can be substituted. Companies making overcoat and topcoats compete with those making raincoats, car coats and other types of sportswear. Companies making dresses face competition from those making skirts, blouses, sweaters, suits, slacks and other sportswear items. The effects of the intense competition in the industry are manifold. It contributes to high business turnover and general instability. It spurs individual firms to utilize their know-how to attain the highest productivity possible in order to survive in competition with their domestic counterparts. It also provides internal discipline that keeps prices in line with costs and prevents unwarranted price increases. This is manifest in the long-term behavior of price indices for apparel as compared to overall price movements. Thus, the Bureau of Labor Statistics shows that wholesale prices of apparel in 1967 were only 2,6 percent higher than in 1951 as compared with a 10.3 percent increase in wholesale prices of all items (see Annex H). During the same period, prices of apparel at retail, where price discipline is not as effectively exercised, rose 8.7 percent as compared with a 28.5 percent increase in the Consumer Price Index (see Annex I). PAGENO="0349" 2655 As a result of the industry's competitiveness, its profit margins on the sales dollar are the lowest in all manufacturing. An examination of quarterly data compiled by the Federal Trade Commission and the Securities and Exchange Commission, shows that profits in the apparel industry were 2.9 percent of the sales dollar after taxes in the last quarter of 1967 as compared with 5.5 percent for all nondurable goods industries and 5.0 percent for durable goods industries (see Annex J). Moreover, data gathered by the National Association of Bank Loan Officers and Credit Mçn for the purpose of evaluating the `health" of applicants for credit, show that profit margins are not significantly different in the different branches of the industry or as between companies of different size (see Annex K). One of the most significant factors in the competition among domestic firms in the industry is its cost structure in which labor cost represents a very high proportion of the sales dollar. Wages and salaries, depending on the branch of the industry, range from an average of 22.6 percent to 38.0 percent of the value of the ki product (see Annex L). The particular ratios .represent labor costs incurred directly by manufacturers and jobbers (or converters) as well as the labor expenditures incurred by their contractor~s. In the case of contracting establishments, which are basically purveyors of labor service, labor costs are substantially higher, ranging from `4/Wage and salary costs in relation to value added in the different branches of the apparel (knit and woven) industry range from `49.6 to `6k.2 percent. PAGENO="0350" 2656 60 to8O percent of their total receipts. In view of this cost structure and the competitive nature of the industry, the differentials between domestic labor costs and labor costs in the countries which export apparel to the United States take on a critical significance. The problem is magnified by the fact that wages and salaries are the major item of cost subject to management control. While material costs (including the cost of parts, containers, fuel, electricity and other supplies) loom larger than the outlays on wages and salaries, the prices of material are not subject to control by the apparel manufacturer and tend to balance out to no special advantage of any particular firm (see Annex L). Because of the cost structure of the industry, a firm which obtains lower wage costs obtains a substantial advantage over competitors. In view of the highly competitive nature of the industry, this advantage, however, is not typically retained as profits. Often it is utilized to spur more intensive competition, through price concessions, through increasing the quantity of labor or material input of the garment, or through increased expenditures for advertising and product promotion. The result is continuous pressure on other firms in the industry to seek lower labor costs. . The constant pressure to cut labor costs is the economic basis for the sweatshops which once characterized the production of apparel (knit and woven) in this country and for the many sweatshops that continue to operate abroad in this industry. In response to d PAGENO="0351" 2657 publicopinion, and as a by-product of the development of strong unions in the apparel trades, the sweatshop was finally eliminated in the United States. It is now a matter of public policy, recognized in the Fair Labor Standards Act as well as other legislation, that labor conditions detrimental to the~ maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers are not acceptable in this country. Nevertheless, powerful pressures to compete unfairly in terms of labor cost continue to plague the industry. It is the economic basis for the industry's continued high degree of geographic instability, with its wasteful transfer of production and employment from one area at the cost of idle facilities and unemployment in~another. Today there is a growing tendency for some entrepreneurs either to establish their own plants abroad or foster foreign operations, particularly in the low-wage areas of the world, for the production of apparel for export to the United States. The ease with which inexperienced workers in the apparel (knit and woven) industry can be trained on the job within a short time permits new firms to open up in areas where there are no experienced workers and permits existing firms to expand output by hiring persons with no prior training or industrial know-how. This is due in large measure to the fact that most of the tasks performed by workers in the industry do not fall into the skilled category. With the development of technology, such skills as may once have been required in the industry have been diluted by new production techniques, by minute subdivision of labor, and by the resulting specialization which calls PAGENO="0352" 2658 for the performance of highly simplified tasks. in the case of sewing machine operators, for example, the work is subdivided to such a degree that most operators may do no more than sew single, short-run seams on garment parts. Once the elementary instruction In the handling of a sewing machine is given to an inexperienced worker --- and it requires very little time --- the rest of the learning process consists of a progressive and relatively rapid acquisition of maximum operating speed. It is not surprising, there- fore, that the performance of most of the tasks in the industry do not call for high educational attainment. Data derived from the 1960 Census of Population for the apparel (knit and woven) industry's labor force demonstrate that one out of every four persons failed to complete primary schooling and that yirtually three out of every four persons did not complete high school education..~" A few other figures bearing on the profile of the industry's personnel can be cited. Approximately ko percent of them are k5 years 6/ 2, of age or over. Around 30 percent of them live in rural communities. About eight out of ten persons on the payrolls of the industry are fema1e.-~" About one-third of them are either single, widowed, divorced or separated.~~" Most of the women in the industry are not casual workers. 5/the above information is for labor force engaged in work on apparel and - other fabricated textile products and knitting mills (U.S. Bureau of the Census~ Census of Population 1960, Industrial Characteristics, PC(2)7F, Table 21). 6/Data are for the employed wage and salary earners (ibid., Table 5). 7/Data are for the employed labor force (ibid., Table 1). 8/U.S. Bureau of Labor Statistics, Employment and Earnings Statistics for the United States, 1909-1967, Bulletin No. 1312-5 (data for SIC 23 and 225). i/Data are for employed women (U.S. Bureau of th& Census, Census of Population 1960, industrial Characteristics, PC(2)7F, Table 20). PAGENO="0353" 2659 Their work is essential to support themselves and their dependents. This has been demonstrated by a study conducted by the Women's Bureau of a sample of the ILGWU membership. For every 100 women who reported, 6Lf supported or partly supported dependents (including children, husbands, parents or other relatives) in addition to supporting themselves. More married women than single used all of their earningsfor daily living, irrespective of whether the 10/ particular woman was or was not the sole support of the family. Nearly one-third of the women had at least one other person to support, one-fifth had two and one-eighth of them had three or more persons to 11/ support. These statistics are indicative of the type of workers that readily find jobs in this industry~. They have very few alternative opportunities for employment. For the most part, they are women whose family ties prevent geographic mob~ility. Many of them share characteristics which recent experience indicates mark persons in the ranks of the hard-core unemployed. It is particularly significant, therefore, that the apparel (knit and woven) industry provides one out of every four jobs in the manufacturing sector of the economy for women workers and 12/ is the largest single employer for women seeking factory work. The industry thus performs a dual function in the economy. On the one hand, it provides the American people with a basic necessity. On the 10/U. S. Women's Bureau, Women Workers and Their Dependents (Bulletin 239, pp. 52f). 11/Ibid., p. 17. 12/Data for 1966 in U. S. Bureau of Labor Statistics, Employment and and Earnings and Monthly Report on the Labor Force, March l96~, pp. 73ff. 95-159 0 - 68 - pt. 6 - 23 PAGENO="0354" 2660 other hand, it is the source of jobs for a huge number of persons throughout the nation who would otherwise remain unemployed or be out of the labor force. The ease with which persons without prior skill or experience can be employed and trained facilitates the development of the chronic overcapacity characteristic of the industry. Underemployment is therefore quite general, even in periods of relative prosperity. As a result, the unemployment rate in the industry is typically much higher than for all workers in the economy or those who are employed in manufacturing. The unemployment rate for garment workers does, of course, fluctuate with changes in general economic conditions as does the rate for workers in all manufacturing. During the period under Presidents Kennedy and Johnson, when the general economy grew at a much faster pace than in the immediately preceding years, this improvement was reflected in the unemployment rate for the apparel industry as well as other industries. However, as can be seen from data on the rate of unemployment of experienced workers or workers covered by unemployment compensation (see Annexes M and N), the ratio of apparel unemployment to that of manufacturing has been rising in recent years. This suggests the possibility that the relative severity of unemployment in apparel when matched against unemployment in manufacturing as a whole is rising. The increase in apparel imports which has been taking place in recent years seems the most plausible explanation. PAGENO="0355" 2661 Under the stress of domestic competition, aggravated by the rise in imports, wages of apparel workers in this country have fallen behind the general wage level in this country. In l91f7, the difference be- tween the wages of apparel workers and those for all manufacturing was only six cents an hour. Since then It has steadily widened. The differential rose in 1956 to 51f cents an hour. In 1967 it rose further to 80 cents an hour (see Annex 0). The 1967 average wage in apparel was $2.03 as compared with $2.83 for all manufacturing. Workers in *the apparel (knit and woven) indus~try are among the lowest paid in the 13/ nat ion. Admittedly, a certain amount was added to the wages of apparel (knit and woven) workers since the end of the Second World War in the form of negotiated, voluntary and legally required fringe benefits. A periodic study made by the Chamber of Commerce of the United States showed that total fringe benefit payroll additions in the textile and apparel industries in 1965 amounted to 18.9 percent of payroll, or 38.7 cents per hour (see Annex F'). The corresponding figure for all manu- facturing was 23.6 percent or 67.6~ cents per hour. 13/ Examination of the most recent U.S. Bureau of Labor Statistics, Employment and Earnings and Monthly Report on the Labor Force, April 1968, pp. 6'fff., reveals that wages lower than in apparel are found only in a few industries, including retail trade and services. Average annual earnings for all persons engaged full time in the apparel and other finished products industry (in- cluding proprietors, executives, administrative, professional, technical and sales personnel) are the lowest in all manufacturing industry and only exceed earnings of persons in farming, hotels and other lodging places, medical and other health services, and private households (Survey of Current Business, July 1967, p. 35). PAGENO="0356" 2662 The foregoing profile of the apparel (knit and woven) industry showed its special characteristics --- small firms competing vigorously with each other, ease of entry into business and high rate of business mortality, industrial over-capacity, excess competition operating as a discipline against price increases, low profitability, easy-to-train labor force, under-employment, relatively low rates of worker compensation, a work force composed largely of women for whom little or no alternative employment opportunities exist in the economy, and yet, an industry that;does provide employment for some 1,1+00,000 persons,the largest single employer of women workers in manufacturing and the major customer of the domestic textile industry. In the years following the Second World War, until very recently, the industry's total employment remained relativ~ly stagnant, fluctuating up and down along a relatively level axis in the wake of changes in the general economic conditions. Employment in 1963, when it approximated 1,31+5,800 (see Annex Q), was not much different from 1953 when it approximated l,3141+,lOO. In the last 11 years, however, largely after the inauguaration of President Kennedy when the national economy began to grow at a more vigorous pace, the industry added about 130,000 persons to its payrolls. Patterns of employment have not, of course, been uniform in all branches of the industry. Some branches gained employment and others lost, partly as a result of shifts in demand due to style and other PAGENO="0357" 2663 competitive influences, and partly as a result of the growing volume of imports. The wholesale volume of domestic production of apparel (knit and woven) has grown at a fa~ster pace. The dollar volume advanced from $10.1 billion in 1956 to $13.9 billion in 1967 in actual prices, and from $10.1 billion to $13.0 billion in constant prices (see Annex R). Despite deflation of the dollar volume of shipments by the wholesale price index, the dollar volume figures in constant prices tend to overstate the growth in production because of the tendency of the American public, fostered by the rise in personal incomes, to switch to apparel of highe.r quality, and hence higher price, than they bought previously. This tendency on the part of the consumers to upgrade their purchases. is widely recognized. Yet data are lacking to enable us to 1k! eliminate fully the effect of such uptrading from the statistical 1k/An indication of uptrading by consumers is indicated by the data collected by the U.S. Bureau of the Census on production by price lines for a limited number of garments for women, misses and juniors. In 1956, for example, dresses wholesaling by the unit for less than $6 a piece, constituted k6.8 percent of production as compared with 39.9 percent in 1965. The corresponding figures for untrimmed coats showed a decline from k5.3 percent to kl.8 percent for untrimmed coats wholesaling under $16 per unit; a drop from 61.1 percent to 59.0 percent in the case of suits wholesaling under $16 per unit; a decline from k9.k percent to k7.l percent in skirts wholesaling under $39 per dozen; and a drop from 57.3 percent to 50.8 percent in the case of blouses wholesaling under $23 per dozen (U.S. Bureau of the Census, Apparel Survey, 1957 and 1965). Parenthetically it should be noted that the Federal Reserve Board index of industrial production. of apparel and its several subdivisions suffers from the same weakness as the data referred to above. PAGENO="0358" 2664 series measuring changes in the real volume of production, such as the deflated wholesale values of apparel (knit and woven) production (presented in Annex R) which records an advance of 29.0 percent, or an average annual rate of growth of 2.3 percent between 1956 and 1967. Substantially all of the output of domestic industry is for domestic consumption. Thus, in 1967, when exports of apparel (ktiit and woven) amounted to $ll1L7 million (Annex s) exports 15/ represented only 0.8 percent of the domestic output. Prior to 1950, imports of apparel (knit and woven) to the United States, except for a few items, were insignificant. Thereafter, however, first at a relatively slow tempo, and then at an accelerated though variable pace, imports of apparel (knit and woven) began to exhibit a remarkable rate of growth. This, in turn, led to numerous dislocations and market disruption in the industry already beset by excessive competition and instability. Several indicators can be used to measure the degree to which apparel (knit and woven) imports have grown. The first of these are the data provided in the foreign trade reports of the Bureau of the Census which contain values of imports for consumption or general imports in market values in foreign 15/ Beginning with 1965, shipments of U. S. made clothing and footwear donated for relief and charity began to be combined with other exports classified under Standard Industrial Trade Classification (S.I.T.C.) group 8~l. Previously, data for such clothing was not combined with other clothing exports. As a result the official statistics show an abnormal rise in exports between 1964 and 1965 as a result of the anomaly created by the change in the publication rules. PAGENO="0359" 2665 countries (exclusive of custom duties, freight and insurance). A tabulation of these data shows that apparel (knit and woven) imports in foreign valuation increased between 1956 and 1967 close to five-fold (see Annex T). The value of imports expressed in foreign valuation in the official statistics of the United States does, however, understate the real impact of apparel (knit and woven) imports on the United States market, in the first instance, the data do not include freight and insurance charges required to bring the merchandise from the point of exportation in the foreign country to the point of entry in the United States. Nor do they include additional costs, such as buying commissions, custom duties, and importer 16/ or distributor margins. The values reported in the Census tabu- lations are not comparable therefore to prices charged for imported goods at the same point of distribution at which domesti- cally-produced articles enter trade. The true value of imported apparel (knit and woven) materially~ exceeds the figures extracted from the U. S. Bureau of the Census reports. Another indicator of apparel import growth is provided by the data regularly compiled and published by the U. S. Department 16/it is incorrect to compare the value of imports as reported by the Census with the corresponding value of domestic products except for balance-of-payment purposes. Even then data has to be adjusted, before it can be used, for other costs that are paid by domestic sources abroad~ in foreign currencies. To measure the degree of market penetration a different measure is required that would provide reasonable commensurability as between the goods originating abroad and those originating domestically. PAGENO="0360" 2666 of Agriculture. For this purpose, the Department examines data on the physical quantities of the imported textile goods and translates them into equivalent poundage of cotton, wool and man-made raw fiber required for their production. Information from this source is presented in Annex U. Poundage figures show that between 1956 and 1967 apparel imports nearly sextupled; shipments of cotton apparel were four times greater than in 1956, wool apparel shipments were five times greater, and those made of man-made fibers 69 times as large. The rising shipments of apparel made of man-made fiber, whether knit or woven, are significant in view of the development of new processes in textile and apparel manufacture which invite an increasing use of synthetic fibers or blends, for these are utilized in the production of permanent press or soil resistant clothing. Importers are thus taking advantage of consumer demand in the United States to invade markets developed by the efforts and expenditures of domestic producers. This also enables them to increase market penetration in areas which are not regulated by the International Cotton Textile Arrangements or bilateral agreements concluded between the United States and a number of foreign countries with regard to cotton textiles and apparel. A third method used to gauge the volume of apparel imports is the conversion of the quantities of imports of the different groupings of products into the equivalent number of square yards required.for their manufacture. This technique was first PAGENO="0361" 2667 developed by Japan in connection with the administration of her voluntary program of export limitation to the United States. It is currently utilized in the administration of the Inter- national Cotton Textile Arrangements and in the tabulations of textile and apparel imports prepared by the Office of Textiles of the Department of Commerce. The summary of these data, available only beginningwith 1962, is presented in Annex V. Apparel imports between 1962 and 1967 expressed in square yard equivalent increased by 8Li percent, as compared with a 80 percent rise shown by data expressed in equivalent pounds of raw fiber 17/ shown in Annex U. - Conversion of imports into equivalent poundage of raw fiber or into equivalent square yards provides an important and useful, though a limited, device for measuring changes in textile and apparel imports. Poundage, however, is primarily an indicator of raw fiber consumption used in the production of imported goods. Square yard, equivalent is primarily an indicator of the coverage provided by imported textile products, whether these come in the 18/ form of fabrics, made-up goods or apparel. This approach to 17/The data on the value of imports of apparel (knit and woven) at foreign valuation showed a 73 percent rise in this period. The definition of this series differs somewhat from the concept used by the Departments of Commerce and Agriculture. 18/Imports of yarn are also converted into equivalent square yards of fabrics, but this is done solely for the purpose of providing a common measure with other textile imports. PAGENO="0362" 2668 the measurement of imports recognizes that a specific weight of raw textile fiber can be utilized to produce a variable quantity of piece goods, made-up goods, or apparel, depending on the construction, specifications and fiber used. Neither measure, however, takes account of the fact that different items are made up of fibers of different quality and speci- fication and of differing physical quantities of labor and capital input. In a domestic competitive market, such differences in the make-up of different products are approximated, at a given point of time, by their respective prices. This approach fails, however, when more than one country is involved. Even when two countries produce an identical product and when it is produced under identical conditions (with physical productivity of labor and capital per unit of output or per manhour the same), pricing of such goods in each of the countries would be made on a different basis and would reflect the economic conditions and standards prevailing in each. In the case of labor-intensive products, such as apparel, prices are prone to be set on a lower level in a country where wages are generally low than in a country where compensation standards are higher. Thus, a different yardstick is called for in order to provide a more meaningful measure of apparel imports compatible with data on domestic production and exports than one that solely reflects either the poundage of raw fiber or the equivalent yardage of PAGENO="0363" 2669 fabrics used in their manufacture. Value of apparel produced in the United States deflated by appropriate price indexes does provide a reasonable measure of changes in real output over a period of time. Exports constitute a fraction of domestic production. Their prices are determined by the same market forces as those affecting all domestic production. A measure of the physical changes in exports of apparel can, therefore, be obtained by deflating the value of exports by similar price indexes as are used for deflating all domestic production. The two series are compati- ble (i.e. additive) since they measure total output and exports in comparable units. In order to develop a compatible measure of imports, it is necessary to convert their prices into prices charged for comparable goods produced in the United States. The resultant series can then be deflated by the same price indexes used to deflate domestic value of production. This would provide a series representing changes in the real volume of imports ex- pressed in the same units as are used to measure domestic output and exports. A reasonable approximation of such measure, ex- pressing apparel (knit and woven) imports in constant United States prices, has been developed by the ILGWU Research Department and is presented in Annex W together with data on domestic productipn and exports for the period between 1956 and 1967. It shows that in the eleven years, the physical volume of imports of apparel (knit and woven) rose 5.0 times (compared with a t~.6 times rise PAGENO="0364" 2670 in the dollar value in market values in foreign countries shown in Annex T). Between 1962 and 1967, the physical volume of these imports increased 70.0 percent (as compared with the increase of 8~+.2 percent for apparel imports ex- pressed in square yard equivalent shown in Annex V). The three series shown in Annex W --- imports, domestic production and exports --- are compatible, i.e.additive. It is, therefore, possible to compute the degree to which imports have penetrated the domestic apparel market. Imports of apparel *(knit and woven) in 1956 equaled I~.0 percent of domestic production. The ratio of imports to domestic production grew steadily. The preliminary 1967 estimates indicate that it was 15.6 percent, or about two-thirteenths of domestic output. We can expect further import growth in 1968. However, domestic apparel production so far in 1968 was down as compared with the same months of last year, 19/ according to available information on production activity. However, imports of apparel, measured by the available data 20/ in square yard equivalent, increased. It thus appears that the ratio of apparel imports to domestic production will reach a new high in 1968. These figures also indicate that 19/ For example, the Federal Reserve Board's index of industrial - production ot apparel products was down 3 percent in January 1968 as compared with January 1967. Similarly, Bureau of Labor Statistics data on manhours of employment indicate that production workers in the apparel (knit and woven) industry worked one percent less during the first quarter 1968 than in the first quarter 1967 and two percent less than in the first quarter 1966. 