PAGENO="0001" TARIFF AND TRADE PROPOSALS -~ ~ ~7 2 ~ ~ HEARINGS BEFORE THE COMMITTEE ON WAYS AND MEANS HOUSE OF REPRESENTATIVES NINETY-FIRST CONGRESS SECOND SESSION ON TARIFF AND TRADE PROPOSALS MAY 11, 12, 13, 14, 18, 19, 20, 21, 22, JUNE 1, 2, 3, 4, 5, 8, 9, 10, 11, 12, 15, 16, 17, AND 25, 1970 Part 13 of 16 Parts (June 11, 1970) Printed for the use of the Committee on Ways and Means `~ /) c:T) k `~ ~ ~(i(~ / U.S. GOVERNMENT PRINTING OFFICE 46-127 0 WASHINGTON: 1970 For sale by the Superintendent of Documents, U.S. Government Printing Office Washington, D.C. 20402 - Price $1 PAGENO="0002" COMMITTEE ON WAYS AND MEANS WILBUR D. MILLS, Arkansas, Chairman HALE BOGGS, Louisiana JOHN C. WATTS, Kentucky AL ULLMAN, Oregon JAMES A. BURKE, Massachusetts MARTHA W. GRIFFITHS, Michigan DAN ROSTENKOWSKI, Illinois PHIL M. LANDRUM, Georgia CHARLES A. VANIK, Ohio RICHARD H. FULTON, Tennessee JACOB H. GILBERT, New York OMAR BURLESON, Texas JAMES C. CORMAN, California WILLIAM J. GREEN, Pennsylvania SAM M. GIBBONS, Florida JOHN W. BYRNES, Wisconsin JACKSON B BETTS, Ohio HERMAN T. SCHNEEBELI, Pennsylvania HAROLD R. COLLIER, Illinois JOEL T. BROYHILL, Virginia BARBER B. CONABLE, JR., New York GEORGE BUSH, Texas ROGERS C. B~ MORTON, Maryland CHARLES E. CHAMBERLAIN, Michigan JERRY L. PETTIS, California (II) JOHN M. MARTIN, Jr., Chief Counsel J. P. BAKER, Assistant Chief Counsel RICHARD C.. WILBUR, Minority Counsel PAGENO="0003" TABLE SHOWING CONTENTS OF THESE HEARINGS BY DATES, SUBJECTS, VOLUME NUMBERS, AND PAGE NUMBERS Date Subject Volume I number Pages 1970 May 11 May 12 May la May 14 May 18 May 19 May 20 May 21 May 22 June 1 June 2 June 3 June 4 June 5 June 8 June 9 June 10 June 11 June 12 June 15 June 16 June 17 June 25 Government officials do do do General testimony do Textiles and apparels do General testimony Iron, steel, brass, copper, and related products_ Footwear (leather and rubber) and related products. Oil, gas, and coal DISC, oil, refund of duties on exported ar- ticles; machinery and machine tools. State agencies, scissors afid shears, toys and novelties, umbrellas, flowers, alcoholic beverages, glue, candles, sporting arms, tobacco, general testimony. Electronics, heavy electrical equipment, item 807. General testimony, fur, item 807, hardwood - Chemicals, ASP Textiles, meat, bearings and àhains, industrial fasteners, aluminum and other metals, gen- eral testimony. Aircraft, bicycles, pins and fasteners, mush- rooms, seafoods, coffee. Stone, glass, clay, ceramic tile, cement, marble, granite. Farm products, milk and milk products, soy- beans, honey, molasses, cand~r, footwear, textiles, apparel, general testimony. Farm and citrus products, footwear, textiles, apparel, tea, general testimony. Government officials 1 2 2 3 3 4 5 5 6 6 7 8 9 10 10 11 12 13 14 14 15 15 16 1-297 299-556 557-643 645-737 739-1000 1001-1210 1211-1500 1501-1615 1617-1748 1749-1959 196 1-2177 2179-2395 2397-2651 2653-2825 2827-3049 3051-3344 3345-3640 3641-3833 3835-3969 3971-4155 4157-4274 4275-4416 4417-4651 (III) PAGENO="0004" PAGENO="0005" CONTENTS SUBJECT HEADINGS Aircraft Alcoholic beverages Aluminum American selling price Bearings and chains Bicycles Brass Candles Candy Cement Ceramic tile Chemicals Clay Coal Coffee Copper Domestic International Sales Corp Electrical equipment Electronics Exported articles, refund of duties Farm products Fish Flowers Footwear (leather and rubber) and related products_ Fur Gas General testimony June 12. June 5. June 11. June 10. June 11. June 12. June 1. June 5. June 16. June 15. June 15. June 10. June 15. June 3. June 12. June 1. June 4. June 8. June 8. June 4. June 12, 16, 17. June 12. June 5. June 2, 16, 17. June 9. June 3. May 18, 19, 11, 16, 17. Glass June 15. Glue June 5. Government offiëials May 11, 12, Granite June 15. Hardwood June 9. Honey June 16. Industrial fasteners June 11. Iron June 1. Item 807 June 8, 9. Machinery and machine tools June 4. Marble June 15. Meat June 11. Milk and milk products June 16. Molasses June 16. Novrities June 5. Oil June 3, 4. Pins and fasteners Jui~e 12. Scissors and shears June 5. Soybean June 16. Sporting arms - June 5. State agencies - June 5. Steel June 1. Stone - June 15. Tea June 17. Textiles and apparels May 20, June 11, 16, 17. Tobacco June 5. Toys June 5. Umbrellas June 5. Zinc - June 15. (V) Date 22, June 5, 9, 13, 14, June 25. PAGENO="0006" VI BACKGROUND MATERIAL Page Letter frbm the President to Chairman Mills, dated May 11, 1970 65 Press releases: Dated Thursday, April 16, 1970, outlining future schedule of the Com- mittee on Ways and Means 1 Dated Monday, May 4, 1970, announcing public hearings on tariff and trade proposals 2 Proposed Trade Act of 1969, committee print 5 Draft bill (H~R. 14870, introduced by Chairman Mills and Congressman John W. Byrnes of Wisconsin on November 19, 1969, at the request of the administration) 15 Message of the President 8 Section-by-section analysis - 20 Trade Expansion Act of 1962, as amended 30 ORAL STATEMENTS BY GOVERNMENT OFFICIALS Agriculture, Department of: Hardin, Hon. Clifford M., Secretary 626 Commerce, Department of: Stans, Hon. Maurice H., Secretary 299,4417 Abbuilil, Forrest, Director, Trade and Commercial Policy Division_ 299,4417 Bodner, Seth, Special Assistant to Deputy Assistant Secretary for Itesources 299,4417 Butler, Michael F., Assistant General Counsel, Domestic and Interna- tion Business ~ 4417 Fox, Lawrence, Deputy Assistant Secretary for International Trade Policy Johnson, Chadwick, Japan Desk Officer 4417 Nehmer, Stanley, Deputy Assistant Secretary for Resources 482,4417 Labor, Department of: Shultz, Hon. George P., Secretary 589 Blackman, Herbert N., Deputy Assistant Secretary for Trade and Adjustment Policy 589 Hildebrand, Hon. George H., Deputy Under Secretary 589 State, Department of: Rogers, Hon. William P., Secretary 557 Trezise, Philip H., Assistant Secretary for Economic Affairs 570 Treasury, Department of: Kennedy, Hon. David M., Secretary 499 Nolan, John, Acting Assistant Secretary for Tax Policy 499 Patrick, Robert J., Associate Tax Legislative Counsel (International) 499 Petty, John R., Assistant Secretary for International Affairs 532 Rossides, Eugene T., Assistant Secretary for Enforcement and Opera- tions 521 `\Tolcker, Paul A., Under Secretary for Monetary Affairs 524 Trade Negotiations, Office of the Special Representative for: Gilbert, Hon. Carl J., Special Representative for Trade Negotia- tions 67, 645 Garland, Allen H., chairman, Trade Staff Committee 67, 645 Gates, Theodore R., Assistant Special Representative for Industry and Labor 67, 645 Pomeranz, Morton, acting general counsel, and secretary, Trade Exec- utive Committee 67, 645 ORAL STATEMENTS BY PUBLIC WITNESSES Abbitt, Hon. Watkins M., a Representative in Congress from the State of Virginia Ackley, Hon Gardner, on behalf of the American Retail Federatiop 921 Aerospace Industries Association of America, Inc.: Harr, Karl G., Jr., president 3835 Marshall, Robert B., member, International Committee 3847 Stoffel, Albert W., chairman, International Committee-Trade Policy Task Group-,- 3843 Alevra, Peter, Pulp & Paper Machinery Association 2486 Allen, Edward A., Jr., on behalf of the Stainless Steel Flatware Manu- facturers Association 1810 Amalgamated Clothing Workers of America, Jacob S. Potofsky, president-- 1267 PAGENO="0007" VII Amalgamated Meat Cutters & Butcher Workmen of North America: Page Feinglass, Abe, international vice president (statement delivered by Mr. Wishart) 2130 Wishart, James, research director 2130 Fur and Leather Department: Foner, Henry 3157 Shapiro, Ralph, counsel 3154 American Apparel Manufacturers Association: Brawley, H. W 1373 Flanagan, William S., board of directors and executive committee~~ 1373 Meredith, Ellis E., executive vice president 1373 Priestland, Carl, economic consultant 1373 American Association of Port Authorities, Clifford B. O'Hara, chairman, committee XI American Association of Woolen Importers, Inc.: Bissinger, Fred, Jr., president 1490 Daniels, Michael P., counsel 1490 American Butter Institute, Rdbert F. Anderson, executive secretary 4178 American Farm Bureau Federation: McLain, Marvin, director, legislative department 1620 Sherwin, Dale, assistant director, legislative department 1620 Shuman, Charles B., president 1620 American Federation of Labor and Congress of Industrial Organizations: Biemiller, Andrew J., director, department of legislation 1001 Goldfinger, Nathaniel, director, department of research 1022 American Footwear Manufacturers Association: Griffin, W. L. Hadley, chairman, board of directors 1983 Olson, Iver M., vice president 1983 Shannon, Thomas F., counsel 2024 Sheskey, William, chairman, national affairs committee 2016 American Fur Merchants' Association, Inc.: Dreisin, Eugene, cochairman, foreign trade committee 3094 Hessel, B. H., cochairman, foreign trade committee 3096 Sharp, James R., Washington counsel 3094 American Fur Merchants Council, Eugene Dreisin, former president 3159 American Gas Association, Herbert D. Clay, chairman, government re- lations committee 2315 American Importers Association: Cutler, Ralph H., Jr., chairman, trade policy committee 933 O'Brien, Gerald, executive vice president 933 Footwear group: Beispel, Paul 2119 Davis, Jeff 2103 Hemmendinger, Noel, counsel 2103 Organic chemicals group: Hochschwender, Dr. Karl A., chairman 3508 McCauley, Alfred R., counsel 3508 Stobaugh, Robert B., 3509 Textile and apparel group: Daniels, Michael P., general counsel 1324 American Iron & Steel Institute: Roche, John P., president 1753 Stinson, George A., chairman 1753 American Institute for Imported Steel, Inc.: Graubard, Seymour, counsel 1796 Greenberg, Michael H., associate counsel 1796 American Loudspeaker Manufacturers Association, Herbert Rowe (chair- man, parts division and distributor products division, Electronic In- dustries Association) 2881 American Mexican Association: Blum, William 3200 Bramble, H. ~ 3218 Courtney, Gen. J. Cal, president - 3200 Nathan, Robert R 3202 PAGENO="0008" VIII American National Cattlemen's Association, C. W. McMillan, executive Page vice president 3687 American Petroleum Institute, panel on behalf of: Dunlop, Robert G., chairman of the board, Sun Oil Co 2239 Ikard, Hon. Frank N., president 2202 Wright, Myron A., chairman of the board, Humble Oil & Refining Co., also in behalf of Standard Oil Co. of New Jersey 2210 American Pipe Fittings Association: Goodridge, Raymond H., secretary-treasurer 1905 Vilsack, Robert M 1905 Wilcox, William F 1908 American Retail Federation: Ackley, Hon. Gardner 921 Keeney, Eugene, president 921 American Saint Gobain Corp., J. Clifford Knochel, president and chief executive officer 3976 American Soybean Association, D. Leslie Tindal, president 4222 American Sprocket Chain Manufacturers Association, Edward M. Rhodes, special consultant 3745 American Textile Manufacturers Institute, panel of: Dent, Frederick B., chairman, international trade committee 1222 Jackson, Robert C., executive vice president 1217 McCulloch, Donald F., president 1217 Booth, Robert, chairman, Northern Textile Assn 1240 Darman, Morton H., chairman of the board, National Association of Wool Manufacturers 1243 Robie, Merle C., chairman, executive committee, Cordage Institute~ 1264 Anderson, Hon. John B., a Representative in Congress from the State of Illinois 290 Anderson, Robert F., executive secretary: American Butter Institute 4178 National Cheese Institute, Inc 4178 Anderson, Robert W., on behalf of Tanners Council of America, Inc 2023 Anti-Friction Bearing Manufacturers Association, William E. Decaulp, chairman, foreign trade committee 3740 Apparel Industries Inter-Association Committee: Ferster, Herbert F., counsel, Clothing Manufacturers Association of the U.S.A 1517 Korzenik, Sidney S., co~insel 1517 McEvoy, James, research director, National Knitted Outerwear Association 1517 Appleman, Leonard, immediate past president, Green Olive Trade Asso- ciation Archer, John, counsel, Mass Retailing Institute 2671 Arcuri, Andrew, International Union of Dolls, Toys, Playthings, Novelties and Allied Products of the United States and Canada 2769 Ashley, James M., cochairman, board of trustees, Trade Relations Council of the United States, Inc 3649 Aspinall, Hon. Wayne N., a Representative in Congress from the State of Colorado 2397 Association on Japanese Textile Imports, Inc.: Ishikawa, Samuel, of counsel 1388 Masaoka, Mike M., Washington representative 1388 Atkins, Edward, executive vice president, Volume Footwear Retailers of America 2078 Atkind, Leon, chairman, Textile Importers Group of the Italy-America Chamber of Commerce 1649 Baldanzi, George, international president, United Textile Workers of America 1290 Barnard, Robert C., counsel: Synthetic Organic Chemical Manufacturers Association 3371 Dry Color Manufacturers Association 3371 Barnes, Delbert, tax counsel, Cummins Engine Co 2471 Bates, Victor, president, Bates Nitewear Co., Inc 15~0 Beispel, Paul, member, footwear group, American Importers Association__ 2119 Bennett, Hon. Charles E., a Representative in Congress from the State of Florida 3879 PAGENO="0009" Ix Bent, Donn N., Meat Importers Association, on be~ialf of John E. Ward, Pate chairman Berncolors-Poughkeepsje, Inc., James W. Monks, president 3571 Bevil, Hon. Tom, a Representative in Congress from the `State of Alabama 1512, 1749 Biaggi, Hon. Mario, a Representative in Congress from the State of New York 2654 Bicycle Manufacturers Association of America: Hannon, William M., chairman, Washington affairs committee 3850 Shannon, Thomas, counsel 3850 Biemiller, Andrew J., director, Department of Legislation, American Feder- ation of Labor, Council of Industrial Organizations 1001 Bissinger, Fred: American Association of Woolen Importers, Inc. (president) 1490 Synthetic Organic Chemical Manufacturers Association (senior vice president) 3371 Blake, Peter, acting director, Division of Economic Development, New Jersey Department of Labor and Industry, on behalf of New Jersey Economic Development CounciL 2659 Blum, William, American Mexican Association 3200 Boland, Hon. Edward P., a Representative in Congress from the State of Massachusetts 42841 Boot & Shoe Workers Union, John E. Mara, general president 2066 Booth, Robert, chairman, Northern Textile Association 1240 Bradley, Gail, vice president, League of Women Voters of the United States 979 Bramble, H. P., American Mexican, Association 3218 Brawley, H. W., on behalf of the American Apparel Manufacturers Asso- ciation 1373 Brazilian-American Chamber of Commerce, Morris Rosoff, president 1686 British-American Chamber of Commerce: Farquharson, David N. G., executive secretary 1677 Lee, Derek A., president 1677 Pacy, David G., vice president 1677 Bronz, George, on behalf of the Tie Fabric Importers Association 1541 Broun, E. Fontaine, member, exeóutive advisory committee, Man-Made Fiber Producers Association 1427 Brown, Phillip, on behalf of Rubber Manufacturers Association 2094 Broyhill, Hon. James T., a Representative in Congress from the State of North Carolina 1501 Brudno, Walter W., counsel, in behalf of Cummins Engine Co. and Kobe, Inc 2471 Bruno, Vincent J., director, World Trade Department, Commerce & Industry Association of New York 1208 Bryant, F. Leonard, chairman of the board of directors, Manufacturing Chemists Association 3490 Buchanan, Hon. John, a Representative in Congress from the State of Alabama 1812, 1905, 4024~ Burch, Bob, vice chairman, import policy committee, Independent Petro- leum Association of Amerca, and also president, Rocky Mountain Oil & Gas Association 2299 Burton, Hon. Laurence J., a Representative in Congress from the State of Utah 2428 Busby, David, Washington, D.C 2573 Butler, George D., president, Electronic Industries Association 2827 Buzzard, John A., chairman, Import-Export Advisory Committee, National Confectioners Association 4232 Byrnes, Hon. John W., a Representative in Congress from the State of Wisconsin and a member of the Committee on Ways and Means, state- ment with reference to testimony Of Nelson Stitt 1126. 3641 Bywater, William, vice president, International Union of Electrical, Radio & Machine Workers; also on behalf of International Association of Machinists & Aerospace Workers and the International Brotherhood of Electrical Workers 2903 California-Arizona Citrus League, Julian B. Heron, Jr., counsel 4360 PAGENO="0010" x Campbell, John, assistant general counsel, United Rubber, Cork, Linoleum Page & Plastic Workers of America 2137 Campbell, William, chairman, footwear division, Rubber Manufacturers Association 2094 Cast Iron Soil Pipe Institute: Hendrickson, Jerome, executive vice president 1813 Hunt, Frederick D., foreign trade consultant 1813 Perry, J. Wiley, Jr., chairman, Import Study Committee 1813 Caterpillar Tractor Co.: Fender, James, Public Affairs Department 1202 Grant, Virgil V., vice president 1202 C-E Glass, Robert C. Hordis, president 3982 Cement Industry Antidumping Committee: Hiss, Donald, counsel 4089 Mundt, John C., vice chairman, advisory committee 4089 Ceramic Tile Manufacturers of the United States: Murchison. David M - 4074 Steele. Robert W 4074 Chamber of Commerce of the United States: Field, John E 1048 Ostrander, F. Taylor, Jr 1050 Surrey, Walter Sterling, member, international group 1039 Vest, Kay, manager, international group 1039 Chattem Drug & Chemical Co. of Chattanooga, Tenn.: Colburn, Charles S., engineer 3617 Evans, Ray W., vice president 3591 Vansant, John M., Jr., counsel 3591 Chester, Howard P., executive secretary, Stone, Glass & Clay Coordinating Committee 4032 Chicago (Ill.) Board of Trade, Henry H. Wilson, president 4323 Christopher, William, on behalf of Manufacturing Chemists Association~ 3506 Christopher, William F., chairman, Society of the Plastics Industry, Inter- national Committee 3322 Churchill, Robert, member, executive advisory committee, Man-Made Fiber Producers Association 1427 Citronbaum, Jack, executive vice president, Luggage & Leather Goods Man- ufacturers Association of America 2158 Clay, Herbert D.: chairman, Government Relations Committee, American Gas Association; president, National Fuel Gas Co 2315 Clayman, Jacob, administrative director, Industrial Union Department, AFL-CIO 1776 Cleveland, Hon. James C., a Representative in Congress from the State of New Hampshire 3345 Clothespin & Veneer Products Ass~ciation,. Myron Solter, counsel 3331 Coerper, Milo G., Washington counsel, German-American Chamber of Com- merce 1672 Cohen, Samuel Harris, counsel, New York Local No. 1, International Leather Goods, Plastics & Novelties Workers Union 2143 Colburn, Charles S., engineer, Chattem Drug & Chemical Co. of Chatta- nooga, Tenn 3617 Coleman, Gerald R., vice president-executive secretary, United Hatters, Cap & Millinery Workers International Union 1317 Collins, George, assistant to the president, International Union of Electri- cal, Radio & Machine Workers; also on behalf of the International As- sociation of Machinists & Aerospace Workers and the International Brotherhood of Electrical Workers 1776, 2903 Commerce & Industry Association of New York, Vincent J. Bruno, direc- tor, w-orld trade department 1208 Committee for a National Trade Policy: Hight, John W., executive director 861 Steinberg, David J., secretary and chief economist 872 Taft, Hon. Charles P., chairman 852 PAGENO="0011" XI Committee for Economic Development: Page Neal, Alfred C., president 914 Roth, Hon. William M., vice chairman, international economic studies, research and policy committee 914 Conte, Hon. Silvio 0., a Representative in Congress from the State of Mas- sachusetts 2421 Cooper, Mitchell J., counsel, footwear division, Rubber Manufacturers Association 2094 Copper & Brass Fabricators Council, Inc.: Veltfort, Theodore E., managing director 1830 Wardell, Robert J., assistant managing director 1830 Cordage Institute, Merle 0. Robie, chairn~tn, executive committee 1204 Cornett, Hollan, international vice president, Stone & Allied Products Workers 4055 Cotton, Hon. Norris, a U.S. Senator from the State of New Hampshire~_ 2184 Coughlin, Hon. R. Lawrence, a Representative in Congress from the State of Pennsylvania 1515, 4073 Council of State Cham!bers of Commerce: Koch, George S., chairman, Federal finance committee 2439 Rinta, Eugene F., executive director 2439 Courtney, Gen. J. Cal, president, American Mexican Association 3200 Crimmins, Mitchell T., counsel, Tenneco Chemicals, Inc 3565 Culleton, Edward J., president, Green Olive Trade Association 4347 Cümmins Engine Co.: Barnes, Delbert, tax counsel 2471 Brudno, Walter W., counsel 2471 Curran, Jack, legislative dir~ctor, Laborers' International Union of North America 4121 Cutler, Ralph H., Jr., chairman, trade policy committee, American Im- porters Association 933 Cycle Parts and Accessories AssociatiOn, Carrol J. Warrell, chairman, tariff and customs committee 3858 Damon, E. M. Jr., executive secretary, Mushoom Processors Association_ 3885 Danielian, N. R., president, International Economic Policy Association~ 946 Daniels, Michael P., counsel: American Association of Woolen Importers, Inc 1490 American Importers Association, textile and apparel group 1324 Darman, Morton H., chairman of the board, National Association of Wool Manufacturers 1243 Daugherty, Philip, legislative representative, Industrial Union Depart- ment, AFL-CIO 1776 David Guttman, Inc., David Guttman (executive representative, Miss Erika, Inc.) 1552 Davies, Richard, consulting economist, Synthetic Organic Chemical Manu- facturers Association 3476 Davis, Jeff, member, footwear group, American Importers Association~~ 2103 Decaulp, William E., chairman, foreign trade committee, Anti-Friction Bearing Manufacturers Association 3740 Decker, James, president, Kobe, Iné 2481 Dent, Frederick B., chairman, international trade committee, American Textile Manufacturers Institute 1222 Dent, Hon. John H., a Representative in Congress from the State of Pennsylvania 3107 De Santis, Arthur A., executive secretary, Italy-America Chamber of Commerce 1647 (Greater) Detroit Chamber of Commerce, world affairs committee: Lyon, Lyman R., chairman-designate 1636 Toro, Carlo's, vice chairman-designate 1636 Dirlam, Dr. Joel B., director, Institute for the Study of International Aspects of Competition, University of Rhode Island 1840 Discover America Travel Organizations, Inc., Sam N. Mercer, presidenL~ 2581 Distillery, Rectifying, Wine and Allied Workers International Union, AFL-CIO, Abraham S. Weiss, legislative representative 2801 Donehower, William L., Jr., chairman, executive committee, Rolled Zinc Manufacturers Association 4112 PAGENO="0012" XII Donohue, Hon. Harold D., a Representative in Congress from the State of Page Massachusetts 2186,4284 Dreisin, Eugene, cochairman, Foreign Trade Committee, American Fur Merchants' Association, Inc 3094, 3159 Driver, William, president, Manufacturing Chemists Association 3490 Dunlop, Robert G. (chairman of the board, Sun Oil Co.) on behalf of the American Petroleum Institute 2239 Eagle Shoes of Philadelphia, Inc., Harry A. Kozac (president, Worldwide Shoes, Inc.) 2162 Eckles, William C., general manager, Pure Milk Products Cooperative____ 4217 Edmondson, Hon. Ed, a Representative in Congress from the State of Oklahoma - 2403 Egge, George C., Jr., Synthetic Organic Chemical Manufactures Associa- tion Electronic Industries Association: Butler, George D., president 2787 McCauley, Alfred R., special counsel 2876 Price, Jay, director of public affairs 2827 Consumer products division: Hoffman, Charles N., chairman 2870 Wayman, Jack, staff vice president 2870 Parts and distributor products divisions: Rowe, Herbert, chairman, world trade committee 2881 Semiconductor division: Field, John C., economist 2987 Meagher, Edward, chairman 2987 New Delman, Mitchell J., attorney 2987 Emergency Committee for American Trade: Hazard, Ellison L 749 Kendall, Donald M., chairman 739 McNeil, Robert L., executive vice chairman 836 Townsend, Lynn 750 Empire State Novelty Corp., Ira Weinberg, vice president and general manager 2779 E. Stanwyck Coil Co., Inc., Edward Stanwyck, president 3016 Evans, Ray W., vice president, Chattem Drug & Chemical Co., of Chatta- nooga, Tenn 3591 Evans, S. W., member, Umbrella Frame Association of America 2796 Fairchild Camera & Instrument Corp.: Herzstein, Roberty, attorney 2995 Hinkelman, Thomas, vice president for coporate planning 2995 Fannin, Hon. Paul J., a U.S. Senator from the State of Arizona 4275 Farmers & Manufacturers Beet Sugar Association: O'Rourke, Dennis, counsel 4243 Reeve, Perc A., executive vice president 4243 Farquharson. David N. G., executive secretary, British-American Chamber of Commerce 1677 Farrington, James, president, National Association of Scissors & Shears Manufacturers 2748 Fecteau, George 0., general president, United Shoe Workers of America_. 2061 Feinglass, Abe, international vice president, Amalgamated i\ieat Cutters & Bu~eher Workmen of North Amer~ca (statement delivered by James WTishart) 2130 Fender, James, public affairs department, Catepillar Tractor Co 1202 Ferster, Herbert F., counsel, Clothing Manufacturers Association of the U.S.A. 1517 Field, John E., economist, on behalf of: Chamber of Commerce of the United States 1048 Electronic Industries Association, semeiconductor division 2987 Fish, Hon. Hamilton, Jr., a Representative in Congress from the State of New York 3565 Findley, Hon. Paul, a Representative in Congress from the State of Illinois. 3079 Finkel, Leonard E., president, Umbrella Frame Association of America~ 2790 Flanagan, William S., board of directors and executive committee, Ameri- can Apparel Manufacturers Association 1373 PAGENO="0013" XIII Flat glass domestic producers, panel on behalf of: Hainsfurther, Robert M., vice president and general manager, glass Page division, PPG Industries, Inc 3986 Hordis, Robrt C., president, C-E Glass 3982 Knochel, J. Clifford, president, chief executive officer, American Saint Goibain Corp 3976 Stewart, Eugene L., special counsel 3988 Wingerter, Robert G., president, Libby-Owens-Ford Co 3972 Flood, Hon. Daniel J., a Representative in Congress from the State of Pennsylvania 1961 Florida Citrus Mutual: Rutledge, Robert W., executive vice president 4305 Underhill, William Amory, cour~sel 43~5 Foner, Henry, on behalf of Fur & Leather Department of the Amalga- mated Meat Cutters & Butcher Workmen of North America 3157 Friedel, Hon. Samuel N., a Representative in Congress from the State of Maryland 1508 Fuller, Robert P., member, government affairs committee, National Shoe- board Conference, Inc 2092 Furrier Joint Council of New York, Charles Hoff, assistant manager~~ 3154 GAF Corporation, chemical division, Alison Webb, director of marketing__ 3568 Gaydos, Hon. Joseph M., a Representative in Congress from the State of Pennsylvania 3151 GEM's Guernsey Farms, Germantown, Wis., Robert G. Lewis 4212 German-American Chamber of Commerce, Milo G. Coerper, Washington counsel 1672 Gettys, Hon. Tom S., a Representative in Congress from the State of South Carolina 1211 Giaimo, Hon. Robert N., a Representative in Congress from the State of Connecticut 2193 Glass, Irving R. president, Tanners Council of America, Inc 2005 Gleason, Donald H., chairman, international taxation subcommittee, Na- tional Association of Manufacturers 2438 Golden, David A., tariff and customs counsel, United States Potters Association 1188 Goldfinger, Nathaniel, director, Department of Research, AFL-CIO 1022 Goldman, Julius, marketing manager, industry sales, Tenneco Colors Divi- sion, Tenneco Chemicals, Inc 3565 Goldy, Daniel L., vice chairman, committee on commercial policy, United States Council of the International Chamber of Commerce 1170 Golson, Charles E., on behalf of International Engineering & Construction Industries Council 2481 Goodman, Richard J. member, international trade committee, National Grain & Feed Association 3734 Goodridge, Raymond H., secretary-treasurer, American Pipe Fittings Association 1905 Gordon, Douglas R., assistant executive director, Society of American Florists 2797 Gordon, Milton, International Union of Dolls, Toys, Playthings, Novel- ties and Allied Products of the Tinited States and Canada 2768 Gorton, Harry, American Aniline Products, Inc 3575 Graham, Harry L., legislative representative, National Farmers Orga- nization 987 Graham, James A., chairman, government and international affairs corn- mi1~tee. Industrial Fn'~tener~ Institvite 3757 Grant, Virgil V., vice president, Caterpillar Tractor Co 1202 Graubard, Seymour, counsel, American Institute for Imported Steel, Inc 1706 Greenberg, Michael H., associate counsel, American Institute for Im- ported Steel, Inc 1796 Green Olive Trade Association: Appleman, Leonard, immediate past president 4347 Culleton, Edward J., president 4347 Nolan, John E., Jr., counsel 4347 Pappas, John, Jr 4347 Schuman, Samuel, past president 4347 PAGENO="0014" XIV Griffin, W. L. Hadley, chairman, board of directors, American Footwear Page Manufacturers Association 1983 Griffin, Hon. Charles H., a Representative in Congress from the State of i~iississippi 4298 Gubser, Hon. Charles S., a Representative in Congress from the State of California 4159, 4360 Guttman, David, executive representative, Miss Erika, Inc 1552 Also testifying in behalf of: David Guttman, Inc 1552 Ricki Knits, Jr 1552 Hagericli, Don A., executive director, Marble Institute of America 4121 Hainsfurther, Robert M., vice president and general manager, glass dlvi- sion~ PPG Industries, Inc 3986 Halpern, Hon. Seymour, a Representative in Congress from the State of New York 2190 Hannon, William M., chairman, Washington Affairs Committee, Bicycle Manufacturers Association of America 3850 Hansen, Hon. Orval, a Representative in Congress from the State of Idaho 3092 Harr, Karl G., Jr., president, Aerospace Industries Association of Amer- ica, Inc 3835 Harsha, Hon. William H., a Representative in Congress from the State of Ohio 2653 Hathaway, Hon. William D., a Representative in Congress from the State of Maine 1504 Hazard, Ellison L., on behalf of the Emergency Committee for American Trade Healy, Patrick B., secretary, National Milk Producers Federation 4181 Healey, William, staff counsel, Machinery & Allied Products Institute 2454 Hemingway, Stuart C., Jr., executive vice president, Stainless Steel Flat- ware Manufacturers Association 1804 Hemmendinger, Noel, counsel, footwear group, American Importers As- sociation 2103 Henderson, Dave, executive secretary, National Board of Fur Farm Or- ganizations 3051 Hendrickson, Jerome, executive vice president, Cast Iron Soil Pipe In- stitute 1813 Heeron, Julian B., Jr., counsl, California-Arizona Citrus League 4360 Herzs'tein, Robert, attorney, Fairchild Camera & Instrument Corp 2995 Hessel, B. H., chairman, foreign trade committee, American Fur Mer- chants' Association, Inc 3096 light, John W., executive director, Committee for a National Trade Policy 861 Higman, W. E., Washington, D.C 2596 Hinkelman, Thomas, vice president for corporate planning, Fairchild Cam- era & Instrument Corp 2995 Hiss, Donald, counsel, Cement Industry Antidumping Committee 4089 Hobbs, Claude, chairman, committee on foreign trade policy, National Electrical Manufacturers Association 2934 Hochschw-ender, Dr. Karl A., chairman, American Importers Association, Organic Chemical Group 3508 Hoff, Charles, assistant manager. Furrier Joint Council of New York 3154 Hoffman, Charles N., chairman, consumer products division, Electronic Industries Association 2870 Hordis. Robert C., president, C-E Glass 3982 Humble Oil & Refining Co., Myron A. Wright, chairman of the board~ 2210 Hunt, Frederick D.: Cast Iron Soil Pipe institute, foreign trade consultant 1813 Office Machines International institute, director 3314 Ikard, Hon. Frank N., president, American Petroleum Institute 2202 Imported Hardw-ood Products Association, Inc., James R. Sharp, counseL~ 3195 independent Natural Gas Association of America, Hon. Walter E. Rog- ers, president 2307 PAGENO="0015" xv Independent Petroleum Association of America, panel on behalf of: Page Jameson, Minor, executive vice president 2299 Burch, Bob, vice chairman, import policy committee, and also presi- dent, Rocky Mountain Oil & Gas Association~. 