20/ As can be seen from Annex V, general imports of apparel rose 13.1 percent in the first three months of 1968 as compared with the same months of 1967. PAGENO="0365" 2671 thedownturn in domestic apparel production was not paralleled by a downturn in shipments from abroad --- they continued to grow both in 1967 and early in 1968. The import statistics tell only part of the story. In the atmosphere of cut-throat competition which pervades the apparel industry on both the manufacturing and retail levels, a relatively small volume of imports can be disruptive. Most apparel (knit and woven) is promoted and sold at retail in this country in terms of price appeal. When a retail outlet undersells his competitors on the basis of imports from low-wage countries, competing retailers demand equivalent price concessions from their domestic suppliers, and shop for them from manufacturer to manufacturer. When domestic manufacturers find that they are losing accounts to competition from abroad which they cannot possibly meet, they are under pressure to resort to undesirable practices, such as lowering the quality of their products, cutting wages and speeding-up their workers, particularly in nonunion factories, in order to meet this price competition. Some abandon manufacturing and become importers themselves, thereby closing down factories, eliminating jobs, and causing distress to their former employees and to the communities in which they had operated. This down-spiraling and self-destructive process tends to be accelerated with higher levels of apparel imports, and cut-backs in the employment level of the domestic apparel (knit and woven) industry and the closely related textile PAGENO="0366" 2672 industry are the inevitable result. The prospect is for an increasing degree of import penetration in the domestic apparel (knit and woven) market, with accompanying market disruption and job curtailment for the industry's workers. There are numerous reasons for this. For one, imports have been shifting into non-cotton garments. As can be seen from Annex U, cotton apparel imports in 1956 amounted to 81 percent of apparel imports measured in terms of raw fiber poundage. Wool apparel represented 16 percent of the total and that of man-made fiber accounted for 3 percent. The poundage of different fibers used in imported apparel increased in the next ten years but their rela- tive importance shifted. * Cotton accounted for only 59 percent of apparel imports in 1967. The relative share of wool dropped slightly, to 1k percent. On the other hand, man-made fibers gained at the expense of cotton and their share advanced to ~7 percent of the total apparel imports expressed in pounds. In square yard equiva- lent, imports of apparel of man-made fibers accounted for 39 percent of apparel imports, wool apparel, represented 7 percent of the total, and cotton apparel 5~ percent. In the first three months of 1968 the share of man-made fiber apparel accounted for ~+0 percent of all imported apparel (the relevant, data are in Anrfex V). Obviously, the swing in imports is in the direction of apparel not subject to the regulatory influences of the International Cotton Textile Arrangements and the bilateral agreements applicable to cotton textiles and apparel. The shift towards an increased PAGENO="0367" 2673 ~hipment of apparel of man-made fibers is also stimulated by technological developments (previously referred to) which invite Increased use of man-made fibers in garment production. The rapid rise in imports of apparel (knit and woven) following the Second World War was facilitated by the reductions in custom duties made by the United States under Reciprocal Trade Agreements or under the General Agreement on Tariffs and Trade. The concessions granted prior to this year were made, for the most part, against an entirely different background of trade from the one that has subsequently developed. When those concessions were negotiated, they only took account of the then existing pattern of trade. At the time the rise of apparel shipments from low-wage, low-cost countries was not even contemplated. And yet, this is precisely what took place. A further growth of apparel (knit and woven) imports is in the offing as a result of the most recent Kennedy Round negotiations. Up to the present, our tariffs and import practices with regard to apparel were among the most liberal in the world. As a result of the recent Kennedy Round discussions, the United States agreed to lower duty rates on apparel made of~silk, cotton and other vegetable fibers and on a few selected wool and man-made products. Some tariff rates on apparel were also cut by foreign nations, but the likelihood is great that a number of them, as they have in the past, will use non-tariff barriers to offset duty reductions they made in the course of the Kennedy Round. Even prior to the conclusion of PAGENO="0368" 2674 these tariff negotiations, a variety of devices were used by the more developed countries to limit imports of apparel, particularly from low~wage areas. Included were the use of individual country or global quotas on all or specified types of apparel, license requirements for imports, the distribution of licenses to large numbers of importers to make it uneconomic for many of them to utilize their individual allocations, cumbersome administrative practices i~nvolving delays in the issuance of licenses, delays in the release of foreign exchange, requirement for a full or partial pre-.peyment of orders placed abroad in order to tie up importers' capital, and the imposition of various tax or service levies over and above custom duties. These various practices have been used by the different countries in varying degrees. As a result, countries eager to export have tended to concentrate on the easieNto-enter United States market. The future is likely to see a continuation of this push of apparel shipments to the United States as foreign countries implement old and new mechanisms to control the flow of apparel imports. The growth of apparel imports to the United States will continue to be facilitated by the ease with which individual countries can expand their shipments. This is true not only of the.older suppliers but of the new starters as well. It can be seen from a diagram contained in Annex X which shows the levels of imports to the United States from the different countries in 1956 and 1966. A number of countries that did not ship apparel to the United States in 1956 have done it ten years later and frequently in substantial amounts. PAGENO="0369" 2675 Similarly, a number of the smaller suppliers in 1956 increased their apparel shipments and now rank among the top of the volume exporters to the United States. Another significant development portrayed by this chart is a large number of new starter countries that are shown in 1966. For the moment, their shipments are small. But, as experience demonstrates, these shipments can be built up rapidly. The rapidity with which imports of specific items of apparel can be built up is repeatedly illustrated in the official statistics published by the Bureau of the Census. For example, prior to 1965, Taiwan shipped no sweaters made of synthetic textile fibers. In 1965, it sent 8,028 dozens to the United States, 53,100 dozens in the following year and 309,382 dozens in the year ended in August 1967. This performance was paralleled by South Korea. It shipped 2,363 dozens in 196k and 31,689 dozens in 1965. Thereafter, South Korea sent 91,280 dozens in 1966 and 364,891 dozens in the year ended in August 1967. Even an older supplier like Japan skyrocketed its shipments of these sweaters from 192,755 dozens in 1964, to 395,171 dozens in 1965, to 1,084,045 dozens in 1966 and to 1,172,058 dozens in the year ended in August 1967. The overall volume of imports of sweaters made of synthetic fibers from all countries rose from 229,900 dozens in 1964 to 2,229,797 two-and-a-.half years later a ten-fold increase. . Examples of this rapid growth, recur continually. Korea shipped no dress shirts for men and boys made of woven man-made fibers in 1964. In the next two years, 1965 and 1966, her shipments to the 95-159 0 - 68 - pt. 6 - 24 PAGENO="0370" 2676 United States amounted to 111,088 dozens and 136,961 dozens - respectively, in the year ended in August 1967, however, Korea shipped 236,651+ dozens. In the case of Japan the picture is similar but the build-up was more rapid, from 10,061+ dozens in 1964 to 92,172 dozens in the following year; shipments then went up to 349,1+88 dozens in 1965 and 1+57,519 dozens in the year ending in August 1967. I-long Kong boosted its shipments to an even greater degree. in 1964, they amounted to 90,663 dozens. in the following year shipments faltered slightly and only 80,600 dozens were sent, but this temporary retrogression was more than made up when 508,211 dozen shirts were shipped to the United States in 1966 and 1,096,091 dozens were.shipped in the year ended in August 1967. Shipments from all countries rose in this period from 121,970 dozens in 1964 to 1,991,564 dozens in the year ended in August 1967. Poland, which shipped no cotton knit shirts (other than 1-shirts and sweat shirts) to the United States prior to 1966, sent us 67,952 dozens in that year and 219,109 dozens in the year ended in August 1967. These examples can be multiplied, each one underscoring how rapidly new starters and old suppliers can boost their shipments of apparel without any strain. The ability to expand production rapidly is basic in the apparel industry, It is fostered by low capital requirements and the ease with which inexperienced personnel can be trained within a relatively short time to top proficiency. Continued improvements in the means of transportation and PAGENO="0371" 2677 communication have shrunk the size of the world and made it possible to overcome the previously existing barriers of time and space. This has facilitated the movement of apparel production out of the United States to distant parts of the globe. It provided another means by which certain kinds of entrepreneurs in this co'untry could evade the wage and labor standards of the domestic industry. To this end, they deliberately encouraged expansion of garment production in low.wage countries and provided, whenever necessary, financial assistance, technical and managerial guidance, as well as advice on styling and merchandising. Others fostered "run-away" shops on an international scale by setting up their own factories abroad solely or principally for the purpose of exporting finished garments to this country. The rise of apparel imports will stimulate further plant displacement. As competition from the low-wage, low-cost areas increases in severity, additional domestic manufacturers are bound to eye foreign operations as a possible way out. A number of firms in this country have already suspended all or. part of their operations in this country and have become importers of apparel produced either in their own foreign plants or else in plants operated by foreign nationals. More will follow this road as imports rise, inevitably worsening unemployment in the very group in our population for whom alternative jobs are hard to find and for whom alternative employment opportunities outside this industry are few and far between. Another and continuing inducement to the relocation of plants and the increase in the volume of apparel imports results from the many PAGENO="0372" 2678 special incentives offered by foreign countries to their nationals as well as to those of other countries to manufacture within their boundaries solely for export purposes. Depending on the country, these incentives differ. Income and other taxes are remitted in full or in part. Custom duties may be waived on materials and machinery used for the production of goods to be exported in full or in part, or else may be payable in installments. New plant construction may be partly subsidized through lower interest loans or partly financed by governmental agencies. Working capital and q~aterial may be supplied and special credit terms arranged for the purchase of machinery and equipment. Minimum return on capital and investment may be guaranteed. Where monetary controls are in force, arrangements are made for preferential treatment in securing - foreign exchange or taking profits out of the country. * This is just a partial list of the various devices used in many countries. The existence of these unfair competitive practices magnifies the serious competitive disadvantage which confronts apparel firms in this country and which continually helps to spur a rising tide of apparel imports. Another stimulus to a continued rise in garment imports is the common practice among retailers of taking much higher mark-ups on foreign-made apparel than they do on garments made in this country. This enables them to raise their profit margins by paying less for merchandise of foreign origin than for the identical domestically- produced goods and not passing the differential on to the ultimate consumers. "By buying foreign goods for less and taking the larger PAGENO="0373" 2679 markups, retailers improve their operating margins at the expense of both the industry and the ultimate consumers of the products', Richard J. Schwartz, President of Jonath~n Logan, Inc., one of the largest domestic manufacturers of knit and woven garments, told the House Committee on Education and Labor in 1966. The effect of this practice, as described by Mr. Schwartz, is to foster imports: "Already the open-to--buy position of many store buyers for our merchandise --- even though it meets with an excellent consumer response and is competitively priced --- is affected when buyers reduce their commitments to, our merchandise and increase 21/ their commitments to imported merchandise". The most significant factor in the rapid and large increase in the shipment of apparel to the United States from abroad is the great difference between labor standards in American garment factories and their counterparts abroad. For the most part, there is little difference in output per manhour here and abroad. Technology and management know-how in this industry, as previously noted, is relatively simple. Today they are internationalized. The same machine producers and management consultants frequently operate throughout the world and provide firms everywhere with similar equipment and advice. The relatively low cost of new capital equipment makes it relatively easy for firms everywhere to furnish their shops with 21/House of Represen~tives, Comit~ee~on Education and Labor, Hearings on Impact of Imports on American Industry and Employment (89th Cong., 2nd sess, 1966), p 547. PAGENO="0374" 2680 latest machinery and equipment when such are needed to attain peak productivity. Thus, for example, when permanent press ovens first made their appearance in the apparel indu~try of the United States, Hong Kong producers immediately followed suit by purchasing this heavy equipment in this country and airlifting it to Hong Kong. The internationalization of technical know-how is illustrated by a recent description of the state of apparel production in Korea, 22/ a relatively new starter exporting goods to the United States: Apparel produced in Korea are of immense variety in kind and quality. The industry, while requiring the intense application of labor, employs relatively simple production techniques, and its capital requirement is also low Modern production techniques are rapidly being incorporated both to increase the efficiency of production processes and lower costs even while improving production quality... The industry now boasts a full complement of high-performance sewing machines and processing facilities, including Durable Press facilities, many of which are fully automated. The installation of modern, up-to-date production facilities has led to diversification into hitherto unexplored fields, and the range of production is greatly expanded.... In quality and design, Korean-made apparel and garments are rated as inferior to none on the world market. A similar picture emerges when production of Korean sweaters is 23/ reviewed: The rapid growth of export was due chiefly to the constant effort of manufacturers to rationalize their production setup and process, which resulted in a great modernization and renovation of production facilities and the introduction of up-to-date equipment and techniques The industry has a full complement of knitting, linking, setting and pressing machines, most of which are fully automated and fully up to the prevailing international standards in efficiency and the quality of the final product. It is also impossible for American manufacturers compete with 2.2./~'AppareJ" in Korea Trade, April 1967, p. 20. 23/"Sweaters" in Korea Trade, April 1967, p. 10. PAGENO="0375" 2681 foreign suppliers on the basis of increased efficiency. The intensity of cQmpetition in the domestic apparel (knit and woven) industry constantly drives individual firms~to operate near the peak level of productivity attainable with existing know-how and technology, in this respect they are no different than producers abroad. The latter, however, have a large and unfair competitive advantage over American producers as a result of the great difference between wages in American factories and their foreign counterparts.- With labor cost representing a high proportion of total cost i~apparel manufacturing, relative wage levels thus become crucial. As can be seen from Annex Y, average hourly earnings in key exporting countries in Europe range from 17 cents to 88 cents an hour. Elsewhere the wages range from 8 cents an hour to 35 cents an hour. These figures on hourly earnings exclude the earnings of cottage workers employed in significant numbers in many countries. Their earnings are but a fraction of the average wages paid to apparel workers employed as factory workers in the same countries. The competitive advantage is not modified when account is taken of fringe benefits which are paid to some workers abroad. Dollar for dollar, fringe benef it payments in the United States are substantially higher than those found in the foreign apparel factories, even though at times it may appear lower if expressed in terms of percentages of hourly earnings. As a matter of fact, however, apparel workers in many parts of the world do not receive fringe benefits. Also unlike the United PAGENO="0376" 2682 States, where time-and-a-half is paid for hours over ko under the Fair Labor Standards Act or, under collective bargaining agreements, after regular daily hours and 35 hours per week, workers in a number of countries work up to 60 hours per week without premium pay. Because productivity in the apparel (knit and woven) industry of the United States is substantially the same as abroad, one can estimate the impact of the recent growth of imports on domestic employment from data contained in. Annex W and Annex Q. The data *on domestic output, imports and exports in Annex W, as previously noted, are in compatible units. The ratio of import or export volume to domestic production will therefore be substantially identical with the ratio between the number of workers employed in producing apparel (knit and woven) for import or export and domestic employment in this industry, which is shown in Annex Q. On the basis of these data it would appear that in 1956, when domestic industry employed l,3l1+,800 persons, approximately 8,900 workers were engaged in producing goods for export and ~2,8oo workers in manufacturing apparel (knit and woven) imported to this country. In 1967, when domestic industry had 1,1147,700 persons on.its payrolls, approximately i~2,O00 workers were producing apparel for export and 226,100 workers for import to the United States. If there were no apparel imports whatsoever in 1967, domestic industry could have employed over 225,000 workers to satisfy the level of demand for apparel (knit PAGENO="0377" 2683 2k! and ~4oven) that existed in that year. Viewing the changes that have taken place since 1956, the increase in the number of workers engaged in the production of goods imported to the United States rose by approximately 173,000, a measure of job loss in this country. This number of workers would have been placed on the domestic industry's payrolls if imports did not rise in this period. Even if one were to offset this figure by the additional ~,lOO employees engaged in the production of merchandise for export, the net loss of jobs in the last decade approximates 170,000 jobs badly needed by the many hard-to-place persons in our nation. 2k,f It is assumed in this calculation that the real volume of goods sold in the United States market would be substantially identical if apparel (knit and woven) that was, in fact, imported had been manufactured in this country. The reason underlying this assumption is the fact that a much smaller price differ- ential exists between the prices of domestic and foreign-made goods in retail stores in the United States than exists between the prices received by domestic and foreign producers for the merchandise they sell. The narrowing of this differential is ascribable to the fact that many charges (including freight, insurance, custom duties, buyers' commissions and the markups of the various handlers of such~ goods before they are sold to the retailers) are added to the price received by foreign manufacturers as well as to the fact that American retailers take substantially higher markups on apparel of foreign origin than on domestically produced apparel. The differential in retail prices is not sufficient to change significantly the demand for apparel by consumers in the different income brackets in view of its relatively low elasticity. PAGENO="0378" 2684 * The erosion of employment opportunities for many workers for whom the apparel. (knit and woven) industry provides a logical and natural place for employment underlines the importance of governmental action to safeguard this industry and its workers from the type of unfair competition that emanates from low-wage countries. Failure to face up to the special problems of the industry will ultimately have not only wasteful and destructive consequences in this country but also abroad. Overcapacity, which already plagues the domestic industry, increasingly becomes world-wide. As domestic importing interests play off producers of one nation against another low wages and appalling labor conditions are viewed as virtues instead of something in need of redress. Japan, for example, is discovering that it is no longer the haven for low-priced merchandise that it once was. Taiwan, I-long Kong and Korea have been undercutting it. "These days," writes Tsukasa Furukawa, "American buyers invite bids from all four Asian sources, and almost automatically pick the lowest bidder, as quality is no 25/ longer a problem!1 Instead of reporting the progress they make in improving the conditions of their people, countries begin to boast of their too low standards, as was the case in a promotional advertisement which proclaimed that Taiwan's "Wages are lower than those of Hong 26/ Kong or Japan". 25/"Japan Exporters Suffer Al lments of the Affluent" in the Daily News Record, October 18, 1957. 