2286 Medders, Tom B., .Jr., chairman, import policy committee 2295 Industrial Fasteners Institute: Graham, James A., chairman, government and international af- fairs committee 3757 Masterson, Frank, president 3811 Industrial Union Department, AFL-CIO: Clayman, Jacob, administrative director 1776 Daugherty, Philip, legislative representative 1776 Institute on U.S. Taxation of Foreign Income, Inc., Paul D. Segh- ers, president 2443 International Association of Machinists & Aerospace Workers: Bywater, William (vice president, International Union of Electrical Radio, & Machine Workers) 2903 Collins, George (assistant to the president, International Union of Electrical, Radio, `& Machine Workers) 2903 International Brotherhood of Electrical Workers: Bywater, William (vice president, International Union of Electrical, Radio, & Machine Workers) 2903 Collins, George (assistant to the president, International Union of Electrical, Radio, & Machine Workers) 2903 International Brotherhood of Operative Potters, Lester Null, president_~_ 4041 International Chemical Workers Union, Frank D. Martino, Washing- ton director / - 3575 International Economic Policy Association, N. R. Danielian, president 946 International Engineering & Construction Industries Council: Golson, Charles E ~tsi Rutherford, H. L 2481 International Ladies' Garment Workers' Union, Lazare Teper, director of research, presenting statement on behalf of Louis Stulberg, president_ 1269 International Leather Goods, Plastics, & Novelties Workers Union: Cohen, Samuel Harris, counsel, New York Local No. 1 2143 Weiss, Abraham, legislative representative 2143 International Longshoremen's & Warehousemen's Union, Albert Lannon, Washington representative 1185 International Trade Club of Chicago, Lawrence C. McQuade, director~_ 2559 International Union of Dolls, Toys, Playthings, Novelties & Allied Products of the United States and Canada: Arcuri, Andrew 2769 Gordon, Milton 2768 International Union of Electrical, Radio, & Machine Workers: Bywater, William, vice president 2903 Collins, George, assistant to the president 2903. International Union of Radio & Machine Workers of America, George Collins 1776 Ishikawa, Samuel, of counsel to Mike M. Masaoka, Washington representa- tive, Association on Japanese Textile Imports, Inc 188 Italy-America Chamber of Commerce: Atkind, Leon, chairman, Textile Importers Group 1649 De Santis, Arthur A., executive secretavy 1647 Luft, Willard, coehairman, Footwear Importers Group 1647 Jackson, Robert 0., executive vice president, American Textile Manufac- turers Institute 1217 Jameson, Minor, executive vice president, Independent Petroleum Associa- tion of America 2286 Jenkins, George 0., Jr., chairman, government affairs committee, National Shoeboard Conference, Inc 2092 Joelson, Mark, counsel, Pulp & Paper Machinery Association 2489 Johnson, Reuben L., director of legislative services, National Farmers Union 4237 Keeney, Eugene, president, American~ Retail Federation 921 Keith, Hon. Hastings, a Representative in Congress from the State of Massachusetts 1980 Kendall, Donald M., chairman, Emergency Committee for American Tracle_ 739 PAGENO="0016" xv' Page Kessler, Bernard, president, Mass Retailing Institute 2673 Knochel, J. Clifford, president, chief executive officer, American Saint Gobain Corp Kobe, Inc.: Brudno, Walter W., counsel 2471 Decker, James, president, finance 2481 Koch, George S., chairman, Federal Finance Committee, Council of State Chambers of Commerce 2439 Korzenik, Sidney S., counsel, Apparel Industries Inter-Association Corn- rnitteee 1517 Kozac, Harry A., president, Worldwide Shoes, Inc., also on behalf of Eagle Shoes of Philadelphia, Inc 2162 Kyros, Hon. Peter N., a Represenative in Congress from the State of Maine 1982 Laborers' International Union of North America, Jack Curran, legislative director 4112 Langen, Hon. Odin, a Representative in Congress from the State of Minnesota 4165 Lannon, Albert, Washingion representative, International Longshoremen's & Warehousemen's Union 1185 League of Women Voters of the United States, Gail Bradley, vice president LeBlond, Daniel W., National Machine Tool Builders Association 2550 Lee, Derek A., president, British-American Chamber of Commerce 1677 Levy, Edward, executive director, National Handbag Association 2160 Lesnick, Edward, director of product planning, Wang Laboratories, Inc____ 3013 Lewis, Robert G.: Wisconsin Cheese Makers' Association 4212 Geehl's Guernsey Farms, Germanteowil, Wis 4212 Libbey-Owens Ford Co., Robert G. Wingerter, president 3972 Liberty Lobby, Warren S. Richardson, general counsel 1630 Lincoln, Donald 0., trade, legislative and legal consultant, Maine Sardine Packers Association and Maine Sardine counsel 3892 Lobred, Leonard K.: National Canners Association, director, international trade division__ 4327 U.S. National Fruit Export Council, secretary-treasurer 4367 Lovre, Hon. Harold 0., Washington counsel, Natjonal Board of Fur Farm Organizations 3051 Luft, Williard, cochairman, Footwear Importers Group of the Italy-Amer- ica Chamber of Commerce 1647 Luggage & Leather Goods Manufacturers of America, Jack Citronbaum, executive vice president 2158 Lynn, Bruce N., president, National Cotton Council of America 1494 Lyon, Lyman R., chairman-designate, world affairs committee, Greater Detroit Chamber of Commerce 1636 MacArthur, Arthus R., Janesville, Wis 3172 Machinery & Allied Products Institute: Healey, William, staff counsel 2454 Stewart, Charles W., president 2454 Magdanz, Don F., executive secretary-treasurer, National Livestock Feeders Association 3704 Mahon, Hon. George H., a Representative in Congress from the State of Texas 2179 Mahoney, James, member, executive advisory committee, Man-Made Fiber Producers Association 1427 Maine Sardine Packers Association and Maine Sardine Council: Lincoln, Donald 0., trade, legislative and legal consultant 3892 Reed, Richard E., executive secretary 3892 Warren, James L., chairman, legislative committee 3892 Man-Made Fiber Producers Association: Executive advisory committee: Broun, E. Fontaine 1427 Churchill, Robert 1427 Mahoney, James 1427 Stoll, Dr. Reiner 1427 Swank, Dr. Howard 1427 Ramsey, Claude, chairman of the board 1427 Stewart, Eugene L., counsel 1427 PAGENO="0017" XVII Manufacturing Chemists Association: Pam Bryant, F. Leonard, chairman of the board of directors 3490 Christopher, William 3506 Driver, William, president 3490 Plumb, Robert 3490 Mara, John E., general president, Boot & Shoe Workers Union 2066 Marble Institute of America, Don A. Hagerich, executive director 4121 Marshall, Robert B., member, International Committee, Aerospace Indus- tries Association of America, Inc 3847 Martin, Hon. Dave, a Representative in Congress from the State of Nebraska 3678 Martin, Lewe B.: Miniature Precision Bearing Co., counsel 3345 Mushroom Processors Association, counsel 3885 Stainless Steel Flatware Manufacturers Association, secretary 1804 Martino, Frank D., Washington director, International Chemical Workers Union 3587 Marzetti, Alex, chairman, government relations committee, Mushroom Processors Association 3885 Masaoka, Mike M., Washington representative, Association on Japanese Textile Impoi4ts, Inc 1388 Masterson, Frank, president, Industrial Fasteners Institute 3811 Mass Retailing Institute: Archer, John, counsel 2671 Kessler, Bernard, president 2673 Peabody, Hon. Endicott 2671 Massachusetts Department of Commerce and Development, Carroll P. Sheehan, commissioner 2656 May, Ernest M., president, Otto B. May, Inc 3572 McCauley, Alfred R., counsel: American Importers Association, organic chemicals group 3508 Electronic Industries Association 2876 McClanahan, W. W., executive president, National Coal Policy Con- ference 2335 McClure, Hon. James A., a Representative in Congress from the State of Idaho 4290 McCulloch, Donald F., president, American Textile Manufacturers Insti- tute 1217 McEvoy, James, research director, National Knitted Outerwear Asso- ciation 1517 McEwen, Hon. Robert C., a Representative in Congress from the State of New York 1968 McFall, Hon. John J., a Representative in Congress from the State of California 4160 McKenna, Neal, on behalf of Rubber Manufacturers Association 2094 McLain, Marvin, director, legislative department, American Farm Bureau Federation 1620 McMillan, C. W., executive vicce president, American National Cattle- men's Association 3687 McNeill, Roberi L., executive vice chairman, Emergency Committee for American Trade 836 McQuade, Hon. Lawrence C.. director, International Trade Club of Ghi- cago 2559 Meagher, Edward, chairman, semiconductor division, Electronics Indus- tries Association 2987 Meat Importers Association, Donn N. Bent, on behalf of John E. Ward, chairman 3696 Medders, Tom B., Jr., chairman, import policy committee, Independent Petroleum Association of America 2295 Mercer. Sam N., president, Discover America Travel Organizations, Inc~ 2581 Meredith, Ellis E., executive vice president, American Apparel Manufac- turers Association 1373 Metal Masters of Baltimore, Md., H. M. Weiss, president 1910 Minard, Richard A., officer, Miniature Precision Bearing Co 3345 Minchew, Daniel, legislative director, United States~Japan Trade CounciL~ 1066 Miniature Precision Bearing Co.: Martin, Lewe B., counsel 3345 Minard, Richard A., officer 3345 PAGENO="0018" XVIII Mink Hon. Patsy T., a Representative in Congress from the State of Page Hawaii 2198 Mizell, Hon. Wilmer D., a Representat.ive in Congress from the State of North Carolina 1513, 1549 Miss Erika, Inc., David Cuttman, executive representative 1552 Mollohan, Hon. Robert H., a Representative in Congress from the State of West Virginia 4293 Monagan. Hon. John S., a Representative in Congress from the State of Connecticut 4229 Monks James W., president, Berncolors-Poughkeepsie, Inc 3571 Moorcones, John S., on behalf of the National Restaurant Association___ 3725 Mundt, John C., vice chairman, advisory committee, Cement Industry Antidumping Committee 4089 Murchison, David C., on behalf of Ceramic Tile Manufacturers of the United States 4074 Mushroom Processors Association: Damon, E. M., Jr., executive secretary 3885 Martin, Lewe B., counsel 3555 Marzetti, Alex, chairman, government relations committee 3885 National Association of Secondary Material Industries, Inc., Sidney Silver. vice president, foreign trade division 3823 National Association of Manufacturers. Donald H. Gleason, chairman, international taxation subcommittee 2438 National Association of Wool Manufacturers. Morton H. Darman, chair- man of the board 1243 National Association of Scissors & Shears Manufacturers, James Far- rington, president 2748 National Board of Fur Farm Organizations: Henderson, Dave, executive secretary 3051 Lovre, Hon. Harold 0., Washington counsel 3051 Plaisted, Ken, general counsel 3051 Woodley, Albert 3057 National Canners Association, Leonard K. Lobred, director, international trade division 4327 National Cheese Institute. Inc., Robert F. Anderson, execi~tive secretary~ 4178 National Coal Association, Brice O'Brien, vice president 2318 National Coal Policy Conference. W. W. McClanahan, executive president_ 2335 National Confectioners Association, John A. Buzzard, chairman, import- export advisory committee 4232 National Cotton Council of America: Lynn, Bruce N., president 1494 Weilford, Dabney S., economist 1494 National Electrical Manufacturers Association: Hobbs, Claude, chairman, committee on foreign trade policy 2934 Simpson, John W 2934 National Farmers Organization, Harry L. Graham, legislative repre- sentative 987 National Farmers LTnion, Reuben L. Johnson. director of legislative services 4237 National Foreign Trade Council: Scott, Robert T., vice president 928 Walker, Melville H., executive vice president 928 National Fuel Gas Co., Herbert D. Clay, president 2315 National Grain & Feed Association, Richard J. Goodman, member, inter- national trade committee 3734 National Handbag Association: Levy Edward, executive director 2160 Weiss, Steven J.. counsel 2155 National Livestock Feeders Association, Don F. Magdanz, executive secre- tary-treasurer 3704 National Machine Tool Builders Association: Henry D. Sharpe, Jr., first vice president 2489 Daniel W. LeBlond 2550 National Milk Producers Federation. Patrick B. Healy, secretary 4181 PAGENO="0019" XIX National Restaurant Association: Page Moorcones, John S 3725 Neville, Robert B 3725 Nunn, Ira H., counsel 3725 National Shoeboard Conference, Inc.: Fuller, Robert P., member, government affairs committee 2092 Jenkins, George 0., Jr., chairman, government affairs committee_~~ 2092 Nathan, Robert R., American Mexican Association 3202 Nation-Wide Committee on Import-Export Policy, 0. R. Strackbein, president 883 Neal, Alfred C., president, Committee for Economic Development 914 Nelson, Arthur, president, Revere Stainless Steel Sink Corp 1913 Neville, Robert B., on behalf of the National Restaurant Association__ 3725 New Delman, Mitchell J., attorney, semiconductor division, Electronic Industries Association 2987 New Jersey Economic Development Council, Peter Blake, acting director, Division of Economic Development, New Jersey Department of Labor and Industry 2659 Nolan, John E., counsel, Green Olive Trade Association 4347 North Atlantic Ports Association, Clifford B. O'Hara, chairman, foreign commerce and Government traffic committee 975 Northern Textile Association, Robert Booth, chairman 1240 Null, Lester, president, International Brotherhood of Operative Potters~ 4041 Nunn, Ira H., counsel, National Restaurant Association 3725 O'Brien, Brice, vice president, National Coal Association 2318 O'Brien, Gerald, executive vice president, American Importers Association O~3 O'Rourke, Dennis, counsel, Farmers and Manufacturers Beet Sugar As- sociation 4243 O'Hara, Clifford B., appearing in behalf of American Association of Port Authorities (chairman, committee XI) and North Atlantic Ports As- sociation (chairman, foreign commerce and Government traffic com- mittee) Office Machines International Institute, Frederick P. Hunt, director_~ 3314 Ohio Greenhouse Cooperative Association, Roger Ruetenik, vice president 4371 Olson, Iver M., vice president, American Footwear Manufacturers As- sociation 1983 Oregon Cattlemen's Association, Fred Phillips, president 3693 Ostrander, F. Taylor, Jr., on behalf of the Chamber of Commerce of the United States 1050 Otto B. May, Inc., Ernest M. May, president 3572 Pacy, David G., vice president, British-American Chamber of Commerce__ 1677 Palmer, Charles, Southern Dyestuff Co 3575 Pappas, John, Jr., Green Olive Trade Association 4347 Peabody, Hon. Endicott, Mass Retailing Institute 2671' Perkel, George, research director, Textile Workers Union of America~ 1277 Perry, J. Wiley, Jr., chairman, import study committee, Cast Iron Soil Pipe Institute 1813 Peterson, Dean A., economic consultant, Volume Footwear Retailers of America 2082 Philips, A. Lloyd, president, American Aniline Products, Inc 3575 Phillips, Fred, president, Oregon Cattlemen's Association 3693 Piquet, Dr. Howard S., Washington, D.C. 2676 Plaisted, Ken, general counsel, National Board of Fur Farm Organizations 3051 Plumb, Robert, Manufacturing Chemists Association 3490 Pollock, William, general president, Textile Workers Union of America~ 1277 Potofsky, Jaeob S.. pre~iclcut, Amalgamated Clothing Workers of America_ 1267 PPG Industries, Inc., Robert M. Hainsfurther, vice president and general manager, glass division 3986 Preyer, Hon. Richardson, a Representative in Congress from the State of North Carolina 1550 Price, Jay, director of public affairs, Electronic Industries Association~ 2827 Priestland, Carl, economic consultant, American Apparel Manufacturers Association 1373 Pucinski, Hon. Roman C., a Representative in Congress from the State of Illinois 3647 PAGENO="0020" xx Pulp & Paper Machinery Association: Page Alevra, Peter 2486 Joelson, Mark, counsel 2489 Pure Milk Products Cooperative, William C. Eckles, generki manager 4217 Quillen, Hon. James, a Representative in Congress from the State of Ten- nessee 1617 Ramsey, Claude, chairman of the board, Man-Made Fiber Producers Asso- ~iation 1427 Reed, Richard E., executive secretary, Maine Sardine Packers Association and Maine Sardine Counsel 3892 Reeve. Perc A., executive vice president. Farmers and Manufacturers Beet Sugar Association 4243 Rehm, John B.. Washington, D.C 2576 Reiser, Ralph, international president, United Glass & Ceramic Workers_ 4045 Revere Stainless Steel Sink Corp., Arthur Nelson. president 1913 Rhodes, Edward M., special consultant, American Sprocket Chain Manu- facturers Association 3745 Richardson, Warren S., general counsel, Liberty Lobby 1630 Ricki Knits, Jr., David Guttrnan (executive representative, Miss Erika, Inc.) 1552 Rinta, Eugene F., executive director, Council of State Chambers of Commerce 2439 Rivers, Hon. L. Mendel, a Representative in Congress from the State of South Carolina 3642 Robie, Merle C., chairman, executive committee, Cordage Institute 1264 Robison, Hon. Howard W., a Representative in Congress from the State of New York 2188 Roche, John P., president, American Iron & Steel Institute 1753 Rocky Mountain Oil & Gas Association, president, Bob Burch 2299 Rogers, Hon. Paul G., a Representative in Congress from the State of Florida 4164 Rogers, Hon. Walter E., president, Independent Natural Gas Association of America 2307 Rolled Zinc Manufacturers Association, William L. Donehower, Jr., chair- man, executive committee 4112 Rose, Richard C., president, Trade Relations Council of the United States, Inc 3649 Rosoff, Morris, president, Brazilian-American Chamber of Commerce__ - 1686 Roth, William M., vice chairman, international economic studies, research and policy committee, Committee for Economic Development 914 Row-an, Richard L., associate professor of industry and associate director, research unit, Wharton School of Finance and Commerce, University of Pennsylvania 1561 Rowe, Herbert, chairman, world trade committee, parts division and dis- tributor products division, Electronic Industries Association (also on behalf of the American Loudspeaker Manufacturers Association) 2881 Rubber Manufacturers Association: Brown, Neal 2094 Campbell, William, chairman, footwear division 2094 Cooper, Mitchell, counsel, footwear division~. 2094 McKenna, Neal 2094 Ruetenik, Roger. vice president, Ohio Greenhouse Cooperative Association 4371 Ruth, Hon. Earl B., a Representative in Congress from the State of North Carolinia 4172 Rutherford, H. L., on behalf of International Engineering & Construction Industries Council 2481 Rutledge, Robert W., executive vice president, Florida Citrus Mutual 4305 Schenk, Prof. Alan, Wayne State University Law School 2585 Schuman, Samuel, past president. Green Olive Trade Association 4347 SchwengeL Hon. Fred, a Representative in Congress from the State of Iowa, submitting statement of William L. Huilsiek (vice president, cor- porate development, Amana Refrigeration, Inc.) 1209 Schwenger, Robert B., Kensington, Md 2726 Scott, Robert T., vice president, National Foreign Trade Council 928 PAGENO="0021" xx' Seghers, Paul D., president, Institute on U.S. Taxation of Foreign Income, Page Inc 2443 Shannon, Thomas F., counsel: American Footwear Manufacturers Association 2024 Bicycle Manufacturers Association of America 3850 Shapiro, Ralph, counsel, Fur & Leather Department of the Amalgamated Meat Cutters & Butcher Wo~'kmen of North America 3154 Sharp, James R., counsel: American Fur Merchants' Association, Inc. 3094 Imported Hardwood Products Association, Inc 3195 Sharpe, Henry D. Jr., first vice president, National Machine Tool Builders Association 2489 Sheehan, Carroll P., commissioner, Massachusetts Department of Corn- merce and Development 2656 Sheehan, John J., legislative director, United Steelworkers of America~_ 1823 Sherwin, Dale, assistant director, legislative department, American Farm Bureau Federation 1620 Sheskey, William, chairman, national affairs committee, American Foot- wear Manufacturers Association 2016 Shuman, Charles B., president, American Farm Bureau Federation 1620 Silver, Sidney, vice president, foreign trade division, National Association of Secondary Material Industries, Inc 3823 Simpson, John W., on behalf of the National Electrical Manufacturers As- sociation 2934 Sindelar, Charles, staff assistant, Zenith Radio Corp 2945 Sisk, Hon. B. F., a Representative in Congress from the State of C;alifornia 4157 Slide Fastener Association, Myron Solter, counsel 3864 Sloane, Jack, president, Standard Cellulose & Novelty Co 2781 Society of American Florists, Douglas R. Gordon, assistant executive di- rector 2797 Society of the Plastics Industry, International Committee: Christopher, William F., chairman 3322 Tiernan, Robert R., counsel 3322 Solter, Myron, counsel: Clothespin & Veneer Produdts Association 3331 Slide Fastener Association 3864 South Carolina, State of, Lt. Gov. John Carl West, on behalf of Gov. Rob- ert E. McNair 1211 St Germain, Hon. Fernand J., a Representative in Congress from the State of Rhode Island 1509, 2195 Staggers, Hon. Harley 0., a Representative in Congress from the State of West Virginia 1976 Stainless Steel Flatware Manufacturers Association: Allen, Edward A., Jr 1810 Hemingway, Stuart C., Jr., executive vice president 1804 Martin, Lewe B., secretary 1804 Standard Cellulose & Novelty Co., Jack Sloane, president 2781 Standard Oil Co. of New Jersey, i\'Iyron A. Wright (chairman of the board, Humble Oil & Refining Co.) 2210 Stanwyck, Edmund, president, E. Stanwyck Coil Co., Inc 3016 Steele, Robert W., on behalf of Ceramic Tile Manufacturers of the United States 4074 Steiger, Hon. William A., a Representative in Congress from the State of Wisconsin 4300 Steinberg, David J., secretary and chief economist, Committee for a Na- tional Trade Policy 872 Stewart, Charles W., president, Machinery & Allied Products Institute__ 2454 Stewart, Eugene L., counsel: American Loudspeaker M~nufacturers Association 2809, 2881 Electronic Industries Association 2809, 2881 Man-Made Fiber Producers Association 1427 Flat Glass Domestic Producers Association 3988 Trade Relations Council of the United States, Inc 3649 U.S. Dyestuff Producers 3575 PAGENO="0022" XXII Page Stinson, George A., chairman, American Iron & Steel Institute 1753 Stitt, Nelson A., director, United States-Japan Trade Council: Testimony 1066, 1127 Membership list 1131 Registration statement filed with Department of Justice, pursuant to Foreign Agents Registration Act of 1938 1143 Statement of Congressman John W. Byrnes (Wis.), a Member of the Committee on Ways and Means, with reference to testimony of Mr. 1128, 3641 Interrogation by Congressman John W. Byrnes (Wis.) of Mr. Stitt~_ 1155 Stobaugh, Robert B., American Importers Association, Organic Chemicals Group 3509 Stoffel, Albert W., chairman, International Committee-Trade Policy Task Group, Aerospace Industries Association of America, Inc 3843 Stoll, Dr. Reiner, member, executive advisory committee, Man-Made Fiber Producers Association 1427 Stone & Allied Products Workers, Hollan Cornett, international vice president ~405~ Stone, Eugene, III, president, Stone Manufacturing Co 1554 Stone, Glass & Clay Coordinating Committee, panel in behalf of: Chester, Howard P., executive secretary 4032 Cornett, Hollan, international vice president, Stone & Allied Products Workers 4055 Null, Lester, president, International Brotherhood of Operative Potters 4041 Reiser, Ralph, international president, United Glass & Ceramic Workers Stone Manufacturing Co., Eugene Stone III, president 1554 Strackenbein, 0. R., president, Nation-Wide Committee on Import-Export Policy 883 Stratton, Hon. Samuel S., a Representative in Congress from the State of New York 1965 Sun Oil Co., Robert G. Dunlop, chairman of the board 2239 Surrey, Walter Sterling, member, international committee, Chamber of Commerce of the United States 1039 Swank, Dr. Howard, member, executive advisory committee, Man-Made Fiber Producers Association 1427 Synthetic Organic Chemical Manufacturers Association: Barnard, Robert C., counsel 3371 Bissinger, Fred, senior vice president 3371 Davies, Richard, economist 3476 Egge, George V., Jr 3364 Turchan, Thomas P., president 3364 Taft, Hon. Charles P., chairman, Committee for a National Trade Policy-- 852 Tanners Council of America, Inc.: Anderson, Robert W 2023 Glass, Irving R., president 2005 Taquey, Charles H., Washington, D.C 2723 Tenneco Chemicals, Inc.: Crimmins, Michael T., counsel 3565 Goldman, Julius, marketing manager, industry sales, Tenneco color division 3565 Teper, Lazare, director of research, International Ladies' Garment Work- ers' Union, AFL-CIO 1269 Textile Workers Union of America: Perkel, George, research director 1277 Pollock, William, general president 1277 Thomson, Hon. Vernon W., a Representative in Congress from the State of Wisconsin 3971 Thurmond, Hon. Strom, a ITS. Senator from the State of South Carolina~ 1538 Tie Fabric Importers Association, George Bronz 1541 Tiernan, Robert R., counsel, Society of the Plastics Industry, Interna- tional Committee 3322 Tindal, D. Leslie, president, American Soybean Association 4222 Toro, Carlos, vice chairman-designate, world affairs committee, Greater Detroit Chamber of Commerce 1636 PAGENO="0023" XXIII Townsend, Lynn, on behalf of the Emergency Committee for American Page Trade 750 Trade Relations Council of the United States, Inc.: Ashley, James M., cochairman, board of trustees 3649 Rose, Richard C., president 3649 Stewart, Eugene L., general counsel 3649 Turchan, Thomas P., president, Synthetic Organic Chemical Manufac- turers Association 3364 Uhler, Berman, Blackman Uhier Chemical Division 3575 Umbrella Frame Association of America: Evans, S. W., member 2796 Finkel, Leonard E., president 2790 Underhill, William Amory, counsel, Florida Citrus Mutual 4305 United Glass & Ceramic Workers, Ral~li Reiser, international president~. 4045 United Hat, Cap & Millinery Workers International Union, Gerald R. Coleman, vice president-executive secretary 1317 United Rubber, Cork, Linoleum & Plastic Workers of America, John Campbell, assistant general counsel 2137 United Shoe Workers of America, George 0. Fecteau, general president~ 2061 United States Council of the International Chamber of Commerce, Daniel L. Goldy, vice chairman, committee on commercial policy 1170 United States-Japan Trade Council: Minchew, Daniel, legislative director 1066 Stitt, Nelson A., director; Testimony 1066, 1127 Membership list 1131 Registration statement filed with Department of Justice, pursuant to Foreign Agents Act of 1938 1143 Statement of Congressman John W. Byrnes (Wis.) a member of the Committee on Ways and Means, with reference to testimony of Mr. stitt 1126, 34341 Interrogation by Congressman Byrnes (Wis.) of Mr. Stitt 1155 United Steelworks of America, John J. Sheehan, legislative director 1823 United Textile Workers of America, George Baldanzi, international president 1290 U.S. dyestuff producers, panel of: Gorton, Harry, American Aniline Products, Inc 3575 Palmer, Charles, Southern Dyestuff Co 3575 Phillips, A. Lloyd, president, American Aniline Products, Inc 3575 Stewart, Eugene L., counsel 3575 TJhler, Berman, Blackman, Uhier Chemical Division 3575 U.S. National Fruit Export Oouneil, Leonard K. Lobred, secretary- treasurer 4367 U.S. Potters Association, David A. Golden, tariff and customs counsel 1188 Vansant, John M., Jr., counsel, Chatten Drug & Chemical Co., of Chatta- nooga, Tenn 3591 Veitfort, Theodore E., managing director, Copper & Brass Fabricators Council, Inc 1830 Vest, Kay, manager, international group, Chamber of Commerce of the United States 1039 Vilsack, Robert M., on behalf of American Pipe Fittings Association 1905 Volume Footwear Retailers of America: Atkins, Edward, executive vice president 2078 Peterson, Dean A., economic consultant 2082 Weiss, Morton A., president 2074 Walker, Melville H., executive vice president, National Foreign Trade Council 928 Wang Laboratories, Inc., Edward Lesnick, director of product planning~ 3013 Wardell, Robert J., assistant managing director, Copper & Brass Fabrica- tors Council, Inc 1830 Warrell, Carrol J., chairman, tariff and customs committee, Cycle Parts & Accessories Association 3858 Warren, James L., chairman, legislative committee, Maine Sardine Packers Association and Maine Sardine counsel 3892 Waynmin, staff vice president, consumer products division, Electronic In- dustries Association 2870 Webb, Alison, director of marketing, chemical division, GAF Corporation__ 356$ PAGENO="0024" XXIV Weinberg, Ira, vice president and general manager, Empire State Novelty PaEC Corp 2779 WTeiss, Abraham, legislative counsel: Distillery, Rectifying, Wine, & Allied Workers International Union__ 2801 International Leather Goods, Plastics, & Novelties Workers Union____ 2143 Weiss, H. M., president, Metal Masters of Baltimore, Md. 1910 Weiss, Morton B., president, Volume Footwear Retailers of America 2074 Weiss. Steven J., counsel, National Handbag Association 2155 Wellford, Dabney S., economist, National Cotton Council of America 1494 West, Hon. John Carl, Lieutenant Governor, State of South Carolina, on behalf of Gov. Robert E. McNair 1211 Wilcox, William F., on behalf of American Pipe Fittings Association~~ 1908 Wilson, Henry H., president, Chicago (Ill.) Board of Trade 4323 Wingerter, Robert G., president, Libbey?Owens-Ford Co 3912 Wisconsin Cheese Makers' Associa~on, Robert G. Lewis 4212 Wishart, James, research director, Amalgamated Meat Cutters & Butcher Workmen of North America 2130 Wold, Hon. John S., a Representative in Congress from the State of Wyoming 4173 Woodley, Albert, National Board of Fur Farm Organizations 3057 Worldwide Shoes, Inc., Harry A. Kozac, president 2102 Wright, Joseph S., chairman of the board, Zenith Radio Corp 2945 Wright, Myron A. (chairman of the board, Humble Oil & Refining Co.), on behalf of the American Petroleum Institute 2210 Wyman, Hon. Louis C., a Representative in Congress from the State of New Hampshire 1971 Zenith Radio Corp: Sindelar, Charles, staff assistant 2945 Wright, Joseph S., chairman of the board 2045 Zwach, Hon. John M., a Representative in Congress from the State of Minnesota 3881 MATERIAL SUBMITTED FOR THE RECORD Br GOVERNMENT WITNEssEs Commerce, Department of: Stans, Hon. Maurice H., Secretary: Cordage industry (United States), information concerning im- ports and employment status 491 DISC, letter relating to, with enclosure, to Chairman Mills 2334 Escape clause decisions of Tariff Commission, and President's actions thereon 405 Wool/man-made fiber textiles, foreign import restrictions on, report~ 309 Labor, Department of: Shultz, Hon. George P., Secretary: Exports and imports, employment relationships 008 Letter dated June 17, 1970, to Chairman Mills, with attachment proposing amendment to section 304 of H.R. 14870 594 Written statement concerning "Cabinet Task Force Report on Oil Import Control" with appendix containing observations of some criticisms of the task force report which occurred during testi- mony of June 3, 1970 2340 State, Department of, David M. Abshire, Assistant Secretary for (`rn- gressional Relations: Letter dated May 21, 1970, to Chain~an Mills, with regard to wages 579 Letter to Chairman Mills 4212 Trade Negotiations, Office of Special Representative of, Hon. Carl J. Gilbert, Special Representative: Benzenoid chemicals, title IV of H.R. 17551 (90th Cong.), statement pertaining to 000 Border tax ~adjustments 720 Export-import trade breakdown, category by category 127 Response to Synthetic Organic Chemical Manufacturers Association (SOCMA) questions 719 Staff Papers and Inventory of Industrial Nontariff Barriers 166 PAGENO="0025" xxv Treasury, Department of: Englert, Roy T., Acting General Counsel, letter dated June 16, 1970, Pa50 to Chairman Mills with regard to GATT 528 Nolan, John S., Acting Assistant Secretary for Tax Policy: Company and Industry Responses to DISC Proposal, comments_ 543 U.S. Income Tax Provisions Affecting Tax Planning for Sales in Foreign Markets, summary 546 Report entitled "Domestic International Sales Corporation, Techni- cal Explanation of Treasury Proposal" 511 Rossides, Eugene P., Assistant Secretary for Enforcement and Operations: Antiduimping and countervailing duty laws, information regarding administration of 523 Response to testimony of Cast Iron Soil Pipe Institute, letter dated July 16, 1970, to John M. Martin, Jr., chief counsel, Com- mittee on Ways and Means, with enclosures 1822a Voicker, Paul A., Under Secretary for Monetary Affairs: Foreign direct taxation laws affecting export activities, provi- sions in 548 Treasury revenue estimates concerning DISC 524 B~ PUBLIC WITNESSES Ajinomoto Co. of New York, Inc., H. William Taiika, statement 3621 Alcan Aluminum Corp., Eric A. Trigg, president, statement 3831 Alder, Donald H., president, Maestro Import Industries, Inc., letter, dated May 13, 1970, to John M. Martin, Jr., chief counsel, Committee on Ways and Means 3305 Allerhand, Irving W., on behalf of CITC Industries, Inc., statement 2171 Aluminum Association, Monroe Leigh, counsel, international policy com- mittee, statement 3827 Amalgamated Clothing Workers of America, supplemental statement pre- ceded by letter of transmittal from Stanley H. Ruttenberg 1271 Amalgamated Meat Cutters and Butcher Workmen (AFL-CIO), Leon B. Schachter, vice president and director, Washington office, statement__ 3961 Amana Refrigerator, Inc., William L. Hulisiek, vice president, corporate development, prepared statement submitted by Representative Schwen- gel of Iowa 1209 American Association of University Women, Mrs. Jean Ross, chairman, legislative program committee, statement 1746 American Cotton Shippers Association, Neal P. Gillen, vice president and general manager, letter, dated June 8, 1970, to Chairman Mills 2606 American Cyanamid Co., C. D. Siverd, president and chief executive of- ficer, statement 3630 American Federation of Labor-Congress of Industrial Organizations, An- drew J. Biemiller, director, department of legislation: Policy resolution 1015 Letter to Chairman Mills 2603 American Flint Glass Workers' Union of North America, George M. Parker, president, statement 4061 American Footwear Manufacturers Association, Iver M. Olson, vice presi- dent, letter dated June 17, 1970, to Chairman Mills, with enclosures~__ 2036 American Fur Breeder, Harold Scales, editor and publisher, statement__ 3181 American Importers Association: Machine tool group, Eric R. Bachman, chairman of steering committee, statement 2556 Textile and apparel group, Michael P. Daniels, counsel: "Long-Term Textile Outlook: More" (paper) 1333 "Textiles in the Seventies," article from the Chemical and Engi- neering News 1345 Trade policy committee, Ralph H. Cutler, Jr., chairman, brochure entitled "Here's What's Wrong With Import Quotas" 938 American Institute of Certified Public Accountants, Division of Federal Taxation, statement 2002 American Paper Institute, John F. Darrow, vice president, letter, dated June 2, 1970, to Chairman Mills 260-1 American Petroleum Refiners Association, Walter F~mariss. Jr., president, statement 2370 PAGENO="0026" XXVI Amity Leather Products Co., Leonard E. Benedict, secretary, letter dated Page May 27, 1970, to Chairman Mills 2175 Apel, Peter C., president, Upholstery & Decorative Fabrics Association of America, letter dated June 23, 1970, to Chairman Mills 1003 Associated Fur Manufacturers Association, Inc., J. George Greenberg, executive vice president, statement 3183 Association of Food Distributors, Inc., Harold Bruce, executive vice presi- dent, statement 4338 Association of Yarn Distributors, Mars J. Bishop, president, letter dated May 22, 1970, to John M. Martin, Jr., chief counsel, Committee on Ways and Means 1590 Association of Fur Farm Suppliers, Inc.: Bear, David A., past president, statement 3179 Graff, Herbert, statement 3179 Atkins. Edward, executive vice president, Volume Footwear Retailers of America, supplementary statement 2088 Australia, Government of, letter dated June 16, 1970, forwarded by letter of transmittal from the U.S. Department of State 1579 Auto Air Accessories, Inc., Howard E. Roberts, president, letter, dated June 9, 1970, to Chairman Mills 2644 Automobile Manufacturers Association, Inc., Thomas C. Mann, president, letter dated May 20, 1970, to Chairman Mills 1728 B. F. Goodrich Co., Charles M. Jorgeson, general manager, textile division, statement 1613 Bachrnann, Eric R., chairman of steering committee, American Importers Association, machine tool group, statement 2556 Baguena, Mariano, executive secretary, Spain-U.S. Chamber of Commerce, Inc., statement 1736 Baker, Hon. Howard H., Jr., a U.S. Senator from the State of Tennessee, statement 3619 Ballantyne of Omaha (Nebr.), Inc., J. Robert Hoff, president, statement~ 3947 Barschdorf, Milton P., port director, Greenville (Miss.) Port Commission, letter, dated June 5, 1970, to Chairman Mills 2635 Bauer, Richard J., chairman of the board, Independent Zinc Alloyers Association, statement 4120 Baughman, Harry W., Jr., national president, Window Glass Cutters League of America, statement 4063 Beam's International Division, 0. T. Beam, letter, dated June 8, 1970, to Chairman Mills 2644 Bear, David A., past president, Association of Fur Farm Suppliers, Inc., statement 3179 Beemer, George T., manager, Florida Flower Association, Inc., statement 2800 Benedict, Leonard E., secretary Amity Leather Products Co., letter dated May 27, 1970. to Chairman Mills 2175 Berard, Jack B., president, Pacific Coast Coffee Association: Letter, dated May 25, 1970, to Chairman Mills 3964 Letter, dated June 26, 1970, to Chairman Mills, with attachments~ 3964 Berman, A. T., Toby Berman Corp., letter dated May 20, 1970, to John M. Martin, Jr., chief counsel, Committee on Ways and Means 1568 Berry, Hon. E. Y. a Representative in Congress from the State of South Dakota, statement 1700 Biemiller, Andrew J., director, department of legislation, American Federa- tion of Labor-Congress of Industrial Organizations: Policy resolution 1015 Letter to Chairman Mills 2003 Birkhead Frank. Jr., manager, McAllen (Tex.) Industrial Board, statement 3293 Bishop, Mars J., president, Association of Yarn Distributors, letter dated May 22, 1970, to John M. Martin, Jr.. chief counsel, Committee on Ways and Means 1596 Boecklin, George E.. president. National Coffee Association, letter, dated May 13. 1970. to Chairman Mills, with attachment 3960 Borsum, Leslie C., sales manager, feed sales division, Kellogg Co., statement ~18S Boss Manufacturing Co., Kurt Schaffer. vice president-administration, statement 3308 PAGENO="0027" XXVII Bourbon Institute, V. Adm. William J. Marshall, U.S.N. (ret.), president, Page statement 2811 Brennan, Joseph P., director of research, and marketing, United Mine Workers of America, statement 2366 Briggs, Porter, executive secretary, Catfish Farmers of America, statement 3898 Brock, Hon. W. E., a Representative in Congress from the State of Ten- nessee, letter, dated June 17, 1970, to Chairman Mills 3619 Brownsville (Texas), Port of, Al Cisneros, general manager and port di- rector, letter dated June 3, 1970, to Chairman Mills, with enclosure_~ 2389 Bruce, David S., chairman, Petrochem Group, statement 2362 Bruce, Harold, executive vice president, Association of Food Distributors, Inc., statement 4338 Bruno, Vincent J., director, World Trade Department, Commerce and In- dustry Association of New York, letter, dated May 21, 1970, to Chair- man Mills 3292 Builders Harthvare Manufacturers Association, Clyde T. Nissen, execu- tive director, statement 3812 Burrows, Fred W., executive vice president, International Apple Associa- tion, Inc., letter, dated June 22, 1970, to Chairman Mills, with enclosure__ 4391 Business Equipment Manufacturers Association, John S. Voorhees, coun- sel, statement 3237 Butler, George D., president, Electronic Industries Association, position paper 2834 Byrne, George P., Jr., secretary, United States Wood Screw Service Bu- reau, letter dated June 5, 1970, to Chairman Mills, with attachments~_. 3815 Bywater, William, vice president, International Union of Electrical, Radio, & Machine Workers: Summary and statement given before the Tariff Commission on May 5, 1970 2914 "The Developing Crisis in Electronics and Companion Industries," article 2908 California Council for International Trade, G. B. Levine, chairman, legis- lative committee Letter dated May 15, 1970, to Chairman Mills, with attachments 3292 Letter dated June 17, 1970, to Chairman Mills, with position paper~_ 2633 California Dried Fig Advisory Board, Ron Klamm, manager, statement~ 4375 California Fig Institute, Ron Klamm, managing director, statement 4375 California State Chamber of Commerce, Ernest J. Loebbecke, president, letter of transmittal dated April 16, 1970, to Chairman Mills, with enclosures 1701 Candle Manufacturers Association, H. H. Parker, secretary, letter, dated May 26, 1970, to John M. Martin, Jr., chief counsel, Committee on Ways and Means 27S5 Canners League of California, statement 4161 Card Clothing Manufacturers Association, E. A. Snape, Jr., chairn~an, tariff committee, statement 1589 Carison, Paul, on behalf of the Welded Steel Tube Institute, statement~ 1935 Caskie, Maxwell, vice president, Reynolds Metals Co., letter dated June 26, 1970, to Chairman Mills 3831 Cast Iron Soil Pipe Institute, Wiley J. Perry, Jr., chairman, import study committee: Letter dated April 9, 1968, to Secretary of the Treasury Henry H. Fowler 1816 Letter dated April 17, 1970, to Secretary of the Treasury David M. Kennedy l81~ Catfish Farmers of America, Porter Briggs, executive secretary, statement 3898 Cement Industry Antidumping Committee, Donald Hiss, counsel: Letter dated June 16, 1970, to Congressman Betts of Ohio 4111 Letter dated June 16, 1970, to Congressman Conable of New York 4110 Chamber of Commerce of the United States: Ostrander, F. Taylor, speech delivered to Chamber of Commerce of Buffalo, N.Y., May 22, 1970 1062 Statham, Robert R., taxation and finance manager, statement 2602 Cheese Importers Association of America, Inc., Martin A. Fromer, counsel, letter dated June 3, 1970, to Chairman Mills 4221 PAGENO="0028" XXVIII Chemco Group, Morse G. Dial, Jr., chairman, and Petrochern Group, David Page S. Bruce, chairman, statement 2362 Cheney Bros., Hon. Albert P. Morano, letter dated April 13, 1970, to Chairman Mills 1614 Cherokee Products Co., Jesse G. Moore, letter dated June 1, 1970, forwarded by Congressman Landrum of Georgia 4339 Chilton, Werner F., president, West Coast Metal Importers Associa- tion, letter dated June 10, 1970, to Chairman Mills 1920 Christensen, John B., John R~ Christensen Associates, letter dated June 25, 1970. to the Committee on Ways and Means 2783 Chrysler Corp., Brian T. O'Keefe. assistant comptroller, letter dated May 27, 1970, to Chairman Mills 2637 Cisneros, Al, general manager and port director, Port of Brownsville (Texas), letter dated June 3, 1970, to Chairman Mills, with enclosure__ 2389 CITC Industries, Inc., Irving W. Allerhand, statement 2171 Clayman, Jacob, administrative director, Industrial Union Department, AFL-CIO, letter dated June 29, 1970, to Chairman Mills, with enclosures_ 1789 Cleveland, Hon. James C., a Representative in Congress from the State of New Hampshire: Letter dated June 11, 1970, to Chairman Mills, with attachments____ 3361 Letter dated June 26, 1970, to Chairman Mills, with attachments____ 3363 Cold Spring Granite Co., Kenneth R. Kruchten, director of marketing, letter dated June 8, 1970, to Chairman Mills, with attachment 4154 Committee for a National Trade Policy, David J. Steinberg, secretary and chief economist: "Wanted for U.S. Trade Policy: A Single Baton and a Certain Trum- pet" (speech before the Newark Rotary Club, June 2, 1970) 879 "U.S. on a Collision Course in Trade Policy," (speech before the Mil- waukee World Trade Club, October 2, 1969) 874 Committee of Producers of Ferroafloys and Related Products, Lloyd Sym- ington, counsel, letter dated June 26, 1970, to Chairman Mills, with state- ment 19~2 Commerce and Industry Association of New York, Vincent J. Bruno, director, World Trade Department, letter, dated May 21, 1970, to Chairman Mills 3292 Conner, Doyle. commissioner. Florida Department of Agriculture and Con- sumer Services, letter dated June 1, 1970. to Chairman Mills 4317 Conte, Hon. Silvio 0., a Representative in Congress from the State of Massachusetts, statement 3019 Control Data Corp., Hugh P. Donaghue, assistant to the president, statement 2990 Cook Industries, Inc., Frank A. Jones, Jr.. executive vice president-finance, letter, dated June 8, 1970, to Chairman Mills 2643 Cooperative League of the USA, Stanley Dreyer, president, letter dated May 14, 1970, to Chairman Mills 1728 Cordage Institute of the United States, statement 1249 Corn Refiners Association, Inc., Robert C. Liebenow, president, letter, dated June 9, 1970, to Chairman Mills 4396 Cox. Langford & Brown, counsel, Glaverbel (USA), Inc., letter dated June 26, 1970, to Chairman Mills 4022 Crompton Co., Inc., Howard Richmond. president, statement 1611 Crystal International Corp., David P. Houlihan, counsel, statement 4005 Cutler. Ralph H.. Jr., chairman, trade policy committee, American Importers Association, brochure titled "Here's What's Wrong With Import Quotas" 983 Dana Corp., R. C. McPherson, president, letter dated June 1, 1970, to Chairman Mills, with statement 2639 Daniels, Michael P., Washington counsel: American Importers Association, textile apparel group: "Long-Term Textile Outlook: More" (paper) 1333 "Textiles in the Seventies," article from the Chemical and Engineering News_ 1345 Swiss Union oi~ Commerce and Industry, statement forwarded by Swiss Embassy through the Department of State 3622 PAGENO="0029" XXIX Page Danish American Trade Council, Knud Sorensen, president, statement____ 1740 Darrow, John F., vice president, American Paper Institute, letter, dated June 2, 1970, to Chairman Mills 2604 Davis Equipment, W. W. Hanley, controller, letter, dated June 9, 1970, to Chairman Mills 2643 David, Joffre C., secretary-treasurer, Florida Fruit & Vegetable Associa- tion, statement 4340 Deisler, Paul F., Jr., vice president, manufacturing, transportation and supplies, and marketing, letter, dated June 25, 1970, to Chairman Mills, with statement 2280 Design Products, Inc., Harry Goodman, president, letter dated May 20, 1970, to John M. Martin, Jr., chief counsel, Committee on Ways and Means 3823 DeRan, James, general manager, Farmers Production Credit Association, letter dated June 19, 1970 4401 DeWick, John S., vice president, FMC Corp., letter, dated June 17, 1970, to Chairman Mills 3634 Dial, Morse G., chairman, Chemco Group, statement 2362 Domestic Manufacturers of Knotted Fish Netting and Fishing Nets, Howard C. Johnson, statement 1597 Donaghue, Hugh P., assistant to the president, Control Data Corp., statement 2990 I)orn, Hon. Wm. Jennings Bryan, a Representative in Congress from the State of South Carolina, statement 1570 Douglas, Donald W., Jr., corporate vice president for administration, McDonnell Douglas Corp., statement 3849 Dowland, Robert E., vice president, Mitchum Co., letter, dated June 3, 1970, to Chairman Mills 2645 Dreyer, Stanley, president, Cooperative League of the USA, letter dated May 14, 1970, to Chairman Mills 1728 E. D. Magnus & Associates, Inc., Frank G. Reinhard, president, letter, dated May 26, 1970, to Chairman Mills 2644 E. I. du Pont de Nemours & Co., Samuel Lenher, vice president, letter dated June 3, 1970, to Chairman Mills (w~ith enclosure) 1605 Electronic Industries Association, George D. Butler, president, position paper 2834 Emergency Committee for American Trade: Haggerty, Patrick E., statement 752 Townsend, Lynn, article entitled "Digest of Import Duties for Motor Vehicles Levied by Selected Countries" 760 Evans, C. M., president, Welch Allyn, Inc., Skaneateles Falls, N.Y 3042 Evans, Hon. Daniel J., Governor, State of Washington, letter dated May 27, 1970, to Chairman Mills (with enclosure) 1696 Evaporated Milk Association, Fred J. Greiner, executive vice president, statement 4221 Exportadora, Inc., of Illinois, W. R. Magnus, president, letter, dated June 22, 1970, to Chairman Mills 2645 Falk, Bernard H., vice president, government and membership services, National Elecerical Manufacturers Association, letter dated June 16, 1970, to Chairman Mills, with attachments 2941 Famariss, Walter, Jr., president, American Petroleum Refiners Associa- tion, statement 2370 Farmers Production Credit Association, Jay K. Kohler, president, and James DeRan, general manager, letter dated June 19, 1970 4400 Farrar, Hon. Frank L., Governor, State of South Dakota, letter dated June 1, 1970, to Chairman Mills 3730 Field, Richard M., president, Tea Association of the TJnited States of America, Inc., letter dated June 19, 1970, to Chairman Mills. 4401 Fine & Specialty Wire Manufacturers Association, J. A. Mogle, chairman foreign trade committee, statement 1954 First Devonshire Corp. (New York, N.Y.), Yale L. Meltzer, assistant direc- tor of research, statement - 3637 First National Bank of Memphis, William W. Mitchell, president, letter, dated June 10, 1970, to Chairman Mills 2646 PAGENO="0030" xxx Flegenheimer, Ernest, president, Michigan Sugar Co., statement, for- P~e warded by Congressman James Harvey. of Michigan 2395 Florida Citrus Commission, Edward A. Taylor, executive director, citrus department, letter dated May 28, 1970, to Chairman Mills 4316 Florida Citrus Mutual, Robert W. Rutledge, executive vice president, brief in behalf of the Florida citrus grow-ers 4309 Florida Department of Agriculture & Consumer Services, Doyle Conner, commissioner, letter, dated June 1, 1970, to Chairman Mills 4317 Florida Flow-er Association, Inc., George T. Beemer, manager, state- ment 2800 Florida Fruit & Vegetable Association, Joifre C. David, secretary- treasurer, statement 4340 Florida Fresh Citrus Shippers Association, W. G. Strickland, secretary- general manager, letter dated June 3, 1970, to Robert W. Rutledge, execu- tive vice president 4316 FMC Corp., John S. DeWick, vice president, letter, dated June 17, 1970, to Chairman Mills 3634 Form-O-Uth Co.. Calvin Fraser, president, letter, dated June 19, 1970, to Committee on Ways and Means 3306 Forrow, Brian D., letter dated June 16, 1970, to John M. Martin, Jr., chief counsel, Committee on Ways and Means 1709 Fraser, Calvin, president, Form-O-Uth Co., letter, dated June 19, 1970, to Committee on Ways and Means 3306 Fromer, Martin A., counsel, Cheese Importers Association of America, Inc., letter, dated June 3, 1970. to Chairman Mills 4221 Fur Dresser's Bureau of America, Arthur M. Stringari, legal counsel, statement 3185 Furriers Joint Council of New- York. Oscar Ward, assistant manager, letter dated June 18, 1070. to Chairman Mills, with enclosure 3107 Gasket Materials Producers Institute, Inc., Charles A. Hofmann, president, letter, dated June 12, 1970. to John M. Martin, Jr., chief counsel, Com- mittee on Ways and Means 2558 General Electric Co., New York, N.Y., statement 3023 General Time Corp., statement 3298 Gillen, Neal P., vice president and general manager. American Cotton Ship- pers Association, letter, dated June 8, 1970, to Chairman Mills 2606 Gillon, J. Werner, president, Status Shoe Corp., statement 2169 Glaverbel (USA) Inc., Cox, Langford & Brown, counsel, letter dated June 26, 1970, to Chairman Mills 4022 Goodling, Hon. George A., a Representative in Congress from the State of Pennsylvania, statement 2165 Goodman, Harry, president, Design Products, Inc., letter dated May 20, 1970, to John M. Martin, Jr., chief counsel, Committee on Ways and Means 3823 Graff, Herbert, in behalf of Association of Fur Farm Suppliers, Inc., state- ment 3179 Graham, Harry L., legislative representative, National Farmers Organiza- tion, supplemental statement entitled. "The United States and the I.G.A." 994 Greeff Fabrics, Inc., Theodore Greeff, president. letter dated June 24, 1970, to Chairman Mills 1614 Greeff, Theodore, president, Greeff Fabrics, Inc., letter dated June 24, 1970, to Chairman Mills 1614 Green Coffee Association of New Orleans, Trion T. Harris, president, letter dated May 11, 1970, to Chairman Mills 3968 Greenberg, J. George, executive vice president, Associated Fur Manufac- turers Association, Inc.. statement 3183 Greenville (Miss.) Port Commission. Milton P. Barschdorf, port director, letter dated June 5, 1970, to Chairman Mills 2635 Greiner, Fred J.. executive vice president. Evaporated Milk Association, statement 4221 Grospiron, A. F., president, Oil. Chemical and Atomic Workers Interna- tional Union, statement 3626 Giilf+Westerii Industries, Inc., Victor L. Nutt. Washington counsel, le~t- ter, dated June 15, 1970. to John M. Martin. Jr., chief counsel, Commit- tee on Ways and Means 3295 PAGENO="0031" XXXI Haggerty, Patrick E., member, Emergency Committee for American Trade, Page statement 752 Hampton, Robert N., director of marketing and international trade, Na- tional Council of Farmer Cooperatives, statement 4269 Harris, Trion T., president, Green Coffee Association of New Orlea as, let- ter dated May 11, 1970, to Ohairman Mills 3968 Harvey, H. A., Jr., president, Harvey Industries, Inc., statement 4072 H. Kohnstamm & Co., Inc., Paul L. Kohnstamm, pres'ident, letter dated Ma~y 20, 1970, to Chairman Mills _ 3633 Hadley, G. L., president, National Livestock Feeders Association, state- ment 3704 Hanley, W. W., controller, Davis Equipment, letter dated June 9, 1970, to Chairman Mills 2643 Hanson, Orin T., manager, agricultural and world trade department, Greater Minneapolis Chamber of Commerce, statement 3635 Hardwood Plywood Manufacturers Association, statement 3197 Harman, Roy D., Christianburg, Va., statement 3194 Harshaw Chemical Co., J. A. Zelek, vice president-general manager, pig- ment and dye department, letter dated May 20, 1970, to the Committee on Ways and Means 3635 Hatfield, Hon. Mark 0., a U.S. Senator from the State of Oregon, letter dated June 26, 1970, to Chairman Mills, with attachments 3174 Henderson, David W., executive secretary, National Board of Fur Farm Organizations, statement 3073 Hendricks, H. L., Volco, Inc., letter dated May 16, 1970, forwarded by Congressman Graham Purcell of Texas 2177 Hills Brothers Coffee, Inc., Reuben W. Hills III, president, telegram dated May 18, 1970, to Chairman Mills 3968 Hiss, Donald, counsel, Cement Industry Antidumping Committee: Letter dated June 16, 1970, to Congressman Betts of Ohio 4111 Letter dated June 16, 1970, to Congressman Conable of New York___ 4110 Hoff, J. Robert, president, Ballantyne of Omaha (Nebr.), Inc., statement~ 3047 Hofmann, Charles A., president, Gasket Materials Producers Institute, Inc., letter dated June 12, 1970, to John M. Martin, Jr., chief counsel, Com- mittee on Ways and Means 2558 Holmberg, Donald W., secretary, U.S/Mexico Border Cities Association, letter dated May 25, 1970, to the Committee on Ways and Means, with statements 3254 Hommel, E. M., president, 0. Hommel Co., letter daited May 18, 1970, to John 1\1. Martin, Jr., chief counsel, Committee on Ways and Means 3640 Houlihan, David P., counsel, Crystal International Corp., statement 4005 Hughes, H. B., Hughesco, Inc., letter dated May 20, 1970, forwarded by Congressman Graham Purcell of Texas 2176 Hugheaco, Inc., H. B. Hughes, letter dated May 20, 1970, forwarded by Con- gressman Graham Purcell of Texas 2176 Hullsiek, William L., vice president, corporate development, Amana Refrig- erator, Inc., prepared statement, submitted by Representative Schwen- gel of Iowa 1209 Hungate, Hon. William L., a Representative in Congress from the State of Missouri, letter dated June 23, 1970, to Chairman Mills 3731 Illinois, State of, Hon. Richard B. Ogilvie, Governor, statement 1694 Impression Fabrics Group, 3'. A. Zullivan, Jr., chairman, letter dated June 5, 1970, to John M. Martin, Jr., chief counsel, Committee on Ways and Means 1591 Independent Petroleum Association of America, Robert E. Mead, president, statement (submitted by Minor Jameson, executive vice president) 2289 Independent Refiners Association of America, statement 2377 Independent Zinc Alloyers Association, Richard J. Bauer, chairman of the board, statement 4120 Industrial Union Dept., AFL-CIO, Jacob Clayman, administrative director, letter dated June 29, 1970, to Chairman Mills, with enclosures 1789 Institute on U.S. Taxation of Foreign Income, supplemental statemenL~ 2450 International Apple Association, Inc.. Fred W. Burrows, executive vice president, letter, dated June 22, 1970, to Chairman Mills, with enclosure 4391 PAGENO="0032" XXXII International Ladies' Garment Workers' Union: Supplemental Statement preceded by letter of transmittal from Page Stanley H. Ruttenberg 1271 Teper, Lazare, director, research department, letter dated June 8, 1970, to Chairman Mills, with statement 3218 International Molders & Allied Workers Union, Carl Studenroth, vice president, statement 1933 International Union of Electrical, Radio, & Machine Workers, William Bywater, vice president: Summary and statement given before the Tariff Commission on May 12, 1970 2914 "The Developing Crisis in Electronics and Companion Industries," article 2908 Italian Embassy, Alberto Rossi, Commercial Minister, letter of transmittal dated June 12, 1970, wffh memorandum, to Robert M. Beaudry, Country Director, Department of State, forwarded by Department of State____ 1742 Italy-America Chamber of Commerce, footwear importers group, Gunter von Conrad, counsel, brief 1064 J. B. Hargrave Naval Architects, Inc., J. B. Hargrave, president, letter dated May 13, 1970, to John M. Martin, Jr., chief counsel, Committee on Ways and Means 2646 John R. Christensen Associates, John R. Christensen, letter dated June 25, 1970, to the Committee on Ways and Means 2783 Johnson, Howard C. on behalf of certain domestic manufacturers of knotted fish netting and fish nets, statement 1597 Jones, Felix C., president, United Cement, Lime & Gypsum Workers Inter- national Union, statement 4058 Jones, Frank A., Jr., executive vice president-finance, Cook Industries, Inc.. letter dated June 8. 1970. to Chairman Mills 2643 Jorgeson, Charles M., general manager, B. F. `Goodrich Co., textile division, statement 1613 Kahn. Max Ti.. on l)ehnlf of woven label rn~nufacturers of the United States of America, letter dated May 20, 1970, to John M. Martin, Jr., chief counsel, Committee on Ways and Means 1603 Keith, Hon. Hastings, a Representative in Congress from the State of Mas- sachusetts, Letter, dated June 12, 1970, to Chairman Mills 3899 Statement 2427 Kellogg Co.. Leslie C. Borsum. sales manager. feed sales division, state- ment 3188 Klamm. Ron. managing director. California Fig Institute; manager, Cali- fornia Dried Fig Advisory Board. statement 4375 Knowles, Hon. Warren P.. Governor, State of Wisconsin, letter dated June 4. 1970, to Chairman Mills 3174 Kohler, Jay K., president. Farmers Production Credit Association, letter dated June 19. 1970 4400 Kohnstamm, Paul L., president, H. Kohnstarnm & Co., Inc., letter da~ed May 20, 1970, to Chairman Mills 3633 Korea, Republic of, memorandum dated June 9, 1970. forwarded by letter of transmittal from the IJ.S. Department of State 1580 Kornegay, Horace R.. president. Tobacco Institute. Inc.. statement 2820 Kruchten. Kenneth R.. director of marketing. Cold Spring Granite Co.. letter dated June 8. 1970. to Chairman Mills, with attachment 4154 Kust. Leonard E.. vice president and general counsel. Westinghouse Elec- tric Corp.. statement 2686 Leaf Tobacco Exporters Association. Inc. Malcolm B. Seawell. executive secretary, letter dated June 11. 1970. to the Committee on Ways and Means 2825 Leigh. Monroe. counsel. interaational policy committee. Alumninuni Asso- ciation. statement 3827 Lenher. Samuel. vice president. E. I. du Pont de Yemours & Co., letter dated June 3. 1970. to Chairman Mills (with eaclosure) 1605 Lennon, Hon. Alton. a Representative in Congress from the State of North Carolina, letter dated June 17 1910, to Chairman Mills 1549 PAGENO="0033" xxxiii: Levine, G. B., chairman, legislative committee, California Council for In- ternational Trade: Pam Letter dated May 15, 1970, to Chairman Mills, with attachment 3292 Letter dated June 17, 1970, tO Chairman Mills, with attachment 2633 Liebenow, Robert C., president, Corn Refiners Association, Inc., letter dated June 9, 1970, to Chairman Mills 4396 Loebbecke, Ernest J., president California State Chamber of Commerce, letter of transmittal dated April 16, 1970, to Chairman Mills, with enclosures 1701 Low, Charles H., executive committee member, National Board of Fur Farm Organizations, statement 3078 Ludlow Corp., J. C. Mahoney, vice president, letter dated May 20, 1970, to Chairman Mills 1611 Maestro Import Industries, Inc., Donald H. Adler, president, letter dated May 13, 1970, to John M. Martin, Jr., chief counsel, Committee on Ways and Means 3305 l\iagdanz, Don F., executive secretary-treasurer, National Livestock Feed- ers Association: "The Truth About Beef Supplies and Beef Prices," document dated April 8, 1970 3718 "The Truth About Processed Beef Supplies and Prices," sequel to document of April 8, 1970 3704 Magnus, W. R., president, Exportadora, Inc., of Illinois, letter, dated June 22, 1970, to Chairman Mills 2645 Mahoney, J. C., vice president, Ludlow Corp., letter dated May 20, 1970, to Chairman Mills 1611 Mahoney, John H., senior vice president, Seaboard World Airlines, letter dated June 11, 1970, to Chairman Mills 1729 Man-Made Fiber Producers Association, Claude Ramsey, chairman, sup- plemental memorandum 1477 Mann, Hon. James R., a Representative in Congress from the State of South Carolina 1577 Mann, Thomas 0., president, Automobile Manufacturers Association, Inc., letter dated May 20, 1970, to Chairman Mills 1728 Marks Specialties, Inc., Harry L. Marks, chairman o'f the board, statement_ 2759 Marshall, V. Adm. William J., TJ.S.N. (ret.), president, Bourbon Institute, statement 2811 Martin, George B., Jr., member, Memphis (Penn.) Regional Export Expan- sion Council, letter, dated June 3, 1970, to Chairman Mills 2646 Mathias, Hon. Bob, a Representative in Congress from the State of Call fornia, letter dated June 12, 1970, to Chairman Mills, with enclosures__ 2~U - Mattutat, F. M., president, R. B. Willson, Inc., letter dated June 15, 1970, to John M. ~iartin, Jr., chief counsel, Committee on Ways and Means_ 425~ May, Hon. Stephen, mayor, city of Rochester, N.Y., statement 1316 Mazzocchi, Anthony, citizenship-legislative director, Oil, Chemical and Atomic Workers International Union, AFL-CIO, statement 4151 McAllen. ((Tex.) Industrial Board, Frank Birkhead, Jr., manager, ~batement 3293 McDonnell Douglas Corp., Donald W. Douglas, Jr., corporate vice president for administration, statement 3849 McIntyre, Hon. Thomas J., a U.S. Senator from the State of New Hamp- shire, statement 2166 McMillan, Hon. John L., a Representative in Cnngre~s froni the State South Carolina, statement 364~ McPherson, R. C., president, Dana Corp., letter, dated June 1, 1970, to Chairman Mills, with attachment 2639 Mead, Robert E., president, Independent Petroleum Association of Amer- ica, statement (submitted by Minor Jameson, executive vice president) -- 2289 Meat Importers Association, John E. Ward, chairman, statement (sub- mitted by Donn N. Bent) 3697 Meltzer, Yale L., assistant director of research, First Devonshire Corp. (New York, N.Y.), statement 3637 Memphis (Tenn.) Regional Export Expansion Council, George B. Martin, Jr., member, letter, dated June 3, 1970, to Chairman Mills_ 2646 PAGENO="0034" XXXIV Mercker, A. E., executive secretary, Vegetable Growers Association of Page America, statement 4390 Metal Masters of Baltimore, Md., H. M. Weiss, president, extension of remarks 1919 Michigan Sugar Co., Ernest Flegenheimer, president, statement, forwarded by Congressman James Harvey of Michigan 2395 Milwaukee Sausage Co., Seattle, Wash., Martin B. Rind, president, statement 3732 (Greater) Minneapolis Chamber of Commerce, Orin T. Hanson, manager, agricultural and world trade department, statement 3635 Mitchell, George F., Washington, D.C., letter dated June 13, 1970, to John M. Martin, Jr., chief counsel, Committee on Ways and Means, with attachments Mitchell, William W., president, First National Bank of Memphis, letter, dated June 10, 1970, to Chairman Mills 2646 Mitchum Co., Robert E. Dowland, vice president, letter, dated June 3, 1970, to Chairman Mills 2645 Mitsuboshi Cutlery, New York, Inc., H. William Tanaka counsel, statement 1957 Mogle J. A., chairman, foreign trade committee, Fine & Specialty Wire Manufacturers' Association, statement 1954 Moore, Jesse G., on behalf of Cherokee Products Co., letter dated June 1, 1970, forwarded by Congressman Landrum of Georgia 4339 Moore, Larry, Suamico, Wis., statement 3192 Morano, Hon. Albert P., on behalf of Cheney Bros., letter dated April 13, 1970, to Chairman Mills 1614 Morss, Elliott R., Taxation With Representation, statement 2607 Morton Frozen Foods Division, ITT Continental Baking Co., George R. Vail, president, statement 3733 National Association of Export Management Companies, Arthur A. Singer, president: Letter dated June 16, 1970, to Chairman Mills 2605 Letter to Chairman Mills 4415 National Association of Glue Manufacturers, Inc., W. R. O'Connor, chair- man, tariff committee, letter, dated June 9, 1970, to John M. Martin, Jr., chief counsel, Committee on Ways and Means 2784 National Board of Fur Farm Organizations: Henderson, David W., executive secretary statement 3073 Low, Charles H., executive member, statement 3078 National Building Granite Quarries Association, Inc., Kneeland Swen- son, secretary, letter dated June 5, 1970. to John M. Martin, Jr., chief counsel, Committee on Ways and Means 4152 National Coal Association. Brice O'Brien. vice president, letter dated June 12, 1970, to Chairman Mills, with enclosures 2327 National Coffee Association, George E. Boecklin, president, letter, dated May 13, 1970, to Chairman Mills, with attachment 3960 National Council of Farmer Cooperatives. Robert N. Hampton, director of marketing and international trade, statement 4269 National Council of Jewish Women. Mrs. Leonard H. Weiner, national president, statement 1744 National Council of Music Importers. Norman R. Sackheim, president, let- ter dated June 10, 1970, to Chairman Mills, with attachment 3048 National Electrical Manufacturers Association, Bernard H. Falk, vice pres- ident, government and membership services, letter dated June 16, 1970, to Chairman Mills, with attachments 2941 National Farmers Organization, Harry L. Graham, legislative represent- ative, supplemental statement entitled "The TJnited States and the 094 National Federation of Independent Business. Edw-ard Wiinmer. vice pres- ident, letter of transmittal dated May 20, 1970, with enclosures, to Chairman Mills 1731 National Foreign Trade Council. Robert T. Scott, supplemental memo- randum 2601 National Grange, John W. Scott. master, statement 4254 PAGENO="0035" xxxv National Livestock Feeders Association, Don F. Magdanz, executive secre- tary-treasurer: "The Truth About Beef Supplies and Beef Prices," document dated Page April 8, 1970 3718 "The Truth About Processed Beef Supplies and Prices," sequel to document of April 8,1970 3714 H'adley, G. L., president, statement 3704 National Semiconductor Corp., C. E. Sporck, president, statement 3296 National Soybean Processors Association, statement 4227 Nation-Wide Committee on Import-Export Policy, 0. B. Strackbein, pres- ident: Trade Balances: F.o.b. Versus C.i.f.,, paper 889 Trade Statistics-A Continuing Distortion, committee paper 892 Ness Industries, Inc., Oscar Pieper, statement 3302 New York Chamber of Commerce, Thomas N. Stainback, executive vice president, statement 1704 Nichols, Hon. Bill, a Representative in Congress from the State of Ala- bama, statement 1615 Nissen, Clyde T., executive director, Builders Hardware Manufacturers Association, statement 3812 Nutt, Victor L., Washington counsel, Gulf + Western Industries, Inc., letter, dated June 15, 1970, to John M. Martin, Jr., chief counsel, Commit- tee on Ways and Means 3295 North American Rockwell Corp., Robert C. Wilson, president, commercial products group, statement 1608 Nosawa, New York, Inc., II. William Tanaka, counsel, statement 1957 0. Hommel Co., E. M. Hommel, president, letter, dated May 18, 1970, to John M. Martin, Jr., chief counsel, Committee on Ways and Means 3640 O'Brien, Brice, vice president, National Coal Association, letter dated June 12, 1970, to Chairman Mills, wIth enclosures 2327 O'Connor, W. R., chairman, tariff committee, National Association of Glue Manufacturers, Inc., letter, dated June 9, 1970, to John M. Martin, Jr., chief counsel, Committee on Ways and Means 2784 Oddy, Charles F., secretary-treasurer, Optical Manufacturers Association, letter dated May 20, 1970, to John M. Martin, Jr., chief counsel, Com- mittee on Ways and Means 3041 Oil, Chemical, and Atomic Workers International Union: Grospiron, A. F., president, statement 3626 Mazzochi, Anthony, citizenship-legislative director, statement 4151 Ogburn, Tom, president, Wilkes (N.C.) Chamber of Commerce, letter of transmittal dated May 11, 1970, to Chairman Mills, with statement 1710 Ogilvie, Hon. Richard B., Governor, State of Illinois, statement 1694 O'Keefe, Brian T., assistant comptroller, Chrysler Corp., letter, dated May 27, 1970, to Chairman Mills 2637 Olsen, Hon. Arnold, a Representative in Congress from the State of Mon- tana, letters, dated May 15 and 22, 1970, with attachments, to Chairman Mifls 3177, 3178 Olson, Iver M., vice president, American Footwear Manufacturers Associa- tion, letter dated June 17, 1970, to Chairman Mills, with enclosures 2036 Optical Manufacturers Association, Charles F. Oddy, secretary-treasurer, letter dated May 20, 1970, to John M. Martin, Jr., chief counsel, Commit- tee on Ways and Means 3041 Ostrander, F. Taylor, Chamber of Commerce of the United States, speech delivered to Chamber of Commerce, Buffalo, N.Y., May 2, 1970 1062 Pacific Car & Foundry Co., John S. Voorhees, counsel, statement 3309 Pacific Coast Coffee Association, Jack B. Berard, president: Letter, dated May 25, 1970, to Chairman Mills 3964 Letter, dated June 26, 1970, to Chairman Mills, with attachments___ 3964 Palmer, John D., president Tobacco Associates, Inc., statement and at- tachment 2823 Parker, George M., international president, American Flint. Glass Workers' Union of North America, statement 4061 Parker, H. R., secretary, Candle Manufacturers Association, letter, dated May 26, 1970, to John M. Martin, Jr., chief counsel, Committee on Ways and Means 2785 PAGENO="0036" xxxv' Patterson, Huberta M. secretary, West Virginia League, West Virginia, Pennsylvania, Ohio & Indiana Glass Workers' Protective Leagues, Pam statement 4072 Perry, Wiley J., Jr., chairman, import study group, Cast Iron Soil Pipe Institute: Letter dated April 9, 1968, to Secretary of the Treasury Henry H. Fowler 1816 Letter dated April 17, 1970, to Secretary of the Treasury David M. Kennedy 1818 Petrochem Group, David S. Bruce, chairman, and Chemco Group, Morse G. Dial, Jr., chairman, statement 2362 Philadelphia Textile Association, Robert B. Putney, Jr., president, letter dated May 27, 1970, to Committee on Ways and Means 1603 Philbin, Hon. Philip J., a Representative in Congress from the State of Massachusetts, letter, dated June 9, 1970, to Chairman Mills 3177 Pieper, Oscar, Ness Industries, Inc., statement 3302 Pin, Clip and Fastener Association, Straight Pin and Safety Pin Divi- sions, Myron Solter, Counsel, statement 3873 Piquet, Dr. Howard S., Washington, D.C., article entitled, Trends in Inter- national Trade of the United States 2686 Pressure Products Industries, Robert J. Senn, sales manager, letter, dated May 22, 1970, to John Martin, Jr., chief counsel, Committee on Ways and Means 2559 Putney, Robert B., Jr., president, Philadelphia Textile Association, letter dated May 27, 1970, to Committee on Ways and Means 1603 Quillen, Hon. James H., a Representative in Congress from the State of Tennessee, letter, dated June 15, 1970, to Chairman Mills 3620 R. B. Willson, Inc., F. H. Mattutat, president, letter dated June 15, 1970, to John M. Martin, Jr., chief counsel, committee on Ways and Means__ 4252 Ramsey, Claude, chairman, Man-Made Fiber Producers Association, sup- plernental memorandum 1477 Reading, Pa., city of, Hon. R. H. Yarnell, mayor, resolution re American selling price 3640 Reese, R. S., chairman pro tern., U.S. Earthenware Dinnerw~re Emer- gency Committee, statement 4086 Reimann, Bernard, president, Tie Fabrics Importers' Association 1548 Reinhard, Frank G., president, E. D. Magnus & Associates, Inc., letter, dated May 26, 1970, to Chairman Mills 2644 Reynolds Metals Co., Maxwell Caskie, vice president, letter dated June 26, 1970, to Chairman Mills 3831 Richmond, Howard, president, Crompton Co., Inc., statement.. 