26/New York Times, January 18, 1965 (text space in the full page advertisement was contributed by the Taiwan Foreign Exchange & Trade Comission, Industrial Development & Investment Center, and China Productivity & Trade Center). PAGENO="0379" 2685 - The competition becomes so intense.that low-wage areas seek to take business away from each other throuqh the development of extra incentives on top of the low-wage attraction. Thus, recently, the Executive Yuan (cabinet) of Formosa approved a five-year moratorium on the payment of customs duties by manufacturers who would move their plants from Hong Kong or Macao and provided additional incentive 11/ to make the particular package deal sweeter. A foundation is thus laid, to which our own entrepreneurs contribute, for sustaining depressed labor conditions in many parts of the world and for building up excess capacity generated when businessmen switch their orders from one country to another. The inevitable result is the multiplication of production facilities, increasing underemployment, and international tension. Competition ceases to be a constructive force and becomes destructive. The possibility that this might happen has long been feared by experts on international development who cautioned countries against the wasteful buildup of duplicating export facilities. Jan Tinbergen, for example, urged in his "The Design for Development", p. 2k, that Expansion of exports should ... be based on demand analysis, in this case for foreign markets. There might be still a danger of inconsistencies if two or more countries independently planned to expand the same line of production. Such uncoordinated programs might result in overproduction. Therefore it is desir~ble that duplication be avoided. ~~7~ily NeWS Record, July 1k, l96~. PAGENO="0380" 2686 The drive to increase apparel exports to the United States, which is already powerful, will increase many-fold as present exporting countries continue to expandtheir production facilities, as new starters join the ranks of exporters, and as overcapacity continues to grow abroad. The result would be a thorough disruption of the United States apparel market. This is a real possibility in view of the numerous devices that other countries continue to use to limit the expansion of exports into their markets in contrast to the ease with which apparel can be shipped to the United States. Even the secretariat of the United Nations Conference on Trade and Development is conscious of this threat and tells the lesser developed countries that "The distribution of ... exports over as many markets as possible is ... necessary in the interest of avoiding disruption in certain 28/ markets which are favourite destinations for exports". Unfortunately, this policy is not, in fact, pursued in the case of apparel shipped to this country. Country after country tend to view the United States as the favored market in which their exports are to be concentrated. As capacity to produce grows abroad and nations are faced with overcapacity, competition between low-wage, low-cost foreign producers will be intensified and this will have reverberations on our own production and employment. With labor cost the most si.gnificant factor in cut-throat, destructive competition, domestic producers cannot hope 28/United Nations Conference on Trade and Development, Non Tariff Barriers: Report by the UNCTAD Secretariat (TD/20/Supp.3, 12 October 1967), p. 57 PAGENO="0381" 2687 to stand up for long against an ever-increasing flow of goods from abroad produced under labor standards and at a cost no domestic producer can hope to match. The moderating influence that International Cotton Textile Arrangements has thus far to some extent been exercising is being diluted by the increasing use of man-made fibers. The United States is thus confronted by a situation in which decisions made abroad will largely determine the proportion of the domestic apparel industry to survive and the extent of how much additional unemployment to which the nation's garment workers are to subjected. Moreover should it become clear that the United States is either unable or unwilling to implement the special program for textiles and apparel of which the International Cotton Textile Arrangement is a part or take alternative action to safeguard the domestic industry and its workers, the unavoidable tendency on the part of many domestic producers will be to relocate thefr operations abroad. This is already taking place. Furthermore, business casualties are likely to rise as firms in the industry, particularly the smaller ones, find it increasing- ly difficult to withstand the competition of low-wage areas. This will mean additional unemployment and underemployment to the apparel (knit and woven) workers. In turn, this will have inevitable negative repercussions on the nation's industries closely related to apparel production.. This is a serious and disturbing prospect for our nation to contemplate. In the last few years this country has become aware that PAGENO="0382" 2688 even when business is booming and gross.national product is advancing rapidly, poverty remains a problem for the nation and many of its citizens. At the same time experience has taught us that the problem of fitting people into jobs is far more stubborn and complex than had hitherto been imagined. We have discovered that even in a technologically advanced economy such as that of the United States, jobs must be available at all levels of technical proficiency and competence, from * the least skilled to the most advanced. It has become clear that if maximum employment opportunities are to exist, it is. essential to have a whole gamut of occupational opportunities open to the nation's job seekers. If a segment of the nation1s job structure which is essential to balance out employment opportunities for all segments of our population is permitted to erode, there is no guarantee whatsoever that such workers will find ready employment elsewhere in the economy through transfer to other occupations, for there are distinct limiting factors on occupational adaptability. This is apparent from current experience and the inability to find jobs for persons now in the ranks of the hard core unemployed or for persons who are out of the labor force because of discouragement and disillusionment when they discovered that they could not find suitable work. The fact is that thi;s nation needs to create a broader spectrum of job opportunities than now exists rather than reduce its scope on the theory that persons abroad can perform the particular tasks for less and that our own workers displaced by PAGENO="0383" 2689 imports can readily secure other jobs or be retrained for other employment. In the case of garment workers, it is most doubtful that such alternative employment opportunities do in fact exist or can be readily developed. The issue is not that of choosing between free trade and protection. In the case of the apparel industry the problem is one of weighing the full consequence for the nation as a: whole of permitting the erosion of an indigenous industry which provides a large number of jobs to persons for whom few alternative job opportunities exist. The issue cannot be defined in terms of the international division of economic activity based on comparative efficiencies and technological capabilities, product quality or distinctiveness, peculiar nature of raw material going into the manufacture of apparel or the need for price discipline as a countervailing force needed when competition lags in the domestic market. None of these points apply to the domestic apparel (knit and woven) industry as has been demonstrated in the preceding pages. The only advantage that foreign producers have over those in this country is the payment of extremely low wages and the mainten3nce of sweatshop conditions banned from this nation as a matter of public and private action. It would indeed be an irony if, after eliminating such conditions at home and still enabling the domestic apparel industry * and its employment to expand, the United States would now consciously permit it to be eroded by sweatshops~ abroad. It is precisely because PAGENO="0384" 2690 international competition in the apparel (knit and woven) industry is affected to such a great degree by differences in labor standards that the need to develop and implement programs to regularize international trade in apparel of all fibers, preferably through international agreements, is an essential and a desirable objective of national and international policy. PAGENO="0385" 2691 Annex A ~ranches of the Apparel (knit and woven) Industry, by Standard Industrial Classification Code Number SIC Code Branch of Industry - 2253 Knit outerwear mills' 2254 Knit underwear mills 2259 Knitting mills, not elsewhere classified 2311 Men's, youths', and boys' suits, coats and overcoats 2321 Men's, youths', and boys' shirts (except work shirts), collars and n i ghtwear 2322 Men's, youths', and boys' underwear 2323 Men's, youths', and boys' neckwear 2327 Men's, youths', and boys' separate trousers 2328 Men's, youths', and boys' work clothing 2329 Men's, youths', and boys' clothing, not elsewhere classified 2331 Women's, misses' and juniors' blouses, waists, and shirts 2335 Women's, misses' and juniors' dresses 2337 Women's, misses' and juniors' suits, skirts, and coats (except fur coats and raincoats) 2339 Women's, misses' and juniors' outerwear, not else where classified 2341 Women's, misses', children's, and infants' underwear and nightwear 2342 Corsets and allied garments 2361 Girls', children's, and infants' dresses, blouses', waists, and shirts 2.363 Girls', children's, end infants' coats and suits 2369 Girls', children's, and infants' outerwear, not elsewhere classified 2381 Dress and work gloves, except knit and all-leather 2384 Robes and dressing gowns 2385 Raincoats and other waterproof outer garments 2386 Leather and sheep lined clothing 2387 Apparel belts 2389 Apparel and accessories, not elsewhere classified 2395 Pleating, decorative and novelty stitching, and tucking for the trade 2397 Schiff Ii machine embroideries 3069 Fabricated rubber products, not elsewhere classified (insofar as it includes vulcanized rubber clothing) 3079 Miscellaneous plastic products (insofar as it includes plastic clothing) 3151 Leather gloves and mittens 3842 Orthopedic, prosthetic, and surgical appliances and supplies (inso- far as it includes surgical corsets, belts, trusses, and similar articles 3962 Feathers, plumes, and artificial flowers (insofar as it includes artificial flowers) 95-159 0 - 68 - pt. 6 - 25 PAGENO="0386" 2692 Annex B Number of Establishments and Employees, Apparel (knit end woven) Industry, by State, Mid-March 1966 United States, total New England Maine New Hampsh ire Vermont Massach umetts Rhode Island Connect icut Middle Atlantic New York New Jersey Pennsylvania East North Central Ohio Indiana Illinois Michigan Wisconsin West North Central Minnesota Iowa Missouri North Dakota South Dakota Nebraska Kansas South Atlantic Delaware Maryland D. of C. Virginia West Virginia North Carol ma South Carol ma Georgia Florida East South Central Kentucky Tennessee Alabama Mississippi ~s±abl ishments 29,028 1,578 47 55 35 1,032 90 319 16,982 12,082 2,348 2,552 I, 796 384 164 806 248 194 769 166 72 416 5* 6* 35 69 2,867 3I 324 20 209 43 1,052 261 486 441 891 138 355 236 162 Employment Total Per Establ ishment 1,646,097* 57* 94,650 60 4,245 90 4,361 79 1,690 48 62,029 60 5,539 62 16,786 53 649,444 38 349,275 29 87,651 . 37 212,518 83. 111,444 62 22,496 59 14,452* 88* 41,104 51 21,084* 85* 12,308 63 55,201 72 9,784 59 3,743 . 52 35, 879* 86* I0* 2* 44* 7* 1,658 47 4,083 59 339,797 119 3,797 122 25,202 78 147 7 38,899 186 5,519 128 131,167 125 47,678 183 71,007 146 16,38I 37 19I,63I 215 27,168 197 83,336 235 44,438 188 36,689 226 PAGENO="0387" - Employment Total _Per Establishment 77, 152 96 13,737 162 6,420 104 6,518* 94* 50,477 86* 8,865 38 9* 3* 4l 4* 3* 3* 1,657 22 520 26 3, 787* 52* 2, 837* 63* 11* 2* 81,424 30 4,818 36 3,912* 50* 70,386 29 3* 3* 2,305 32 36,489 86 2693 Annex B and Employees, Apparel (knit and woven) Industry, by State, Mid-March 1966 Number of Establishments Establishme West South Central 805 Arkansas 85 Louisiana 62 Oklahoma 69 Texas 589* Mountain 235 Montana 3* Idaho 10 Wyoming 1* Colorado 76 New Mexico 20 Arizona 73 Utah 45* Nevada 7* Pacific 2,680 Washington 134 Oregon 79 California 2,393 Alaska 1* Hawaii 73 Puerto Rico 425 Products of the Apparel (knit and woven) Industry not covered by the data are leather, rubber and plastic gloves, vu~lcanized rubber garments and garments made from rubberized fabrics produced in the same establishment, surgical corsets pro- duced in establishments primarily engaged in manufacturing surgical and orthopedic appliances, and artificial flowers. Products covered by the data which are not products of the Apparel (knit and woven) Industry are hosiery, knit fabrics, hats, millinery, fur garments and accessories, and miscellaneous fabricated textile products. * Partly estimated SOURCE: U.S. Bureau of the Census, County Business Patterns, 1966 PAGENO="0388" 2694 Annex C List of Standard Metropolitan Statistical Areas Where Employment in the Apparel (knit and woven) lndustry* Equaled or Exceeded 0 Percent of Manufacturing Employment, Mid-March, 1966 Percent of Manufacturing Standard Metropolitan Statistical Area Employment Abilene Tex, 10 % Albany-SchenectadrlrOY, N.Y. $0 % Allentown-BethiehO~EaSt0fl, Pa.-N.J. 23% Asheville, N.C. 14 % Atlantic City, N.J. 36 % Brownsville-Harlingefl-Safl Bonito, Tex. 10% Charleston, S.C. II % Charlotte, N.C. 15 % Columbia, S.C. 13% Dallas, lox. II % El Paso, Tex. ~ Fall River-New Bedford, Mass. 28 % Greensboro-High PoInt, N.C. 19 % Greenville, S.C. 18% Harrisburg, Pa. $2 % Honolulu, Hawaii 12 % Jersey City, N.J. 20% Johnstown, Pa, 19 % Knoxville, Tenn. 22 % Lancaster, Pa. 14 % Laredo, Tex. 36 % Lynchburg, Va. 13 % Mayaguez, Puerto Rico 39 % McAIlen-Pharr-Edinburg, Tex. 10 % Miami, Fla. 19 S Nashville, lenn. $0 5 New York City, N.Y. 27 5 Ogden, Utah 12 5 Paterson-Cl ifton-Passaic, N.J. II S Philadelphia, Pa. 13% Ponce, Puerto Rico 12 5 Reading, Pa. 23 S Roanoke, Va. $6 S San Antonio, lox. IS 5 San Juan, Puerto Rico 26 5 Scranton, Pa. 34 5 Sherman-Donton, lex. 36 5 Waco, lox. $7 S Wichita Falls, lox. $35 Wilkes-Barre-Hazleton, Pa. 40 5 Winston-Salem, N.C. 23 5 York, Pa. $3 S 42 Standard Metropolitan Statistical Areas 20 5 Manufacturing Employment in 42 S.M.S.A.'s 3,274,408 Apparel (knit and woven) Industry Employment: In 42 S.M,S.A's 665,370 Elsewhere in the United States 970,727 Distribution of Apparel (knit and woven) Industry Employment: In 42 S.M.S.A.'s 40% Elsewhere in the United States United States 100% * Data are for Standard Industrial Classifications 23 and 225 S0Ui~E: U.S. Bureau of the Census, County Business Patterns, $966 PAGENO="0389" 2695 Annex D Number of Establishments Per Company*, Apparel (knit end woven) Industry, United States, By Branch of Industry, 963 Branch of Number of Number of Establishments Industry ~~~npanjes Establishments _Per Company Men's end Boys' Suits end Coats 1,031 1,112 1.08 Men's Dress Shirts and Nightwear 659 832 1.26 Men's and Boys' Underwear 65 80 (.23 Men's and Boys' Neckwear 341 341 (.00 Separate Trousers 667 735 1.10 Work Clothing 301 439 (.46 Men's and Boys' Clothing, n.e.c. 529 554 (.05 Blouses 1,130 1,175 1.04 Dresses 4,577 4,752 (.04 Women's Suits, Coats and Skirts 2,481 2,516 1.01 Women's Outerwear, n.e.c. 1,252 1,297 (.04 Women's and Children's Underwear 978 1,069 (.09 Corsets and Allied Garments 296 351 1.19 Children's Dresses 630 667 (.06 Children's Coats 269 285 (.06 Children's Outerwear, n.e.c. 602 624 1.04 Fabric Dress and Work Gloves (70 197 1.16 Robes and Dressing Gowns 268 271 1.01 Waterproof Outergarments 223 341 1.53 Leather and Sheeplined Clothing ((4 114 (.00 Apparel Belts 38B 389 (.00 Apparel, n.e.c. 265 270 (.02 Schiff Ii Machine Embroideries 755 759 1.01 Pleating and Stitching 2,061 2,072 1.01 Knit Outerwear 1,175 1,185 1.01 Knit Underwear 104 118 1.13 Knitting Mills, n.e.c. 86 88 1.02 Fabricated Rubber Products, n.e.c. 1,046 1,173 1.12 Leather Gloves (60 166 1.04 Artificial Flowers 367 384 1.05 * A company is defined to include all manufacturing establishments owned by the company, plus all manufacturing establishments of subsidiaries or affiliates over which the company has acknowledged control. n.e.c. -- Not elsewhere classified SOURCE: U.S. Bureau of the Census PAGENO="0390" 2696 Annex E Distribution of Companies by Size of Employment, Apparel (knit and woven) Industry, 1963 Number of Employees All Less 50 100 ~250 500 1,000 2,500 Compan- than to to to to to and les ...~_.. .22_... ..2~L ..~22... ...222._ 2422 ~ Branch of Industry Men's and boys' suits and coats Men's dress shirts and nightwear Men's and boys' underwear Men's and boys' neckwear Separate trousers Work clothing Mon's and boys' clothing, n.e.c. 100.0% 100.0 100.0 100.0 100.0 100.0 100.0 61.0% 51.6 40.0 86.5 59.2 45.8 58.0 15.2% 12.7 15.4 9.1 11.0 11.0 19.3 13.4% 18.5 12.3 3.2 15.0 18.6 15.7 4.8% 7.4 7.7 0.6 7.6 12.0 4.0 2.5% 4.0 7.7 - 2.4 5.0 1.1 1.7% 1.8 4.6 - 2.1 4.0 0.4 1.4% 4.0 12.3 0.6 2.7 3.6 1.5 Blouses Dresses Women's sults,coats and skirts Women's outerwear, n.e.c. Women's and children's underwear Corsets and allied garments Children's dresses Children's coats Children's outerwear, n.e.c. Fabric dress and work gloves Robes and dressing gowns Waterproof outergerments Leather and sheeplined clothing Apparel belts Apparel, n.e.c. Schiffli machine embroideries Pleating and stitching Knit outerwear Knit underwear Knitting mills, n.e.c. Fabricated rubber products,n.e.c. Leather gloves Artificial flowers 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 73.6 75.2 79.5 72.6 67.6 56.4 69.7 75.1 70.3 70.0 77.6 73.2 78.9 86.3 85.6 97.9 95.5 73.8 29.8 75.6 67.4 71.8 95.9 14.6 17.5 14.8 16.3 13.7 14.9 16.3 13.7 13.9 12.3 10.1 16.0 13.2 8.5 7.2 1.2 3.1 12.7 18.3 10.5 10.0 12.5 1.6 8.1 5.6 4.3 7.9 10.8 19.3 9.0 7.8 10.8 7.1 9.0 6.3 6.1 3.6 3.4 0.4 0.7 7.4 22.1 7.0 8.7 10.0 2.2 1.9 I .0 0.8 1.2 3.7 3.4 3.2 2.6 2.5 5.3 1.9 2.4 0.9 0.5 3.4 0.4 0.2 3.0 . 9.6 2.3 3.5 1.9 0.3 0.4 0.4 0.3 0.6 2.4 2.0 0.5 0.4 1.0 2.9 0.0 1.2 0.9 0.3 0.0 0.1 0.2 1.7 6.7 3.5 3.0 1.9 0.0 0.4 0.2 0.2 0.7 0.6 1.7 0.8 0.0 0.2 1.8 0.3 0.3 0.0 0.3 0.0 0.0 0.2 0.1 2.9 0.0 2.5 1.9 0.0 1.0 0.1 0.1 0.7 1.2 2.3 0.5 0.4 1.3 0.6 1.1 0.6 0.0 0.5 0.4 0.0 0.1 0.7 10.6 1.1 4.9 0.0 0.0 S0U1~E: U.S. Bureau of the.Census PAGENO="0391" 2697 Annex F Special izat ion Rat ios*, Different Branches of Apparel Cknit and woven) Industry, United States, 1963 Men's and Boys' Suits and Coats 92 % Men's Dress Shirts and Nightwear 85 % Men's and Boys' Underwear 89 % Men's and Boys' Neckwear 98 % Separate Trousers 83 % Work Clothing 81 % Men's and Boys' Clothing, n.e.c 83 % Women's Blouses 86 % Women's Dresses 96 % Women's Suits, Coats and Skirts 88 % Women's Outerwear, n.e.c~ 80 % ~ and Children's Underwear, 93 % Corsets and Al lied Garments 95 .% Children's Dresses 90 % Children's Coats 92 % Children's Outerwear, n.e.c 79 % Fabric Dress and Work Gloves 94 % Robes and Dressing Gowns 96 % Waterproof Outergarments 92 % Leather and Sheeplined Clothing 97 % Apparel Belts 91 % Apparel, n.e.c 93 % Schiffli Machine Embroideries 96 % Pleating and Stitching . 98 % knit Outerwear Mills 92 % knit Underwear Mills 89 % knitting Mills, n.e.c 93% Fabricated Rubber Products, n.e.c 86 % Leather Gloves 81 % Artificial Flowers 97 % * The special izat ion ratio compares the given industry's value of shipments or production of its primary products to its total value of shipments or production of products. SOURCE: U.S. Bureau of the Census PAGENO="0392" 2698 Average Net Worth per Dot tar of Sates, Different Branches, Apparel (knit and woven) Industry, 1966 (cents) Annex G Branch of Industry ~, Net Worth Dollar of II.I~ Per Saigs Blouses and waists Children's and infants' outerwear 11.9 Men's and boys' coats and suits 21.9 Women's coats and suits 12.8 Dresses 9.6 Knitted outerwear 16.1 Overalls and work clothing 27.6 Men's shirts, underwear and pajamas 18.3 Men's and boys' trousers 23.4 Women's and children's underwear 17.6 SOURCE: Dun and Bradstreet, Inc. Size of Assets Under $250,000 to $1,000,000 to Branch of Industry $250,000 $1,000,000 $10,000,000 All Sizes Knitgoods (*) l9.2~ I9.2~ 24.4't 28.6~ Men's suits and coats 21.3 20.0 29.4 28.6 Men's shirts, collars, nightwear Men's work clothing n.a. n.a. n.a. 23.8 18.5 23,3 18.9 23.8 Men's sports clothing Men's pants 19.2 n.a. 23.3 21.7 23.3 26.3 28.6 25.0 Women's coats,suits,skirts,sportswear Women's dresses 12.5 12.3 14.7 10.9 18.5 17.9 19.6 18.2 Women's undergarments and sleepwear n.a. 15.2 n.a. 27.8 Children's clothing 15.9 16.4 20.4 21.7 n.e. -- Notavailable (*) -- Except hosiery SOURCE: National Association of Bank Loan Officers and Credit Men PAGENO="0393" 2699 Annex Fl Wholesale Price Index, United States, Apparel and Al I Commodities (1957-59=100) All Year Apparel Commodities 1951 104.2 96.7 952 100.4 94.0 1953 99.7 92.7 .1954 98.9 92.9 1955 98.9 93.2 1956 l00.Ô 96.2 1957 100.0 99.0 1958 99.7 100.4 1959 100.4 100.6 1960 101.3 100.7 1961 100.9 100.3 1962 101.5 100.6 1963 101.9 100.3 1964 102.8 100.5 1965 103.7 102.5 1966 105.0 105.9 1967 106.9 106.1 SOURCE: U.S. Department of Labor PAGENO="0394" 2700 Consumer Price Index, United States, Apparel (other then footwear) end All Items (1957-59=100) Annex I Year All Apparel All Lt~iua 1951 101.7 90.5 1952 100.8 92.5 1953 99.8 93.2 1954 99.0 93.6 1955 98.2. 93.3 1956 99.2 94.7 1957 100.1 98.0 1958 99.9 l00.~ 1959 100.0 101.5 1960 101.1 103.1 1961 101.7 104.2 1962 101.8 105.4 1963 102.8 106.7 1964 103.6 108.1 1965 104.4 109.9 (966 (06.3 113.1 1967 110.5 116.3 SOURCE: U.S. Department of Labor PAGENO="0395" ~J Incleded On major indautry above. PROFITS PER DOLLAR OF SALES, BY INDUSTRY (Cents) SOURCE: Federal Trade Commission and Securities and Exchange Commission 2701 Industry Before Federal income taxes -- -- After taxes 4q SQ 2Q 3Q 4tf 6Q 1Q 2Q * 3Q 4Q 1066 1067 1067 1067 1067 1066 1067 1067 1067 1067 All manufacturing corporations, except newspapers . . . . 9.0 8.3 8.7 7.8 8,4 5.5 4.9 5.2 4.7 5.2 Durablegoods Transportation equipment 87 10.0 7.9 9.4 9.2 7.4 3.8 8.7 8.0 2.4 5.3 4.8 4.4 5.3 5.1 4.3 5.0 - 2.3 4.5 Motor vehicles and equipment' 12.1 9.4 11.3 3.0 9.7 6.4 5.3 6.3 1.9 5.4 Aircraft and parts' 5.2 4.7 4.7 4.7 5.2 2.9 2.6 2.5 2.6 2.9 Electrical machinery, equipment, and supplies . . . . 8.4 7.9 8.0 7.7 8.5 4.6 4.2 4.4 4.2 4.8 Othermachinery 10.7 10.6 11.5 10.2 9.9 5.9 5.7 6.3 5.5 5.3 Metalworking machinery and equipment' Other fabricated metal products 11.0 10.2 .~ 7.5 8.1 11.0 8.7 10.1 7.4 9.4 . 7.5 6.3 4.2 5.7 4.6 6.2 4.9 5.6 4.9 4.2 4.2 Primarymetalindustrics 11.4 10.3 9.5 6.8 8.8 6.8 6.1 5.9 4.4 3.9 Primary iron and steel ` Primary nonferrous metals' Stone, clay, and glass products Furnitureandflxtures 9.5 7.9 14.2 14.0 3.9 4,8 6.8 5.9 7.6 12.4 9.1 6.3 5.9 8.2 9.6 6.4 8.6 9.2 8.4 ` 6.9 5.8 8.4 4.9 3.7 4.8 8.1 2.3 3.2 4.8 7.7 3.4 3,5 3.9 5.7 5.3 6.0 5~7 5.4 3.6 3.8 Lumber nnd wood produces, except furniture Instruments and related products 3.7 4.0 18.1 14.8 ~.4 14.7 6.0 16.2 5.3 16.1 2.3 9.9 2.4 8.0 3.4 7.9 4.0 3.7 8.8 9.1 Miscellaneous manufacturing and ordnance Nondurable goods Food and kindred prctducts Dairy products - 8~tknry prndantn .71 Alcohnlie bcvorn~esiJ Tobacco manufactures Textile mill products 8.7 7.1 8.2 7.9 4.5 4.3 4.0 3.7 5.0 3.7 7.7 6.7 10.8 10.0 6.0 4.5 7.0 7.9 4.6 4.4 4.9 7.9 11.0 3.0 7.2 8.1 5.1. 4.5 4.6 8.6 12.3 5.3 7.6 8.1 4.8 4.2 5.4 8.5 11.5 6.1 - 5.7 3.3 2.6 2.3 2.9 4.3 5.8 3.4 4.2 5.1 2.3 2.1 2.0 3.3 3.1 2.4 4.1 5.2 2.5 2.5 2.7 4~3 5.8 2.7 4.2 4.1 5.2 5.5 2.8 2.8 2.5 2.3 2.5 3.2 4~7 4.6 6.4 6.2 2.9 ~trclandothcrfinishedprooluets 4.1. 3.2 3.3 4.7 4.7 2.4 1.8 1.7 2.8 2.9 ) Paper and allied products 8.9 8.2 8.3 7.4 7.3 5.4 4.8 4.9 4.5 4.7 Printing and publishing, except newspapers . *. . . Chnmieals and allied products Basic chemicals' *. 8.3 7.6 12.3 12.4 11.4 12.2 8.0 12.1 11.6 8.7 11.5 9.7 7.2 11.7 10.3 4.9 7.4 7.1 4.3 6.9 7.1 4.6 7.0 6.8 4.9. 3.9 6.3 7.0 5.8 6.4 Drugs' 18.4 18.6 17.3 19.7 17.3 10.5 9.9 9.5 10.8 10.2 Petroleum refining and related lndustrks 13.0 13.0 12.3 12.4 12.5 11.2 11.0 10.8 10.7 11.1 Petroleum refining' - . Rubber and miscellaneous plastics products Leatlterandleatlterproducts 13.2 13.1 7.6 6.8 5.3 5.7 12.5 6.0 4.1 12.4 6.3 3.3 12.6 8.0 6.1 11.4 4.5 3.0 11.2 3.7 3.2 10.9 3.4 2.1 10.7 11.2 3.6 5.1 3.0 3.4 PAGENO="0396" 2702 Profits as a Per Cent of Sales, by Size.of Assets, Different Branches, Apparel (knit and woven) Industry 966 Size of Assets Branch of Industry $250, 000 Under to $259,000 $1,000,000 $1,000,000 to $10,000,000 All sizes 0.7%(L) .5% 2.6% 2.8% 2.1 1.2 2.5 2.3 1.1 1.7 3.1 . 3.0 n.e. n.e. 2.0 2.1 n.a. 2.7 2.0 2.3 1.6 1.4 2.5 2.9 1.4 1.4 1.9 2.6. 1.7 1.6 1.8 2.7 n.e. .5 * 1.3 * 1.4 cs.2%L) 2.4% 5.0% 5.7% 2.9 1.8 4.7 4.2 1.9 2.8 5.8 5.6 n.a.~ n.e. 3.7 3.8 n.e. 4.8 3.7 4.4 2.1 2.2 4.7 5.4 2.0 2.2 3.8 4.9 2.6 2.6 3.1 * 5.1 n.a. 2.7 2.7 2.7 AFTER TAXES Knitgoods (*) Children's clothing Men's suits and coats Men's shirts,col lars and nightwear Men's work clothing Women's coats, suits, skirts, sportswear Women's dresses Men's sports clothing Men's pants ~EF0RE TAXES Knitgoods (*) Children's clothing Men's suits end coats Men's shirts,col lars and nightweer Men's work clothing Women's coets,suits,skirts,sportswear Women's dresses Men's sports clothing Men's pants (*) -- Other than hosiery n.e.