1611 Rind, Martin B., president, Milwaukee Sausage Co., Seattle, Wash., state- ment 3732 Roberts, Howard E., president, Auto Air Accessories, Inc., letter, dated June 9, 1970, to Chairman Mills 2644 Robison, Hon. Howard W., a Representative in Congress from the State of New York, statement 2167 Rochester (N.Y.), City of, Hon. Stephen May, mayor, statement 1316 Ross, Mrs. Jean, chairman, legislative program committee, American As- sociation of University Women, statement 1746 Ross, W. J., comanager, Ross-Wells, statement 3191 Rossi, Alberto, Commercial Minister, Italian Embassy, letter of transmit- tal dated June 12, 1970, with memorandum, to Robert M. Beaudry, coun- try director, Department of State, forwarded by Department of State_._ 1742 Rutledge, Robert W., executive vice president, Florida Citrus Mutual, brief in behalf of the Florida citrus growers 4309 Ruttenberg, Stanley H., president, Stanley H. Ruttenberg & Associates, Inc., letter of transmittal to Chairman Mills, dated June 16, 1970, for- warding supplemental statement of Amalgamated Clothing Workers Union of ArneriOa and the International Ladies Garment Workers Union 1271 Sackheim, Norman R., president, National Council of Music Importers, let- ter dated June 10, 1970, to Chairman Mills, with attachment 3048 Saylor, Hon. John P., a Representative in Congress from the State of Penn- sylvania, statement 1574 PAGENO="0037" XXXVII Schachter, Leon B., vice president and director, Washington office, Amal- Page gamated Meat Cutters and Butcher Workmen (AFL-CIO), statement__ 3961 Schaffer, Kurt, vice president-administration, Boss Manufacturing Co., statement 3308 Scales, Harold, editor and publisher, American Fur Breeder, statement~ 3181 Sehutt, Mrs. William E., Clarksville, Va., letter forwarded by Hon. W. C. "Dan" Daniel 4414 Schiffli Lace & Embroidery Manufacturers Association, I. Leonard Seiler, executive director, statement 1582 Scott, John W., master, National Grange, statement 4254 Scott, Robert T., National Foreign Trade Council, supplement memoran- dum 2601 Seaboard World Airlines, John H. Mahoney, senior vice president, letter dated June 11, 1970, to Chairman Mills 1729 Seawell, Malcolm B., executive secretary, Leaf Tobacco Exporters Associa- tion, Inc., letter, dated June 11, 1970, to the Committee on Ways and Means 2825 Seiler, I. Leonard, executive director, Schiffli Lace & Embroidery Manufac- turers Association, statement 1582 Senn, Robert J., sales manager, Pressure Products Industries, letter, dated May 22, 1970, to John Martin, Jr., chief counsel, Committee on Ways and Means 2559 Shapiro Bros. Shoe Co., Inc., Arthur N. Shapiro, letter dated May 22, 1970, forwarded by Congressman William D. Hathaway of Maine 2168 Shell Oil Co., Paul F. Deisler, Jr., vice president, manufacturing, transpor- tation and supplies, and marketing, letter, dated June 25, 1970, to Chairman Mills, with statement 2280 Sherwin Williams Chemicals, division of the Sherwin-Williams Co., G. L. Tickner. eastern sales manager, statement 3632 Shostak, S. Richard, Los Angeles, Calif., article, "United States Textile Articles Assembled Abroad Should be Excepted from Quotas" 3312 Sikes, Hon. Robert F. L., a Representative in Congress from the State of Florida. two statements: H.R. 15052 1568 Textiles 1569 Singer, Arthur A., president, National Association of Export Management Companies: Letter dated June 16, 1970, to Chairman Mills 2605 Letter to Chairman Mills 4415 Sisk, Hon. B. F., a Representative in Congress from the State of California, letter, dated May 25. 1970. to Chairman Mills 4390 Siverd, C. D., president and chief executive officer, American Cyanamid Co., statement 3630 Smith, Hon. Preston. Governor of the State of Texas, prepared statement submitted by Congressman George H. Mahon of Texas 2181 Snape, E. A., Jr., chairman, tariff committee, Card Clothing Manufacturers Association, statement 1589 Solter, Myron, Counsel, Pin, Clip and Fastener Association, Straight Pin and Safety Pin Divisions, statement 3873 Sorensen, Knud, president, Danish American Trade Council, statemenL~ 1740 South Dakota. State of, Hon. Frank L. Farrar, Governor, letter dated June 1, 1970, to Chairman Mills 3730 Spain-United States Chamber of Commerce, Inc., Mariano Baguena, execu- tive secretary, statement 1736 Sporck, C. E., president, National Semiconductor Corp., statement 3296 Sporting Arms and Ammunition 1\Ianufaeturers Instithte. Robert C. Zim- iner, counsel, statement 2786 Stainback, Thomas N.. executive vice president, New York Chamber of Commerce, statement 1704 Standard Parts Co. of Houston. A. C. Tabbert, vice president, letter, dated June 8, 1970, to Chairman Mills 2643 Statliam, Robert R.. taxation and finance manager. Chamber of Commerce of the United States, statemenL - 2602 Status Shoe Corp., J. Werner Gillon, president, statement 2169 PAGENO="0038" xxxvm Steinberg, David J., secretary and chief economist, Committee for a Na- tional Trade Policy: Wanted for U.S. Trade Policy: A single Baton and a Certain Trumpet Page (speech before Newark Rotary Club, June 2, 1970) 879 U.S. on a Collision Course in Trade Policy (speech before the Milwau- kee World Trade Club, Oct. 2, 1969) 874 Stevens, Robert Warren, associate professor of international business, Graduate School of Business Administration, Indiana University, state- ment 1747 Stewart, Eugene L., general counsel, Trade Relations Council of the United States, letter dated June 19, 1970, to Chairman Mills 3673 Stitt, Nelson A., director, United States-Japan Trade Council: Testimony 1060, 1127 Membership list 1131 Registration statement filed with Department of Justice, pursuant to Foreign Agents Registration Act of 1938 1143 Statement of Congressman John W. Byrnes (Wis.), a Member of the Committee on Ways and Means, with reference to testimony of Mr. Stitt 1120 Interrogation by Congressman John W. Byrnes (Wis.) of Mr. Stitt~_ 1155 "A Comparison of Trade and Economic Data" (pamphlet) 1118 "How Much Would Textile Quotas Cost the United States" (pam- phlet) 1085 Letter, dated~May 26, 1970, to Chairman Mills 1110 Invitation to membership 1161 Stokely-Van Camp, Inc., Alfred J. Stokely, president, letter, dated June 15, 1970, to John M. Martin, Jr., chief counsel, Committee on Ways and Means Strackbein, 0. B., president, Nation-Wide Committee on Import-Export Policy: Trade Balance: F.o.b. Versus C.i.f., paper 889 Trade Statistics-A Continuing Distortion, committee paper 892 Strickland, W. G., secretary-general manager, Florida Fresh Citrus Ship- pers Association, letter dated June 3, 1970, to Robert W. Rutledge, ex- ecutive vice president, Florida Citrus Mutual 4316 Stringari, Arthur M., legal counsel, Fur Dresser's Bureau of America, statement 3185 Struning, William C., (Pan-American Coffee Bureau) New York, N.Y., letter, dated May 28, 1970, to Chairman Mills, with attachments 3900 Studenroth, Carl, vice president, International Molders & Allied Workers Union, statement 1933 Sullivan J. A., Jr., chairman, Impression Fabrics Group, letter dated June 5, 1970, to John M. Martin, Jr., chief counsel, Committee on Ways and Means 1591 Swenson, Kneeland, secretary, National Building Granite Quarries As- sociation, Inc., letter dated June 5, 1970, to John M. Martin, Jr., chief counsel, Committee on Ways and Means 4152 Swiss Union of Commerce and Industry, Michael P. Daniels, Washington counsel, statement, forwarded by Swiss Embassy through Department of State 3622 Symington. Lloyd, counsel, Committee of Producers of Ferroalloys and Related Products, letter dated June 26, 1970, to Chairman Mills, with statement 1922 Tabbert, A. C., vice president, Standard Parts Co. of Houston, letter, dated June 8, 1970, to Chairman Mills 2043 Tanaka, H. William, counsel: Ajinomoto Co. of New York, Inc.. statement 3621 Mitsuboshi Cutlery, New York, Inc., statement 1957 Nosawa, New York, Inc., statement 1957 Toshiba America, Inc., statement 3035 Taxation With Representation, Elliott R. Morss. statement 2607 Taylor, Edward A., executive director, citrus department, Florida Citrus Commission, letter dated May 28, 1970, to Chairman Mills 4316 Taylor, Walter, Stafford Springs, Conn., statement 3189 PAGENO="0039" XXXIX Tea Association of the United States of America, Inc., Richard M. Field, Pam president, letter dated June 19, 1970, to Chairman Mills 4401 Teper, Lazare, director, research department, International Ladies' Gar- ment Workers' Union, letter, dated June 8, 1970, to chairman Mills, with statement 3218 Texas, State of, Hon. Preston Smith, Governor, prepared statement sub- mitted by Congressman George H. Mahon of Texas 2181 Thompson, William P., stated clerk, United Presbyterian Church in the United States of America, statement 1744 Tickner, G. L., eastern sales manager, Sherwin Williams Chemicals, Divi- sion of the Sherwin-Williams Co., statement 3632 Tie Fabrics Importers' Association, Bernard Reimann, president, statement 1548 Tobacco Associates, Inc., John D. Palmer, president, statement and attachment 2823 Tobacco Institute, Inc., Horace R. Kornegay, president, statement 2820 Townsend, Lynn, on behalf of the Emergency Committee for American Trade, article entitled "Digest of Import Duties for Motor Vehicles Levied by Selected Countries" 760 Toby Berman Corp., A. T. Berman, letter dated May 20, 1970, to John M. Martin, Jr., chief counsel, Committee on Ways and Means 1568 Tool & Stainless Steel Industry Committee, statement 1774 Toshiba America, Inc., H. William Tanaka, counsel 3035 Tozzoli, Guy F., secretary General, World Trade Centers Association, statement 1700 Trade Relations Council of the United States, Eugene L. Stewart, general counsel, letter dated June 19, 1970, to Chairman Mills 3673 Trigg, Eric A., president, Alcan Aluminum Corp., statement 3831 Union Carbide Corp.,~ F. Perry Wilson, president, letter to Chairman Mills, with attachment 2646 United Automobile, Aerospace & Agricultural Implement Workers of America (UAW), Leonard Woodcock, president, statement with attach- ments 1711 United Cement, Lime & Gypsum Workers International Union, Felix C. Jones, president, statement_~ 4058 United Mine Workers of America, Joseph P. Brennan, director of research and marketing, statement 2366 United Presbyterian Church in the United States of America, William P. Thompson, stated clerk, statement 1744 United States-Japan Trade Council, Nelson A. Stitt, director: Testimony 1066, 1127 Membership list 1131 Registration statement filed with Department of Justice, pursuant to Foreign Agents Registration Act of 1938 1143 Statement of Congressman John W. Byrnes (Wis.), a Member of the Committee on Ways and Means, with reference to testimony of Mr. Stitt 1126 Interrogation by Congressman John W. Byrnes (Wis.) of Mr. Stitt~ 1155 "A Comparison of Trade and Economic Data" (pamphlet) 1118 "How Much Would Textile Quotas Cost the United States" (pam- phlet) 1185 Letter, dated May 26, 1970, to Chairman Mills 1110 Invitation to membership 1161 U.S. Wood Screw Service Bureau, George P. Byrne, Jr. secretary, letter dated June 5, 1970, to Chairman Mills, with attachments 3815 Upholstery & Decorative Fabrics Association of America, Peter C. Apel, president, letter dated June 23, 1970, to Chairman Mills 1603 U.S. Earthenware Dinnerware Emergency Committee, R. S. Reese, chair- man pro tem, statement 4066 United States-Mexico Border Cities Association, Donald W. Holmberg, secretary, letter dated May 25, 1970, to the Committee on Ways and Means, with statements 3254 Vail, George R., president, Morton Frozen Foods Division, ITT Continental Baking Co., Inc., statement 3733 `~Tarel Manufacturing Co., Jim Walker, controller, letter to Chairman Mills 2638 PAGENO="0040" XL Vegetable Growers Association of America, A. E. Mercker, executive secre- Page tary, statement Volco Inc., H. L. Hendricks, president, letter dated May 16, 1970, for- warded by Congressman Graham Purcell of Texas 2177 Volun~e Footwear Retailers of America, Edward Atkins, executive vice president, supplementary statement 2088 Voorhees, John S., counsel: Business Equipment Manufacturers Association 3237 Pacific Car & Foundry Co., statement 3309 Wralker, Jim, controller, Varel Manufacturing Co., letter to Chairman Mills 2638 Ward, John E., chairman, Meat Importers Association, statement (sub- mitted by Donn E. Bent) 3697 Ward, Oscar, assistant-manager, Furriers Joint Council of New York, let- ter dated June 18, 1970, to Chairman Mills, with enclosure 3167 Washington, State of, Hon. Daniel J. Evans, Governor, letter dated May 27, 1970, to Chairman Mills (with enclosure) 1696 Weiner, Mrs. Leonard H. national president, National Council of Jewish Women, statement 1744 Weiss, H. M., president, Metal Masters of Baltimore, Md., extension of remarks 1919 Welch Allyn, Inc., C. M. Evans, president, Skaneateles Falls, New York, letter 3042 Welded Steel Tube Institute, statement submitted by Paul Carlson 1935 West Coast Metal Importers Association, Werner F. Chilton, president, letter dated June 10, 1970, to Chairman Mills 1920 `~Vest Virginia, Pennsylvania, Ohio, & Indiana Glass Workers' Protective Leagues, Huberta M. Patterson, secretary, Wrest `~nirginia League, statement 4072 Western Oil & Gas Association, statement 2278 Westinghouse Electric Corp., Leonard E. Kust, vice president and general tax counsel, statement 2636 Wilkes (North Carolina) Chamber of Commerce, Tom Ogburn, president, letter of transmittal dated May 11, 1970, to Chairman Mills, with statement 1710 Wilson, F. Perry, president, Union Carbide Corp., letter to Chairman Mills, with attachment 2646 Wilson, Robert C., president, commercial products group, North American Rockwell Corp., statement 1608 Wimmer, Edward, vice president, National Federation of Independent Business, letter of transmittal dated May 20, 1970, with enclosures, to Chairman Mills 1731 Window Glass Cutters League of America, Harry W. Baughman, inter- national president 4063 Winters, Elmer C., acting chairman, Wyoming-Nebraska Regional Export Expansion Council, letter, dated June 9, 1970, to Chairman Mills 2633 Wisconsin, State of. Hon. Warren P. Knowles, Governor, letter dated June 4, 1970, to Chairman Mills 3174 Woodcock, Leonard, president, United Automobile, Aerospace & Agricul- tural Workers of America (UAW). statement with attachments 1711 World Trade Centers Association, Guy F. Tozzoli, secretary general, statement 1700 Woven Label Manufacturers of the United States of America, Max L. Kahn, letter dated May 20, 1970, to John M. Martin, chief counsel, Committee on Ways and Means 1603 Wyoming-Western Nebraska Regional Export Expansion Council, Elmer C. Winters, acting chairman, letter, dated June 9, 1970, to Chairman i~Iills 2633 Zelek, J. A., vice president-general manager, pigment and dye department, Harshaw Chemical Co., letter, dated May 20, 1970, to the Committee on Ways and Means 3635 Zimmer, Robert C., counsel, Sporting Arms and Ammunition Manufac- turers Institute, statement 2786 PAGENO="0041" TARIFF AND TRADE PROPOSALS THURSDAY, rUNE 11, 1970 HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, Wa~shington,D.C. The committee met at 10 a.m., pursuant to notice, in the committee room, Longworth House Office Building, Hon. Al Uliman presiding. Mr. IJLLMAN. The committee will come to order. Mr. BYRNES. Mr. Chairman? Mr. ULLMAN. Mr. Byrnes. STATEMENT OF HON. JOHN W. BYRNES, A REPRESENTATIVE IN CONGRESS PROM THE STATE OF WISCONSIN Mr. BYRNES. Before we proceed with the witnesses, I would like to make a brief statement and a re4uest of the committee. It arises out of the testimony before this committee on May 19 by a Mr. Nelson A. Stitt on beha1f of what was called the United States-Japan Trade Council, which he purported to represent. He advised the committee at that time that his organization was, and I quote, "an association of approximately 800 firms doing business in the United States and in- terested in promoting healthy trade between the two countries." Since then information has come to my attention that the United States-Japan Trade Council, it would appear, is really a front for the Japanese Embassy and the Japanese Government. The organization did file a statement, as is required, with the Justice Department and it showed income to the organization of $171,992 from the Japanese Government via a circuitous route during the second half of 1969. The only other income of this~ organization was $2,280 from its membership dues during that period. It would appear, therefore, that on a monetary basis, 98 percent of the testimony of the so-called United States-Japan Trade Council was in behalf of the Japanese Govern- ment and only 2 percent for the 800 firms. Under these circumstances, it seems to me that the committee was intentionally misled as to who Mr. Stilt really was appearing for on May 19. It appears this was deceptive, and in light of this, I would ask that Mr. Stitt's testimony on that day be stricken, at least until this whole matter is thoroughly examined and straightened out. I think this case also points out the great need for committee wit- nesses to identify their principals. I think the members of the com- mittee have a right to know whom and what these witnesses represent. A failure to make such a disclosure is a disservice not only to the corn- mittee, but to the American people, as well, because our hearings are (3641) 46-127 O-70-pt. 13-3 PAGENO="0042" 3642 published as public documents and are open to all for use as primary information sources. It seems to me that we must preserve the integrity of these proceed- ings. Certainly I am not suggesting that the Japanese Government, if it desires to have somebody represent it before this committee to express its views, has no right to do so. But as for a witness who comes here and purports to speak for 800 businesses, and presents himself on that basis, when in truth and in fact the organization that he appears for is financed 98 percent by the Japanese Embassy and the Japanese Government, that is a distortion and is misleading as far as the testi- mony given to this committee is concerned. If the Chair desires to do so, it is perfectly all right to hold my mo- tion in abeyance. But I would request that the testimony given to us under these circumstances be stricken from the record, or not appear in the printed record, until we have a chance to examine thoroughly the information that has been developed. Mr. ULLMAN. Mr. Byrnes, this is an extremely serious matter. The committee certainly is appreciative of your digging into this matter. If the gentleman does not object, I will ask that the matter be held ii~ abeyance and that the staff and the committee study the matter. Mr. BYRNES. I would suggest, Mr. Chairman, that Mr. Stitt be in- vited to appear at some convenient time before the committee if he desires to do so, to explain this situation and respond also to any further questions that we may have with regard to this matter and to his testimony on the 19th. Mr. ULLMAN. It is the policy of this committee to schedule orga- nizations incorporated in the United States as witnesses. So, without objection then, this matter will be held in abeyance and a study made by the staff and the members of the committee. [Mr. Nelson Stitt subsequently appeared before the committee at a later time on this same day, June 11. For these proceedings, see part 4, page 1126, on May 19, following Mr. Stitts' originally scheduled appearance. These proceedings have been moved to that portion of the printed hearings in accordance with a unanimous consent agreement.] Mr. ULLMAN. Our first witness today is a very distinguished col- league, the Chairman of the Armed Services Committee, the gentle- man from South Carolina, my good friend, the Honorable L. Mendel Rivers. We are very happy to have you before the committee this morning. STATEMENT OP HON. L. MENDEL RIVERS, A P~EPRESENTATIVE IN CONGRESS PROM THE STATE OP SOUTH CAROLINA Mr. Rivrns. Thank you very much, Mr. Chairman. As I said to this great committee last year, I know that you know more about this kind of stuff than I do, but I represent a lot of people, just like you do, over 600,000, and whenever their economic interests are involved I am going to holler just like you do when your economic interests are involved. Now, Mr. Chairman, I came here this morning primarily in the interest of our textile industry. The textile industry is the largest industry in South Carolina. There is not too much of it in my district, PAGENO="0043" 3643 but, unless our textile industry in South Carolina is healthy, South Carolina is unhealthy. This industry is vital to the survival of our economy. Now, let me start by saying that I have not come here to lambast any nation in particular. I have just come here to say a word for this country that you and I belong to. I consider this, and this is not a good simile but it is as oood a com- parison as I can make, to be the Pearl Harbor of our texti~Ie industry. At this time, however, there appears to be no possibility that our sunken hulks, the textile industry in my own case, being torpedoed by the com- petition from Japan will ever be refloated unless you do something about it now. Now, we have had promises on aid from every administration. The promises have been so wonderful that we have grown lean on them. Japan today is engaged in a deadly competition with us. She is, like England in the 17th century, practicing a new mercantilism that has the same effect on us that it did at that time. At stake is the very life of this country as an industrial nation. What I am saying today applies to textiles. You are the very next on the list, Mr. Betts, your steel mills in Ohio, as sure `as you are a foot high. Now, how long can we gorge ourselves on cheap imports while we starve our own industries of theirvery substance? Let me say this: Do not let anybody kid you that these Japanese goods are not good quality. Take the electronics, take those auto- mobiles, take these ships, take the steel that is coming in. That is not second class. They work long hours. They produce good stuff. The only way you are going to protect your country is by law, law enacted by this Congress. Don't leave it to the State Department. I, for one, cannot believe that `all these signs hanging around your necks and mine don't mean something to us. We are going out of busi- ness, and fast. The Mills bill is the only thing that is going to save us, the Mills-Rivers bill, if you please, and it is a good bill. I want to say this, Mr. Chairman, it is in that order, too. This `bill applies the law to anybody who has not agreed to limit his exports to this country. Let us set the law and the quotas. We have much more at stake than does someone who is on the Federal payroll down in the State Department who looks up so much he can't see the ground on which he walks. Now, our textile and apparel industries are among our oldest, from the hand looms of the colonial times to the giant mills and the factories of today. I worked in a textile mill. I know something about them. They have automatic looms today; one man can watch 30 or 40 of them. We have the most automa'ted industry on earth, trying our best to survive. If anybody knows something about the textile industry, it is Mendel Rivers, because I worked in them. I don't know what contribution I made but I worked 11 hours a day. I understand they don't work that long these days. The workers in these plants are fine people. They have a fine life to live. Their wages are good. Our wOrkers in America have the highest standard of living of any workers on earth, and you know it. Get out PAGENO="0044" 3644 on the highway any weekend and see how many of our employees are out with their trailers on the back and motorcycles on the `back of the trailer headed for the mountains of South Carolina, often with the trailers carrying boats. They go out to get recreation starting Friday evening, your Ameri- can workers. All they want is a chance to survive. I want to save them. God bless them. You, Mr. Schneebeli, are the one who can help them survive because you and I together have to put some law on the books. Do not take the word of the people downtown. I don't care who the administration is. Now, the workers in these plants have taken care of us in wartime. They have worked long hours. Roosevelt called them the arsenal of democracy. Now it is our turn to take care of them and this kind of competition. They have kept the faith with this country when other people have not in other lands. We have a lot of allies but sometimes I think they are dependents. They give us lipservice. How many came to our aid in Korea? How many came to our aid in Vietnam? Now our industry is all we have left, the free enterprise system, as I understand it. Now, we have tried our darndest to solve this thing through inter- national negotiations time and time again. Mr. Mills is the only Mem- ber in this room today who has been in this Congress longer than I have. He has seen the negotiations. He knows what he is doing when he puts this bill in the hopper. He has seen the. diplomatic course tried. And it has not worked. We have met with negative replies time and time again. Now Japan leads the world in textile exports, while our industry continues to go down. In South Carolina this year already we have closed a dozen textile mills. Unless our industry is to go the way of the passenger pigeon we must take action now; otherwise we might just as well-listen to this-we may just as well make it mandatory that our children take a course in Japanese so that they can get a job in Japan when you and I are gone, so that they can eat. There won't be any American industry. Now, I cannot speak for all the States represented by you distin- guished gentlemen. You know what you have and you know how you are affected. But I can speak for my country. If we do not act to pre- serve this industry, many places will suffer depression, and you haven't seen anything yet. There are members of this committee who know what happens when an industry or an important installation leaves his district. I do not need to tell you. Today it is textiles; tomorrow what is it going to be? Will it be Jim Burke's shoes? I suspect that he feels his shoe industry disap- pearing from New England. Ten years from now, every suit you wear could well be made in Japan. Five years from now, every shirt might well be a Japanese import. It may be that you have seen the last American-made towel or American-made washcloth. Let me show you what I am talking about. The other day, Mr. Chairman, one of our textile manufacturers showed me a printed towel he had just gotten out of his mill and put on the market in New York, just gotten it out. But then in a short time, the identical thing came from a Japanese mill or some mill in PAGENO="0045" 3645 Hong Kong, the identical towel, only that the dimensions were just a little shorter. Of course, to the unknowing layman public, they thought they were getting the same thing. It was identical. This is what happens. And it is quality merchandise. Now, after the Japanese have successfully put the American tex- tile industry out of business, they will turn to rugs, building materials; you name it. Already they are No. 2 in the world in automobiles. Look on the street and see how many Toyotas and Datsuns you see. And they are quality, not junk. They have replaced Germany as No. 2 in the automobile business. Now, are we going to continue to bury our head in the sand? Let us do it knowing these things. It may well be in the next few years the largest single industry in the United States will be gone and the people on this committee from Michigan had better remember that. And they may come here pleading to save the automobile industry. You know who ought to be sitting where I am this morning or following me? The head of the UAW. Brother, he is next on the list. Don't let anybody kid you. Now, we are not asking you to give us preference in my part of the world. All I am asking you is the simple route to survive for my people. Now, I am in the military business. I know what we do in the mili- tary. We have to have four-ply muslin cotton for our military forces in Vietnam. I had one textile man go to DOD-and you can't buy this; they don't make it-he offered to~ put up a mill for the Department of Defense at no cost. And all the four-ply muslin cloth they make for the cotton goods these boys wear in jungles is essentially made by your textile industry. They are making a contribution to the war effort. This industry is loaded with patriotism. They should not get the treatment that they are getting. Don't you think just because it is happening to the textile industry that it won't happen to the automobile industry and the rest of the industries in this country. Now, the wage differential in Japan and these other places is well- known. As I said, I am proud that we have the highest standard of living, but it must `be considered that our competitors are able to en- gage in practices that are prohibited to this nation by law. The mini- mum wage, the antimonopoly, the~ antitrust laws, and a number of things of this character that they don't have in their countries. We are just not matched equally. Then when you give them the right to come over here and load our markets, our firms can't compete. I am not using Japan as a whipping boy. I went down to the White House, I think with the chairman, some time ago, when the President announced the return of Okinawa to Japan. I got the im- pression that-I can't quote the President; he quotes himself; he has enough troubles without my misquoting him; I want to help him- but I got the impression then that he had some kind of understand- ing on some of this competition. But, whether he has or not, my business is in the Congress and so is your and the greatest business you can have, Mr. Chairman, this morning, is to address yourselves to the salvation of these basic industries. Now, I think Secretary Stans has done a fine jab, Mr. Chairman, PAGENO="0046" 3646 but I do not think that he can get by some of the deeply entrenched crowd in other parts .of this Government. Take the electronics business. If we depend on Japan for electronics, and they are good, where are you going to get your spare parts in time of trouble? We only export about three things in this country that we get currency balance on. Did you know this? One of them is com- puters, another is airplanes, and the third is agricultural products. Most of the other stuff we don't make any money on. We make money on airplanes and, Mr. Pettis, you are a licensed pilot; you know what I am talking about. When you sell a 707 or 741 to Great Britain, you sell spare parts and they have to come back and get them. If they want anybody over there you send somebody; you get the Americans over there; you get the American policy to these people. Just like South America. If we sell them our fighters against the French Mirages~ we send them our technicians and we implement our diplomacy. It is the same way with Japan. Now, if we depend on them for so many things, our industry is gone. We'will have to go there to get them. Mr. Chairman, I won't take any more of your time. I am just warm- ing over the coffee you have been drinking up here for a number of weeks. I am just telling you I know a little something about what I am talking about. Yours is the most realistic approach I have seen. I am honored that you let me be one of the co-authors to be right along with your mag- nificent train, just to be in your wake helps me where I come from. I am glad to be in this country. I know this, Mr. Chairman, if I read you, you are going to do some- thing about this. I just want to let you know that I come here with this in mind. This distinguished committee, I want to thank you. You have been much kinder to me than I deserve and I want to thank you. The CHAIRMAN. Mr. Rivers, I want to congratulate you for making this very fine statement, taking time from your very busy schedule to share your thoughts with us. We appreciate your doing it very* much. You have been very helpful to us. Any questions? Mr. GILBERT. Mr. Chairman. The CHAIRMAN. Mr. Gilbert. Mr. GILBERT. I would like to compliment the distingui~hed chair- man of the Armed Services Committee for the contribution he has made here this morning. You mentioned that the United Auto Workers Union should come out and support this. You might know some of our great labor leaders are in support of this legislation. Mr. RIVERS. Of course, they are. Mr. GILBERT. And particu'larly in the garment and textile indus- tries, they are all four-square behind the position that you have )ust espoused here. Mr. Rivr~s. You take the garment industry, it came from New York, look at the contribution they made, look what Dubinsky did for the working people of this country. We can't see these people sink; they have a right to be protected in your great city of New York and PAGENO="0047" 3647 great State of New York. You know what I am talking about. The automobile industry is next. This is vital legislation. Mr. GILBERT. It certainly is. Mr. RIVERS. Japan is going to rule Asia; we can't stop that. We at least can save this country. Mr. GILBERT. Thank you. The CHAIRMAN. Are there any further questions? If not, we thank you again, Mr. Rivers, for coming to the committee. Mr. RIVERS. Thank you very much. The `CHAIRMAN. Our next witness is our colleague from Illinois, Mr. Pucinski. STATEMENT OP EON. ROMAN C. PUCINSKI, A REPRESENTATIVE IN CONGRESS PROM THE STATE OP ILLINOIS Mr. PUCINSKI. Thank you, Mr. Chairman, for allowing me to ap- pear before your committee this morning. I appear before you today to urge favorable action on H.R. 16920, for I firmly believe that prompt action is imperative with respect to the import problems of the apparel-textile-shoe industries which are covered by this proposed legislation. It is because of this that I felt it my duty to join in co-sponsoring this bill. I was guided in my decision-as I earnestly hope you will be in yours-by several incontrovertible facts. It is a fact that, with respect to the covered industries, the degree of penetration of domestic markets by imports from low-wage coun- tries has been increasing both steadily and substantially. At the outset of the 1960's, for example, the value of apparel imports amounted to well under 10 percent of the value of domestic production. The esti- mate for last year is in excess of 22 percent. It is a fact that these imports are produced under substandard con- dit~.ions-but with a technology that generally matches that which is available to United States producers. As a result, the competitive ad- vantage that is enjoyed by foreign manufacturers stems mainly from the pitifully low wages they pay. `, Average hourly earnings in the apparel industry in the United States, for instance, were $2.31 in 1969. Except for Canada, where the corresponding figure was $1.75, in no other country with which we do any amount of trading did workers in this industry receive as much as $1 per hour. In Japan, for example, apparel workers averaged 40 cents per hour in 1969, while in Hong Kong the figure was about 25 cents. This is exactly the kind of situation that Congress felt represented "an unfair method of competition" and prompted the adoption of the Fair Labor Standards Act-to prohibit such competition. It is illogical to give foreign producers an advantage that the act has de- nied to domestic producers. It is yet another fact that this unfair competition has been destroy- ing job and income opportunities for American workers. And the type of workers. most affected are those who generally have fewer job options, such as women, workers without advanced skills, and minorities. PAGENO="0048" 3648 For example, women hold fewer than 30 percent of the jobs in all manufacturing combined, but in apparel they comprise 80 percent of the work force, and in textiles more than 45 percent. Moreover, about 45 percent of the workers in all manufacturing are classified as semiskilled, but in textile the figure is 70 percent and in apparel 80 percent. With respect to employment of minorities, data from the Equal Em- ployment Opportunity Commission has disclosed that over 18 percent of those employed in the apparel industry in the Chicago area are Negroes and an additional 9 percent have Spanish surnames. Given these facts, I find it impossible to view with equanimity the prospect of further job destruction caused by the unfair competition of imports from low-wage countries. In the last year alone, data pro- vided by the Illinois Department of Labor disclose how serious the erosion of jobs has been in the Chicago area. Between March 1969 and March 1970, employment in manufactur- ing in the Chicago SMSA declined by about 9,000, while in the non- durable goods sector it remained stable. However, in apparel, which is a part of the nondurable sector, employment was off by 1,400-or from 25,700 in March of 1969 to 24,300 in March of 1970. In textile and shoe manufacturing, which are also part of the non- durable goods sector but which provide fewer jobs in the Chicago area than does apparel, employment was also down-from 2,200 to 2,000 in leather footwear, and from 3,300 to 3,000 in textiles. These are but a few of the facts that clearly establish the adverse im- pact from imports that guided me in my decision to cosponsor 16920. I would make one other point. H.R. 16920 is not a protectionist device. It would, in fact, permit foreign nations to share in whatever growth this country experiences in the consumption of products covered by the bill. H.R. 16920 is an instrument to promote orderly marketing arrange- ments and, as such, will serve the interests of those concerned with the need to expand world trade. The CHAIRMAN. Thank you, Mr. Pucinski, for coming before this committee and giving us the benefit of your views. Are there any questions? If not, again we thank you. Mr. PucINsKI. Thank you, Mr. Chairman. (The following statement was received for the record:) STATEMENT OF HON. Jouw L. MOMILLAN, A REPRESENTATIVE IN CONGRESS FRo~r THE STATE OF SOUTH CAROLINA Mr. Chairman and members of the House Ways and Means Committee, I want to join my colleagues from South Carolina and Chairman Mills in supporting the textile import quota bill now being considered by your committee. During the past 10 years I have introduced several bills for this purpose, however, we have always been persuaded to give the executive department an opportunity to adjust this problem without legislation. I believe the executive department has exhausted its efforts to curb textile imports from cheap labor countries and this leaves the problem squarely on the shoulders of the Members of Congress. I want to reiterate the words expressed by the South Carolina Lieutenant Governor and the other Members of the South Carolina congressional delegation in support of this bill. I will not try to clutter up the hearing record by dupli- cating these statements as we have a solid front in support of this legislation which will, in my opinion, save the jobs of thousands of textile workers in South Carolina alone. PAGENO="0049" 3649 The CHAIRMAN. Our next witness is Mr. Eugene Stewart. Please come forward, if you will. Although we know you quite well, if you will identify yourself for the record, we will be glad to recOgnize you. STATEMENT OP EUGENE L. STEWART, GENERAL COUNSEL, TRADE RELATIONS COUNCIL OP THE UNITED STATES, INC.; ACCOMPA- NIED BY JAMES M. ASHLEY, COCILAIRMAN, BOARD OP TRUSTEES; AND RICHARD C. ROSE, PRESIDENT Mr. STEWART. Thank you, Mr. Chairman. I am Eugene L. Stewart, general counsel of the Trade Relations Council. I am accompanied this morning by James M. Ashley of Libbey- Owens-Ford, cochairman of the board of trustees of the Council, and Richard C. Rose of Allegheny-Ludlum Industries, president of the Trade Relations Council. In addition, at this table are members of the board of trustees of the council. The board of trustees has fully considered the statement we shall present this morning and has approved it. We would like to proceed, Mr. Chairman. The CHAIRMAN. We are glad to have you all with us. Mr. STEWART. Mr. Chairman, I have a prepared statement. I shall not read it at length. I shall give the highlights of it. The Trade Relations Council represents manufacturing corpora- tions and trade associations. We have 72 members. Their names will be submitted for the record. (The information referred to follows:) MEMBERSHIP ROSTER OF THE TRADE RELATIONS COUNCIL Company Address Official Acme Shear Co 1380, Bridgeport, Conn. 06609 Henry C. Wheeler, president. Albany Felt Co Albany. N. Y. 12204 Wdyne F. Fry, senior market analyst. Allegheny-Ludlum Steel Corp Oliver Building, Pittsburgh, Pa. 15222 Richard C. Rose, secretary. Alliance Manufacturing Co Alliance, Ohio 44601 John Bentia, president. Amalgamated Sugar Corp 801 First Security Bank Building, Ogden, A. E. Benning, president. Utah 84401. American Fine China Guild P.O. Box 229, Nyack, N.Y Lynne A. Warren, secretary. American Hardboard Association~. 100 W. Cold Spring Lane, Baltimore, Md. Donald Linville, consultant. 21210. American Aniline Products, Inc_... Box 3963, Paterson, N.J. 07509 A. L. Phillips, president. American Olean Tile Co 1000 Cannon Ave., Lansdale, Pa. 19446 William M. North, president. American Pipe Fittings Associa. 60 East 42d St., New York, N.Y. 10017 Ray H. Goodridge, secretary-treasurer. tion. Antifriction Bearing Manufac- do James J. Whitsett, secretary-general turers Association, manager. Atkins & Pearce Manufacturing 537 East Pearl St., Cincinnati, Ohio 45202 - Asa I. Atkins, president. Co. Banner Mining Co Tucson, Ariz. 85703 A. B. Bowman, vice president. Bausca & Lomb. Inc Rochester. N.Y. 14605 Joseph W. Taylor. secretary-treasurer. Bicycle Institute of America 122 East 42d St., New York, N.Y. 10017___ John Auerbach, executive secretary. Burlington Industries, Inc Burlington House, 1345 Avenue of the - Robert P. Lynn, vice president, Americas, New York, N.Y. 10019. legal department. Carlisle Tire & Rubber Division, P.O. Box 99, Carlisle, Pa. 17013 C. J. Warrell, president and general Carlisle Corp. manager. Carpenter Technology Corp 101 West Bern St., Reading, Pa. 19603 John Moxon, president. Cayuga Rock Salt Co Myers, N.Y. 14866 William B. Wilkinson, vice president. Coats & Clark, Inc 430 Park Ave., New York, N.Y. 10022 W. A. Wailer, secretary. Columbia Tool Steel Co Lincoln Highway and State St., Chicago Adolph J. Scheid, president. Heights, III. 60411. Committee of Tool Steel 120 East 42d St., New York, N.Y. 10017 - - - L. F. Granger. Producers, American Iron & Steel Institute. Copper & Brass Fabricators 225 Park Ave., New York, N.Y V. E. Veltfort, managing director. Council, Inc. PAGENO="0050" 3650 MEMBERSHIP ROSTER OF THE TRADE RELATIONS COIJNCIL-Continued Company Address Official Crompton & ithowles Corp 93 Grand St., Worcester, Mass. 01610 James Barringer, executive vice president. Crompton Co., Inc 1071 Avenue of the Americas, New York, Howard Richmond, president. N.Y. 10018. Cycle Parts and Accessories % Troxel Manufacturing Co., Moscow, R. A. Faulhaber, president. Association. Tenn. 38057. Day Mines, Inc Day Building, Wallace, Idaho 83873 Henry L. Day, president. Draper Bros. Co 28 Draper Lane, Canton, Mass. 02021 John H. Draper, Jr., president. Dundee Mills, Inc Griffin, Ga. 30223 J. M. Cheatham, president. Ensign-Bickford Co Hopmeadow St. ,Simsbury, Conn. 06070 - - - John E. Ellsworth, president. Fostoria Glass Co 1200 1st St., Moundsville, W. Va. 2604L~_ David B. DaIzell, president. Fourco Glass Co P. 0. Box 991, Clarksburg, W. Va. 26302_~ 0. D. under, secretary-treasurer. Fourdrinier Wire Council 1012 14th St., NW., Washington, D.C. 20005~ John Ferry, secretary-treasurer. Glass Crafts of America 816 Empire Building, Pittsburgh, Pa. 15222~ J. Raymond Price, executive secretary. A. F. Gallun & Sons Corp 1818 North Water St., Milwaukee, Wis Edwin A. Gallun, chairman of the board. The Hall China Co East Liverpool, Ohio 43920 John T. Hall, president. Hardwood Plywood Manufac- 2310 South Walter Reed Dr., Arlington, Va. Clark E. McDonald, managing director. turer's Association. 22206. Harnischfeger Corp 4400 W. National Ave., Milwaukee, Wixc. Walter Harnischfeger Chairman of the 53214. Board. Hastings & Co., Inc 2314 Market St., Philadelphia, Pa. 19103 - - Henry R. Robb, Jr., president. Industrial Fasteners Institute 1505 East Ohio Building, Cleveland, Ohio Frank Masterson, president. 44114. International Silver Co 500 South Broad St., Meriden, Conn. 06450_ Stuart C. Hemingway, executive vice president. James R. Kendrick & Co., Inc 419 Park Ave. S., New York, N. Y. 10016~_ Warren R. Kendrick, secretary. The Lamson & Sessions Co 700 Terminal Tower, Cleveland, Ohio 44113 R. A. Gatz, vice president, cnrporate secretary. Latrobe Steel Co P. 0. Box 31, Latrobe, Pa. 15650 Marcus W. Saxman III, president Homer Laughlin China Co Newell, W. Va. 26050 J. M. Wells, Jr,. executive vice president and secretary. Libbey-Owens-Ford Co 811 Madison Ave., Toledo, Ohio 43624 James M. A&l4oy, vice president Lead Pencil Manufacturer's 60 East 42d St., New York, N.Y. 10017 Carl W. Priesing, executive vice presi- Association. dent Ludlow Corporation 145 Rosemary St, Neeham Heights, Mass. J. C. Mahoney, vice president Magee Carpet Co West 5th St, Bloomsburg, Pa. 17815 James G. Law, president Marriner & Co 600 Broadway, Lawrence, Mass. 01841 Kenneth W. Marriner, president Otto B. May, Inc 52 Amsterdam St, Newark, N.J. 07105 Dr. Ernest H. May, president. Metal Cookware Manufacturers P.O. Box D, Fontana, Wis. 53120 Kenneth H. Johnston secretary. Association. Mohasco Industries 57 Lyon St., Amsterdam, N.Y. 12010 William J. Kennedy, secretary. National Association of Wool 386 Park Ave. S., New York, N.Y. 10016_ - Jack A. Crowder, president Manufacturers. National Cherry Growers & 302 North 29th St, Corvallis, Oregon 97330 Ernest H. Wiegand, executive secretary. Industries Foundation, Inc. National Footwear Manufacturers 342 Madison Ave., New York, N.Y. 10017~ Mark E. Richardson, president Association, Inc. National-Standard Co 8th and Howard St., Niles, Mich. 49120 James A. Mogle, vice president. Northern Textile Association 211 Congress St., Boston, Mass. 02110 William F. Sullivan, president Optical Manufacturers Association 30 East 42d St., New York, N.Y. 10017 Charles R. Oddy, secretary-treasurer. Owens-Illinois, Inc., Consumer P.O. Box 1035, Toledo, Ohio 34601 F. D. Pinotti, vice president and Technical Products Division. Phelps Dodge Corp 300 Park Ave., New York, N.Y. 11022 John E. Masten, vice president and secretary. PPG Industries: 1 Gateway Center, Pittsburgh, Pa. 15222_. George P. Cheney, Jr., counsel, govern- ment and public affair. Republic Steel Corp P.O. Box 6778, Cleveland, Ohio 44101 C. J. Kraven, director of government relations. Rockwell Manufacturing Co...... -- 400 North Lexington Ave., Pittsburgh, Pa. Col. Willard F. Rockwell, chairman of 15288. the board. Rubber Manufacturers 444 Madison Ave., New York, N.Y. 10022.~ C. P. McFadden, chairman, footwear Association, Inc. division. Do do William C. Campbell, Industrial Rubber division. Schiffli Lace & Embroidery Manu- 513 23d St., Union City, N.J. 07087 I. Leonard Seller, executive director. facturers Association. Service Tools Institute 331 Madison Ave., New York, N.Y. 10017_ - George P. Byrne, Jr., secretary. Singer, Frederick G Chevannes, Greenville, Del. 19807 Sprague Electric Co 87 Marshall St., North Adams, Mass. 01247 Robert C. Sprague, chairman and chief executive officer. J. P. Stevens & Co., Inc 1460 Broadway, New York, N.Y. 10036 James R. Franklin, assistant to the president. Syracuse China Corp Syracuse, N.Y. 13204 R. C. Cobuorn, vice president. Teledyne, Inc 1901 Avenue olthe Stars, Los Angeles, Calif. RobertS. Bell, assistantto the president. 90067. Timken Roller Bearing Co 1835 Deuber Ave. SW., Canton, Ohio 44706 G. L. Deal, vice president, finance. The Torrington Co 59 Field St., Torrington, Conn. 06790 E. B. Thompson, vice president and secretary. United States Potters' Association Box 63, East Liverpool, Ohio Miss Dena E Powell, acting secretary. Viking Glass Co New Martinsville, W. Va C. T. Swartling, president. PAGENO="0051" 3651 Mr. STEWART. They cover most sections of American manufacturing industry. The council has for the past 6 years made a serious effort to study the facts of our foreign trade policy. We have created `at our own expense a computer data bank containing all Government statistics on employment, output and foreign trade of manufacturing industries. We attempt to combine a study of the facts with an accurate knowl- edge of how our foreign trade remedies are administered. We come to you this morning with broad recommendations for re- form of our Nation's foreign trade procedures, on behalf of the Na- tion's manufacturing industries generally. We are not pleading the case of any particular industry but manufacturing industries generally in the United States. . The committee has performed a helpful service by printing the testi- mony of the `administration witnesses and the materials which they submitted at your request for the record. On behalf of industry, we thank you for this. Some of the material submitted at your request is extremely valuable and I shall refer to several portions of it. I have studied the prepared statements of the administration wit- nesses and I find it very discouraging that there is such little evidence in their prepared testimony of some of the basic problems that exist in our foreign trade policy. Our trade machinery and policies have been totally ineffective to ad- vance the interests of our export industries and totally ineffective to limit the imports which are increasing at a rapid rate. If you will turn to page 2 of my statement, there is a chart prepared by Assistant Secretary of Commerce Davis, which shows our U.S. trade surplus, as it is entitled. This chart, however, needs to be cor- rected and it is very simple. It overstates exports by $2 billion a year because it does not exclude the Government-financed exports and it understates imports by $2 billion a year because it does not take them at the CIF value. If you would take a pencil and just draw a line where you see the "4" at the left-hand side, straight across the page, you will then get a true picture of what our U.S. commercial trade balance is, and it is not a. surplus; it is a significant deficit. Originally, the trade agreement legislation was structured to the very sound idea that by negotiation we would gain access for our exports to markets abroad by giving comparable access to the exports of other countries to the U.S. market. It was, to be a reciprocal program. And it was a reciprocal program prior to Warld War II. When the GATT was drawn up, and the architects were the people in our State Department., in 1945 and adopted in 1947, they were con- cerned with using a massive reduction of tariffs as a form of economic foreign aid. You all remember the slogans, "Trade not Aid" and "Close the Dollar Gap" to help the reconstructed industries of Western Europe and of Japan. Our trade agreement negotiations under the GATT were essentially unilateral so far as their results were concerned during the 1950's ana the late 1940's. In 1956, we did the extraordinary thing, extraordinary in its generosity, by reducing our tariffs in concessions granted to Europe for the benefit of Japan. Our Government granted concessions on our tariffs to Western PAGENO="0052" 352 Europe in exchange for a promise by Western Europe to open up its markets to the products of Japan. This promise was not realized. In- stead, the countries of Western Europe attached reservations to the admission of Japan to GATT in the middle 1950's and they have steadily applied that reservation by imposing quotas on imports from Japan. In the Kennedy round, the negotiating plan originally was that con- cessions on U.S. industrial products would be offered in exchange for concessions by the Common Market particularly on agricultural prod- ucts from the United States. The negotiating technique was that each country put on the table not the articles it was willing to reduce but the articles that it would not subject to reductions and everything not mentioned would be subject to a 50 percent cut in duty. Our negotiators were led down the garden path by this technique. Our modest exceptions list was on the table. At the end of the negotia- tions, the Common Market did not grant any significant modifications in their variable import levy plan on agricultural imports and our negotiators instead of getting up and walking away from the table signed the agreement, so that we made very major reductions in our industrial tariffs and got precious little for the benefits of our agricul- tural exports. So far as our industrial products are concerned, the day that the tariff, the Kennedy round agreement was to go into effect, the Common Market announced that it would harmonize its border taxes. The result was that for the major markets for U.S. exports an increase in the border tax rate erased the benefit of those tariff concessions that were granted on industrial products that might have helped U.S. exports. We thus came out of the Kennedy round having used up a great deal of our currency for bargaining, that. is, our tariff levels, without gain- ing any significant advantages for our exports but opening wide the market of the United States for imported products. The Trade Relations Council in its data bank calculated that in 1966 the products of manufacturing industries represented a net loss of 160,000 jobs when you count the jobs created by exports and loss of jobs represented by directly competitive imports. Up until this time, the Government, itself, has not made such a study but I am complimenting you, Mr. Chairman, and the committee on the fact that in the materials that you have printed which you re- quested from the administration, and I compliment the administra- tion for making this study, there is an analysis by the Bureau of Labor Statistics of both the employment content of our exports and our im- ports for the years 1966 and 1969. As to manufactures, Mr. Chairman, the Government study shows that we had a modest net surplus of job's created in 1966, something in the order of about 79,000 jobs, but in 1969, according to their figures, we had a 168,000 job deficit. That is to say, the job content of the directly competitive manufacturedimports was nearly 168,000 greater than the job content of the exports from this country. A moment's reflection will tell you that this must be the case. Even the advocates of free trade identify our export potential in those sophisticated products made by a.utomated methods which have PAGENO="0053" 3653 very low labor content whereas, our imports consist of labor-incentive products which displace more labor per dollar's worth of imports than we create by our exports. The Bureau of Labor Statistics that made this study that is in your committee print used the imports at the foreign value which understate their value in the American market and their displacement effect on American jobs by 20 percent. When that adjustment of 20 percent is made, it will be seen that the net job displacement in the year 1969 of our foreign trade balance in manufactures was a half million jobs. And what is the significance of that, a half million jobs? It is enough to reduce the unemployment rate in manufacturing industries from the present 5 percent down to about 3 percent. And we are experiencing this increase in unemployment at the ex- pense of countries like Japan whose unemployment rate is less than 1 percent. In my prepared testimony, I have presented the economic data per- tinent to a consideration of the ~situation of 10 basic industries. In order to demonstrate how persuasive is this imbalance in our trade, the 10 industries are steel, textiles, footwear, electronic products, automo- biles, ceramic tiles, fiat glass, textile machinery, bicycles, and hard- wood plywood. Mr. Ohairman, in 1969 those 10 industries experienced a net balance of trade deficit in their products of $6,200 million. Those industries in the aggregate through the first quarter of 1970 have sustained an absolute loss of 303,100 jobs. It is not the case, as administration wit- nesses represented in their testimony, that the disappearance of our trade surplus and our trade problems may be attributed to temporary factors such as inflation, the overheating of the U.S. economy, and the like. Their efforts to assign our present dilemma to temporary factors that would go away is inaccurate. The reality is that we have reduced our tariffs so low and the com- petitive advantage of countries whose industries have the same tech- nology, and workers that are as highly motivated as ours, is so great that this situation will continue to grow worse. We identify as a result of our study of the situation of American industries, six i'ssues which I set forth commencing at page 22 of my statement. At the bottom, first it is clear to us that the selective ex- change-page 22 at the bottom-the selective exchange of well-defined market opportunities in the TJnited Sta.tes and foreign countries which was the essence of Cordell Hull's reciprocal trade agreements program has not been realized. Our trade agreement program in fact has been a failure by not being faithful to that important concept. Second. Because the trade agreement authority conferred on the President-and this applies to all the Presidents that have used the au- thority in the postwar era-was used as a species of foreign economic aid rather than as a commercial instrument to benefit our industries in equal measure with the benefit given foreign industries, the U.S. share of world exports of manufactures has declined, while the foreign industries' share of U.S. consumption of manufactured articles has increased, and increased by double in the last 6 years. PAGENO="0054" 3654 Third. With the currency for bargaining reciprocal trade advantage on behalf of the United States substantially wasted or dissipated by the kind of unilateral tariff negotiations we have conducted in the past and especially in the Kennedy round, we are now in a difficult position to protect our commercial interests in the seventies because there is little left in the way of bargaining power. Unless we put all of our manufactured products on the free list the duty rates are so low following the Kennedy round that there is not much left to put on the table as currency for ba.rgaining. Fourth. The syndrome that the United States has a duty to exercise leadership by always going first and the syndrome that our export industries are invincible to competition from like industries around the world which have dominated the judgment of our trade negotiators throughout the postwar era is now contrary to the facts of interna- tional commercial life. The sooner that concept of the use of our trade agreements authority is outlawed the sooner we will begin to get down to cases in straightening out our foreign trade position and its problems. Fifth. Contrary to the philosophy of the foreign-aid-oriented trade agreement negotiating experts of the past two decades, many of whom, Mr. Chairman, are still occupying key positions in the administration's foreign trade apparatus, the realities of international commercial life are that the U.S. industry does not possess any signficant technological advantage translatable into competitive cost advantages in comparison with its foreign counterparts. What is the outlook for the seventies? As we see it, the outlook is that technologically dynamic, large-scale manufacturing enterprises located in foreign countries, many substantially financed and enriched by technological know-how by U.S. corporations, will reap the eco- nomic advantage of the cost bias of the lower standard of living of foreign countries and dominate world trade in manufactured products. This dominance will extend to the progressive diminution of U.S. share of world trade in manufactured products and the continued and more rapid invasion of the U.S. markets by foreign industries. This process is already well-advanced and it will certainly continue. Sixth. There has be,en no coherent and consistent policy for the sup- port of domestic manufacturing industries in this kind of contest com- parable to the close liaison and effective support which Japan and the developed nations of Europe give their industries in competing for export markets. The efficient, comprehensive, and realistic way that the Japanese Government subsidizes research and development and the expansion of plant capacity, and its limitation of imports of competitive prod- ucts, is really an example of what a government can do to apply the forced draft to the expansion of her industries and increase her posi- tion in world trade. While Japan and the countries of Europe are subsidizing their in- dustries, what has our Government done? It has compensated the measures taken by foreign governments in behalf of the foreign in- dustries by major reductions in our import duties to make our domestic market even more available to the products of those industries. We present our recommendations beginning on page 25. These recom- PAGENO="0055" 3655 mendations, Mr. Chairman, and members of the committee, we believe to be politically realistic within the framework of the world of what is possible. If adopted, we think they will make possible a major turn- around in these trends that we have talked about, so that American industries can remain alive. First, as to the trade agreement negotiating procedure, at the bottom of page 25. One of the fundamental defects in the past has been that the people who in fact make the policy decisions as to what will be negotiated and how it will be negotiated are not the persons who hear the representatives of domestic industry who come to present their case. With some limited exceptions, the hearing is conducted by an interagency panel of middle-level civil servants who are not policy- makers and who summarize what they hear and that summary may or may not even be considered by the policymakers. Therefore, my first recommendation as to the trade agreement nego- tiating procedure is that those who make policy and those who nego- tiate the trade agreements also take the trouble direôtly to hear and listen to domestic interests in advance of the negotiations. This committee has tried earnestly to bring about that state of af- fairs. You have failed. Not because your intent was not accurate and proper but because the executive branch simply has not complied with your intent. Secondly, the U.