-- Not available CL) -- Loss SOURCE: National Association of Bank Loan Officers and Credit Men PAGENO="0397" 2703 Annex L. patios of Payrol is* and Material Costs's' to Value of Shipments, Manufacturers ~nd Jobbers, Apparel (knit and woven) Industry, United States, 1963 Payrolls and Branch of Industry Payrolls Materials Materials Men's and boys' suits and coats 36.6% 39.0% 75.6% Men's dress shirts and nightwear 28.l 48.9 77.0 Men's and boys' underwear 22.6 56.9 79.5 Men's and boys' neckwear 25.9 50.5 76.4 Separate trousers 29.3 49.5 78.8 Work clothing 24.0 56.6 80.6 Men's and boys' clothing, n.e.c. 29.5 53.0 82.5 Women's blouses 30.3 46.2 76.5 Women's dresses 33.7 41.8 75.5 Women's suits, coats and skirts 29.4 49.7 79.1 Women's outerwear, n.e.c. 29.5 49.5 79.0 Women's and children's underwear 26.6 52.3 78.9 Corsets and allied garments 29.2 41.1 70.3 Children's dresses and blouses 33.3 42.3 75.6 Children's coats and suits 30.6 46.9 77.5 Children's outerwear, n.e.c. 29.9 48.3 78.2 Fabric dress and work gloves 26.0 52.6 78.6 Robes and dressing gowns 26.6 52.7 79.3 Waterproof outergarments 30.8 45.0 75.8 Leather and sheeplined clothing 23.9 57.2 81.1 Apparel belts 32.6 42.0 74.8 Apparel, n.e.c. 29.0 49.2 78.2 Schiff Ii machine embroideries 37.4 32.4 69.8 Pleating and stitching 38.0 34.9 72.9 Knit outerwear mills 28.4 5l.l 79.5 Knit underwear mills 28.0 52.1 80.1 Knitting mills, n.e.c. 31.7 51.6 83.3 Fabricated rubber Products, n.e.c. 29.4 44.9 74.3 Leather gloves 30.3 52.2 82.5 Artificial flowers 27.l 50.5 77.6 * Payroll includes direct payrol Is of manufacturers and jobbers and indirect payrolls of contractors. `~ Material costs include materials, parts, containers, supplies, fuel end electric energy consumed directly or indirectly. n.e.c. -- Not elsewhere classified SOURCE: U.S. Bureau of the Census PAGENO="0398" 2704 Annex M Average Rate of Insured Unemployment, Apparel and Related Products* and Manufacturing Industries, United States Ratio of Apparel To Manufacturing Period Apparel _Manufacturi~q Unemployment 1956 7.5% 3.8% 197% 1957 n.e. n.e. n.e. 1958 n.e. n.a. n.e. 1959 n.a. n.e. n.e. 1960 12.2% 5.9% 207% 1961 13.4% 6.8% 97% 1962 II .0% 5.0% 220% 1963 11.6% 5.0% 232% 1964 10.3% 4.2% 245% 1965 8.8% 3.2% 275% 1966 7.6% 2.6% 292% 1967 8.2% 3.0% 273% January 1967 10.5% 3.6% 292% January 1968 10.3% 3.4% 303% n.e. -- Not available * Standard Industrial Classification 23 NOTE:. Data not avai I~ble prior to 1956 SOURCE: U.S. Department of Labor PAGENO="0399" 2705 Annex N Average Rate of Unemployment Among Experienced Workers, Apparel and Other Finished Textile Products* and Manufacturing Industries, United States - PeriQd - Apparel Manufacturjjig_. 1957 8.0% 5.0% 1958 12.0% 9.2% 1959 9.6% 6.0% 1960 10.5% 6.2% 1961 11.4% 7.7% 1962 9.8% 5.8% 1963 `9.6% 5.7% 1964 8.0% 4.9% 1965 7.3% 4.0% 1966 6.0% 3.2% 1967 6.5% 3.7% Jan.-AprIl 1967 6.9% 3.8%. Jan.-ApriI 1968 7.2% 3.8% * Standard Industrial Classification 23 NOTE: Data not available prior to 1957 SOURCE:U.S. Department of Labor Ratio of Apparel' To Manufacturing UnemplovmenL 160% 130% 160% 169% 148% 169% 168% 163% 183% * 188% 176% 182% 189% PAGENO="0400" 2706 Average Hourly Earnings, Production Workers, Apparel and Related Products lndustry* and All Manufacturing, United States Annex 0 Year 1947 1948 1949 1950 1951 952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 * 1967 Apparel and Related Products $1.16 .22 1.21 I .24 I .31 I .32 I .35 I .37 1 .37 I .47 1.51 1.54 I .56 I .59 1.64 .69 1.73 1.79 I .83 I .89 2.03 Al I Manu facty~j~g $ 1.22 1 .33 I .38 I .44 1.56 I .65 I .74 I .78 I .86 I .95 2.05 2.11 - 2.19 2.26 2.32 2.39 2.46 2.53 2.61 2.72 2.83 * Standard Industrial Classification 23 SOURCE: U.S. Department of Labor PAGENO="0401" 2707 Annex P Fringe Payments by Type of Payment, Textile Products and Apparel Industry, 965 Cents Per Cent per of Hour Payroll Total fringe payments ~ I~.I% Legally required payments (employer's share only) j~j~ ~ Old Age, Survivors and Disability Insurance 7.0~ 3.4% Unemployment Compensation 4.l 2.0% Workmen's compensation (including estimated cost for self- insured) l.4~ 0.7% State sickness benefits insurance, etc O.2~ 0.1% Pension and other agreed-upon payments (employer's share only) 2.J~ ~ Pension-plan premiums and pension payments not covered by insurance-type plan (not) ,.... 2.3~ 1.1% Life insurance premiums, death benefits, sickness, accident and medical-care insurance premiums, hospitalization insurance, etc. (net) 4.4~ 2.1% Contributions to privately financed unemployment benefit funds * Separation or termination pay allowances 0.l~ 0.1% Discounts on goods and services purchased from company by employees 0.5~ 0.3% Employee meals furnished by company * * Miscellaneous payments (compensation payments in excessof legal requirements, payments to needy employees, etc.) . 0.4~ 0.2% Paid rest periods, lunch periods, wash-up time, travel time, clothes-change time, get-ready time, etc j..2.~ 2.IA% Payments for time not worked L4.~ Paid vacations and bonuses in lieu of vacation. ... 5.7~ 2.8% Payments for holidays not worked . 3.3~ 1.6% Paid sick leave * 0.3'~ 0.1% Payments for State or National Guard duty, jury, witness and voting pay allowances, payments for time lost due to death in family or other personal reasons, etc 0.I~ * Other items ~ Prof it-sharing payments 2.9~ 1.4% Christmas or other special bonuses, service awards, sug- gestion awards, etc 0.9~ 0.5% Employee education expenditures (tuition refunds, etc.) ... * * Special wage payments ordered by. courts, payments to union stewards, etc 0.2~ 0.1% * Less than 0,05~ or 0.05% SOURCE: Chamber of Commerce of the United States, Economic Research Department, Fringe Benefits 1965. 95-159 0 - 68 - pt. 6 - 26 PAGENO="0402" 2708 Annex Q Total Employment, Apparel (knit and woven) Industry, United States Perk?d .` - Number 1946 1,309,900 1956 1,314,800 1957 1,293,400 1958 1,252,800 1959 1,308,900 1960 1,308,700 $961 1,287,900 1962 1,337,400 $963 1,345,800 1964 1,363,200 1965 1,421,900 1966 1,464,200 1967 1,447,700 .Janu~ry-March 1967 `1,453,300 January-March 1968 1,443,400 NOTE: Products of the Apparel (knit and woven) Industry not covered by the data leather, rubber and plastic gloves, vulcanized rubber garments and garments made from rubberized fabrics produced in the same establishment, surgical corsets produced in establishments primarily engaged in manufacturing surgical and ortho- pedic appliances, and artificial flowers. Products covered by the data which are not products of the Apparel (knit and woven) Industry are hosiery, knit fabrics, hats, millinery, and fur garments and accessories. SOURCE: U.S. Department of Labor PAGENO="0403" 2709 Annex R Production, Apparel (knit and woven), United States (in millions of dollars) In Current In (957-59 Year Prices Prices 956 $ 0,055.5 $ (0,055.5 (957 10,214.1 10,2(4.1 (958 9,851.3 9,880.9 (959 (0,520.9 (0,479.0 (960 (0,785.4 (0,647.0 (961 (0,949.4 10,841.0 (962 I I ,620. I ,448. 5 (963 (1,835.6 11,6(4.9 1964 (2,479.3 12,139.4 965 (3,333.0 (2,857.3 I9ô6~ 13,899.7 13,237.9 (3,868.2 12,973.1 p -- PreI in mary estimate SOURCE: U.S. Bureau of the Census and ILGWU Research Department PAGENO="0404" 2710 Annex S Exports, Apparel (knit and woven), United States (in millions of dollars) 1956 $ 68.0 957 71.1 1958 72.1 959 76.2 1960 87.9 1961 84.1 1962 71.7 1963 76.1 1964 85.6 1965 99.9 1966 111.2 1967 114.7 S0UF~E: U.S. Bureau of the Census PAGENO="0405" 2711 Annex T Imports for Consumption of Apparel (Knit and Woven),United States In Market Value in~the Foreign Country* (in millions of dollars) 1956 $149.5 1957 156.9 1958 181.2 1959 268.8 1960 317.6 1961 296.0 1962 397.4 1963 431.6 1964 493.5 1965 578.2 1966 628.1 1967 687.5 * Exclusive of customs duties, ocean freight and marine insurance. SOURCE: U.S. Buroau of the Census PAGENO="0406" 2712 Annex U Imports for Consumption of Cotton, Wool and Man-Made Fiber Apparel, United States (expressed in thousands of pounds equivalent) Man- Year Cotton Wool Made Total 1956 32,922 6,759 1,132 40,813 957 35,453 6,689 1,674 43,816 1958 47,710 6,584 1,979 56,273 1959 74,666 11,863 4,968 91,497 1960 76,289 13,74l 5,665 95,695 1961 60,267 13,717 5,033 79,017 1962 91,823 22,790 10,443 125,056 1963 94,204 28,039 12,847 135,090 1964 107,578 28,421 21,842 157,841 * 1965 119,891 35,443 30,798 186,132 1966 128,782 33,021 38,151 199,954 1967 133,092 30,771 60,884 224,747 SOURCE: U.S. Department of Agriculture PAGENO="0407" 2713 Annex V General Imports of Cotton, Wool and Man-Made Apparel, United States (expressed in millions of square yards equivalent) Man-Made All Perio&__ _QQtLo~. Wool F.iber~ flbers_ 962 381.8 45.6 48.9 * 476.3 963 384.2 54.6 53.7 492.5 1964 414.7 53.9 92.1. 560.7 1965 457.1 67.6 159.5 684.1 1966 485.0 62.8 229.5 777.3 1967 475.4 58.9 343.0 87)7.3 Jan.-Mar. .19,67 127.2 6.9 83.4 2l7.5~ Jan.-Mar. 1968 138.8 H 8.4 98.9 246.1 SOURCE: U.S. Department of Commerce, Office of Textiles PAGENO="0408" 2714 Annex W Imports, Domestic Production and Exports, Apparel (knit and woven), United States Valued in United States Prices (in millions of 1957-59 dollars) p Preliminary estimate SOURCE: I.L.G.W.U. Research Department (based on domestic output and foreign trade data compiled by the U.S. Department of Commerce deflated by wholesale price indexes of the U.S. Bureau of Labor Statistics) Domestic Year _jmports _Product ion Imports as Percent of Domestic Ex~ports _Eroduct ion 1956 $ 403.8 $10,055.5 $ 68.0 4.0% 1957 444.3 0,214.! 71.1 4.3 1958 1959 556.0 881.! 9,880.9 10,479.0 72.3 75.9 5.6 8.4 960 918.7 10,647.0 86.7 8.6 1961 757.9 10,841.0 83.3 7.0 1962 ~l,I91.4 11,448.5 70.7 10.4 I963 1,273.6 1,614.9 74.7 11.0 1964 1,473.7 12,139.4 . 83.3 12.1 965 * 1,779.2 12,857.3 * 96.3 13.8 I96&~ I967~ 1,892.! 2,025.8 13,237.9 12,973.! 105.9 107.3 4.3 15.6 PAGENO="0409" 2715 leports of Apparel (knit and woven) Classified by Country of Origin aud Value of Shipments Vance - 1956 966 $1000 $26999 V t I P Azores ~_-.--. ~~`` Bolivia Bahamas Caaerov Bernvvlu Ceylon Brit. honduras Chile Canary Islands Dovinican Republic Greece Ecuador Haiti East Germany Buegary Estonia Janaica Gambia - Lebanon. ,.~ braltar Malta Honduras Borocco .5~ Hungary Peru Indonesia South Korea. \ latnia Thailand Lebanon Netherlands Antilles New Zealand A geria A Panana Rhodnsia Rumania South Vietnan Syria Uruguay U.S.S.R. Zanbia $ 25.000 - $ 49,999 Argentina BriG. II. Africa Cuba Colocbia Gaza Strip Guatenvala Leeuard Islands $ 50000 - S 99,999 Dencark Brazil Guateeala Greece Ireland Iceland South Africa Turkey 100,000 - S 249,999 Czechoslovakia Czechoslovakia India Haiti Norway Thailand Sweden. Trinidad $ 250,000 - $ 499,999 Belgiue-Lucecburg.. Barbados llextco BriG. Honduras Spain Poland Venezuela $ 500,000 - $ 749,000 blest Germany Australia S 750,000 - $ 999,999 Canada inland Israel Malta Madeira Norway Netherlands Pakistan Taiwan. Sweden $ 1,000,000 - $ 9,999,999 Austria Austria Ecuador Belgiun_Lucnnburg France. Canada Hong Kong Bencark Portugal India SwItzerland Ireland Madei ra Malaysia Nnosei -Ranpo Netherlands Portugal - ingapore Spoin * Switzerland Yugoslavia $ 10,000,000 - $ 24,999,999 Italy France phillipines South Korea United Kingdom .Taiuvan blest Germany $ 25,000,000 - 5 49,999,999 lini ted Kingdom Phillipines $50,000,000 - $ 99.999.999 Japan. $ 100.000.000 - $ 199,999,999 ~ Kong PAGENO="0410" 2716 Annex Y Estimated Average Hourly Earnings, Apparel Industries Abroad (expressed in United States dollars) Average Hourly Germany 1967 85 ~ United Kingdom 1967 73 * France 1967 64 ~ Israel 1967 57 ~ Ireland 1967 54 ~ Italy 1966 46 ~ Austria 1965 42 ~ Japan 1966 35 ~ Jamaica 1964 29 ~ Mexico 1966 26 ~ Philippines 1963 Hong Kong * 1966 20 ~ Spain 1966 20 ~ Portugal 1966 Il ~ Egypt 1964 13 ~ India 1966 13 ~ Pakistan 1966 13 ~ China (Taiwan) 1966 13 ~ South Korea 1967 8 ~ NOTE: The figures do not take account of earnings of cottage workers (i.e. industrial home workers). Their numbers, however, are significant in many countries. Their wages are but a fraction of the earnings of apparel factory workers in the same countries. PAGENO="0411" 2717 EXHIBIT 2 INTERNATIONAL LADIES' GARMENT WORKERS' UNION AND AMALGAMATED CLOTHING WORKERS OF AMERICA, AFL-CIO, NEW YoRK, N.Y. A BRIEF APPRAISAL OF THE TARIFF COMMISSION REPORT ON TEXTILES AND APPAREL Following a request by President Johnson to the United States Tariff Commis- sion to "make a comprehensive investigation of the economic conditions of the United States textile and apparel industries, including the present and future impact of imports upon such industries", the Tariff Commission submitted a two volume report to the President on January 15, 1968. Unfortunately, instead of presenting a comprehensive, unbiased picture of existing conditions and prospec- tive deveolpments, the Commission presented a partisan report, normally not expected from an impartial government agency charged with providing factual information for the President to use in developing policy. The Tariff Commission's Report is neither balanced nor complete. It distorts past and current developments, both domestic and international, by selective em- phasis and the deliberate choice of data. It sidesteps the question of the future impact of imports on the domestic textile and apparel industries and seeks to minimize the impact of imports to date. Moreover, the Report often shows a lack of familiarity with the industries under investigation, and resorts to facile gen- eralization in the total absence of supporting fact. As a result, it contains numer- ous factual and interpretative errors. Some of the more serious defects of the Report, each of which can be readily documented, are briefly sununarized below. 1. The Commission's Report continually changes the dates used in historical comparisons shifting from dates going back to 1954, to 1958, to 1961, to 1962 and to 1063 as the beginning of time periods, and also varying the terminal dates. At times it completes the period with either 1965, or 1966, even though data for 1967 was available, as is clear from other sections of the Report. Data for 1967 were occasionally used when they suited the Commission's purpose. This shifting of dates permits the Commission to develop arguments of convenience. The statis- tical results presented in the report are often determined by the choice of the time period rather than by. an effort to place events in their proper historical perspective. 2. The Commission chose to include raw fibers used in the manufacture of tex- tiles within the ~cope of its investigation even though the President requested only an investigation of the textile and apparel industries. This change in the scope of the investigation was then utilized to distort the degree of import pene- tration for textile and apparel products considered as a totality, to minimize the balance of trade deficit in textiles and apparel, and to confuse the very issues the Commission was asked to investigate. 3. The Commission generally ignores imports as a casllal factor in the decline of domestic production. This is done even where imports of a particular item are rising in the face of a decrease in the domestic production of that item. 4. In an effort to deemphasize the impact of imports on domestic markets, the Commission repeatedly stresses that the imports are either not produced in this country in significant quantities, or that they are in some undefined way different from the domestic product, Or that they serve needs of the lower income groups of this country that presumably are not met by domestic producers. This is done in generalized form and without documentation. This is the approach of the advo- cate who generalizes from the hypothetical or highly unusual situation instead of dealing with the available facts. The Commission's contentions are not sustained by the facts. 5. The Commission fails to take proper account of the import developments which led to the adoption of the Short Term and the Long Term International Cotton Textile Arrangements. It thus ignores the parallel between the earlier developments in cotton textile and apparel imports and subsequent developments in textile and apparel imports of other fibers. 6. The Commission falls to assess the Long Term Cotton Textile Arrangement as a practical international instrument which, despite weaknesses, has introduced a degree of orderliness into internationl trade and, at the same time, permitted a continued expansion of imports. 7. The Commission fails to deal with limitations or contradictions in the statis- tical data which it utilizes. PAGENO="0412" 2718 8. The data published by the Commission in various sections of its report are at variance with the published figures of the data-collecting departments and agencies of the Federal government, or by other research institutions, and can- not be substantiated. 9. In utilizing Census data, the C6mmission does not show any awareness of the duplication in the data that arises in the specific industries as a result of in- tra-industry transactions. Nor does it show any awareness of the effect of such duplication on the changes in the particular industry's undupl'icated sales volume to others. Thus, it utilizes the combined figures on the dollar volume of apparel contractors and of their principals for whom contracting costs are a cost of doing business. As a result of the Commission's failure to eliminate this duplication, the data distort the sales performance of the different branches of the industry and the trends of business volume. 10. The Oonunission's Report often shows no awareness of the difference be- tween data for an industry and data for the principal product of that industry. This misunderstanding leads to confusing statements and invalid explanations and conclusions. 11. In presenting and analyzing import data the Commission resorts to com- parisons of product groupings which are not comparable from one time period to another, and fails to call attention to or take account of changes in import classi- fications which make its comparisons invalid. 12. The Commission relies on its own estimates of import penetration of tex- tile and apparel products in terms of raw fiber weights. It fails to take account of the mare sophisticated series maintained on the same basis by the Office of Textiles of the Department of Commerce which has been utilized by the United States Government in international negotiations. 13. The Commission ignores the impact of apparel imports on domestic fabric and yarn producers, and the impact of fabric imports on domestic yarn producers. It thus significantly underestimates the impact of textile and apparel imports. 14. The Commission recognizes that the overall measure of import penetra- tion in fabrics is best measured in terms of square yards rather than by fabric weight. Yet it fails to pursue this principle in measuring import penetration for apparel. Thus, while comparisons of domestic production and of imports for a limited number of apparel products are made in terms of the number of items, the Commission fails to develop a comprehensive measure of overall apparel penetration in terms of physical units. Nor does the Commission use data presented in the course of its hearings which take account of the factors requiring the development of such a measure. The Commission's figures grossly understate the degree to which apparel imports have penetrated the [Jnited States market. 15. The Commission's discussion of non-tariff barriers employed by many foreign countries to curtail imports of textiles and apparel, particularly from developing countries, is meager and superficial. It ignores the strong pressures that these barriers create in developing countries and other exporting nations to concentrate their exports in the United States market. 16. The Commission's Report reveals a lack of understanding of-the economics and operation of the apparel and textile industries and their problems. It totally ignores the special characteristics of these industries and of their labor force. 17. The Commission's Report emphasizes the increase in the number of larger firms in the apparel industry. It neglects the fact that this industry continues to be a mainstay of small business. As a result, the Commission loses sight of the negative impact of imports on numerous firms in the industry and ignores the national policy of promoting and encouraging small business. 18. The Commission repeatedly assumes, without evidence, that the impact of imports is different on larger and small firms. In the process it neglects serious effects of imports on both large and small firms. It also totally ignores the impact on workers regardless of the size of the company. Even when a large firm is able to switch to the manufacture of other products, the result may still be displacement of those workers affected by imports. When large firms transfer part or all of their production offshore as a result of rising imports, the effect is unemployment for their workers. 19. The Commission's Report shows little understanding of the nature of labor costs. It repeatedly treats changes in hourly earnings of workers as though these were unit labor costs. It fails to recognize that unit labor costs and hourly earnings typically do not move alike. PAGENO="0413" 2719 20. The Commission's Report faila to take account of the ease and rapidity with which countries abroad can create and expand apparel producing capacity for export to the United States. It ignores the ease with which apparel produc- tion can be relocated from the United States abroad through the use of the contracting out practices which have long been an integral characteristic of this industry in its domestic operations. 21. The Coinniission fails to take account of the ease with which importers of apparel shift from one product to another, or from one fiber to another used in the manufacture of a particular product. They thus ignore factors which intensify import penetration and help bypass international arrangements which seek to regulate imports of a single fiber or of specific products. 22. The Commission ignores the ease with which importers shift their pur- chases from country to country. It thus neglects the facility with which importers bypass restraint levels applicable to any individual country and increase import penetration. It also ignores the resulting build up of overcapacity and over- production of particular products, and the economic and political repercussions likely to follow. 23. The Commission fails to make any analysis in depth of the multi-fiber character of the apparel industry and its bearing on the industry's present and prospective import problem. 24. With but one exception, the Commissions' Report fails to take account of the testimony presented in the cOurse of its six day hearing. It disregards testimony presented to it even on matters on which there was neither conflict nor disagreement by witnesses with widely different points of view. LAZARE TaPER, Director of Research, ILGWU. Mu~ox FRmr, Director of Research, AUWA. EXHIBIT 3 IMPORTS OF APPAREL AND TEXTILES (Report of the committee on resolutions unanimously adopted by the delegates at the convention of the International Ladies' Garment Workers' Union, Atlan- tic City, N.J., May 28, 1968) Resolutions 34, 185, 202 and 247 concern problems stemming from the increased imports of wearing apparel and particularly the recent development of con- tracting for U.S. firms across the border in Mexico. The growing imports of apparel, and more specifically women's and children's garments, are a serious concern to all of us-industry and labor alike. Our union's abiding concern with this problem is reflected in the resolutions adopted by our General Executive Board, presentations made by our union before the Tariff Commission, the Trade Information Committee, the Special Representative for Trade Negotiations, Senate and House Committees and the various federal Departments concerned with the problem. It is emphasized in the GEB report as well as in the opening address of President Stulberg at this convention. At the present time, the United States is a signatory to an international agree- ment as well as to a number of bilateral agreements with foreign nations regulat- ing imports of cotton garments and other cotton* textile products. These agree- ments are far from perfect. Yet they do check import penetration. No such agree- ments were concluded for apparel and textiles made of wool and synthetics. All textile and garment imports must be checked. Apparel shipments from abroad already exceed 14 percent of domestic production. In a competitive indus- try such as ours, the rapid rise of imports, mostly from the sweatshops of the Far East and elsewhere, does endanger the livelihood of garment workers over here. The situation is further endangered by the increased tendency on the part of profit-hungry unscrupulous domestic bargain hunters to move their own operations abroad and then export garments to the United States. It would be an irony of history if, after eliminating sweatshops in this country, the United States were to permit the erosion of our industry by competition of sweatshops abroad. PAGENO="0414" 2720 The recent developments in Mexico illustrate the growing threat of unrestrained imports. American firms are encouraged by the Mexican government to open plants across the border as well as in the interior of that country on the promise of substantially lower wages than over here. The cut goods sent there are per- mitted to enter Mexico without customs duties. When finished garments are returned, only fractional duty is paid to the United States on the wages paid in Mexico. This is a threat both to workers in our border region as well as to many others. There exists a decided need for positive action by our goverument to solve the problem of textile and apparel imports to this country. We appreciate what has been achieved in cottons, but this is only the first step. Efforts must be multiplied to negotiate satisfactory international agreements to regulate all trade in apparel and textile, irrespective of the fibers from which these are made. If the adminis- tration meets with undue resistance from foreign countries, Congress should adopt appropri~ate measures to safeguard our industry and our jobs. RESOLUTION NO. 34 Imports `Introduced by the San Francisco Joint Board and Locals 8, 101 and 213. Wearing apparel is imported in increasing amounts from foreign countries. These products are made under much lower standards than those prevailing in this country. The latest gimmick used by some unscrupulous non-union manu- facturers is to carry on some of their production across the border in Mexico at wages as low as $2.08 a day. This is a serious threat to our continued progress. Resolved that this convention instruct the incoming GEB to use every possible means to protect our members against the unfair advantages these unscrupulous employers have; and be it further Resolved that the ILGWU call upon the federal government to take whatever steps are necessary to protect the earnings of American workers against low wage imports from