~S. Government must at long last reject the curiously ambivalent view that it has of domestic industry that forces it to hold industry representative's at arm's length throughout the course of the negotiations. We are the only major developed country in the world that does not have available to its, negotiators accredited to the negoti- ated team industry advisers who `are present during the course of the negotiations and that is a reform that is long overdue. Second, as to the antidumping and countervailing duty remedies. We refer to these because for the lang pull if realistic efforts were made to purge our foreign trade of unfair practices, many of the problems that develop and go unchecked and lead to insistent demands for quotas and other extreme actions, would never come into being. Neither the antidumping or countervailing duties remedies work. As presently administered and as they have been administered in the past 10 or 15 years, they are a snare and a delusion and wholly unsuccessful. They waste the time and effort that industries devote to the occasional at- tempts to invoke their provisions. Apparently on the basis of an informal accommodation made by our Government with Japan in trade agreement negotiations in the fifties and in the sixties and implemented by an informal commit- ment in the Kennedy round, our Nation displays special solicitude for dumping by Japan. The result is `~ that the people who handle anti- dumping investigations are insensitive to the actual commercial real- ities of the problem. All doubts in dumping investigations are resolved in favor of the Japanese. Should per chance a finding of dumping slip through this process, the Treasury Department has almost uniformly in the past promptly accepted written assurances from the Japanese manufac- turers not to continue the dumping. On the basis of those assurances, the dumping investigations have PAGENO="0056" 3656 been terminated. This practice has exonerated virtually all dumping by Japanese manufacturers in the past. It has provided no relief for the future. It is an abominable system. It has been strongly criticized by domestic industries. Two weeks ago, on May 27, the Treasury Department published a revision of its procedures in regard to the discontinuance of dump- ing investigations. Henceforth, dumping investigations will be con- cluded on the basis of written assurances from foreign manufacturers only when the margin of dumping is considered minimal in relation to the total volume of sales involved. Very significantly, in announcing the change in the policy, Assistant Secretary of the Treasury Rossides stated that the past practice, and I want to quote his exact words, "allowed foreign exporters to under- cut the prices of their U.S. competition in American markets without undue concern for the possible consequences under the antidumping act." Think about that for a minute, 1~fr. Chairman. Here is an admission by the Treasury Department that the policy that they have pursued for the past two decades encouraged dumping practices by the foreign manufacturers, protected them in the doing of it and enabled them to undercut the prices of their American com- petitors in this market. A startling admission but an accurate one. Domestic industries welcome this change in practice by the Treasury Department. However, in response to the Kennedy round antidump- ing code, the Treasury Department has changed the date from which appraisement of import entires is withheld in a dumping investiga- tion. Formerly under the Antidumping Act and the customs regulations the withholding of appraisment, that is, simply the action in which they stop to liquidate the import entries so that they have a chance to impose dumping duties on impoi~ts that have been found to have been dumped, formerly this withholding applied to all import en- tries entered during a period commencing 4 months prior to the date the dumping complaint was filed. But when the United States signed the antidumping code, the Treasury changed its regulations and now the withholding of ap- praisement commences on the date when at the end of an investigation the Treasury Department publishes a notice of withholding. The na- ture of that change is that all of the dumping that has transpired prior to the filing of the complaint and during the period of investigation until a year or two later when a finding is made, all of that dumping is exonerated, is not subject and cannot be subject to dumping duties under this regulation by the Treasury Department. Furthermore, under the customs practice, when the Bureau of Cus- toms reaches a tentative conclusion that the merchandise investigated is being dumped they call in the foreign manufacturer and say in ef- fect, "See here, we have come to the conclusion that you are dumping and we are going to publish a notice of withholding." That gives the foreign manufacturer an opportunity to change his prices coincident with the date of the notice of withholding so that in fact none of his imports will be subject to dumping duties. As a result of the U.S. acceptance of the Kennedy Round Anti- PAGENO="0057" 3~57 ~dumping Code, which was not authorized for negotiation under the Trade Expansion Act of 1902, and as a result of Treasury's ~ change of its dumping regulations pursuant to the Code, the anti- ~ dumping remedy has been converted into a shield to protect foreign manufacturers who engage in dumping rather than a sword to strike down the practice. In my opinion, the type of change which Treasury made in the dumping regulations in response to the Kennedy Round Antidump- ing Code is a clear violation of the intent of title II of Public Law 90- 634 which instructed the Secretary of the Treasury to take the provi- sions of the code into account, and now I quote directly from the law: Only insofar as they are consistent with the Antidumping Act, 1921, as ap- plied by the agency administering the Act. Mr. Chairman, the Treasury Department had applied the Anti- dumping Act from 1921 down to 1968 *in one manner. Then they change it. I believe that is a clear violation of your intent in passing that particular law. As for the countervailing duty remedy, the Treasury Department has not had the fortitude in this or any other administration to ad- minister the countervailing duties statute since the emergence of the practice in Europe on a widespread basis of remitting internal taxes on exports. Under the decisions of our Supreme Court, the remission of taxes with respect to good exported is clearly a bounty or grant which should automatically be checked by the imposition of countervailing duties. The practice is so widespread that if the Treasury Depart- ment tried forthrightly to administer the statute in accordance with its intent, countervailing duties would be imposed on virtually all manufactured imports from Europe and from Japan. The unwillingness of Treasury to face up to the scope of this task, viewed in connection with its mandatory duty under the statute, should not excuse the Department, which is, after all, concerned with our balance-of-payments deficit, from now making a beginning to act more realistically in the administration of that remedy. Third, as to the escape clause. There comes a time in the flow of trade stimulated by tariff cuts where, quite apart from unfair prac- tices such as dumping or subsidizing exports, the injury to the domestic industry is so manifest that some adjustment should be made in the tariff in order to smooth out the rate of increase of imports. So, we have an escape clause and it is incorporated into GATT. Article XIX of GATT uses language that was patterned after the escape clause in use in this country, prior to the Trade Expansion Act of 1962. The administration then in power, that is, in 1962, urged an amendment of the domestic escape clause which, as you know, imposed a much more severe test than in the GATT escape clause and by that very act, by imposing on our industries a much tougher test to meet than GATT would recognize as permissible, we gave away rights un- der GATT that we had paid for thrbugh the bargaining that preceded the negotiation of that document. We are very good at giving away our rights, Mr. Chairman. It is a commonplace fact that the 1962 tariff adjustment provisions will not work. The administration's bill, H.R. 148'TO, seems on its 46-127 0 - 70 - pt. 13 - 4 PAGENO="0058" 36~58 surface to reform those provisions but in actuality the acirninistra- tion's amendments would create a condition in which the burden of proof to be met by domestic industries is even heavier than that under the present impossible escape clause. Allow me to explain. Under the present statute, a domestic injury must prove as a second burden of proof that increased imports are the major factor in causing serious injury. That means that an industry has to attempt to come up with quantitative proof showing that imports represented 51 percent or more of the causation of injury. Now, the administration's bill would require that the domestic industry prove that increased imports have been the primary cause of serious injury. But, think for a moment. In order to demonstrate that one of a number of causes is the primary cause you have to be able to provide some quantitative measurement of all the causes, line them up in an array of magnitude and demonstrate that imports are the greatest of all of the identifiable and measured causes. This is a much more severe and difficult method than the 1962 act and everyone agrees that that burden of proof is impossible to meet. A preferred approach is that set forth in title II of your bill, Mr. Chairman, H.R. 16920, which provides the same standard of economic morality for industries as it does for labor unions, namely, the burden of proof to be met for relief is that increased imports have been a substantial cause of serious injury. The GATT escape clause is consistent with this so the enactment of your bill would in no way violate, if one wished to consider that possibility, the intent and meaning of the GATT escape clause. We would be back to where we were and what we purchased under the GATT escape clause. But these are technical matters. The major flaw in our escape clause lies in another quarter, and it is this. Congress has provided an expert body, an independent agency, which, but for the 7-year term of its commissioners, is not directly subject to guidance by the political philosophy of a particular administration. That agency, the Tariff Commission, is therefore for the long term more likely to be a consistent finder of facts than some brance of the executive department that must respond to the policy imperatives of the President in power. The Tariff Commission, as an expert body, by statute is required to make a two-part finding in an escape clause case. First, it must find whether imports are causing serious injury and, if so, it must find the amount of tariff increase or the imposition of quotas necessary to remedy the injury. So far, so good. The vice of the present system is that after that expert body care- fully conducts an exhaustive investigation, including public hearings, and makes its finding, the finding goes to the executive branch where it is virtually ignored. During the public hearing, the domestic indus- try representatives are subject to cross-examination by anybody who chooses to enter the case and this usually includes representatives of at least five foreign countries. The apparatus for trade policy within the executive branch, how- ever, is such that every department in its foreign trade policy side feels absolutely free tc~ consider and find the facts afresh as though PAGENO="0059" 3659 the Tariff Commission had never given the matter consideration. In doing so, they conduct ex parte conferences with all of the interested parties who are anxious to overturn the finding of the Tariff Commission. The result is that in those few instances where the Tariff Commission has found injury from imports the Office of the Special Representative for Trade Negotiations, fronting for an interdepartmental group, has recommended to the President that he not do what the Tariff Commission found to be necessary. The Commerce Department is believed to be the only member of the interdepartmental group which in recent years has ever voted to accept the recommendations of the Tariff Commission. Now, by comparison, in antidumping proceedings, in those cases where the Treasury Department makes a finding of dumping and the case goes to the Tariff Commission and the Commission investigates and finds injury, that finding is self-executing under the law. The Trade Relations Council recommends that the findings of the Tariff Commission in escape clauses also be self-executing and be implemented automatically by, the Secretary of the Treasury just as in antidumping cases. With the reform of the escape clause, there would be some possibility that adjustments could be made in the level of imports affecting major industries so that some beneficial effect could be preserved in our trade interests for domestic empolyment and for our balance of payments. Such a reform of the escape clause would defuse the insistent demand on the part of the industries that are hurt for mandatory inport quotas. Fourth, as to the role of the Commerce Department in foreign trade policy. The Commerce Department has an insufficient role in foreign trade policy at this juncture. Among the Cabinet agencies, it is the most expert body to weigh and evaluate the force of influences on the foreign trade of the United States. It has the strongest interest to do so; yet, it has only one voice out of eight in the legal voting apparatus of the interdepartmental group presided over by the Special Rep- resentative for Trade Negotiations. It has no char~ce for its views to come directly before the President as the advice of his most expert adviser on industry matters, though technically the Secretary is al- lowed to register a dissent from interagency decisions that he disagrees with. We therefore recommend that there be established a foreign trade board within the executive branch under the chairmanship of the Secretary of Commerce with membership for the Secretaries of Agri- culture, Interior and Labor. These are the Cabinet officers directly concerned with domestic matters and with the impact of foreign trade developments on the domestic economy. Let that foreign trade board articulate and present directly to the President a recommendation on foreign trade policies. Then let the Secretary of State and the Office of the Special Representative present their own views separately to the President. In that way, those Cabinet officials with the constitutional responsibility for the domestic economy, namely, Commerce, Labor, Agriculture, and Interior, will have a direct channel to the President and an authoritative way of being heard, PAGENO="0060" 3660 In summary, therefore, the Trade Relations Council recommends, first, enactment of H.R.. 16920 with amendments to title II to accom- plish the following: A. Make the findings of the Tariff Commission in escape clause cases final and self-executing. B. Establish a Foreign Trade Board within the executive branch along the lines I have just described. 2. Amendment of the Antidumping Act so that the withholding of appraisment must extend to imports entered from a date 4 months prior to the date on which the complaint is filed with the Secretary. 3. Amend the countervailing duties statute to require that the Sec- retary of the Treasury impose countervailing duties on all imports which have received the benefit of the remission of value added or other internal taxes in the country of origin. Thank you, Mr. Chairman, and members, for your attention. (The formal statement follows:) PREPARED STATEMENT OF EUGENE L. STEWART, GENERAL COUNSEL, TRADE RELATIONS COUNcIL OF THE UNITED STATES, INC. Mr. Chairman and Members of the Committee: I am Eugene L. Stewart, General Counsel of the Trade Relations Council of the United States. That is a national organization broadly representative of our nation's manufacturing industries. Using the Committee's print of written statements and other material submitted by Administration witnesses in these public hearings, I have carefully considered their version of the nature and cause of the current foreign trade dilemma of the United States. It is discouraging to study the considered testimony of persons responsible for the operation of our trade policy machinery and to find in their comments so little recognition of some of the fundamental defects Which have produced the current debacle in our nation's foreign trade position. It is, I think, quite clear that our trade balance is a function of both our exports and our imports. The plain fact of the matter is that our trade machinery and policies have been totally ineffective to advance our export interests, and they have permitted unchecked, wild, and rapid increases in our imports that have produced the abrupt deterioration in our trade balance depicted in the following chart prepared by Assistant Secretary of Commerce Kenneth Davis. PAGENO="0061" Billions of Dollars ;~L i~u~ ~J~PUJ~ 969 Including exports of P.L. 480, AID, and military sales but excluding military grant-aid. PAGENO="0062" 3662 Allow me to trace for you the major developments that have placed us in this position. The original concept of Cordell Hull's Reciprocal Trade Agreements Act en- acted in 1934 was that a selective exchange of tariff concessions would be made on a bilateral basis with nations willing to open their markets for U.S. products in exchange for a commensurate widening of the U.S. market for their products. The nations of the Atlantic community, led by the United States, developed the concept of multilateral trade agreement negotiations under the aegis of a some- what permanent international body. These efforts culminated in the negotiation of the General Agreement on Tariffs and Trade in 1947. Under the auspices of GATT, driven by U.S. leadership, six rounds of tariff negotiations have been carried out in the post-World War II era. The United States has had changing concepts about the immediate objectives to be attained in these trade agreement negotiations. From the late 1940s and into the decade of the 1950s, the dominant objective was "trade, not aid" and' "close the dollar gap." U.S. markets were opened wide for the benefit of the reconstructed industries of Europe and Japan as a form of economic aid. In the mid-1950s, the dominant purpose of U.S. negotiations was to open the markets of Europe for the products of Japan. The United States opened wider its markets for the products of Europe through tariff concessions in exchange for commitments by European countries to confer trade concessions upon Japan. The intended concessions from Europe to Japan pros ed to be highly transitory. European nations reserved the right to impose quotas on imports from Japan to safeguard European industry and balance of payments under Article XXXV of GATT. The decade of the 1960s was opened with the Dillon Round which focused pri- marily on bargaining with the Common Market. These were the last negotiations in which the peril point procedure was observed under which the Tariff Commis- sion identified the extent, if any, to which U.S. tariffs could be reduced in the negotiations without causing injury to domestic industries. As a result of the Commission's peril point findings, U.S. concessions were quite selective. The EEC declined to negotiate on agricultural commodities in the Dillon Round but gave assurances that the position of U.S. exports would not be detrimentally changed by the implementation of the common agricultural policy of the Com- mon Market. These assurances have not been carried out. The Kennedy Round has been described as a success, the finest example of the initiative of the United States in liberalizing world trade. Regrettably, instead of significantly enlarged market opportunities for U.S. exports, we find major roadblocks: 1. The variable import levies imposed by the EEC on agricultural imports. 2. The harmonization of the value added tax and the related adjustment of the border taxes imposed by Common Market countries on imports. As stated in a research report of the National Industrial Conference Board, "the cost of entry of products moving from the United States to Europe are generally higher than the comparable cost of the same items shipped to the United States." "For shipments `to a common third country, * * * the operation of the border-tax adjustment of a country with turnover taxes will enhance its `competi- tive position over that of the United States." "The practical operation of `the border-tax adjustment serves to increase its burden for imports." "The combined effect of the tariff reductions arrived at through the Kennedy Round negotiations and the adoption by Germany of a value-added tax was a higher cost of entry for the shipment of American products `to that country than existed prior to the adoption of these new measures. The higher rate of border adjustment * * * more than offset the lower duty rates." 3. The retention by Japan of its restrictive nontariff barriers to U.S. exports, and the development by European nations of a restrictive practice `based upon standards and product certification procedures for industrial products from which the United States is excluded. 4. The proliferation of regional and preferential trading bloc areas which exclude the United States. In short, notwithstanding twenty years of effort by the United States and the tremendous price paid by its substantially one-sided tariff concessions in the PAGENO="0063" 366~ GATT `trading rounds, the world trade apparatus is in greater disarray today than at any time in our postwar history. The original concept of the Kennedy Round negotiations included specifically the Common Market's variable import levies on agricultural products; the viola- tion of U.S. rights under GATT implicit in the manner in which the border tax was being administered by Common Market countries in relation to U.S. exports; the separate violation of U.S. rights under GATT represented `by the use by Japan and the Common Market of nontariff measures such `as Japan's "adminis- trative guidance" `systems for controlling t'he allocation of exchange for use in purchasing im'ported products; the effect on the foreign `trade of the United States produced by the diversion of Japanese exports resulting from `the Com- mon Market's quantitative limitations against such exports. In fact, it was the negotiating plan to grant reductions in our industrial duties in exchange, at least, for an amelioration of `the variable import levies on agri- cultural commodities. We filed our exceptions list on `that theory; they were sparse in comparison with other countries' exceptions. The E. E. C. refused to make concessions on its variable agricultural levies; instead of walking away from `the agreement, `by `direction our negotiators signed it. The result is that the U.S. market was opened wider to imports of manufactured products from Japan and Europe, while U.S. agricultural interests were penalized by `the failure to improve access for exports of `agricultural products subject to `the Common Market's variable import levies system. We are confronted with the situation in which we have less favorable access to the principal markets for our goods than prior to the Kennedy Round, while our competitors have greatly increased access for their products `to the United States market. This has contributed to an average annual rate of increase of imports of 15 percent, compared with exports of only 6 percent. The significance of this position is underscored by the major change in `the competitive position of United States `products in .the U.S. and export markets which h'as resulted from `the great progress made by our foreign competitors in "ca;tching up" with our technology while retaining from the point of view of mar- ket costs the economic advantage of `the lower wages inherent in their lower standards of living. Against this background, it is difficult to place faith in the assumption which underlies the position of advocates of a "free trade" foreign economic policy for the United States. That assumption is `that the increased exports of the capital- intensive, technologically oriented export industries of the United States will create more jobs for American workers than are lost un'der the impact of increased imports of labor-intensive products. The `Trade Relations Council's `study released last year is responsive `to that point. At the time that report went to press, our data hank included reasonably complete data for 313 industries These accounted in 1966 for 64% of total em- ployment in `all U.S. manufacturing industries. They `supplied 85% of the value of~hipments of manufactured goods in 1966. Products like or competitive with the output of `these 313 industries accounted for 99% of tota'l U.S. import's of manu- factured goods in 1966, and of 85% of U.S. exports. Within this group of 313 in'dustries, there were 128 which experienced a balance of trade deficit in 1967. These accounted for 25% of total employment in all manufacturing industries in 1966, and for 29% of the value of sipments. Most significantly, however, imports of articles `like or competitive with the output of these 128 industries accounted for 65% of total imports of manufactured prod- ucts in that year, while the exports of these industries accounted for only 12% of total U.S. exports of manufactures. The balance of trade deficit of these industries in 1966 was equivalent, at the value of shipments per worker in these 128 industries, to a net loss of 367,552 jobs. Since the 128 industries preponderantly have comparatively `high labor- intensive ratios, it may also be said that the lost job opportunities represented lost employment opportunities for comparatively unskilled workers who, in manufacturing, are chiefly employed by such industries. The effect of foreign trade in the product categories of `these 128 industries on the U.S. balance of payments was even more `dramatic. Taking imports and exports at the values reported by the Department of Commerce, we had a foreign trade deficit of $9 billion in 1967in these products. In contrast, there is a separate group of 185 industries for which foreign trade has had `the opposite effect. This group accounted in 1966 for 39% of the total PAGENO="0064" 364 employment in all manufacturing industries, and for 56% of the value of ship- ments. Imports of products like or competitive with the output of these industries accounted for only 34% of total imports of manufactured articles in 1967, whereas these industries supplied 73% of total U.S. exports of manufactures in that year. Foreign trade in the product categories of these industries resulted in a for- eign trade surplus of $10.4 billion in 1967. Because the 185 industries are, in general, less labor intensive than the separate group of 128 industries previously described, the job equivalent of the foreign trade surplus in the product cate- gories of the 185 industries was equivalent in 1966 to 201,532 jobs, considerably smaller than *the job loss represented by the foreign trade deficit of the 128 industries. `Since that report was published, employment and output data for that year 1967 have become available, as well as foreign trade data for the years 1968 and 1969. Our data `bank will `be updated with these additional statistics. As is well-known, imports of manufactures continued to increase more rapidly than exports during the years 1967 through 1969. These trends will increase the job loss in labor-intensive industries and erase the balance of trade surplus in favor of the capital-intensive manufacturing industries. We expect to release our updated study in the near ftture. I have selected a group of basic manufacturing industries adversely affected by foreign trade developments in recent years and have updated the employment, output, and foreign trade data for these industries. These cases illustrate the basic fact that the United States favorable balance of trade in manufactured products, which exceeded $5 billion as the decade of the 1960s opened, has been sharply eroded by an average annual rate of growth of imports of manu- factures nearly twice that of our exports. Some of our basic manufacturing industries are suffering such a serious degree of import penetration that rising unemployment and financial instalibility for many firms in these industries are the consequences. U.S. imports of `manufactures are growing at an average annual rate of 15% nearly two and one-half times that of the growth of manufactured products in the Nation's GNP at 6%. The import penetration of manufactured products has doubled during the decade of the 1960s. When U.S. imports are valued in accordance with the practice of virtually all other developed countries, on their c.i.f. value, it will `be seen that the value of imports in 1969 exceeded that of U.S. exports by $551 million. When U.S. exports under the Foreign Assistance Act and Public Law 480' are sub- tracted from our export statistics, the commercial trade deficit becomes $2.2 billion. `So far as U.S. manufactures are concerned, therefore, `the rising tide of foreign trade `has not lifted all of the `boats. Those of the U.S. have been left behind. The dominant characteristic of U.'S. foreign economic policy as shown by this experience is that it is underbalanced and operates unfairly on U.'S. manufactur- ing industries by exposing them disproportionately to rising import competition while retarding them disproportionately in their access to world markets. Allow me to illustrate the effect of this inequity by sketching briefly the situa- tion of selected `basic U.S. manufacturing industries. THE STEEL INDUSTRY U.S. imports of steel rose to 13.62 million tons in 1969, a 71% increase from the period 1964-1965. Total growth of imports `averaged 18% per year, exceeding the average rise in imports of all manufactures. In 1969. we had an unfavorable balance of trade in steel of $843.5 million. For the steel industry, the average ad valorem equivalent of the post-Kennedy Round U.S. tariff is 6.9%, compared to 7.2% for the EEC and 9.6% for Japan. U.S. exports entering the EEC are subject to a `border tax. W'hen the double effect of the imposition of the duty rate to the c.i.f. value and the imposition of the border tax to the c.i.f. duty-paid value of U.S. exports is taken into account, the ad valorem equivalent of these aggregate `border fees is found to be 19.4%, in comparison with the total entry fees on German steel coming into the United States of 6.9%. In 1969, U.S. imports of steel accounted for 13.3% of U.S. consumption, up PAGENO="0065" 3665 from 8.5% in the base period, 1964-1965. Under the impact of the import rise, employment in the steel industry declined from an average of 657.3 thousand workers in 1965, to 643.4 thousand in 1069, and to 636.1 thousand workers in March 1970. THE TEXTILE INDUSTRY U.S. imports of textile articles rose to 3.6 billion equivalent square yards in 1969, a 102% increase from the period 1964-1965. Total growth of imports averaged 26% per year, far exceeding the average rise in imports of all manu- factures. In 1969, the United States had an unfavorable trade balance in textile articles of $1.3 billion. The average ad valorem equivalent of the post-Kennedy Round U.S. tariff on textile products is 18.8%, compared to 10.6% for the EEC and 11.4% for Japan. When the double effect of the application of the duty rate to the c.i.f. value and of the application of the border tax to the cA.f. duty-paid value of U.S. exports into the Common Market is taken into account, the ad valorem equivalent of these aggregate border fees is found to be 23.3%. There is little point in making a similar calculation in respect to Japan be- cause U.S. textile products are virtually excluded from importation into that country. Imports in 1969 accounted for 10.6% of domestic consumption of textile ar- ticles, compared with 7.1% for the first years of the application of the Inter- national Cotton Textile Arrangements. Under the impact of the heightened import rise, employment in textile mills and apparel plants declined from 2,419 thou- sand workers in March 1969 to 2,371 thousand workers in March 1970. THE FOOTWEAR INDUSTRY The U.S. imports of footwear rose to 283.5 million pairs in 1969, a 72% in- crease from the period 1964-1965. Total growth of imports averaged 18% per year, exceeding the growth rate for imports of all manufacturers. In 1969, we had an unfavorable balance of trade in footwear of $480.6 million. The average ad valorem equivalent of the post-Kennedy Round U.S. tariff on footwear is 11.1%, compared to 8.4% for the EEC and 10% for Japan. Exports to Japan are impracticable for the reason previously stated. When the com- bined effect of the use of the c.i.f. value and the imposition of border taxes to the c.i.f. duty-paid value of U.S. exports to the EEC is taken into account, the ad valorem equivalent of the EEC border charges is found to be 20.2%. In 1969, U.S. imports of footwear accounted for 28% of U.S. consumption, up from 16.9% in the base period. Under the impact of the import rise, employment in the footwear industry declined from an average of 260.5 thousand workers during the base period to 252.5 thousand workers in 1969, and to 243.8 thousand in March 1970. President Nixon has indicated he intends to pursue a preferential tariff sys- tem for the benefit of less-developed countries. The U.S. position paper in that matter indicated that the United States was prepared to enter into a system of tariff preferences for developing countries which would set preferential duties at zero but exclude from that preferential system textiles, shoes, petroleum, and petroleum products. THE CONSUMER ELECTRONIC PRODUCTS AND COMPONENTS INDUSTRIES U.S. imports of radios rove to 38.1 million sets in 1969, a 128.4% increase from the period 1964-1965. U.S. imports of TV receiving sets increased to 4.0 million sets in 1969, a 358% increase. In 1969, 49% of the radios and 77% of the TV sets imported into the United States were received from Japan. The value of imports of electronic components increased by 216% in 1969, compared with 1964-1965. The increase in imports of radio sets averaged 32% per year, of TV sets 89% per year, of components 54% per year-all vastly in excess of the average rise in imports of all manufacturers. In 1969, we had an unfavorable balance of trade in radio and TV receiving sets and in electronic components of $741 million. The average ad valorem equivalent of the post-Kennedy Round U.S. tariff is 7.6%, compared to 14% for the EEC and 12.4% for Japan, before any adjust- ment is made in the foreign rates for the fact that they are applied to the PAGENO="0066" 3666 c.i.f. value and that U.S. exports to the EEC are subject to the border tax, and to Japan, to a commodity tax. In 1969, U.S. imports of radios accounted for 73% of U.S. consumption, up from 44% in the base period. U.S. imports of TV sets in 1969 accounted for 31% of U.S. consumption, up from 8% in the base period. Under the impact of the import rise, employment in the industry producing radio and television receiving sets fell from an average of 161.7 thousand workers in 1966 to 153.2 thousand workers in 1969. Further, as the import rise has intensified steadily through 1969, employment dropped in January 1970 to 137.7 thousand workers, compared with the peak January employment in recent years of 175.2 thousand workers in January 1967. This intensification of the recent trend in imports has also affected employment in the components industry. In contrast to the consideration shown by the Executive Branch to the steel, textile, and footwear industries, the electronic products industry has not been the recipient of similar consideration. Its application for a partial withdrawal of past tariff concessions so as to restore the tariff level to 25% ad valorem in connection with the "open season" permitting such action in the latter half of 1969 under the provisions of Artic~e XXVIII of GATT, was rejected by the Special Representative for Trade Negotiations. Antidumping complaints covering TV receiving sets and the major classes of electronic components were filed in late 1967 and early 1968. In each of the~e cases, one or more of the Japanese manufacturers have been found at the staff level of the Bureau of Customs to have dumped electronic products exported to the United States. The Bureau of Customs accepted written assurances from the Japanese manufacturers that dumping would not be practiced in the future. Should these assurances be validated by the Treasury Department, and they have in two cases-resistors and transformers, the Japanese manufacturers will have been exonerated from long-continued dumping practices and relieved of the ob- ligation to pay antidumping duties. The Treasury Department seems not to understand the realities of the Japanese marketing strategy for the U.S. market. This strategy encompasses the following facts: (a) Japan uses its financial resources to support expanded production on an incremental pricing basis with the objective of buying increased shares of the export market; (b) This use of Japan's financial resources accepts low export prices, even below cost, as a justification for enhancing future profit margins as increased export market penetration supports ever-larger economies of scale in manu- facture; and (C) Japan's debt-levered pricing for exports constitutes "dumping" which is exonerated by Treasury Department practices. The gross inequity of U.S. tariff rates compared with those of Japan and the EEC and the total ineffectiveness of existing U.S. tariffs to regulate the rate of increase of imports of consumer electronic products and components have caused the majority of the principal U.S. producers of these products to shift their pro- duction overseas to low-wage nations in an effort to compete with Japan. These offshore operations have been facilitated by the duty-free treatment accorded "American goods returned" in the form of products assembled abroad from U.S. manufactured components. At the request of labor unions who strangely feel that the tariff policy for "American goods returned" rather than the basic tariff inequity which I have described is chiefly accountable for the transfer of production and jobs to foreign shores, the President has requested the Tariff Commission to investigate the effect of the operation of this policy. The ranking members of the Committee on Ways and Means have introduced legislation to repeal these tariff provisions. THE AUTOMOBILE INDUSTRY U.S. imports of automobiles rose to 1,847 thousand automobiles in 1989. a 237% increase from the period 1964-1965. Total growth of imports averaged 59% per year, far exceeding the average rise in imports of all manufactures. In 1969, we had an unfavorable balance of trade in automobiles of $2.4 billion. As a result of trade agreement negotiations, the average ad valorem equivalent of the post-Kennedy Round U.S. tariff on automobiles is 3%, compared with 11% for the EEC and 17.5% and 30% (depending on wheel base) for Japan. PAGENO="0067" 3667 Under the 1965 United States-Canadian Automotive Products Agreement, motor vehicles and parts move across the Canadian border free of duty. Imports from Canada are expected to stabilize at about 700,000 units per year. The principal growth in imports will come from Europe and Japan. U.S. exports of automobiles to the EEC are further inhibited by the effect of the unfair road taxes as well as the application of the tariff rate to the c.i.f. value and of the addition of a border tax based upon the c.i.f. duty-paid value. Access for U.S. automobiles to Japan is effectively denied not only by the high tariffs but also by the imposition of a commodity tax, the application of the tariff rates to the c.i.f. value, and the strict control of the use of foreign exchange through the administrative guidance system. In 1969, U.S. imports of automobiles accounted for 13% of U.S. consumption, up from 6% in the base period. As domestically produced new car sales declined in the latter half of 1969, influenced by the antiinflation program of the Ad- ministration, automobile Imports continued to rise, contributing in major part to the loss of 150,000 jobs in the transportation equipment industry in February 1970. THE CERAMIC TILE INDUSTRY Ceramic tile Is one of the comparatively rare industrial products to be spared reductions in duty in the Kennedy Round. The ad valorem equivalent of the U.S. tariff on ceramic tile is 23.5%, In comparison with an average rate of 8% in the EEC and 5% in Japan. Notwithstanding this, U.S. imports continue to rise. U.S. imports increased to 168.6 million square feet in 1969, a 24% rise from the period 1964-1965. In 1969, the United States had an unfavorable balance of trade of $38.1 million in ceramic tile. In that year, imports accounted for 34.3% of U.S. consumption, up from 30.7% in the base period. In the structural clay products Industry, of which the ceramic tile industry is a part, employment fell from an average of 69.5 thousand workers in 1964- 1965 to 64.6 thousand workers in 1969. By April 1970, employment bad declined to 59.8 thousand workers. THE INDUSTRY PRODUCING FLAT GLASS U.S. imports of flat glass rose to 554.7 million square feet in 1969, a 19% increase from the perIod 1964-1965. Glass manufacturing is labor intensive. Tariff concessions granted by the United States have reduced the average ad valorem equivalent of U.S. import duties on flat glass to 7%, compared with 5.6% in the EEC and rates ranging from 5% to 18% in Japan. Due to the c.i.f. basis for application of the foreign rates, and the addition of border taxes, the effective ad valorein equivalent of the EEC Import charges is 20% of the f.o.b. origin value of U.S. exports, com- pared with the 7% fob. origin border imposts levied by the U.S. on European glass. In 1969, the United States had an unfavorable balance of trade of $60 million in flat glass products. Imports in that year accounted for 23.3% of domestic consumption. In the sheet glass sector, U.S. imports in 169 accounted for 28.1% of domestic consumption, up from 24.4% in the base period. Under the impact of the import rise, employment in the domestic industries producing flat glass dropped in 1969 to 26.8 thousand, down from an average of 31.6 thousand workers for the base period. By March 1970, employment had fallen to 24.1 thousand. President Kennedy recognized that the U.S. tariff was too low. Following an escape clause finding of serious injury by the Tariff Commission in 1961, the President increased the tariff in 1962. In January 1967, President Johnson re- duced the level of the escape clause rates. In December 1969, the Tariff Commis- sion `issued a report in which three Commissioners found that the industry was being seriously injured `and found, further, that the tariff should be restored to `the pre-trade agreement level wthich is equivalent to 29.5% ad valorem. The President rejected `their finding that an increase in'the tariff is required. What `the Executive Branch of the Government `was willing `to do `by way of forbearance for the ceramic `tile industry in maintaining an effective level of duties in excess `of 20%, and what it has vigorously sought to do on behalf of the steel, textile, and footwear `industries `through the negstiation of `restraints on imports, It declined to do on behalf of the sheet glass industry. PAGENO="0068" 3668 THE TEXTILE MACHINERY INDUSTRY U.S. imports rose to $152.8 million in 1969, a 251% increase from the period 1964-1965. Total growth of imports averaged 63% per year, far in excess of the average rise in import's of all manufactures. In 1969, we had an unfavorable balance of `trade in textile machinery of $29 million. The average ad valorem equivalent of the post-Kennedy Round U.S. tariff on `textile machinery is 7.3%, compared with 5.2% for `the EEC and 7.5% for Japan. When the EEC `tariff is adjusted `to a c.i.f. value basis and the weight of the border tax is added, the average ad valorem equivalent of the `import charges imposed on textile machinery exported from the United States to `the EEC is found to be 16.3%. In 1969, U.S. imports of textile machinery, on a value basis, accounted for 21.4% of U.S. consumption, up from 7.6% in `the `base period. Under the impact of the import rise, employment in the textile machinery industry declined from an `average of 44.2 `thousand workers in 1965 `to 41.7 thousand workers in 1969. By March 1970, employment had declined to 38.7 thousand workers. THE BICYCLE INDUSTRY By 1969, the import volume `had increased `to 2.0 million bicycles, up nearly 100% from the period 1964-1965. Total growth of imports averaged nearly 25% per year. In 1969, `the United States h'ad an unfavorable balance of `trade in bicycles of $36.5 million. The average ad valorem equivalent of the post-Kennedy Round U.S. `tariff on bicycles is 10.3%, compared `to 17% for the EEC and 10% for Japan. U.S. exports of bicycles `to Europe are subject to import charges averaging 30.9% ad valorem when `the c.i.f. basis and `the `border tax are taken into account. In 1969, U.S. imports of bicycles accounted for 27.7% of U.S. consumption, up from 19.1% in `the ba'se period. THE HARDWOOD PLYWOOD INDUSTRY U.S. imports of hardwood plywood increased to 4.3 billion square feet in 1969, a 110% `increase from the `period 1964-1965. Total growth of imports averaged 28% per year. In 1969, we had an unfavorable ba'lance of trade in hardwood plywood of $245.9 million. The average ad valorem equivalent of `the post-Kennedy `Round U.S. `tariff on `hardwood plywood is 12.9%, compared with 13% for the EEC and 15% for Japan., The ad valorem equivalent of import charges applicable `to U.S. exports `of `hard- wood plywood into `the EEC is 29.2% of the fob. origin value compared with the U.S. tariff of 12.9%. In 1969, U.S. imports of hardwood plywood accounted for 72.2% of U.S. con- sumption, up from 53.4% in the base period. Under `the impact of the very high `and rising level of import's, employment in the veneer and plywood industry, of which `the `hardwood `plywood industry is a part, declined from 75.5 thousand workers in 1965 to 73.6 thousand in 1969. From 75.3 `thousand workers in Decem- ber 1968, employmerft dropped to 70.7 thousand workers in December 1969 an'd t'o 68.5 `thousan'd workers in March 1970. The a'bove indu'stries have been selected for discussion to illustrate `the `dilemma of U.S. manufacturing industries wthich find that `their domestic market h'as been opened up for unlimited access to foreign competitors while `the markets of those competitors `have been substantially denied to U.S. exports. The foreign economic policy issues which `have been exposed by `the discu'ssion `a'nd analysis presen'ted in this statement are as follows: 1. The `selective exchange of well-defined m'arket opportunities in the U.S. and foreign countries, which was the essence of Oordell Hull's reciprocal `trade agreements proposal, has not been realized. 2. Because the trade `agreement authority conferred upon the President was used as a species of foreign economic `aid rather `than as a commercial instrument to benefi't American industries pan passu with foreign industries, `the U.S. `share of world exports of manufactures has `declined, while foreign industries' share of U.S. consumption `of manufactured `articles has increased. 3. With the currency for `bargainin,g reciprocal trade advantage on behalf of the United States substantially dissipated by the essentially unilateral na'ture of past tariff negotiations, the United States is in a very difficult PAGENO="0069" 3669 position to advance its own commercial interests in the 1970s because it has little in `the way of bargaining power left `to use for such purposes. 4. The U.S. leadership/invincibility of U.S. export industries syndrome that has dominated the judgment of U.S. negotiators throughout the postwar era is contrary to the facts of international commercial life with which we are faced today. 5. Contrary to the philosophy of foreign aid-oriented trade agreement negotiating experts of the past two decades, the realities of international commercial life are that U.S. industry does not possess any significant technological advantage translatable into competitive cost advantages in comparison with its foreign counterparts. The outlook for the 1970s is that technologically dynamic, large-scale manufacturing enterprises in foreign countries, substantially financed and enriched by technological know-how by U.S. companies, will reap the economic advantage of the cost bias of the lower standard of living of foreign countries and dominate world trade in manufactured products. This dominance will extend to the progressive diminution of the U.S. share of world trade in manufactured products, and the continued and more rapid invasion of the U.S. market by foreign industries. This process is already well advanced. 6. There has been no coherent and consistent policy for the support of domestic manufacturing industries in this type of a contest comparable to the close liaison and effective support which Japan and the developed nations of Burope give their industries in competing for export markets. The aggregate expression of the above-described issues in foreign economic policy is that of a serious and pervading imbalance in our foreign economic policy concepts and administration which obscures or ignores the valid interests of domestic manufacturing enterprises and their employees. RECOMMENDATIONS My recommendation is that our foreign economic policy be significantly re- structured with the objective of securing a balanced consideration of domestic with foreign economic interests suitable for advancement in a strong and sus- tained way of t'he general welfare of the people of the United States. This advancement necessarily includes the creation of an economic climate for the strengthened operation of a broad diversity of U.S. manufacturing enter- prises within the United States; the protection and advancement of the inter- ests of American workingmen, allowing them reasonable opportuni'ties for the gainful utilization of the `broad range of native aptitudes and skills which are characteristic of the American ~vorkingmen; and a due regard for the continued fostering of the economic well-being of local manufacturing establish- ments throughout the United States. To accomplish these objectives, I make the following specific recommendations: First, as to the trade agreement negotiating procedure. One of the fundamental defects in the past has been that the people who in fact make the policy decisions as to what will be negotiated and bow it will be negotiated are not the persons who hear the representatives of domestic industry who come to present their case. With some limited exceptions, the hearing is conducted by an interagency panel of middle level civil servants who are not policymakers, and who sum- marize what they hear-and that summary may or may not be considered by the policymakers. Therefore, my first recommendation as to the trade agreement negotiating procedure is that those who make policy and negotiate the decisions also take the trouble directly to hear domestic interests in advance of the negotiations. Secondly, the United States Government must at long last reject the curiously ambivalent view it has of domestic indUstry that forces it to hold industry representatives at arm's length throughout the course of the negotiations. We are the only developed country in the world that does not have available to its negotiators accredited industry `advisers during `the course of the negotiations, and this is a reform that is long overdue. Second, as to the antidumping and countervailing duty remedies. Had these remedies been utilized as intended by the Congress, they might have prevented the abrupt shift in our `balance of trade in 1967, 1968, and 1969. The antidumping and countervailing duty remedies are a snare and a delusion and wholly un- successful. They waste the time and effort that industries devote to the occasional attempts to invoke their provisions. PAGENO="0070" .3670 Apparently on the basis of an informal accommodation made by our Govern- ment with J~apan in trade agreement negotiations in the 1950s and In the 1960s, and implemented by an informal commitment in the Kennedy Round, our nation displays special solicitude for dumping by Japan. The result is that the people who handle antidumping investigations are insensitive to the actual commercial realities of the problem. All doubts in dumping investigations are resolved in favor of the Japanese. Should perchance a finding of dumping slip through this process, the Treasury Department has almost uniformly in the past promptly accepted written assurances from the Japanese manufacturers not to continue the dumping. On the basis of those assurances, the dumping in- vestigations have been terminated. This practice has exonerated virtually all dumping by Japanese manufacturers in the past. It has provided no relief for the future. It is an abominable system. It has been strongly crticized by domestic industries. Two weeks ago, on May 27, the Treasury Department published a revision of its procedures in regard to the discontinuance of antidumping investigations. Henceforth, dumping investigations will be concluded on the basis of written assurances from the foreign manufacturers only when the margin of dumping is considered minimal in relation to the total volume of sales involved. In an- nouncing the change in Treasury's antidumping policy in accepting price as- surances, Assistant Secretary of the Treasury Rossides stated that the past practice "allowed foreign exporters to undercut the prices of their tJ.S. com- petition in American markets without undue concern for the possible con- sequences under the Antidumping Act." Domestic industries welcome this change in practice by the Treasury Depart- ment. However, in response to the Kennedy Round antidumping code, the Treasury Department changed the date from which appraisement of import entries is withheld in a dumping investigation. Under the Antidumping Act, 1921, and the Customs Regulations issued thereunder, the withholding of appraisement applied to import entries commencing on a date four months prior to the date on which the dumping complaint was filed. Currently, the withholding of appraisement applies to import entries on and after the date the notice is published. On the average, the difference of more than a year in time is involved in this change in practice. The foreign manufacturers involved in dumping investigations are notified by the Bureau of Customs prior to the publication of the notice of withholding. This gives them an opportunity to change their prices at the time the notice of withholding of appraisement is published. The significance of this practice under the Kennedy Round antidumping code is that a foreign manufacturer in reality will never be subject to the penalty of dumping duties for the imports which come into the United States at dumping prices. If and when the foreign manufacturer is caught in the act of dumping, the shifting of the effective date of the withholding of appraisement exonerates the foreign manufacturer from all dumping penalties up to the date of the notice. The manufacturer obviously will change his price as of the date of the notice of withholding. As a result of the U.S. acceptance of the Kennedy R~ound antidumping code, and Treasury's change in its dumping regulations pursuant to the code, the antidumping remedy has been converted into a shield to protect foreign manu- facturers who engage in dumping, rather than a sword to strike down the practice. In my opinion, the type of change which Treasury made in the dump- ing regulations in response to the Kennedy Round antidumping code is a viola- tion of the intent of Title II of Public Law 90-634 which instructed the Secre- tary of the Treasury to take the prc visions of the code into account "only insofar as they are consistent with the Antidumping Act, 1921, as applied by the agency administering the Act." Prior to the code, Treasury, the agency administering the Act, applied the provisions of the Antidumping Act so as to withhold appraisement from a date commencing four months prior to the filing of the complaint. Now it has changed that practice to the detriment of domestic industry. This is the type of change which it was forbidden to make by the Congress. As for the countervailing duty remedy, the Treasury Department has not had the fortitude to administer the countervailing duty statue since the emergence of practices in Europe on a widespread basis of remitting internal taxes on imports. Under the decisions of our Supreme Court, the remission of tax is PAGENO="0071" 3671 clearly a bounty or grant which should automatically be checked by the imposi- tion of countervailing duties. The practice is so widespread that if the Treasury Department tried forthrightly to administer the statute in accordance with its intent, countervailing duties would be imposed on virtually all manufactured imports from Europe and from Japan. The unwillingness to face up to the dimensions of the abuse of our foreign trade rights under GATT and other agreements, and the mandatory duty which rests upon the Treasury Department, should not excuse that Depart- ment, which is primarily concerned with our balance of payments deficit, from now beginning to act more realistically in the administration of that remedy. Third, as to the escape clause. The escape clause is incorporated into GATT. Article XIX of GATT uses language patterned after the escape clause in use in this country prior to the Trade Expansion Act of 1962. The Administration then in power urged an amendment of our domestic escape clause, which imposed a much more severe test than that in the GATT escape clause, and by that very act, freely gave away rights which we hold under GATT, which we bargained for at the time GATT was negotiated. It is a commonplace fact that the 1962 tariff adjustment provisions will not work. The Administration's bill now before the Congress, H.R. 14870, which on its surface seems to reform those provisions, would create a condition in which the burden of proof to be carried by domestic industries is even heavier than that under the present impossible escape clause. Under the present statute, a domestic industry must prove, as the second burden of proof, that increased imports are the major factor in causing it serious injury. This means that an industry must attempt to come up with quantitative proof showing that imports represented 51% or more of the causation. The Administration's bill would require that the domestic industry prove that increased imports are the principal cause of serious injury. Now, in order to demonstrate that one of a number of causes is the principal cause, you must be able to provide some quantitative measurement of all the causes, line them up in an array of some magnitude, quantitatively, and demonstrate that increased imports constitute the largest, quantitatively, of all of the various causes. This would so increase the burden of proof in escape clause cases that the condition of domestic industries suffering from import injury would be worse after the amendment of the escape clause than at present. A preferred approach is that set forth in Title II of your bill, Mr. Chairman, H.R. 16920, which provides the same standard of economic morality for indus- tries as it does for labor unions; namely, the burden of proof to be met for relief is that increased imports have been a substa'i~tial ca~&se of serious injury. The GATT escape clause only requires proof that the increased imports have caused, in whole or part, the serious injury-it need not be the major cause, nor even be the principal cause. But these are technical matt~rs. The major flaw in the escape clause is this: Congress has provided an expert body, an independent agency, which, but for the seven-year terms of its commissioners, is not directly subject to guidance by the political philosophy of the Administration in power. It is, therefore, for the long term more likely to be a consistent finder of facts than some branch of the Executive Department that must respond to the policy imperatives of the President. The Tariff Commission, as an expert body, by statute makes findings to deter- mine whether increased imports have caused or threaten serious injury and, under the statute, aso makes a finding as to the amount of tariff increase or imposition of quotas required to correct the injury. The vice of the present system is that after that expert body carefully con- ducts an exhaustive investigation, including public hearings, and makes its find- ing, the finding goes to the Executive Branch where it is virtually ignored. During the public hearings, the domestié industry representatives are subjected to cross examination by anybody that chooses to enter the case, and this usually includes representatives of at least five foreign countries. The apparatus for trade policy within the Executive Branch is such that every Department, in its foreign trade policy side, feels absolutely free to con- sider and find the facts afresh, as though the Tariff Commission had never given the matter consideration. In doing so, they conduct ex parte conferences with all of the interested parties who are anxious to overturn the finding of the Tariff Commission. PAGENO="0072" 3672 The result is that, in those few instances where the Tariff Commission has found injury from imports, the Office of the Special Representative for Trade Negotiations, fronting for an interdepartmental group, has recommended that the President not do what the Tariff Commission recommended. The Commerce Department is believed to be the only member of the interdepartmental group which has ever voted to accept the recommendations of the Tariff Commission, when it has found injury. In antidumping proceedings, in those instances where the Treasury Depart- ment makes a finding of dumping and the case goes to the Tariff Commission, and the Commission finds injury, that finding is sejf-executing under the law. The Trade Relations Council recommends that the findings of the Tariff Commission in escape clause cases also be self-executing, and be implemented automatically by the Secretary of the Treasury, just as in antidumping cases. With the reform of the escape clause, there would be some possibility that ad- justments could be made in the level of imports affecting major industries, so that some beneficial effect could be preserved in our trade interests for domestic employment and for our balance of payments. Fourth, as to the role of the Commerce Department in foreign trade policy. The Commerce Department has an insufficient role in foreign trade policy at this juncture. Among the Cabinet agencies, it is the most expert body to weigh and evaluate the force of influences in the foreign trade of the United States. It has the strongest interest to do so; yet, it has only one voice out of eight in the legal voting apparatus of the interdepartmental group, and it has no chance for its views to come before the President as the advice of his most expert Cabinet adviser on industry matters. Therefore, we recommend that there be established a Foreign Trade Board within the Executive Branch under the chairmanship of the Secretary of Commerce, with membership for the Secretaries of Agriculture, Interior, and Labor. These are the Cabinet officers directly concerned with domestic matters, ani with the impact of foreign trade developments on the domestic economy. Let that Foreign Trade Board articulate and present directly to the President a recommendation on foreign trade policies. Then let the Secretary of State arid the Office of the Special Representative present their own views separately to the President. In that way those Cabinet officials with a Constitutional responsi- bility for every segment of our domestic economy will have a direct channel to the President and an authoritative way of being heard. SUMMARY OF RECOMMENDATIONS In summary, therefore, the Trade Relations Council recommends: 1. Enactment of HR. 16920 with amendments to Title II to accomplish the following: (a) Make the findings of the Tariff Commission in escape clause cases final and self-executing. (b) Establish a Foreign Trade Board within the Executive Branch under the chairmanship of the Secretary of Commerce with membership for the Secretaries of Labor. Interior, and Agriculture, with jurisdiction to advise the President directly on foreign trade matters reserved by statute for the decision of the President. 2. Amendment of the Antidumping Act so that the withholding of appraise- mnent extends to imports entered from a date four months prior to the date upon which the antidumping complaint is filed with the Secretary of the Treasury. 