Mexico and elsewhere. Referred to Committee on Resolutions. RESOLUTION NO. 185 Imports Introduced by Los Angeles Dress and Sportswear Joint Board and Locals 84S & D, 96, 97D, 266, 482 and 496. The production of wearing apparel in foreign countries is in many instances targeted for import to this country. Such imports are produced under working conditions -far below our present labor standards. Imports of apparel have in- creased to the point where they threaten the very structure and existence of vital sections of the garment industry in this country. Resolved that this convention urge the GEB to take prompt and positive action to offset this increasing danger to our industry and to our members. Referred to Committee on Resolutions. RESOLUTION NO. 202 Imports Introduced by Local 117. Economic difficulties of the women's apparel industry have been greatly in- tensified by a growing tide of imports, including those of high fashion garments, from countries where apparel is produced under much lower labor conditions. It is intolerable to expect American workers to compete with such labor. Resolved that the ILGWU call on the federal government to take such neces- sary corrective action as to prevent the deterioration of American industry and to save the jobs and earnings of our workers. Referred to Committee on Resolutions. RESOLUTION NO. 247 Runaways to Mea,ico Introduced by Local 3~0. The recent promotion activities by Mexico are encouraging American firms to shift some of their operations from the United States across the border to Mexico. There workers are paid a pittance for the same work that was previously carried out in the U.S. Furthermore, these employers are taking advantage of the exist- ing tariff regulations in order to escape the payment of the full amount of custom PAGENO="0415" 2721 duties on the work done in Mexico. This development threatens employment of garment workers both stateside as well as in Puerto Rico. The situation is also very serious because unemployment in the several regions of the U.S. that border on Mexico and from which work is frequently taken across the border is among the highest in our country. Resolved that this convention file a protest with the U.S. government and the Congress and urge them to take all necessary action to safeguard jobs od! Ameri- can workers from unfair low-wage competition. Referred to Committee on Resolutions. Exiunir 4 RESOLTJTION ON IMPORTS OF APPAREL Substitute resolution for resolutions submitted by Capitol District Joint Board and affiliated Locals 71 and 196; Joint Board of Shirt, Leisurewear, Robe, Glove and Rainwear Workers; Southwest Regional Joint Board; Local 147G (Knox- ville, Tenn.); Local 609 (Newport, Ky.); Local 948 (Oneida, Teun.); and Local 966 (Campaign, Tenn.). Adopted unanimously by the 26th Bienulal Convention of the Amalgamated Clothing Workers of America, Miami Beach, Florida, May 31, 1968. Unfair competition from imported garments, particularly from low wage coun- tries, is a growing danger to the labor standards and jobs of apparel workers in the United States and Canada. Increasingly, developing countries tend to view the creation of an apparel industry for export as a natural stepping stone to industrialization. They are attracted by its modest capital requirements, its simple technology, and the relative ease with which its labor force can be trained. They direct a large proportion of their exports to the United States and Canada because the import practices of these two countries are much more liberal than those of other developed countries, which skillfully use a variety of non-traiff barriers to limit imports of apparel. The interest of developing countries in increasing apparel exports to the United States and Canada are stimulated and encouraged by domestic chain stores, de- partment stores, mail order houses and large apparel purchasing organizations. They not only place apparel orders abroad, but provide off shore producers with financial assistance, technical guidance, managerial know-how and advice on styling and merchandising. For these domestic entrepreneurs, this is a con- tinuation overseas of their traditional profiteering at home from low wages. For years they have been generating downward pressures on apparel wages and working conditions by playing off one domestic apparel contractor against another and by encouraging the movement of domestic apparel production to firms in anti- union communities. They are now engaged in the same kind of activity abroad, running away from domestic wage levels influenced by collective bargaining and the Fair Labor Standards Act, and playing off contractors in one low-wage country against those in another, with as little concern about the unfair ex- ploitation of workers abroad as they have shown for workers at home. For the garment workers of the United States and Canada, the import threat is extremely serious. The apparel industry is particularly vulnerable to unfair competition based on low wages. It is an intensely competitive industry in which labor cost represents a large proportion of total cost; capital investment is relatively small; capital equipment is relatively simple, and in which inexperi- enced workers here and abroad can be brought to the same high levels of pro- ficiency in a comparatively short period of time. Its machinery, its production and merchandising know-how, its size and style standards tend to be rapidly internationalized as a result of the world-wide activities of machinery pro- ducers, management consultants and importer interests. Its extreme competi- tiveness stimulates a continuing quest for greater efficiency and provides an in- ternal discipline to keep prices in line with costs and prevent unwarranted price increases. Garment manufacturers in the United States and Oanada, therefore, have little leeway-on the basis of technology, productivity, know-how, quality, style, price, or any other measure of comparative efficiency-for offsetting the overwhelming competitive advantage of the extremely low wages paid abroad. In the absence of mechanisms to regulate international trade in apparel, increas- ing imports will undermine the domestic industry and erode its jobs. The displacement of domestic apparel production in the United States by im- ports from low wage countries would have other serious consequences. Recent PAGENO="0416" 2722 experience with the nation's anti-poverty effort makes clear that, even in periods of high employment and relatively rapid economic growth, providing job oppor- tunities for large numbers of people unable to find work because they lack train- ing, skill and job experience is stubborn and complex. It has become increasingly apparent that to achieve the goal of full employment even a highly industrial- ized nation such as the United States must be able to generate a broad spectrum of employment possibilities, with large numbers of jobs in the lesser as well as the more highly skilled categories. The garment industry, which provides ap- proximately 1.4 million jobs, is one of the economy's major sources of manufac- turing employment which typically does not require persons to have training or experience prior to being hired. Moreover, for a very large proportion of its work- ers alternative job possibilities are not readily available. To permit apparel im- ports to undermine this important employment base would only magnify critical domestic problems. The Amalgamated Clothing Workers has repeatedly called attention to the special character if the apparel import problem and the dangers that it poses. Together with other unions and interested industry groups it played a leading role in the developments which led to the negotiations of Short-Term and Long- Term Cotton Textile Arrangements under which international trade in cotton garments and cotton textiles have been governed since 1961. In spite of short- comings in the Long-Term Arrangement, the Amalgamated urged its extension from the original expiration date in 1967 to September 30, 1970, and will continue to resist efforts by those outside and inside the government to weaken its ad- ministration or dilute the substance of the bilateral agreements covered by it. As a result of the intervention of the Amalgamated, together with other labor and in- dustry spokesmen for the apparel and textile industries "Kennedy Round" tariff cuts in the textile-apparel sector were not as deep as would otherwise have been the case. Unfortunately, the effectiveness which our government displayed in negotiating and, later, extending the Long-Term Arrangement covering trade In cotton gar- ments and cotton textiles has not been repeated for non-cotton garments and textiles. As a result, a ever growing proportion of apparel imports are garments made of fabric other than cotton. The failure of our government to conclude international agreements covering trade in non-cotton apparel and textiles in the more than six years since the adoption of the special government program for textiles and apparel, and the total lack of progress in this direction in the past two years has been discouraging to proponents of an internal solution and has strengthened sentiment for unilater~il acton by Congress. The Amalga- mated, in keeping with its long tradition of support for reciprocal trade, con- tinues to prefer an international solution to the problem of apparel and textile imports but recognizes that there may be no practical alternative to unilateral legislation if the pursuit of international agreements means further protracted delay. The urgent need is for timely action of one kind or the other by our gov- ernment to prevent market disruption and insure orderly trade in all apparel and textiles, regardless of fiber. In calling for specific action to regulate the flow of apparel imports, the Amal- gamated is not abandoning its traditional policy of support for the contInued expansion of international trade on a reciprocal basis. It is urging, rather, that the overall cause of liberal trade policy will be better served by recognizing that there are key problem areas in the economy that should be dealt with practically in terms of economic, social and political effects. The doctrinaire approach, which lumps together without distinction all requests for safeguards against the con- sequences of international competition, and sees every situation as a simple choice between free trade and protection, will ultimately weaken the cause it is intended to serve, for it encourages a strengthening of the protectionist alliance and a broadening of its base of public support. In the case of apparel Imports the issue is not that of choosing between free trade and protection, but of weighing the full consequences of permitting the erosion of an important domestic industry which is one of the major sources of a type of employment opportunity the nation urgently requires to achieve its economic, social and political goals. Moreover, the economics of the industry is such that international competition tends to degenerate and to be based ulti- mately on the maintenance of substandard labor conditions instead of compara- tive efficiency. Garment imports do not protect the consumer against price goug- ing, inefficiency or monopoly profit, but turn back the wheel of history in an PAGENO="0417" 2723 attack on the labor standards that responsible apparel unions, like the Amalga- mated, have struggled throughout their history to achieve. Apparel imports from low wage countries compete in the markets of the United States and Oanada, not on the basis of finer styling, a better product or more imaginative merchandising, but on the basis of their low wages and sweated conditions-their long hours and their homework with its unsanitary conditions, health hazards and exploitation of the young, the aged and the infirm. Here the Amalgamated and its members confront the modern analogue of the unfair competition on the basis of low wages which historically endangered the employment and earnings of apparel workers. Our history is a history of triumph over the evils of the sweatshop at home. We shall not permit those evils to destroy us from abroad. Resolved, that the 26th Biennial Convention of the Amalgamated Clothing Workers of America, AFL-CIO, CLO: 1. Commends the Administration for: (a) the account it took of special problems of the domestic apparel indus- try in negotiating the "Kennedy Round" tariff cuts, (b)negotiating the three-year extension of the Long-Term Cotton Textile Arrangement; 2. Urges the governments of the United States and Canada to: (a) take immediate action to insure that international trade in wool and other non-cotton apparel and textiles is regulated by country and category through international agreement or through unilateral legislaton, (b) strictly enforce the existing international agreements governing trade in cotton garments iand firmly resist pressures to dilute their effectiveness; 3. Authorizes the General Officers and General Executive Board to: (a) continue efforts to ensure~ an understanding by the executive and legislative branches of the government of the seriousiiess of the problem of imports of apparel and related products, (b) continue educational activities to acquaint retailers, consumers and the general public with the deplorable wage, working and unsanitary con- ditions under which most of the imported apparel is produced, and the con- sequences for apparel workers and the economy as a whole of unfair competition from such imports, and (c) take such action as they consider necessary to safeguard the interests of Amalgamated members against the dangers of imports. STATEMENT OF DEANE E. RUSMISELL, PRESIDENT, WORK GLovE MANUFACTURERS ASSOCIATION, INC. This statement is prepared and submitted in behalf of the Work Glove Manu- facturers Association, a sixty-five year old trade association composed of 38 leading domestic work glove manufacturers. Not all domestic work glove manu- facturers are members of the association, but volume-wise the assoëiation mem- bers produce approximately 75% of the total volume of work gloves produced in this country. Our industry is suffering by reason of greatly expanded imports from foreign countries, particularly Hong Kong, Taiwan and Korea and unless some remedial action is taken within the reasonably near future, the domestic work glove industry will vanish from among those industries which have contributed much to the economic growth of our country. But the domestic work glove industry is not an expendable industry. Let me give some reasons in support of this contention. During the Korean War, Mr. A. Henry Thurston, Director of the Textile Division of the National Production Authority, prepared a memorandum which referred to work gloves. His memorandum was dated July 13, 1951, and it stated, in part, as follows: "A shortage of work clothing will cause severe dissatisfaction among workers in all branches of the economy. For example, during World War II there were instances of complete work stoppage because of shortages of essential items such as work gloves." (Italic added.) Relative to this matter of essentiality, I would like to refer to a Defense Mobilization Order issued on November 4, 1964 by the Director of the Office of Emergency Planning. The Order first states the policy of the Federal Govern- ment on use of resources in the period immediately following a nuclear attack 95-159 O-68-pt. &-27 PAGENO="0418" 2724 on the United States, and lists those items essential to national survival in the immediate post-attack period. The. Order then lists the activities which are to be accorded priority over all other claims for resources, and the Order also states that "There is no significance in the order of the listing-all are impor- tant. One of the activities listed is. the "Production and distribution of survival items and provision of services essential to continued survival and rapid recovery." One of the survival items listed is "gloves and mittens." In addition, Section III A of Annex 35 of the National Plan of Civil Defense and Defense Mobilization classifies a "work glove" as an "essential survival item." Accurate import statistics relative to "work gloves", as each, are not available because the Bureau of the Census of the Department of Commerce does not classify imports as to end use. However, beginning on September 1, 1963, when new schedules were published relative to the classification of imported goods, a particular classification was included therein entitled: "Gloves of Horsehide or Cowhide, Other Than Wholly of Leather". Since practically all of the gloves which might be classified under this heading are suitable only for work purposes, the following analysis will pertain to this particular style of glove from the beginning of 1964 through 1966 (1967 produc- tion figures are not yet available from the Department of Commerce). During the year 1964 imports of leather and fabric combination work gloves amounted to 5.8% of domestic production. For the year 1965, imports amounted to 8.9% of domestic production. Then in 1966, imports amounted to 25.6% of domestic production. The question uppermost in one's mind is: "How long does an industry which produces an item which is currently classified as `an essential survival item' by the Government of the United States have to wait before some relief is available?" Further, imports during the year 1965 had an average dutiable value of $8.57 per dozen. In 1996, the average dutiable value of these imports was $5.62 per dozen. All of this information wa:s obtained from official reports of the Depart- ment of Commerce. The average selling price of comparable gloves by two domestic manufacturers during 1965 was $9.72 per dozen. In 1966, the average selling price of comparable gloves by the two domestic manufacturers was $11.27 per dozen. So that you may appraise the impact which these iniports may have on the domestic industry, the facts indicate that the import price was slightly less than 50% of the domestic price, and that the imports amounted to slightly more than 25% of the domestic production. Heavy industry, particularly, is dependent upon work glove manufacturers to keep it going. There have been numerous instances in the United States where heavy industries have been threatened with a shutdown because of the lack of available work gloves. Work gloves are used as a protection against cuts, bruises, lacerations, and- sometimes-loss of fingers. Many man-hours during the year are lost in industry when a worker sustains cuts by not using work gloves. Industrial studies show that many cuts and lacerations can be avoided by the use of the proper hand protection. This is exemplified by plants supplying work gloves to the workers in the same manner as they supply safety goggles, hard hats, and other items of safety apparel. Numerous union contracts now require hand protection in the form of work gloves to be furnished to the plant personnel at no charge to the worker. Ninety percent of the work that goes into the making of a work glove is hand labor, performed, usually, by-female employees at sewing machines. It is necessary to train a sewing machine operator, who sews and manufacturers a work glove, from between six months to one year before she becomes proficient and can operate a sewing machine on a piece rate basis where she will earn her pay. Labor rates paid to these workers manufacturing gloves in the U.S. vary from the present minimum wage to $2.50 per hour. If work gloves are allowed to continue to be imported into the United States from low wage rate countries, i.e.. ranging from 15 cents per hour in Taiwan to 55 cents per hour in Italy, the manufacturing of work gloves in the United States will become a lost art, as manufacturers cannot continue to pay minimum or higher wage rates and exist in competition with imports from low wage rate countries. PAGENO="0419" 2725 With further reference to "expendable industries", historically the domestic work glove industry has been a loW net profit industry. The demand for work gloves is not an elastic one. Consumer demand for work gloves does not increase automatically by reason of any reduction in the price of work gloves. A recent survey of domestic work glove manufacturers disclosed that net profit, after taxes, amounted to 1.53% of net sales. The survey also disclosed that net profit, after taxes, amounted to 5.31% of tangible net worth. These returns are hardly worth the risks involved in operating a manufacturing company. Govern- ment bonds today yield a higher return upon investment, and no risk is involved. As to the relationship of net profit, after taxes, to sales, the 1.53% of the work glove industry is approximately only 30% of the national average for all manufacturing corporations, as disclosed by a recent release of the Federal Trade Commission. That release, dated April 12, 1968 indicated that the comparable figure for all manufacturing corporations in the U.S. for the fourth quarter of 1967 was 5.2%. The continuation of existing conditions under which low cost foreign work gloves can be imported into this country will affect the length of our average work week. In other words, growing imports will produce partial unemploy- ment for some people, and will produce complete unemployment for others. This in turn creates the necessity for agencies to retrain these people in new skills, and in many instances, necessitates~ the uprooting of families from their com- munities in order to secure other opportunities to utilize their newly learned skills. One work glove company has factories located in small communities in Ala- bama, Illinois, Missouri, Tennessee and Texas. Their factory labor force consists largely of female employees. In certain of the communities, other than for employ- ment in the glove factory, employenmt for women is extremely limited and in some locations nonexistent. One work glove company alone had a payroll in 1.967 in excess of $5,000,0~X~. Due to the higher minimum wages which became effective in 1968, the payroll will be even greater this year. The elimination of any portion of this payroll will have a material effect upon the communities in which their plants are located-the re- duction of buying power will affect lOcal merchants, professional men, and others in the community, to say nothing of the substantial reduction of taxes which would be brought about by the reduction or elimination of wages. As an example of what in the past has been contributed to a specific commu- nity, we refer to a factory in a small Tennessee town. Before the factory was es- tablished, there was no i~ndnstry Ia this area employing women. At an open house at the factory about a year after they had started production, local com- munity leaders advised that they were grateful to the company for raising the economic level of their town. Through the channeling of wages into this commu- nity, the employees had first been able to pay their debts which had been accumu- lating for many years, they were able to provide a much more healthful menu for their children and they improved their individual homes and transportation. We are proud to tell you of these facts, yet at the same time the thought is running through the mind of the manufacturer, "What is the future of these people if their employment is curtailed or terminated because of the unlimited importa- tion of work gloves?" Although only one company has been used as an example-other work glove manufacturers belonging to our Association could relate similar stories. This industry is in dire need of some relief. It asks ndt for sympathy but for some action which will freeze the percentage of the total domestic market avail-~ able to importers to a figure which will allow both the domestic industry to survive, and at the same time permit foreign producers to participate in any future growth of the domestic market. This industry does not seek an increase in tariffs upon work gloves because it is convinced that even a 100% increase in such tariffs will not help the domestic industry. The disparity in the selling prices-based principally upon the lower labor costs abroad-makes tariff barriers impractical. Only the im- position of quotas will be of any help to the domestic manufacturers of work gloves. In using the imposition of quotais, this association does not recommend a "frO~eze" on total imports for all years to come. This association, instead, recom- mends that some recent year be adopted as a base year and that future annual imports be limited to the imports of the base year. However, this association PAGENO="0420" 2726 further recommends that whenever the domestic production increases, the base year import limit be increased by the same percentage. Conversely, whenever the domestic production diminishes, the base year import limit shall likewise be diminished by the same percentage. This is our "live and let live" formula. Because of the inroads already made into the domestic market by foreign produced work gloves, this association feels that it is recommending a liberal solution to the problem (liberal to foreign producers, that is). But if this ap- proach is adopted, the domestic producers will at least know that their domestic market cannot be further deteriorated by low cost foreign produced work gloves. STATEMENT OF LEONARD E. LEBOEUF, TREASURER AND GENERAL COUNSEL, STEVENS LINEN ASSOCIATES, INC. I. THIS COMPANY HAS BEEN CONSISTENTLY AFFECTED BY IMPORTS OF TOWELING FABRICS AND TOWEL IMPORTS Stevens Linen Associates, Inc. is a textile manufacturer located in Dudley, Massachusetts. Linen towels and toweling is a significant portion of its pro- duction. We import the raw flax, card it, spin it into yarn and weave it into towels that are either finished or printed in various designs. We have been through Escape Clause procedures and succeeded in obtaining some relief. That rellef was incorporated in the new Tariff Schedules of the United States. Our products are effected by item 356.70 for linen fabric chiefly used for making towels and under item 366.30 for linen towels in the piece with coarse yarn counts. We have therefore lived with the problem of competitive imports since 1956 with ever increasing difficulties. Our items were affected by the Kennedy Round of negotiated concessions. II. CURRENTLY THIS COMPANY IS BEING ADVERSELY AFFECTED IN ITS TOWEL PRODUCTION BY IRON CURTAIN IMPORTS Currently our greatest competition is from so-called iron curtain countries. Thus, if linen towel fabrics are imported as fabric, they enter the U.S. under item 356.70. Recent imports of toweling fabric under this item are as follows in pounds for the years indicated: (Item 356.70) Poland Czechoslovakia Total, all countries 1964 1965 1966 1967,8mon thsthroughAu g.31 179,035 241,286 262,137 78,968 129,532 94,553 105,234 42,951 320,650 358,723 370,911 124,059 It is self-evident that the two countries shown account for the bulk of toweling fabrics. Of greater alarm to us is the fantastic increase in recent years in the im- portation of finished towels of coarse yarn counts. These are the ones directly competitive to ours and entering under item 366.30. Thus, we find the following expressed in pounds: (Item 366.30) Poland Czechoslovakia Total, all countries 1964 1965 1966 1967,8mon thsthrough Aug .31 127,773 189,631 267,922 390,122 72,564 104,573 112,857 110,805 261,075 345,394 424,035 510,666 In other words. Polish imports of towels for the eight months of 1967 more than tripled the entire total of the year 1964 (the year following the new Tariff Schedules). PAGENO="0421" 2727 The result to our company has been stagnation and a gradual dwindling of towel sales in an otherwise rising economy. Thus, net sales of towels and towel- ing for our company reflected in dollars are as follows: Year: 1964 $1, 340, 592 1965 1, 444, 441 1966 1, 307, 687 1967 881, ~ We see no future in the towel business, if this continues. III. THIS COMPANY RECOMMENDS MORE PRACTICAL ANTIDUMPING PROCEDURES BASED ON A PERCENTAGE or THE DOMESTIC MARKET We cannot depend on dumping or anti-dumping procedures as legislated. Our competition comes from countries where costs, capital investment, fringe benefits, and the cost pattern normal to the American industrial method, have little or no meaning. Evaluation from any country of origin where capital investment, wages, social welfare, is entirely an outshoot of social ideology, cannot be reasonably equated or measured by our own industrial and marketing yardstick standards. Under present anti-dumping law, proof is difficult and, in our opinion, almost impossible to obtain in the case of importation from countries such as Poland or Czechoslovakia. We respectfully submit that anti-dumping legislation must be based on how much of the domestic market is captured over an historical past of five years. IV. THIS COMPANY RECOMMENDS QUOTAS ON TEXTU~E ARTICLES OF NATURAL FIBERS BASED ON A PAST HISTORICAL PERIOD AVERAGE We are strongly in favor of the principles of import quotas as proposed in the HR. 11578 bill of July 19, 1967. However, we contend that as meritorious as these principles may be to the domestic industry, it will be of no help to us unless the bill also includes natural fibers along with cotton, wool or man-made fibers, since flax, hemp or ramie are such natural fibers; these are the fibers of which coarse towels are usually made. Such quotas should be based on either the previous year's imports, or even more eauitably, an average taken from the previous five years. FIRST WASHINGTON N~ FACTORY, INC., Blame, Wash~., May 22, 1968. Mr. JOHN MARTIN, Jr., Chief Counsel, Committee on Ways and Means, Longworth House Office Building, Washington, D.C. DEAR SIR: To submit our stand in summary to the Committee regards impor- tation of Japanese netting: 1. Total imports of synthetic netting (mostly Japanese) have increased 65% from 415,876 lb in 1966 to 640,044 lb in 1967. 2. In Japan netting is being produced at a wage level of appr. ~4 of ours. In addition, basic raw material for netting (nylon filament) which is made in Japan as well, cost appr. 1/3 less to Japanese netting manufacturers as does U.S. made nylon to us. (Japanese 840 denier nylon filament, dutiable at 18'/2 %, is offered to us free Seattle, freight and duty paid by seller, at 78~ p. lb, current price for U.S. nylon is 82ç~. 3. Japanese netting is therefore sold in USA below our price and to the extent of 65% in 1967 over 1966, after having absorbed freight and import duty with 321/2% ad val. plus 25ç~ p. lb on synthetic netting. 4. Our manufacturing equipment and process of manufacturing is most ad- vanced and certainly in no way second to Japanese. We compete with any for- eign industry, provided the competitor has comparable labor cost, is not subsi- dized and operates on a comparable tax base. 5. Manufacturing of netting is very labor intense. Knotted netting more so than `the knotless variety. This however is irrelevant, since we have to supply what the fishing industry demands and that is about 80 to 90% knotted netting. Kven if this would change, it would make no difference in our situation as our Japanese competitors would just follow suit as well. PAGENO="0422" 2728 6. I state that our products are of excellent quality and well regarded. It is well understood however, that the fishing industry and individual fishermen buy at the lowest offer. It is therefore that the Japanese impact has brought about a falling back in our production of 80% over the first 4 months of 1968. I now fear that a closing down of our operation will be forced on us soon. I see the same fate in store for all other U.S. netting manufacturers. 7. The question which I submit is not the regrettable loss of income and posi- tion for staff and management, but whether it is not a grave mistake to remain without manufacturers of commercial fish netting in the long run. I may men- tion that a similar situation forced all manufacturers of commercial fish netting in the Dominion of Canada, to close for good in December of 1965. 8. Whether or not the United States netting industry, the only now left on the entire North American Continent, is to be retained, or whether domestic fishermen are soon to become solely dependent on foreign sources of supply, is depending on protection through introduction of Quotas. It will be only a matter of time to see the netting industry fade away and no longer available at times of emergency if no steps are taken soon. 9. I further wish to mention that our equipment can be utilized only for pro- duction of commercial fish nets and that no alternatives are open to us. Sincerely yours, OARL KORING, President. JOHN S. MAcR~z & Co., Greensboro, N.C., June 6, 1968. Congressman WILBUR MILLS, Chairman, House Ways and Means Comm'ittee, Ho-use of Representatives, Washington, D.C. DEAR MR. CONGRESsMAN: With reference to the hearings in your committee on general trade policy, I would like to suggest that free trade should work both ways. If the opponents of any meaningful restrictions on imports that are hurt- ing our textile industry so badly are really concerned with free trade, they should agree to the lifting of all restrictions against imports of cotton from foreign countries so that at least some raw materials can be obtained at com- petitive prices; One can imagine the reaction of the Department of Agriculture and farm groups as this would further destroy the cotton growing industry but at least it would be a logical extension of the apparent view of the State Depart- ment that we must destroy our own industry to aid "developing nations." Yours very truly, JoHN S. MACRAE. P.S.-I have no objection to this being made a part of the record of your hear- ings if you would care to. DEPARTMENT OF STATE, Washington, D.C., July 2, 1968. Hon. Wn~un D. MILLS, Chairman, Committee on Ways and Means, House of Representatives, Wa.sMagtoiv, D.C. DEAR MR. CHAIRMAN: The Department of State has received from the Japanese Embassy a statement of the views of the Japan Chemical Fibres Association. The Embassy has requested that the statement be transmitted to the Committee on Ways and Means for is consideration for possible inclusion in the record of the current hearings on tariff and trade proposals. In forwarding the statement, the Japanese Embassy said that this transmittal did not imply an official post- tion of the Japanese Government, and the Embassy was not responsible for the contents of the statement. I am pleased to forward three copies of the enclosed statement for your consideration. Sincerely yours, WilliAM B. MACOMBEE, Jr., Assistant ~eoretary for Congressional Relations. PAGENO="0423" 2729 STATEMENT OF MICHAEL P. DANIELS, COUNSEL, JAPAN CHEMICAL FIBRES ASSOCIATION This statement is filed on behalf of the Japan Chemical Fibres Association of Tokyo, Japan. This Association is composed of manufacturers who account for practically all of the production in Japan of manmade fibers for export. The members of the Association are also concerned with products manufactured of manmade fibers by their customers in Japan for export to the United States. The Association is opposed to the imposition of quotas on imports of man- made fibers and manmade fiber prOducts into the United States from Japan. The Association is also opposed to an international agreement or any other arrangement which would have the effect of restricting, international trade in such fibers and products. This oppositio~ii rests upon the fundamental con- viction that there is no economic justification for such restrictions. Exports from Japan have not injured or threatened injury to the United States industry producing competitive products nor have such exports occasioned market dis- ruption. These contentions are fully substantiated by the Report of the United States Tariff Commission on Textiles and Apparel. The inescapable conclusion of this Report is that there has been no injury or threat of injury to the textile and apparel industries taken as a whole and certainly not in the manmade fiber sector. The Japan Chemical Fibres Association submitted a brief in this pro- ceeding and believes that the results represent an objective appraisal of the facts. This Report ordered by the President of the United States and the Chair- man of the Ways and Means Committee should be taken as conclusive on the question of import impaction. United States production of manmade fibers and products of manmade fiber has grown at spectacular rates over the last five years. Imports of manmade fiber products have also increased, but at a rate commensurate with the growth in United States production, In the face of the strong performance of the domestic industry, there is not a scintilla of evidence to indicate any- thing approaching injury let alone "serious injury," which is the internationally- accepted standard for judgment in gauging the impact of imports. Further- more, imports as a percentage of domestic pro~luction or consumptioni remain at modest levels. Imports based on the first four months show a downward trend in both 1967 and 1968 from the peak of 1966 when imports were stimulated by conditions of very high demand in the United States. In the face of the economic facts, substantiated by the Tariff Commission, it is almost incomprehensible that the domestic manmade fiber industry would press demands for extraordinary import controls such as quotas, and even more incomprehensible that credence could be given to such claims and demands in responsible quarters. A number of distortions have been made of the economic facts: 1. The growth of manmade fiber product imports has been presented in isolation without placing this growth in the perspective of the growth in total demand in the United States for such products and the very high rate of growth of domestic production of such products. 2. The growth in imports of manmade fibers has been presented in isolation from the decline or stagnation in the growth in imports of products of the natural fib~rs with which manma~le fiber products compete. 3. The high level of imports in 1966 occasioned by high levels of demand in the United States in that year has not been qualified by the decline in such imports in 1967 and 1968. These general points will be expanded upon below. GROWTH OF THE UNITED STATES INDUSTRY The growth of the manmade fiber and manmade textile and apparel industries has been of enormous dimensions over the last decade with an accerelated growth over the last several years. The basic reasons for this growth have been: (a) an increasing availability of manmade fibers at prices increasingly competitive with natural fibers PAGENO="0424" 2730 (b) a greater reliability both in supply and price since production is not determined by uncertain factors such as the weather as in the case of the natural fibers (C) aggressive and well-financed promotional campaigns backed by the chemical companies, and the exploitation of trademarks such as Dacron, Orion, etc. (d) a greater adaptability of manmade fibers to new processes im- parting ease of care features such as permanent press and soil release (e) a number of technical factors making for case of handling and greater economy in manufacture such as the ability to operate machinery at greater speeds with less waste. All available statistical data demonstrate the upward surge in United States production of manmade fibers and products. The use of manmade fibers increased from 21.8% of domestic consumption of all fibers in 1950 to 27.6% in 1960 and 45.4% in 1967 (United States Department of Agriculture, Cotton Situation, March 1968). All forecasts are that the manmade fibers will account for well over 50% of the total consumption of fibers in the 1970's. Table 1 measures the growth in this sector of the industry. Manmade fiber productive capacity from 1961 to 1967 increased by 93.1%. For the same years, manmade fiber production doubled. Noncellulosic fiber production for the same years tripled. In terms of mill consumption manmade fibers grew from 2.1 billion pounds in 1961 to 4.2 billion pounds in 1967, an increase of 105.8% with the noocellulosics more than tripling in the same period. Domestic consumption doubled from 2.0 billion pounds to 4.2 billion pounds. l~nd use consumption, which measures total utilization in end products grew from 2.1 billion pounds in 1961 to 4.0 billion pounds in 1966, probably doubling the 1961 production In 1967 although figures are not yet available. Production of manmade fiber spun yarns grew from 241.4 million pounds to 853.9 million pounds, an increase of 253.7% (from 1961 to 1966). Production of manmade fiber broad woven fabrics grew from 2.4 billion linear yards to 4.2 billion linear yards from 1961 to 1967. End use consumption for apparel grew from 702 million pounds to 1,303 million pounds from 1961 to 1966. This is a plentitude of statistics but they all conclusively demonstrate that in every sector of the manmade fiber complex-fibers, yarns, fabrics, and ap- parel-production and consumption have increased at fantastic rates. PERFORMANCE IN 1968 Tables 2 and 3 measure the performance of the domestic manmade fiber and fabric industries by the Index of Industrial Production for the years 1961 to 1968. What is striking about these tables is the very large growth in the In- dexes for the year 1968. For manmade fiber production, whereas the Index grew by 27 points firom 1965 to 1966 and by 13 points from 1966 to 1967, the growth from 1067 to 1968 (April to April) was practically at 100 points, from 252.1 to 351.8. Thus in one year, from 1967 to 1968, the growth in production in manmade fibers was almost equal to the total growth from 1963 to 1961. Production in man- made fiber fabrics shown on Table 3 shows a similar pattern of accelerated growth in 1968. Whereas the Index grew by 23 points from 1966 to 1966 and by 10 points from 1966 to 1967, there has been a 44 point growth from 1967 to 1968 (April to April). These Indexes show truly remarkable levels of growth well above the growth of the economy as a whole. A further measurement of growth in 1968 is shown on Table 4, which meaSures production of manmade fibers in the first quarters of 1966, 1967 and 1968. Al- though there was no growth in 1967 over 19436, reflecting the general sluggishness in the economy, the growth from 1966 to 1968 (and 1967 to 1968) was by 30.6%. From 1967 to 1968 production of total noncellulosic fibers grew by some 41.7% and from 19436 to 1968 by 50.9%. Certainly, these figures indicate a present pattern of dynamic growth of the United States industry with no basis upon which to postulate future injury to this industry. PAGENO="0425" 2731 IMPORTS Imports of fiber manufacturers from Japan grew through 1966. There has, however, since been a significant downturn in imports. Table 5 shows imports for the years 1965, 1966 and 1967. Overall there was a decrease from 1966 to 1967 of some 20.9%. Leaving out the boom year of 1966 where high levels of demand in the United States encouraged importation, the growth in imports of manmade fiber manufacturers grew by 17%. This growth of 17%, however, must be seen not only in the perspective of growth in domestic production and consumption (see above) but also in the importation of manufacturers of all fibers from Japan. These figures are shown on Table 6, illustrating a decrease in imports of cotton manufactures of 6.8% and of wool manufactures of 1.6%. Taken all together, there was a modest in- crease of 3% in total importation from Japan from 1965 to 1967 and an actual de- cline of 14.4% in imports from 1966 to 1967. Since the Tariff Commission Report conclusively demonstrates that this is an all fiber industry, with manmade fiber substituting for both cotton and wool, the significant figure is not the 17% increase ir. manmade fiber manufacture im- ports but the overall increase of 3%. The trend of imports from Japan of manmade fiber manufactures is clearly down as shown on Taible 7 which measures imports for the first quarters of 1966, 1967 and 1968. Total imports from 1966 to 1968 were off by 8.8% and from 1967 to 1968, there was a decline of 5%. It should be noted that the heavy importation of yarn to meet domestic short- ages has somewhat distorted overall performance. Without the yarns the decline in imports would have been greater. Since yarns can only be utilized by the tex- tile industry itself to fill out production, it is difficult to understand why the tex- tile industry should complain of increased yarn importaton over these years. A large portion of imports are not competitive with domestic production. This point is developed at length in the brief filed in the Tariff Commission proceed- ing which is available to the Ways and Means Committee. There are a number of specialties of Japan being exported to the United States and a substantial pro- portion of the imports consists of items which it is not economical for the United States to produce. THE FUTURE The pattern emerging after the unusual year of 1966 is a vastly increasing United States production and a declining importation from Japan of manmade fiber products. In the face of these trends there is no justification for the fears and anxieties expressed by representatives of the United States industry over the future. Prices in the United States of manmade fibers and products have become highly competitive. The American industry has added capacity at a rapid rate, has vigorously promoted its products and has in particular won acceptance for brand names which are the exclusive property of American manufacturers. We are convinced that the American industry will continue to dominate the American market, a market which will continue to expand. We believe imports from Japan will be confined largely to non-competitive items and to fill in domes- tic production in periods of high demand and tight supply. We invite the Ways and Means Committee to take an overall view of the tex- tile and apparel industries and to view the imports of manmade fibers and man- made fiber products in the perspective suggested by this statement. PAGENO="0426" 2732 TABLE 1-PERFORMANCE OF U.S. MANMADE FIBER AND MANMADE TEXTILE AND APPAREL INDUSTRIES, 1961 AND 1967 COMPARED 1961 1967 Percent increase Manmade fibers (million pounds): Capacity 2, 765. 0 Production total 1, 995 4 Cellulosic 1, 095. 2 Noncellulosic 750. 9 Glass fiber 149. 3 Mill consumption total 2, 060. 7 Cellulosic 1,155.6 Noncellulosic 757. 9 Glass fiber 147. 2 Domestic consumption 1, 997. 8 End-use consumption 2, 105. 0 Manmade fiber spun yards (million pounds): Production total 631. 6 Cellulosic 390.2 Noncellulosic 241. 4 Manmade fiber broad woven fabrics (million linear yards): Production~ 2,373. 5 Manmade fiber end-use consumption for apparel (million pounds): Consumption 702. 0 5, 340. 0 93. 1 4, 030. 6 101. 9 1, 388. 1 2, 333. 7 308. 8 22. 2 210. 8 106. 8 4,240. 4 105. 8 1,520.4 2, 417. 3 302. 7 31.6 218. 9 105. 6 4,239. 2 04, 044. 0 112. 2 92. 1 1 1, 465. 7 132. 1 0611.8 853. 9 56.8 253. 7 4,213. 5 11, 303. 0 77. 5 85. 6 1 1966. Source: Textile Organon, Bureau of the Census. TABLE 2-MANMADE FIBERS, INDEX OF INDUSTRIAL PRODUCTION, 1961-68 (NOT SEASONALLY ADJUSTED) [1957-59=100J 1961 1962 1963 1964 1965 1966 1967 1968 January 219.4 249.8 265.5 337.5 February 226. 6 258. 3 267. 6 345. 6 March 232.5 269.8 258.9 350.5 April 233. 3 269. 0 252. 1 351. 8 May 235. 6 269.4 260. 5 June 241.5 282.6 268.0 July 237. 6 265. 6 242. 3 August 243. 4 265. 0 268. 1 September 244. 9 272. 2 291. 8 October 238. 3 250. 2 306. 1 November 247.0 260.4 324.4 December 249. 9 264. 9 333. 9 Year 119.8 150.6 170.0 198.2 237.4 264.8 278.3 Source: Federal Reserve Board. PAGENO="0427" 2733 TABLE 3.-MANMADE FIBER FABR'CS, INDEX OF INDUSTRIAL PRODUCTION, 1961-68 (NOT SEASONALLY ADJUSTED) [1957-59=1001 1961 1962 1963 1964 1965 1966 1967 1968 January 188.3 212.9 210.4 281.3 February 193.1 221.4 217.7 261.5 March 191.4 218.1 215.8 270.5 April 191.1 229.1 222.5 266.9 May 198.9 235.8 220.6 June 201.0 226.2 211.7 July 193.1 221.7 210.4 August 196. 3 218. 4 218. 2 September 200. 2 212. 7 244. 1 October 205.9 218.4 261.6 November 210.9 221.9 268.6 December 205.3 215.3 279.5 Year 108.9 131.6 150.5 171.0 198.0 221.0 231.8 Source: Federal Reserve Board. TABLE 4.-U.S. PRODUCTION OF MANMADE FIBER, 1ST QUARTER 1966, 1967, AND 1968, COMPARED [In millions of poundsj 1st quarter Percent change 1966 1967 1968 1966-67 1967-68 1966-68 Cellulosic yarn and monofilaments 201. 7 181. 3 198. 3 -10. 1 +9. 4 -1. 7 Cellulosic staple and tow 167. 0 155. 3 183. 3 -7. 0 +18. 0 +9. 8 Total cellulosic 368. 7 336. 6 381. 6 -8. 7 +13. 4 +3. 5 Noncellulosic yarn and monofilaments 272. 1 300. 3 377. 8 +10. 4 +25. 8 +38. 8 Noncellulosic staple and tow. 220. 8 224. 5 365. 8 +1. 7 +62. 9 +65. 7 Total noncellulosic 492. 9 524. 8 743. 6 +6. 5 +41. 7 +50.9 Total cellulosic and noncelluloxic 861. 6 861. 4 1, 125. 2 0 +30. 6 +30. 6 Source: Textile Organon. TABLE 5.-U.S. IMPORTS OF MANMADE FIBER MANUFACTURES FROM JAPAN, 1965-67 [Thousands of equivalent square yardsl Percent change 1965 1966 1967 1965-1967 1966-1967 Yarn 17,194 18,444 15,965 -7.2 -13.5 Fabric 175,722 272, 069 186,709 +6. 3 -31.4 Apparel 81,835 116,095 114,833 +40.3 -1.1 Floor coverings and miscellaneous 26, 291 38,377 34, 616 +31. 7 -9. 8 Total 301, 042 444,985 352, 123 +17. 0 -20. 9 Source: U.S. Department of Commerce. PAGENO="0428" 2734 TABLE 6.-U.S. GENERAL IMPORTS OF MAJOR TEXTILE FIBER MANUFACTURES FROM JAPAN, 1965-67 [Millions of equivalent square yardsJ Cotton Wool' Manmadefiber Total 1965 404.2 1966 412.0 55. 1 301. 0 760. 3 1967 376.7 58.2 445.0 915.2 Change 1965 to 1967: Quantity -27. 5 54.2 352.1 783.0 Percent -6. 8 -. 9 +51. 1 +22. 7 Change, 1966 to 1967: Quantity Percent -35. 3 -8. 6 -1. 6 -4. 0 -6. 9 +17. 0 -92. 9 -20. 9 +3. 0 -132. 2 -14. 4 1 Excludes floor coverings. Source: United States Department of Commerce. TABLE 7.-U.S. IMPORTS OF MANMADE FIBER MANUFACTURES FROM JAPAN, JANUARY-APRIL 1966, 1967, AND 1968 [Thousands of equivalent square yardsj Janu ary through April Percent change 1966 to 1968 1967 to 1968 1966 1967 1968 Yarn Fabric Apparel Floor covering and miscellaneous Total 4,383 86, 071 28,667 11, 847 130.868 6,531 66, 921 42,427 9, 755 125,635 8,687 66, 619 35,249 8, 756 119,311 +98.2 -22. 6 +23.0 -26. 1 -8.8 +33.0 -0. 5 -16.9 -10. 2 -5.0 Source: U.S. Department of Commerce. DEPARTMENT OF STATE, Washington, D.C., June 18, 1968. Hon. WILBUR D. MILLS, Chairman, Co-rnmittee on Ways and Means, House of Representatives, Washington, D.C. DEAR Ma. CHAnt~rAN: The Department of State has recieved from the Austra-. han Embassy a statement of the views of Australian wool tops exporters as they relate to the current public hearings before the Committee on Ways and Means on tariff and trade proposals. The Embassy has requested that the statement be transmitted to the Committee for its consideration for possible inclusion `in the record of the hearings. I am, therefore, pleased to forward three copies of the enclosed statement for your consideration. Sincerely yours, H. G. TORBERT, Jr., Acting Assistant secretary for Congressional Relations. Enclosure. STATEMENT OF THE AUSTRALIAN WOOL Tons ExPooxTElls We, the major Australian exporters of wool tops to the tJnited States, wish to express our deep concern at the possibility of any changes which might re- `strict the free imports of Australian wool tops into the United States of America. We contend that a wool top is not a "textile article" but is essentially the raw material of the worsted spinning section of the wool' textile industry. Wool tops are merely raw wool. cleansed of all impurities such as vegetable matter, dirt, grease and undesirable short fibres, presented in a form or pack- age suitable for spinning into worsted yarns. Comparable raw materials for other sections of the textile industry are scoured wool for woollen spinning and ginned cotton for cotton spinning, where in both cases the raw fibre is cleansed of im- purities in the same way as a wool top. PAGENO="0429" 2735 Australia is the principal overseas supplier of wool tops to the United States and in 167 supplied 3.84 million lb. valued at US $4.5 million, some 67% of total imports of wool tops into the United States. Wool tops production in the United States in the three years 1965-67 averaged 147.7 million lb. per annum. This compares with average production in tbe three- year period 1958-60 of 114.6 million lb. In 1965-67 wool tops imports by the United States averaged 8.1 million lb. per annum. ~Et will be seen that wool tops imports amount to a very small proportion of United States' domestic wool *tops production-only 5.5% in the last three years. Moreover, both production and imports of wool tops have shown a rising trend in recent years. In addition, we understand that United States' top makers are presently operating at full capacity and that, following a decline in production last year, the long term rising trend in production and demand has resumed and is demonstrated by the figures available to date for 1968. (First quarter production in 1968 at 36.8 million lb. was 19% above first quarter 1967 production at 30.9 million lb.) In such a situation there is no substance in any claim that the United States wool tops industry is suffering damage as a result of wool tops imports. On the contrary, it is submitted that imported tops are complementary to the United States' wool tops manufacturing industry. Moreover, it is suggested that because of the special characteristics of the Australian product. which is generally of a quality and type not readily available in the United States, Australian wool tops are fulfilling a specialist requirement of the United States' textile industry. We submit that wool tops imports are not a threat to the local United States' topmaking industry and that any restrictions on, or added costs to, Australian wool tops, as well as having a detrimental effect on the Australian wool in- dustry, would tend to create a supply vacuum which might well be filled per- manently by other fibres, thus running counter to the position of wool in the United States and posing a threat to the interests of the United States wool- growing and wool textile industry. We believe in the traditional international method of protection through import tariffs, and both the United States and Australian Governments have subscribed to this principle in the General Agre~ement on Tariffs and Trade. United States producers of wool tops are already well protected by one of the highest tariffs in the world, namely, 27.75 cents per lb. plus 6.25 percent ad valorem, representing some 30 percent of the value of the tops. Whilst it is recognised that part of this tariff is designed to compensate United States' producers for the higher cost of their raw wool, nevertheless, the position compares with duty free entry afforded to wool tops by Britain and Japan (two of the world's largest prOducers of wool tops) and 3% tariff by the European Economic Community. Although the United States reduced the level of import tariffs on many textile products in the recently concluded GATT Kennedy Round of Trade Negotiations, no reductions were in fact made in the tariff rates on wool tops. To conclude, we repeat that, as the vaiue of wool top imports into the United States represents only a very small percentage of the total United States' production of wool tops, we feel the interest of wool in the United States of America would be best served by continuing to regard wool tops as a raw material and therefore not `subject to any restrictions in addition to the high import duties they already incur.~ G. H. MIOHELL & SoNs (Aust.) LIMrrnr, Hindnuz'rsh, south Astrc~ia. JAMES SEYMOUR & Co., WWk~mstow'a, Victorfa. PORT PHILLII' MILLs Pry. LrMIai~n, Footseray, Victoria. J. W. Ai~u~x Pry. LIMIThD, Sydney, New So~ztth Wales. PAGENO="0430" 2736 DEPARTMENT OF STATE, Washington, D.C., June 28, 1968. Mr. JOHN M. MARTIN, Chief Counsel, Committee on Ways and Means, House of Representatives. DEAR MR. MARTIN: The British Embassy, by note No. 189, dated June 28, has requested the Department of State to transmit to the Committee on Ways and Means statements prepared by British manufacturing and trade associations in conjunction with the current hearings on trade policy. A copy of the British note, as well as copies of the statements, are enclosed for appropriate use by the Committee and other interested parties. Sincerely yours, MARTIN Y. HIRABAYASHI, Chief, Special Trade Activities and Commercial Treaties Division. Enclosure. NoTE No. 189 Her Majesty's Embassy for the United Kingdom present their compliments to the Department of State and have the honour to refer to the hearings on trade policy currently being held by the Committee on Ways and Means of the House of Representatives. A number of British manufacturing and trade associations have prepared statements which are relevant to the subjects under discussion by the Ways and Means Committee; and the Embassy would be grateful if the State Depart- ment could facilitate the transmission of these documents to the Committee. The statements which are enclosed with this Note are: * * * * * * * (b) A joint submission by the Clothing Manufacturers' Federation of Great Britain and the Shirt, Collar and Tie Manufacturers' Federation. * * * * Additional copies of the first two of these submissions are enclosed with a request that they be distributed to members of the Ways and I~Ieans Committee and to interested departmental and legislative staffs if the Committee should consider this appropriate. June 1988 THE CLOTHING MANUFACTURERS' FEDERATION OF GREAT BRITAIN, THE SHIRT, COLLAR AND TIE MANUFACTURERS' FEDERATION PUBLIC HEARING5 ON TARIFF AND TRADE PROPOSALS 1. Introduction This submission to the United States Committee on Ways and Means is by the Clothing Manufacturers' Federation of Great Britain and the Shirt, Collar and Tie Manufacturers' Federation, both of 70 Pall Mall, Londoi~, S.W.1. The Federations are the national organisations covering England. Scotland and Wales, representing more than 300 manufacturers of all types of tailored outer- wear for men, boys, women and girls, and 100 manufacturers of shirts and pyjamas. Evidence relating to women's and girls' outerwear has been submitted by the Mantle and Costume Manufacturers' Export Group and the present submission deals with the other garments specified. References to clothing in this submission relate to these garments. Our submission relates to the proposals relative to imposition of quotas either on an across-the-board basis or on named items or commodities. Specifically our submission relates to any proposal for quotas or other restrictions on the importation into the United States of garments made by members of the above Federations. The purpose of our submission is to present to the Committee an analysis of the facts in support of our contention that such clothing imported from the U.K. supplements rather than competes with domestic production and that such imports do not damage the domestic industry and benefit domestic interests. PAGENO="0431" 2737 2. Imports from U.K. do not compete with U.ISLA. clothing Clothing imported from Great Britain is to a large extent made in specialty fabrics, in traditional British styling and to high standards of craftsmanship. These garments are different from, and are not competitive with the bulk of garments produced in America for the home market, and in general British clothing sells in the shops in America at higher prices than American garments. It has not been possible from the statistics available to calculate the average price of U.S. produced garments. It is, however, reported for instance th'at U.S. ootton/m.m.f. raincoats retail at about $30.00 to $40.00 against $50.00 to $90.00 f or U.K. cotton raincoats and that the great majority of U.S. sports and formal shirts retail below $7.00 whereas the retail price for U.K. shirts ranges from $7.00 to $20.00. We feel sure that the Oommiittee will agree that it is fairly common knowledge that imported U.K. clothing generally sells in the higher price field. 3. Imports from U.K. represent very small proportion of UJS~.A. production Whilst the U.S. production figures~ of clothing are not strictly comparable with the import figures, as there is a difference in the coverage of the various headings used, a comparison of tables I and II appended indicates that the total of imports of clothing from the U.K. is only a very small percentage of the American production. For instance, U.S~ production of "dress and sports trousers" in 1967 amounted to 133,762,000 whereas imports from the U.K. of "men's and boys' trousers of wool or m.m.f." amounted to only 60,579, which is less than 0.1% of the production figure; and U.S. production of "overcoats and topcoats" in 1967 amounted to 3~812,00O whereas imports from the U.K. of "separate coats (other than suit type) of wool" amounted to 47,002 which is approximately 1.2% of the produc- tion figure. It is recognised that the figures, quoted above are not strictly comparable, there being, for instance, some imports from the U.K. of outercoats (other than rainwear) of fabrics other than wool. Adjustments made to take account of this and other factors would not, however, materially affect the thesis that imports of tailored outerwear from U.K. amount to only an insignificant pro- portion of American domestic production. Table II shows the main imports from the U.K. and compares these with imports of the garments concerned from all sources. Of these, the only garment of which the U.K. supplies a substantial proportion (221/2%) of the total imports are "separate coats (other than suit type) of wool". 4. Development of U.K. trade with U.S~A. The fluctuations of trade in 1964, 1965, 1966 and 1967 are shown in table III appended from which it is apparent that the trend of the development of trade from the U.K. does not present any potential threat to U.S. producers. Although the total trade is small, much of it is in the hands of comparatively few firms who have specialised in the market over a long period and have acquired the necessary knowledge and experience to be able to satisfy American requirements. The trade has been built up gradually under great difficulties over many years in accordance with accepted commercial practices. Advertising and merchandising programmes over a long period of time have established the names and reputation of British manufacturers, and it has been only by this careful fostering of the market that the demand for their products has been developed. Trade with the U.S.A. is therefore of major importance to these firms. 5. U.K. manufacturers are subject to competitive disadvantages In addition to the import duty, goods exported from U.K. have extra costs in postage, freight, packing and insurance, customs clearance charges, etc., to which the American manufacturer is not subjected to the same degree. Imported goods are subject to delay by customs clearance procedures including the necessity, for tariff purposes, of proving fibre content. Another factor which operates to the advantage of the local manufacturer is the necessity, because of the time lag caused by these procedures and by shipment from the U.K., to maintain large local stocks of imported goods, so thai customers can be readily supplied with the sizes, types and colours, etc., they require. Moreover, if there should be a sudden demand for a particular size, colour or type of garment, replacements often have to be obtained by air in order to keep a balanced stock. PAGENO="0432" 2738 These factors generally result in the application of a higher mark-up on British goods, and the need for larger capital resources. The American industry is also more advantageously geared to meet local requirements, both as regards sizing and styles. The American size roll, for example, is very different from that of the United Kingdom, which means that garments for America have to be cut separately from any bulk which the manufacturers in Great Britain are producing for the home market. 6. Benefits accruing from imports from U.K. Imports from the U.K. supplement local production by providing garments which would not otherwise be available to the American consumer. Over the years, the importation of specialty apparel designed and created in the U.K. has furnished the U.S. industry with style and fashion incentives that would otherwise have been lacking. It is reported that American clothing retailers find that British garments tend to make additional rather than alternative sales. 7. Conclusion, In view of: (a) the fact that U.K. imports do not compete with American bulk production; (b) the small U.K. share of the American market both compared with domestic producers and other overseas suppliers; (c) the additional tariff and non-tariff costs borne by U.K. clothing entering the American market; it is respectfully submitted that imports from the U.K. of clothing covered by this submission are not detrimental to the American domestic industry. Further, we also submit that such U.K. clothing provides additional sales for the American retailer and promotions which have been an aid to overall clothing sales, and meets a demand by American consumers for specialised products which are not made by American garment manufacturers. We, therefore. submit that there, is no case for further restrictions (fiscal, quantitative or procedural) to be imposed on imports of clothing from the U.K. Respectfully submitted by The Clothing Manufacturers' Federation of Great Britain, the Shirt, Collar & Tie Manufacturers' Federation, London, S.W.1. G. W. FRENCH, Secretary. Ju~x 1968.' STATISTICAL APPENDIX TABLE 1.-U.S. PRODUCTION OF CERTAIN GARMENTS IN 1966 AND 1967 1 Units cut (in thousands) 1966 1967 Men's apparel: Suits 20,715 18,904 Tailored separute dress and sports coats 13, 148 12, 659 Overcoats and topcoats 3,799 3,812 Dress and sports trousers 145,673 133,762 Dress and sports shirts (woven) 333, 924 311,820 Work shirts 49,152 45,324 1963 Rainwear and other waterproof outer garments 2 $202, 803, 000 I Source: Survey of Current Business by U.S. Department of Commerce. 2 Source: Census of Manufactures, 1963, U.S. Department of Commerce. Note: The production of rainwear is not included in the Survey of Current Business. The 1963 Census of Manufactures contains the most recent figures available and these relate to value only. PAGENO="0433" 2739 TABLE 11-1967 IMPORTS INTO THE UNITED STATES OF THE MAIN TYPES OF CLOTHING FROM THE UNITED KINGDOM SHOWN AS A PERCENTAGE OF IMPORTS INTO THE UNITED STATES FROM ALL SOURCES (Col. i) Imports from the United (Col. ii) Imports from all sources Col. (i) as percent of col. (ii) Kingdom Men's and boys': Wool suits Separate coats (other than suit type) of wool Trousers, etc., of wool or manmade fiber Rainwear of cotton Woven shirts comprising sport shirts of cotton flannel or cotton, shirts of wool or manmade fiber, dress shirts of poplin broad- cloth or cotton all not knitted Knitted shirts of manmade fiber Pajamas and other nightwear of cotton or manmade fiber 5,642 47, 002 60, 579 37, 824 76,718 4, 788 25, 620 245, 821 208,646 5,700, 337 1, 135, 440 68,280,977 17, 221, 200 6,792,001 2. 3 22. 6 1. 5 3 3 . 1 - 03 - 4 Source (cols. I and ii): "U.S. Imports of Merchandise for Consumption, 1967," U.S. Department of Commerce. TABLE 111.-UNITED KINGDOM EXPORTS TO UNITED STATES 1965 1966 1967 Men's and boys': Overcoats of wool or wool mixture Suits complete of wool or wool mixture Coats, waistcoats, trousers, etc., separate Shirts (not knitted) Pajamas and other nightwear Rainwear (except plastic): Rubberproofed Chemical proofed Other proofings 29, 421 2, 860 £489, 096 109,632 53, 148 10,366 129, 090 6,879 28, 822 4,554 £517, 201 139,800 43,956 9,145 95, 120 11,463 16, 812 5,774 £475, 297 130,716 23,472 3,350 67, 168 8,455 Note: These figures do not include consignments by parcel post. It is estimated, however, that such consignments represent only a very small percentage of the total. There is no reason to believe that this percentage varies greatly from year to year. Source: H. M. Customs and Excise Department DEPARTMENT OF STATE, Washington, D.C., June 28, 1968. Mr. JOHN M. MARTIN, Chief Counsel, - Committee on Ways and Means, House of Representatives. DEAR MR. MARTIN: The British Embassy, by note No. 169 dated June 28, has requested the Department of State to transmit to the Committee on Ways and Means statements prepared by British manufacturing and trade associations in conjunction with the current hearings on trade policy. A copy of the British note, as well as copies of the statements, are enclosed for appropriate use by the Committee and other interested parties. Sincerely yours, MARTIN Y. HIRABAYASHI, Chief, Special Trade Activities and Commercial Treaties Division. Enclosure. NOTE No. 169 Her Majesty's Embassy for the United Kingdom present their compliments to the Department of State and have the honour to refer to the hearings on trade policy currently being held by the `Committee on Ways and Means of the House of Representatives. A number of British manufacturing `and trade associations have prepared statements which are relevant to the subjects under discussion by the Ways and 1~1eans ~mmittee; and the Embassy would be grateful if the State Depart- ment could facilitate the transmission of these documents to the Committee. The statements which are enclosed with this Note are: (a) A statement by the Mantle `and Costume Manufacturers' Export Group * * * * * * * 95-159 O-68--pt. 6-28 PAGENO="0434" 2740 Additional copies of the first two of these submissions are enclosed with a request that they be distributed to members of the Ways and Means Committee and to interested departmental and legislative staffs if the Committee should consider this appropriate. The Apparel and Fashion Industries Association have indicated that they wish to be associated with the statement submitted on behalf of the Mantle and Costume Manufacturers' Export Group. STATEMENT SUBMITTED BY THE MANTLE & COSTUME MANUFACTURERS' EXPORT GROUP OF LONDON, ENGLAND, FOR TRANSMISSION BY THE BRITISH EMBASSY, COMMERCIAL DEPARTMENT, WASHINGTON, D.C., TO COMMITTEE ON WAYS AND MEANS, U.S. HOUSE OF REPRESENTATIVES, LONGWORTH HOUSE OFFICE BLDG., WASHINGTON, D.C. TEXT OF STATEMENT: (1) Description of Interests Represented by Group-(U.K. Exporting Manu- facturers of Women's and Girls' "Heavy" Outerwear). This is an organisation representing the interests of United Kingdom export- ing manufacturers of women's and girls' "heavy" outerwear (overcoats, suits, jackets, skirts, slacks, etc.). The garments they export to the United States market are almost entirely made from fabrics of wool (including of course camel hair, llama, mohair and other fine animal hair) and are chiefly of woven fabric, supplemented by some trade in garments cut out and make-up from knitted wool fabric. Among the Group's members are leading British manufacturers of the above-mentioned descriptions of women's and girls' apparel (particularly of the better grade and classical variety) producing in large modern factories. (ii) Purpose of Statenient.-(Opposition to Restriction of Imports from the United Kingdom). The following Statement is submitted on behalf of this Export Group, through the British Embassy in Washington, to the Committee on Ways and Means, U.S. House of Representatives, for the printed record of the hearing before that Committee on the general subject of the balance of trade between the United States and foreign nations, now commenced. In formulating this Statement note has been taken of the broad scope of the subjects to be encompassed by the hearing as set out in the Committee's press release of 9th May, 1968, as well as of the contents of the relevant Committee Print, issued by the U.S. Government Printing Office, which includes the draft Bill H.R. 17551. In relation thereto this Group wishes to state that it is satisfied that there can be no question that imports into the United States of the garments on which it is qualified to speak (described in paragraph (i) above) do not, and cannot in the foreseeable future, constitute any threat to the wellbeing of the United States and that there is no justification or necessity for any measures designed to restrict such imports. In support of this contention the Group offers the following information and views, which it considers very clearly demon- strate `these facts and in the light of which it is hoped and believed that the Ways and Means Committee will report accordingly. (iii) Supporting information and Uonelvsion..- 1. U.S. imports of U.K. women's and girls' outerwear a minute proportion of U.S. domestio production (a) In relation `to the vast total production of the United States domestic clothing industry, imports from the United Kingdom into the United States of women's and girls' outerwear garments of the kind with which the Group is concerned are infinitesimal. Not only that, such imports are still minute even compared with U.S. production of garments of that particular description and, moreover, in the main such United Kingdom garments are different from and not competitive with the bulk of those produced in the United States. (b) The imports into the U.S.A. from the United Kingdom of these women's, misses and junior heavy outerwear garments are believed in fact to amount to something in the region of only one-twentieth of one percent compared with the United States National production of such garments. 2. Supporting statistical appendic The Appendix to this statement gives U.S. statistics of domestic production of apparel of the descriptions `to which this ease relates, together with U.S. statistics of imports of such apparel, on the basis of which the comparison given in Para- graph 1(b) above (indicating the proportion of one-twentieth of one percent) has been calculated. PAGENO="0435" 2741 3. Protection afforded to U.S. dcnnestic indnstry by factors of grade and cost of imported U.K. Garments The garments imported from this country under this classification by the United States are traditionally those which typify "classic" British garments, so highly regarded and in demand by women throughout the markets of the world, supple- mented by other quality styles featuring the "Young" London look. This British clothing sells in the shops in the United States at prices generally well above those of United States produced garments. Apart from the fact that almost all these British made garments are of high grade fabric and make and are certainly not low priced, as imported goods they are subject, in addition to a substantial import duty, to extra items of cost. It is estimated that the duty, together with freight, insurance, packing and other charges, adds in the region of up to 75/80 percent to the retailers' purchase price. Thus these various factors applicable to the imported product already provide sufficient protection to the U.S. domestic industry. 4. Continuing difficulties for United Kingdom ecoporter in developing United States e~rport trade In addition to these obvious handicaps from the point of view of the British exporter, prosecution and development of trade in the United States market by him otherwise continues to be a difficult exercise. It is in fact not one but several markets, each differing from the others climatically, economically and in various other ways and demanding specialist study and experience. Despite the consider- able endeavours of the British manufacturers in the field represented by this Group (some of whom have had an established business in the U.S.A. for many years) the barriers to progress presented by all these factors continue to ensure that, although increasing, the values of United Kingdom imports into the U.S.A. can in the foreseeable future only remain minute in comparison to the domestic output in the States. 5. Imports from U.K. benefit U.S. consumer and domestic industry alike It can be said with confidence that such exports as are achieved from the United Kingdom in these garments can only be to the benefit, not merely of the United States consumers, offering them specialised garments not in competition with domestic products, but of the highly efficient domestic industry to which such imports must give added stimulation. 6. Conclusion-~no restrictive measures necessary It is considered that the foregoing establishes, so far as concerns imports from the United Kingdom of the description of apparel to which it relates, that in fact no action is called for, either in the interests of the United States Textile and Apparel Industries nor in its national interest, to restrict these imports and it is accordingly earnestly hoped that the Committee on Ways and Means will so report. COMPARISON OF U.S. DOMESTIC PRODUCTION OF WOMEN'S, MISSES' AND JUNIORS' "HEAVY" OUTERWEAR WITH U.S. IMPORTS FROM UNITED KINGDOM OF WOMEN'S, GIRLS', AND INFANTS' GARMENTS OF SIMILAR DESCRIPTION (OALENDAR YEAR 19G4) 1. Domestic production of women's, misses', and juniors' heavy outerwear items of clothing: 1 DOflar8 Suits, coats and skirts $1, 312, 243, 000 Outerwear2 713, 106,000 Girls" and children's coats and suits 186, 931, 000 Girls' and children's outerwear3 373, 118, 000 Total 2,585,398,000 See footnotes at end of table, p. 2742. PAGENO="0436" 2742 2. Imports for consumption from United Kingdom of women's, girls' and infants' heavy outerwear items of clothing: Coats, wool or man-made fibers, ~ and longer, women's, girls' and infants', not knitted__. $645, 408 Coats, wool, not elsewhere specified, women's, girls', and infants', not ornamented, not knitted 493, 902 Skirts, wool or man-made fibers, women's, girls', and infants', not knitted 193, 377 Trousers, slacks and outer shorts, wool, women's, girls', in- fants', not knit, not ornamented 43, 362 Total 1, 376,229 3. Ratio of above imports to domestic production percent (½o of 1 percent approximately) . 053 1 Source: Annual survey of manufactures (as published in Standard and Poor's "Indus- try Surveys," Textiles and Apparel, September 1966 (sec. 2), p. T-44, table 20). 2 Covers other women's heavy outerwear not separately listed. Covers other girls' and children's heavy outerwear not separately listed. ~ Source: F.T. 125, U.S. Imports of Merchandise for Consumption, U~S. Department of Commerce, Bureau of the Census. DEPARTMENT OF STATE, Washington, D.C., Jt~ne 28,1968. Mr. JOHN M. MARTIN, Chief Counsel, Committee on Ways and Means, House of Representatives. DEAR MR. MARTIN: The British Embassy, by note No. 169 dated June 28, has requested the Department of State to transmit to the Committee on Ways and Means statements prepared by British manufacturing and trade associations in conjunction with the current hearings on trade policy. A copy of the British note, as well as copies of the statements, are enclosed for appropriate use by the Committee and other interested parties. Sincerely yours, MARTIN Y. HIkABAYASHI, Chief, Special Trade Activities and Comnsercial Treaties Division. NOTE No. 169 Her Majesty's Embassy for the United Kingdom present their compliments to the Department of State and have the honour to refer to the hearings on trade policy currently being held by the Committee on Ways and Means of the House of Representatives. A number of British manufacturing and trade associations have prepared statements which are relevant to the subject under discussion by the Ways and Means Committee; and the Embassy would be grateful if the State Depart- ment could facilitate the transmission of these documents to the Committee. The statements which are enclosed with this Note are: * * * * * * (d) A letter addressed to the Chairman of the Committee on Ways and Means incorporating the views of the National Association of Glove Manufacturers. * * * * * * NATIONAL Assoor&TI0N OF GLOVE MANUFACTURERS, London SRi, 28th. May 1968. Re Public Hearings on Tariff & Trade Proposals. CHAIRMAN, COMMITTEE ON WAYS AND MEANS, U.S. House of Representatives, 1102 Longworth House Office Building, Washington, D.C. DEAR Sm: We have to refer to the Notice of Public Hearing sent to us by our Board of Trade, As an Association of Glove Manufacturers exporting to the United States we submit the following:- 1. Many of the gloves exported by our members are special types of equipment for sports, driving etc., the equivalent of which we believe are quite unobtainable PAGENO="0437" 2743 in the domestic market in America, others are of types not usually supplied by American manufacturers. They offer no threat to the American Industry, in fact, by introducing new types they tend rather to help the American glove sales by increasing the varieties available to the public. 2. Any introduction of increased tariffs or quotas would, we feel, be a retrograde step and would surely destroy the efforts being made towards free trade and at the same time negate the Kennedy Round of talks on tariffs and trade which advocate opposite measures. 3. The British market is open to American manufacturers and we feel that reciprocal trade between our two countries should be encouraged. Yours faithfully, B. GREENAWAY, Secretary. STATEMENT OF MICHAEL P. DANIELS, COUNSEL, WOOLENS DIVISION, JAPANESE CHAMBER OF COMMERCE This statement is submitted on behalf of the Woolens Division of the Japanese Chamber of Commerce of New York, Inc., incorporated in the State of New York. The members of the Woolens Division of the Japanese Chamber of Commerce account for practically all of the woolen and worsted fabrics and yarns imported from Japan. The Woolens Division is completely opposed to the imposition of quotas on imports of textile and apparel products, particularly on imports of woolen and worsted fabrics and yarns. Such restriction is not justified by objective analysis of the performance of the competitive United States industry and the impact of imports upon this industry. This is clearly supported by the Report of the United States Tariff Commission on Textiles and Apparel, which was instituted at the request of the President and by the Honorable Wilbur D. Mills, Chairman of this Committee. In making its claims for import protection hi this field, the domestic industry has indulged itself in one principal distortion: they have completely left out of their analysis production in the United States of worsted fabrics in chief weight of manmade fibers. The doiñestic industry has turned increasingly to such chiefly manmade fiber fabrics and enjoys almost a monopoly in this field. Production of these fabrics has been Increasing substantially. Ra;ther, the domestic industry has pointed only to a decline in the production of chiefly wool fabrics and represented that this decline is due to import competition. The truth is that worsted fabrics chiefly of wool and worsted fahrics chiefly of manmade fiber blended with wool are completely competitive and are by and large produced in the same mills. Although precise statistics are unavailable, all evidence points to the conclusion that production of all worsted cloth in the United States, both chiefly wool and chiefly manmade, has increased substantially. The Tariff Commission in its Report stated: "The domestic output of woven wool fabrics has, however, also been materially affected by the signflicantly greater popularity of blended woven fabrics, made in the same plants as all-wool fabrics particularly for use in lightweight summer suiting and slacks." The Commission discussed a number of products for which domestic produc- tion has declined including wool fabric. It stated: "For the most part, the failure of output for such products to expand appears attributable chiefly to changes either in fashion or style, to technology, or both. In relatively few instances do imports appear to have been a major factor." Certainly this is proper perspective. As a matter of fact, total imports of woolen and worsted fabrics has declined over the last several years (see Table 1). From a height of 84.9 million yards in 1965, total imports declined to 67.1 million yards in 1966 and 60.6 million yards in 1667. Imports from Japan during this period have been relatively stable, declining from 40.1 million yards 1111965 to 37.7 million yards in 1966. Imports in 1967 of 38.7 million yards were only one million yards above the 1960 level and below the 1905 import performance. Figures for total imports in the first three months of 1968 indicate a slight increase over the same period in 1966 (sec Table 2). Imports from Japan for this period in 1968 are above 1967 levels but somewhat below 1966 performance. Certainly the import record has been one of decline (or relative stability, given the cyclical nature of the market) but definitely not a pattern of rapidly increasing imports such as to justify demands for import protection. PAGENO="0438" 2744 A closer analysis of the trade further reveals that imports and domestic production are highly differentiated with little direct competition between imports of worsted fabrics from Japan and United States production of worsted fabrics. Japanese worsted fabrics are high quality, highly-styled, woven of the finest materials in expensive constructions, produced in small runs allowing great style diversification and exclusivity, are in large part of specialty fabrics such as blends with silk or mohair, and are considerably higher in price than prac- tically all domestic production. Domestically-produced worsteds on the other hand are, for the most part, staple items, capable of mass production and long runs, with relatively auto- mated manufacturing techniques. woven in simple constructions of cheaper and coarser raw materials and yarns, in large part dominated by the utilization of manmade fibers, and sell at prices considerably below imports from Japan. Imports and domestic production are also highly differentiated in terms of the markets they supply. A very large proportion of imported worsted fabric from Japan is utilized in the quality men's suit market, with a small percentage utilized in sport jackets and only a very minute proportion used for slacks or overcoats. On the other hand, domestic production predominates in the cheaper suit lines, especially summer suiting, in sport jackets and slacks and practically has the women's wear field entirely to itself. The pattern of these factors indicates that imported and domestic fabrics are physically different, are moving in different markets, and fulfill different needs commensurate with the manufacturing advantages and capabilities of the domestic and Japanese industries. The American industry has a strong position and excellent prospects in medium and low-priced worsted fabrics in the expanding market for these kinds of goods. On the other hand, Japan can look forward to continued growth at a moderate rate in quality fabrics which are highly styled to meet increasing consumer demand for quality, as American affluence grows and consumer taste becomes more discriminating and better educated. Japanese worsteds for export to the United States are woven of the finest Australian wools in the higher grades. Raw wools utilized are predominantly 64's to 70's and finer. These are extremely fine wools and relatively expensive. The process of manufacturing worsted fabric starts with washing and scouring these materials and then through a process of combing achieving fibers which lie parallel to each other and are of even length. The result of such parallel, even fibers is an intermediate product known as "top." Extreme care must be taken when working with fine materials to produce quality top as opposed to the greater facility in working the fibers when they are of coarser and less ex- pensive grades. On the worsted system (including fibers to be eventually utilized in both weaving and knitting) in the United States, 40% of the raw wool consumed is below 60's with 60% of 60's arid finer. However, it is believed that the Ge's and finer wools utilized in the American industry on the worsted system are of very small quantities, especially for weaving yarns. Thus, the American industry is utilizing a cheaper material with less difficulties and expense involved in the initial stages of production. Wool top is then `spun into yarn. Here, again, the difficulties and expense in manufacture in working with the finer fibers in the Japanese industry are matched by relative ease of manufacture and less expense in American `spinning. Further, double ply yarns (see below) require an additional stage of processing, twisting. Japanese fabrics are practically all woven in not less than 2/60 x 2/60 construction (metric count). What this means is that the yarn count is at least 60 (an extremely fine yarn), that the yarns are plied (two strands twisted together) and that both the warp and the fill consist of such yarns. This creates a luxurious cloth with an excellent hand, or feel, suitable for top quality garments. `The American industry on the other hand produces very `little in 2/GO x 2/60 construction's, and it has only been in the last two or three years following a fashion trend and acceptance created by Japan and other foreign exporters to the United States that the United States industry has begun in a small way to make any top quality constructions. This is limited to one division of one com- pany, the Raeford division of Burlington Industries. As stated in the Daily News Record for October 12, 1967: "The Raeford division is known to have `booked virtually all the business it can take in fabrics composed of yarns in a 2/430s metric count without throwing PAGENO="0439" 2745 its ratio of spinning to weaving out of balance. Raeford is the only domestic mill producting any volume in this fine yarn count." For the most part, United States production consists of single yarns, that is, one strand, not two as in the plied yarns, in both the warp and fill, or in single yarn in the warp and plied yarn in the fill. Yarn counts are lower than the 60's (metric) and higher utilized by the Japanese industry, with 30's Bradford (about 34's metric) predominating in the United States. These constructions are cheaper, coarser and although serviceable and widely accepted in the mass market, they are unacceptable for fashion or quality fabrics. These fabrics can, however, be mass produced with fewer production difficulties, fewer problems of mending and burling, on machinery run at relatively high speeds, and with fewer workers necessary to tend the looms. They are produced in the United States in extremely long runs of staple items, with a minimum production run of about 40 pieces (one piece equals 70 to 80 linear yards) ; whereas in Japan, runs can be in as small as four pieces and usually are produced in quantities substantially less than 40 pieces. Shorter runs and smaller minimum orders in the case of Japanese cloth mean the ability to create style diversification; whereas uniqueness, the hallmark of fashion, cannot be offered or will not be offered by an American industry seek- ing to maximize efficiency of production. Even with the move to more highly- styled fabrics by a small part of the United States industry, long runs and minimum orders of 40 pieces are still insisted upon, which largely dissipates the advantages of styled goods. Domestic and Japanese cloths are also differentiated by specialty. A very large proportion of Japanese exports of worsted cloth to the United States are silk-worsted blends with 90% wool/l0% silk composition predominating. These fabrics, which for the last three or four years have been the biggest selling item in men's clothing, cannot be produced by the American industry. Nobody else in the world has developed the technical know-how which exists in Japan for working with silk-worsted fabrics. Although attempts have been made, it simply cannot be produced in the United States or elsewhere. The problems of mending and burling are difficult. It is a burdensome, troublesome fabric to make. American mills, interested in long runs of simple staple cloth without production problems, simply will not, and probably cannot, manufacture this cloth. In 1967 total worsted exports from Japan were 26.1 million linear yards. Of this 16.2 million worsteds other than silk blends, with silk blends account- ing for 9.9 million square yards. Thus, the silk blends, a unique specialty of Japan; accounted for some 38% of total imports of worsteds from Japan. This has also been the fast growing item in the worsted trade from Japan and has ac- counted for a large part of the growth over the long run. What all of these factors embody is the concept of style. Imports from Japan, highly designed and highly styled have revolutionized the men's clothing busi- ness. Before the imports, men were wearing plain serges, gabardines and flannels in solid colors. Japanese fabrics and fabrics from other exporting nations have lent color, lustre, and design to the men's suit field. This style impact has in the last two years stimulated the domestic industry into making style innovations of its own by the fabrication of cheaper imitations of quality Japane~e fabric, such as the blends of worsted polyester and silk or blends of polyester, worsted and mohair in an attempt to achieve the lustrous look innovated by imports from Japan of silk worsted and mohair worsted fabrics. Such American imitations have found their way into lower end garments and light weight garments for summer. Imports from Japan have stimulated United States production of quality fabrics and the cheaper imitations of the lustre fabrics, which are doing quite well. According to the Daily News Record of November 13, 1967: "Domestic mills have met the challenge of tough competition from fancy styling in Japanese worsted fabric lines. "The American clothing industry is the beneficiary and has shown its appre- ciation in dollars and cents by booking most of these mills up to next May. "Clothing producers are buying more domestic fabrics and fewer imports. It's a fancy season and the decline is in the staple Japanese worsted sharkskins which are no longer the fashion focus. "Manufacturers want luster in fancies. Accordingly, they continue to buy Japanese worsted and silk blends and are also buying a new domestic lustrous Dacron/worsted blend using a triangular-formed Dacron now available for the first time in fall weight goods. PAGENO="0440" 2746 "The desire for luster is moving these blends into the fall season much more extensively. Buyers for some of the bigger clothing makers say they have bought far more than formerly as a result of this development by Burlington's Pacific Mills Division." Japanese fabrics are preponderantly used in `the production of men's suits for the fall season with the remainder utilized in fabrics for sport coats and expen- sive slacks with a small portion for spring and summer seasons. The American industry has made much of the concentration of Japanese fabrics in the men's suit field with misleading statistics capitalizing upon an unjustified segmentation. Japanese worsted fabrics are primarily for men's suits because high quality is demanded. On `the other hand, American production completely dominates (1) the production of summer suits with the polyester worsted blends, (2) the field of slacks where solid colors easy to produce pre- dominate, and (3) in the sport jacket field where closeness to the market in point of time is a distinct advantage. What is significant is that these fields, especially slacks and sport coats are rapidly expanding segments of the garment industry; whereas the production of suits has been rather static in the postwar years. This reflects the movement in the United States `to more casual wear. Styles in summer suit fabric have tended to be rather simple. There is some small demand at present for highly styled and specialty summer weight fabrics which Japan can supply, but most of the market is for plainer fabrics. Further- more, the American fabric producers have behind them the huge promotional campaigns for the branded manmade fibers such as Dacron; whereas the Japanese brand names for polyester `and acrylic have not been promoted to any large extent in this market, making it difficult for them `to compete. It is in the field of blends with manmade fibers that the American industry has had its greatest growth. It is not only in the polyester worsted blends but in such combinations as polyester acrylic, polyester rayon in heavier construc- tions, wool and acrylic blends and in other blends utilizing manmade fiber that the American industry has seen growth. Production of fabrics utilizing man- made fibers is commensurate with the production techniques and styling of American fabric since machines can be run at faster speeds with less breakage utilizing the manmade rather than the natural fibers. The resulting fabrics are more suitable for the medium and low quality fabrics in which the American industry has its greatest strength. Even if Japan, at some time in the future, turned increasingly to the manmade fibers, it is believed that quality and style differentiation would remain. There is great uncertainty in today's market for fabric because of what is apparently a fashion turnaround. Neither fabric makers nor clothing manu- facturers are certain of what the trend will be. This is not only in tailoring `but in fabric as well. The American industry is now turning more to highly-styled fabrics, and, as indicated in the Daily News Record story quoted above, is doing quite well. How resultant style trends will favor Japan or the American industry is not yet clear. It does appear certain, however, that both industries will do well in their respective specialties: highly-styled fabrics for Japan and mass-produced items for the United States. Finally, Japanese worsted fabrics sell at prices well above those for United States worsted fabrics. In the fall market for 1968, silk-worsteds are selling at wholesale in the United States at between $4.35 and $4.65. Prices for other goods range from about $4.05 up to $4.50. There may be a few isolated sales at slightly below $4, but practically all worsteds from Japan are selling in the indicated price ranges. American worsteds sell, for the most part, from $2.80 to around $3.40. This range represents an estimated 90 to 95% of domestic production. The more highly-styled mentioned previously are reportedly selling at about $3.80 to $3.85 in the market, still substantially below Japanese prices. - Of course, the price differential reflects the factors discussed above, making for low quality fabrics produced by the American industry and high quality by Japan. It is believed that the factors discussed above, making for differentiations between Japanese and American worsted cloth are the key to any discussion of impact of imports. We believe that the products of the two countries are almost completely noncompetitive in the very direct sense although there is probably some indirect competition. PAGENO="0441" 2747 The stability of imports and indications that domestic worsted production is booming certainly provide no justification for the imposition of import quotas. In a field dominated by style and fashion, such as the worsted field, quotas would play havoc with commerce. It is important to note that quotas would affect not only importers of cloth from Japan but would seriously impair production and employment by American clothing manufacturers, would hobble American retailers in their effort to supply quality and style to meet their customers' demands, and that the real burden would fall upon the American consumer. The facts as developed by the United States Tariff Commission in its report provide no justification for import quotas. On the contrary, all available evidence indicates that imports and domestic production are moving in different markets in a complimentary rather than a competitive relationship. For these reasons, we respectfully ñrge the Committee to reject the demands being pressed upon it for import quotas. TABLE 1.-U.S. IMPORTS FOR CONSUMPTION OF APPAREL FABRICS, PRINCIPALLY WOOL, REPROCESSED WOOL, OR REUSED WOOL BY WEIGHT,' 1965-67 [In thousands of square yards] 1965 1966 1967 Japan United Kingdom Italy Korea Other Total 40,380 13, 160 26, 251 1,587 3, 545 37,749 9,685 14, 710 1,489 3, 430 38,746 8, 089 8, 403 2,160 3,201 84, 923 67,063 60, 598 `Includes apparel fabric from Italy in chief weight of wool but in chief value of other fibers. See footnote 1 to table B-3-9, U.S.Tariff Commission report on textiles and apparel. Source: U.S. Tariff Commission. TABLE 2.-U.S. IMPORTS OF WOOLEN AND WORSTED FABRICS' [In thousands of square yards] 1966 January-March 1967 1968 Japan United Kingdom Italy Others Total 11,709 2,973 990 1,463 9,111 2,380 710 1,396 11,884 3,015 705 1,803 17,135 13,597 17,407 In chief value wool. Source: U.S. Tariff Commission. STATEMENT OF OLINTON M. HESTER, ATTORNEY, ON BEHALF OF Moicais FISHMAN & SONS Morris Fishman & Sons, Philadelphia, Pa., is an old Philadelphia Corporation engaged in the business of "Wool Pullers". The business of Wool Pullers is buying wooled sheepskins after the lambs have been slaughtered for food, removing the wool by means of a chemical process, sorting the wool into its different grades for woolen and worsted purposes, and pickling the remaining skin for tanning into leather. Because of the tariff the company has for many years been unable to buy foreign sheepskins which were once a large part of its business and that of other wool pullers in the United States many of which have been forced out of business. Until 1948, a large percentage of volume of the business of Morris Fishman & Sons was in foreign sheepskins. Until that time the company imported sheepskins from Australia, New Zealand, South America and South Africa. In 1948 the PAGENO="0442" hi ~ Marshall Plan went into effect and the company found that it was impossible to compete with France and Italy which went into the same foreign markets and purchased sheepskins for pulling in their own countries. In the early 50's the company was able to import occasional lots of sheepskins for pulling purposes, only because of foreign country exporters requiring dollars. However, this has not been the case since 1954. There has been a steadily declining production of sheepskins in this country. Major producers have been going out of business and growers are finding it very difficult to obtain the necessary labor to care for their flocks. This, of course, has created a condition where there are not enough sheepskins to meet demand. The United States is aware of the necessity of importing sheepskins because in the recent tariff reductions wooled sheepskins are included, but the insignificant reduction in tariff allowed wooled sheepskins is not sufficient to make it possible to import this commodity into the United States. An example of the impossibility of importing foreign sheepskins because of the duty on sheepskins occurred within the past few days when Morris Fishman & Sons was in foreign sheepskins. Until that time the company imported sheepskins had not had to pay the duty it would have been possible for the company to buy the lot. For the reasons stated, Morris Fishman & Sons, respectfully urges the House Ways and Means Committee to recommend to the Congress legislation which will eliminate the import duty on foreign sheepskins. Morris Fishman & Sons makes its request of the House Ways and Means Com- mittee to enable it and other wool pullers to import raw materials so that American labor can have the opportunity of employment to produce end products which are most necessary not only to our ever expanding civilian population, but also to the National Defense of this country. (Whereupon, at 7:10 p.m., the committee adjourned, to reconvene at 10 a.m., Friday, June 21, 1968.) 0