3. Amendment of the countervailing duty statute to require that the Secre- tary of the Treasury impose countervailing duties on all imports which have received the benefit of the remission of value added and other internal taxes in the country of origin. The CHAIRMAN. Thank you, Mr. Stewart., for your very fine state- ment and your excellent delivery of it. WTe appreciate very much your bringiug these views to the commit- tee. I know they will be helpful to us. Are there any questions? Mr. Sehneebeli? PAGENO="0073" 3673 Mr. SCHNEEBELI. Mr. Stewart, I think we all agree you have given us a very hard-hitting statement. It certainly seems to be supported by the facts and very good logic. It was an excellent presentation but that is what we have come to expect of you. You have done such a good job up to this point and you continue to do a good job. I am very happy you gave us some specific ideas because we get a lol of generalizations. Your specific recommendations seemed to be very sound and we appreciate very much your coming to the com- mittee. It was a very fine statement. Mr. STEWART. Thank you, Mr. Schneebeli. Mr. SCHNEEBELI. Thank you, Mr. Chairman. The CHAIRMAN. Are there any further questions? If not, again we thank you, Mr. Stewart. Mr. STEWART. Thank you, sir. The CHAIRMAN. We appreciate you gentleman accompanying him to the table. (The following was received for the record:) LINCOLN & STEWART, Washington, D.C., June 19, 1970. Hon. WILBuR D. MILLS, Chairman, Ways and Means Committee, House of Representatives, Washington, D.C. DEAR MR. Mrr~~s: In my testimony before your Committee on foreign trade legislation on behalf of the Trade Relations Council of the United States, I pre- sented recommendations which included the "amendment of the countervailing duty statute to require that the Secretary of the Treasury impose countervail- ing duties on all imports which have received the benefit of the remission of value added and other internal taxes in the country of origin." In support of that recommendation, in my testimony I stated that, "Under the decisions of our Supreme Court, the remission of tax is clearly a bounty or grant which should automatically be checked by the imposition of countervailing duties." It may be helpful to you and the Committee to have a citution to the Supreme Court cases which I had in mind in making the above statement. You will ap- preciate that the key terms in the countervailing duty statute, Section 303 of the Tariff Act of 1930, are those emphasized in the following quotation from the statute: "Whenever any country 0 * shall pay or bestow, directly or indirectly, any bounty or grant upon the manufacture or uroduction or export of any article or merchandise 0 * 0, then upon the importation of any such article or merchandise into the United States, * whether such article or merchandise is imported in the same condition as when exported * * or has been changed in condition by remanufacture or otherwise, there shall be levied and paid, in all such cases * * an additional duty equal to the net amount of such bounty or grant, however the same be paid or bestowed." [Emphasis added] (19 U.S.C. 1303) Before discussing the Court cases, a brief treatment of the legislative history of the countervailing duty statute is in order. A. THE TARIFF ACTS OF 1890 AND 1894 Countervailing duties were first imposed by the Tariff Act of 1890. They were limited to imports of sugar from countries paying a bounty on exports. It is evi- dent from the legislative history, and the considerable history of the payment of export bounties on sugar, widely practiced in the latter part of the 19th Cen- tury and the early part of the 20th Century, that the provisions of the Tariff Act of 1890 were specifically limited to the imposition of a specific additional duty on sugar exported to the United States where a cash bounty on the expor- tation had been paid directly by the government concerned to the exporter of the sugar. See Congressional Record, Sept. 27, 1890, p. 10576, and Sept. 30, 1890, p. 10712. This specific countervailing duty on sugar was carried forward into the Tariff Act of 1894. The legislative history of that Act makes it abundantly clear that 46-127 0-70-pt. 13-5 PAGENO="0074" 3674 the object of the duty was sugar "imported from countries that pay an export bounty on their sugar." [Congressional Record, July 19, 1894, p. 7711] B. THE TAIUFF ATP OF 1897 In the Tariff Act of 1897, for the first time the counterv~ii1ing duty provision was made general, though it is evident that the legislators continued to have the export bounties paid by foreign countries on sugar primarily, if not exclusively, in mind. [Congressional Record, July 2, 1897, pp. 2203, 2225; see generally pp. 2203-2226] The legislative history of the 1897 Act shows that the bounties paid by foreign governments on sugar exported to the United States were definite; liquidated amounts per pound. [Ibid., pp. 2203-5; 2220-1] The fact that the sole concern of the Congress was the export bounties paid on sugar imported into the United States is important. Knowing that Congress bad in mind the direct payment by foreign countries of a specified sum per pound of sugar exported to the United States, we can more readily construe the words which Congress used in the 1897 Act, "pay or bestow, directly or indirectly, any bounty or grant upon the exports of ~ny article or merchandise." These words were carried forward into the Tariff Act of 1930 virtually unchanged. "Pay * * * any bounty e * C upon the exportation" meant to the Congress which chose those words the payme.nt at the time of exportation of a sum cer- tain on each unit of the merchandise exported. Further evidence of the dominant role which the sugar export bounties played in the formation of the Congressional purpose in 1897 is offered by the fact that during the debate prominent attention was given to the agreement reached by the United States and other countries in the International Sugar Conference of 1888 that the export sugar bounties paid by foreign countries could be countervailed by the United States. [Ibid., p. 2218] The practical necessity for the departure trom the specific countervailing duty of one-tenh of one cent per pound provided in the Acts of 1890 and 1894 was the action of Germany in 1890 of increasing its export bounty on sugar by 100 per- cent. [Ibid., p. 2218] Germany's action was quickly followed by other European producers in establishing or increasing their export bounties on sugar. [Ibid., p. 2221] The effect of the bounties paid on exports of sugar was a reduction in the prices charged for sugar in international trade. The purpose of the bounty was to enable the bounty-paying countries to dispose of their surplus sugar out- put in the world market at prices considerably below their home market prices. [Ibid., pp. 2222-3] The advocates of the 1897 Act understood that the payment of a specified sum per unit of product exported enabled that product to be sold to the United States at an unfair advantage over domestically produced sugar. They intended that the countervailing duty provision prevent this from occurring. Thus, Senator Caffery of Louisiana stated during the debate: "* * * ~ say, therefore, that in the keen competition of the world in the matter of sugar production an export bounty of 38 cents a hundred given by one country to give it superior advantages over another will enable it to destroy the products of its rival in the same line, and that is the ground upon which I put my action." [Congressional Record, July 2, 1897, p. 2224] The legislators also understood that the unfair advantage conferred by the payment of a bounty on exports resulted from the lowering of the foreign pro- ducer's cost of production by his receipt of the bounty payment. Senator Chandler of New Hampshire spoke to this point in his strong advocacy of the counter- vailing duty provision: "It is manifest that if protection is to be accomplished by imposing duties in the United States upon foreign products that shall equalize conditions of pro- duction to the home producers of any article of merchandise, and a particular duty is imposed for that purpose, or as one of the objects of imposing it. and in any foreign country an caport bounty shall be paid upon~ that article, then the cost to the foreign producer as against the honie producer is reduced just so much, and the equalizing of conditions has failed. (Emphasis added) "Apply the principle in this case. Manifestly if there is an export bounty upon German sugar. then the producer of German sugar has an advantage over every producer of sugar in every other country who wants to send it to the United States." (Congressional Record, July 2, 1897, p. 2224) PAGENO="0075" 3675 Even the opponents of the countervailing duty provision conceded that it was directed against the specific bounty payments made by foreign governments to their exporters of sugar. Senator Lindsay of Kentucky, an advocate of a tariff for revenue but not for protection, declared: "It is protection pure and simple, and it is resorted to for no other purpose, and can be explained upon no other hypothesis, than that it is to protect the American sugar industry against the unfair competition of the foreign sugar raisers who receive a bounty of 28 or 38 cents a hundred upon the exported sugars." (Congressional Record, July 2, 1897, p. 2225) C. SUMMARY OF THE 1897 5TATUTE The legislative history of the basic countervailing duty provision of law, as adopted in 1897, shows that Congress had a specific. and definite understanding of the type of conduct they wished to reach by the language chosen. They had the following conditions in mind: (1) The "article or merchandise" was sugar; (2) The bounty or grant consisted of the payment of a definite sum of money per unit of product exported [28 to 38 cents per hundred pounds of sugar]; (3) This payment was made to the exporter at the time of the exportation; (4) This payment was in fact received by the exporter and thereby lowered his cost of production on the merchandise exported; (5) As a result, the exporter was able to lower and did lower the price of the merchandise for export, giving him an unfair competitive advantage over U.S. producers, D. THE TARIFF ACTS OF 1913, 1922, AND 1930 The countervailing duty provision of the 1897 Act was carried forward virtually unchanged into the Tariff Act of 1913. [H. Rept. 5, 63d Cong., 1913, pp. XLI, LII There was very little debate on the provision, and the remarks made in- dicated that it was still intended by the Congress as a remedy against bounties paid on exports of sugar to the United States. By 1913, Russia had replaced Germany as the worst offender. [Congressional Record, May 7, 1913, p. 1336] The provision was carried forward into the 1922 Tariff Act with minor amend- ments making it applicable to bounties or grants on manufacture or production,. as well as on exports. This was not deemed to be a change in substance. Bounties paid by private persons and organizations were made subject to the Act. [Congressional Record, April 24, 1922, p. 5874] The Tariff Act of 1930 carried forward the countervailing duty provision with the main substance of the 1897 Act still intact. An amendment was added au- thorizing the Secretary of the Treasury to estimate the net amount of the bounty or grant. [H. Rept. 7, 71st Cong., 1929, p. 159] Since the main structure and language of the 1897 statute are contained in Section 303 of the Tariff Act of 1930, the meaning given to the words used by the Congress in 1897 remain a vital part of the interpretive tools of the present statute. During the debate on the 1930 Tariff Act in the Senate, an exchange took place which throws some additional light on the understanding of that Congress of the meaning of the term "bounty or grant." During the consideration of the specific duty provided in the tariff schedules for maple sugar and maple syrup, Senator Harrison offered an amendment which would have lowered the rates. His contention was that the rates in the bill before the Senate had been in- creased in the Committee of the Whole on the ground that Canada imposed a bounty on the production of maple sugar and maple syrup. Senator Harrison took the position that no such bounty existed in fact; therefore, he wanted the rates of du.ty reduced. (Congressional Record, March 14, 1930, p. 5271) Senator Smoot. in charge of the bill for the Committee, acknowledged that there was not a direct bounty, "but what amounts to a bounty." (Ibid., p. 5271) Senator Dale, also a member of the Finance Committee, interposed to state: When the bill was under consideration, dealers in maple products did state before the committee that there were inducements made by the Cana- dian Government under which the producers of sugar were greatly helped. PAGENO="0076" 3676 That is what they call a bounty. * * This letter is from the Canadian legation, and goes on further to state: "It is desired to point out that the activities and cooperation extended to the maple-sugar industry by the provincial authorities of the Province of Quebec is solely for the purpose of improving the quality of the products of that industry, particularly with a view to the production of grades lighter in color." Of course we concede that, but it has the same effect. They state in that very letter that the Government is helping the producers, and they give the reasons for the help; but that reason does not change the fact. It has the same effects as a bounty. (Emphasis added) (Senator Dale referred to documents in the Committee's possession estab- lishing that the Province of Quebec had given loans and bonuses to producers.) They may not be bounties, but they are loans and bonuses, and this is exactly what the officials of Canada say they are doing. Taken with our low duty, that is largely the reason why the importations of maple sugar have so greatly increased and why the production on this side of the line has de- creased." (Congressional Record, March 14, 1930, p. 5273) (Emphasis added). Senator La Follette then suggested that if it were to be assumed that the governmental grants and loans made to the Canadian maple sugar producers were a bonus or bounty, the countervailing duty provision of the bill (present Section 303) would be relevant. He promptly stated his opinion, however, that the moneys expanded to improve the quality of the Canadian products were not a bounty or grant. Subsequently, Senator Fess stated: I also recall what the chairman of the committee stated. He used the word "bounty," but if there is assistance afforded under a different name than bounty, of course the result would be the same. I take it for granted, how- ever, that there is no bounty granted, according to the technical meaning of the word. (Emphasis added) "Mr. HARRISON. Absolutely not. "Mr. PESS. I think that is correct." (Congressional Record, March 14, 1930, p. 5274) Thereafter, the Senate retained the high rates of duty which the Committee had premised upon the fact of the payments made to Canadian producers by the Province of Quebec. In view of the reference to the countervailing duty pro- vision of the bill during the debate, and the colloquy, above quoted, indicating the opinion of those playing a leading role in the debate that the bonuses and loans did not satisfy the technisal meaning of the countervailing duties statute, this legislative action shows that not every payment of moneys to foreign pro- ducers by their government can be considered the payment of a bounty which is subject to countervailing duties. And this is true even though the bonus payment program may, as in the case of maple sugar and syrup, stimulate increased exports to the United States. This insight into the understanding of the 1930 Congress of the term bounty or grant paid upon e~vperts is instructive in the Committee's consideration of the efficacy of the countervailing duty statute. It shows that something more than the payment of moneys by the government to foreign manufacturers is required to bring the action within the provisions of the countervailing duty statute, even though such payments are accompanied by increased exports to the United States. JUDICIAL INTERPRETATION OF THE LAW Against this background of legislative history, let us consider now the judicial interpretation of the countervailing duty statute. "Bounties" exist for many purposes. Those paid upon exports are but one of the many uses of bounty payments by governments to achieve public purposes. The Supreme Court defined the term, subsequent to its use in the Tariff Act of 1897, as follows: Bounties granted by a government are never pure donations, but are al- lowed either in consideration of services rendered or to be rendered, objects of public interest to be obtained, production or manufacture to be stimu- lated, or moral obligations to be recognized. Smith v. Allen, 173 U.S. 389, 402. Establishing the fact that a bounty has been paid does not, therefore, dispose of the issue presented in a countervailing duty case. It would be necessary to PAGENO="0077" 3677 go beyond the mere finding that a bounty has been paid and to determine for what purpose the bounty is paid. The countervailing duty statute requires that the bounty be paid or conferred upon production or ewportation. The specific meaning given those words by the statute is that the bounty is upon the production or exportation of an article when it is paid to the producer who exports it, under circumstances where the amount of the bounty is measured by the number of units exported. The Supreme Court construed the countervailing duty provision of the 1897 Tariff Act in Downs v. United States, 187 U.S. 49G; At issue was Russia's export bounties on sugar. The Court discussed the general meaning of the word "boun- ties," apart from its statutory context. It found that "bounties" may be: Direct, as "where a certain amount is paid upon the production or exportation of particular articles" [e.g., U.S. sugar bounties and customs drawback]; or. Indirect, as `~by the remission of taxes upon the exportation of `articles which are subjected to a tax when sold or consumed in the country of their produc- tion" [e.g., the U.S. remission of internal revenue taxes on distilled spirits which are exported]. [187 U.S. at 502] In the Downs case, the Court found that the Russian exporter of sugar ob- tained a certificate from the government upon exportation of sugar, solely be- cause of the exportation. These export certificates had monetary value in the markets of Russia. That monetary reward was held by the Court to be a bounty requiring the imposition of countervailing duties. In Nicholas & Co. v. United States, 249 U.S. 34, the Supreme Court had occa- sion to construe the countervailing duties section in the 1913 Tariff Act. Whiskey and gin imported from Great Britain with the benefit of a monetary allowance paid on each gallon of exported spirits were involved. The Court stressed that the essential requirement of the countervailing duty statute was a conferring of something by a country npoa the enportation of an article or merchandise. The Court laid down the rule that `two things must be considered in determining the applicability of the countervailing duty statute: 1. The fact that the grant is made at the time of exportation and only upon exportation, * * * 2. The event, that the spirits may be sold cheaper in `the United States than in the United Kingdom, and necessarily there may be that aid to their competitive power. (Emphasis added) (249 U.S. at 39) The Court held that the monetary allowance granted at the time of exporta- tion on each gallon of spirits exported vas the payment of a bounty upon ex- portation which, under the statute, was subject to countervailing duties. It stated: We have the fact of spirits able to be sold cheaper in the United States `than in the place of their production, and this is the result of an act of gov- ernment because of the destination of the spirits being a foreign market. For that situation [the statute] was intended to provide. (249 U.S. at 39, 40) The several decisions of the U.S. Court of Customs and Patent Appeals constru- ing the countervailing duty statutes add'~ nothing of substance to the principles developed by the Supreme Court in the cases discussed above. An actionable bounty under the countervailing duty statute must be capable of ascertainment in relation to the number of units comprising the particular exportations deemed to be subject to the Act. See Franklin Sugar Refining Co. v. United States, 1 Ct. Cust. App. 242, and United States v. Franklin Sugar Refining Co., 2 Ct. Cust. App. 110. Those cases involved the bounty paid by Germany of 2.5 and 2.4 Marks per 100 kilograms of sugar exported. The issue was whether the bounty (and, hence, the countervailing duty) should be computed `on the basis of the export weight, or on the weight found at the time of importation (sugar being subject to some shrinkage in transit). The court found the latter to be the correct weight. In Nicholas ~ Co. v. United States, 7 Ct. Oust. App. 97, aff'd, 249 U.S. 34, the court declared that the "plain, explicit, and unequivocal purpose" of the counter- vailing duty statute [there, the 1913 Act] is as follows: Whenever a foreign power or depen'dency or any political subdivision of a government shall give any aid or advantage to ecvporters of goods imported into this country therefrom whereby they may be sold for less in competition with our domestic goods, to that extent by this paragraph the duties fixed in the schedule of the act are increased. It was a result Congress was seeking to equalize regardless of whatever name or in whatever manner or form or for whatever purpose it was done. (Emphasis added, except for "result") (7 C.C.P.A. at 106) PAGENO="0078" 3678 This forceful construction of the statute emphasizes two bask prerequisites for the application of countervailing duties. These prerequisites are as follows: (1) the `said or advantage to exporters' and (2) the requirement that the exported goods may be sold for less in competition with U.S. goods as a result of the conferring of the "aid or advantage to exporters" by the challenged government policy. The court has followed its Nicholas cC Co. decision in later cases construing the countervailing duties provision in the Tariff Act of 1930. F. W. Woolworth Co. v. United States, 28 C.C.P.A. (Customs) 239, 249; Robert E. Miller ci Co., Inc. v. United States, 34 C.C.P.A. (Customs) 101, 105. Export prices below home market prices are not necessarily the result of the conferral of a bounty or grant, if a difference in quality in the product sold in the two markets contributes to the difference in price. Energetic Worsted Corp. v. United States, 53 C.C.P.A. (Cus- toms) 36, 45, CAD. 874. The court's decisions in Nicholas, Woolworth, and Miller, supra, establish that the changes in language which have occurred in the statute since 1897 have not changed Its meaning. Therefore, the Supreme Court decisions discussed above continue to be the authoritative construction of the statute. SUMMARY OF JUDICIAL INTERPRIFIATION OF THE LAW Under the settled judicial construction of the countervailing duty provision, the conditions which must be found to exist as a prerequisite to the assessment of countervailing duties exist in regard to the remission of Internal taxes by foreign countries (for example, the countries of the European Economic Com- munity) on exports to the U.S.: (1) The benefit extended by the foreign government in the form of remission of Internal taxes is uniformly conferred on exporters; (2) The payment of the benefit is made at the time of exportation or solely because of the exportation; and (3) The benefit conferred in the form of a remission of internal taxes enables the exporters to sell products to the United States below the price at which such articles are available in the country of origin. CONCLUSION The practice of foreign countries, including the countries of the European Economic Community, in remitting internal taxes on exports destined to the United States is clearly equivalent to the payment or bestowal of a bounty or grant directly or indirectly upon the exportation of articles for importation into the United States. Consequently, within the letter and intent of the judicial inter- pretation of the countervailing duty statute, countervailing duties may validly be imposed on such imports. Respectfully submitted, EUGENE L. STEWART, General Counsel, Trade Relations Council of the United States. The CHAIRMAN. Our colleague from Nebraska, the Honorable Dave Martin, will be the next witness before the committee today. We are glad to have you with us; you may proceed with you statement. STATEMENT OP HON. DAVE MARTIN, A REPRESENTATIVE IN CONGRESS PROM THE STATE OP NEBRASKA Mr. MARTIN. Mr. Chairman and members of the committee, I thank you for the opportunity to appear before you today on the subject of amending the law relating to limitations on meat imports, as proposed in H.R.. 6516, which I introduced and sponsor in this Congress. I urge the swift approval of this legislation in the interest of pro- tecting the American livestock producer, individually and collectively, and to preserve this industry as `a completely independent segment of our American economy. PAGENO="0079" 3679 As members of the committee know, from information compiled by the Department of Agriculture, imports of beef have `a definite rela- tionship to the price of cattle in the United States. American cattle- men are the last free and completely independent segment of our American economy. They do not want Government controls, nor do they want price supports. And yet, if current trends of imports of beef into the United States `are continued in fu'ture years, it is almost a certainty that Government programs will be initiated to regulate the production of meat in the United States, `and provide `another costly price support `and subsidy program. I feel `strongly that the American cattlemen `are entitled to protec- tion from foreign imports by our Government. Not only are they en- titled to this, but they need such protection now if they are to succeed in the years ahead. We know that the American livestock producers are capable of producing the meat that is needed and th'at will be needed for consumption in the United States in the years ahead. But, if they are continually made to compete with va'st foreign imports of meats, they cannot be expected to `be `able to continue to produce. Where they now have the capacity `to expand as consumption expands, to meet the test of supply and demand, they will not be `able to do so if they are gradually priced out of business by foreign imports. Mr. Chairman, imagine if you will, the possibilities of the long- range effect the'se stepped-up imports of beef might `have on the United States. As American cattlemen have to fight the price wars of cheaper produced foreign meat imports, more and more will go out of business. As more `and more go `out of business, and `as U.S. production of meat decreases, foreign imports will inôrease-at least they will have to in- crea'se to meet the need. And, `as more and more imports come in, more and more American producers will be priced out of the market. But, `then what is to happen? Can we sit `here today and say th'at foreign countries `currently importing meat into the United States will be able to `supply the total market we now have, `at reasonable prices? `Will `the foreign countries be able; for instance, to supply beef to the United States `at `a rate of more than 23 billion pounds this year, `and 25 billion pounds by 1972, `and 30 to 35 billion pounds by 1980? Can we honestly `believe that these foreign countries `alone can `supply `such meat to the United `States, while `at the same time their own consump- tions and demands are increasing? And, if so, at what price will this meat, certain to be in mu'ch more `demand by 1980, be selling for in the United States? Mr. Chairman, I pose these questions which now hardly seem rele- vant, because they are very real questions we should consider before we continue to give licensure to foreign imports of meat that threaten this very important industry in the United States. It is time that we give first consideration to American industry and to the American taxpayers rather than consideration~of our image in the eyes of foreign countries, particularly when this well-meaning intention of ours may well have a boomerang effect on our country `by result of our inability to provide our own food after having been the most productive nation in the world in meat. T well realize that we now have enacted into law, limitation on meat imports into the United States. It is this very law with which we are PAGENO="0080" 3680 now concerned and with which the legislation I have introduced and support is concerned. The legislation is necessary because of the con- text of the present legislation, and the high imports it now allows that threaten our American cattle industry as I have discussed. By virtue of the exclusion of certain types of meat, certain classifi- cations, and by the formulas we have devised for setting new and higher annual import allowances, the current legislation does not in fact have the concern of the American livestock producer at heart. WTith this in mind, Mr. Chairman, I would like to present statistics showing the huge increases of meat imports, particularly beef and veal, in recent months and years, making comparisons, and reflecting consumption changes and comparisons. I have provided tables `here based on information of the Depart- nient of Agriculture, to provide easy reference to increase and figures discussed. In examining the vast increases in imports, I will cover six areas: (1) meat imports presently subject to quota restrictions: (2) comparisons of 1970 quota meat imports for the first 4 months of this year; (3) imports of prepared and preserved and other meats not presently subject to meat quota restrictions; (4) total import figures, 1965 through 1969, including quota, nonquota and Canadian imports; (5) TJ.S. beef consumption and percentages of foreign imports; and (6) imports from Canada as they relate to increasing activities by importing countries to bypass US. quota agreements and restrictions. Mr. Chairman, it is plain to see from table I how much imports of meats subject to quota restrictions have increased over the years. But, what the chart does not show, is that 1969 imnorts of meat subject to import quota restrictions came close to triggering quotas. (The table referred to follows:) TABLE I -TOTAL IMPORTS, QUOTA RESTRICTION MEATS, 1959-63 AVERAGE TO 1969 (INCLUDING ANNUAL INCREASES, TOTAL INCREASES, AND PERCENTAGE INCREASES) [In million pounds product weightJ Increase over Percent 1969 increase over Percent Total Annual Percent increase each increase Year imports increase increase average 1969 1,084. 1 83. 1 8. 30 361.9 50. 11 1968 1,001.0 106.1 11.86 278.8 38.60 83.1 8.30 1967 894.9 71. 5 8.68 172. 7 23.91 189.2 21. 14 0966 823. 4 209. 2 34. 06 101. 2 14. 01 260. 7 31. 66 1965 614.2 -125.7 -16.99 -108.0 -14.95 449.9 76.51 1964 739. 9 17. 7 2. 45 17. 7 2. 45 344. 2 46. 52 1959-63 average 722.2 361.9 50.11 Note: Average annual increase since 1959-63 average, 8.06%; Average annual increase since 1965, 15.73%; Average annual increase since 1966, 9.61% Mr. MARTIN. The base quota for 1969 was 988 million pounds product weight, and the 110 percent adjusted base for triggering quotas was 1,086.8 million pounds. The Department of Agriculture, from its first through its fourth and final quarterly estimate in 1969, had estimated total imports for the year at 1,035 million pounds. This estimate was 51.8 million pounds below the amount-maximum-that would have triggered quotas. However, the total of meats subject to quotas restrictions actually imported for the year, by year's end had reached 1,084.1 million pounds-just 2.7 million pounds below the quota trigger maximum PAGENO="0081" 3681 of 1,086.8 million pounds allowed for the year, and nearly 50 million pounds more than the USDA estimates for the year. Mr. Chairman, from table II, which compares quota meat imports for the first 4 months of 1970 with the first 4 months of 1969, it is obvious that imports of meats into the United States in 1970 could reach as much as 20 percent more than in 1969, and than is presently allowed under import meat quota restrictions. The situation would, of course, require the imposition of quotas by the Secretary of Agricul- ture and the Federal Government, on importing nations. (The table referred to follows:) TABLE Il-U.S. IMPORTS OF MEAT SUBJECT TO MEAT IMPORT LAW,1 JANUARY-APRIL 1969-70 WITH COMPARISONS Comntry of origin April January-April Percentchange from 1969 1969 (1,000 pounds) 1970 (1,000 pounds) 1969 (1,000 pounds) 1970 (1,000 pounds) April (percent) January- April (percent) Australia New Zealand Mexico Canada Costa Rica Ireland Nicaragua Guatemala Honduras Panama Dominican Republic Haiti 39, 753 26, 361 4, 957 3, 268 2,564 5, 355 3, 168 1,823 1,223 184 943 73 39, 982 13, 693 8, 816 7, 420 5,009 4, 176 3, 574 2,757 1,467 830 690 193 138, 172 71, 263 25, 325 13, 177 13,049 16, 056 15, 522 9,220 7,768 1,794 4, 734 482 202, 680 65, 038 37, 249 25, 237 19,699 27, 137 17, 377 12,030 11,844 3, 506 2, 712 419 +. 6 -48. 1 +77. 8 +127. 0 +95.4 -22. 0 +12.8 +51.2 +20.0 +351.1 -26.8 +164.4 +46.7 -8.7 +47. 1 +91. 5 +51.0 +69.0 +12. 0 +30.5 +52.5 +95.4 -42.7 -13.1 United Kingdom 332 103 1,864 965 -69.0 -48.2 Total - 90,004 88,710 318,426 425,893 -1.4 +33.7 1 Fresh, frozen and chilled beef, veal, mutton and goat meat. Excludes canned beef and other prepared or preserved beef products. Mr. MARTIN. The Agriculture Department has reported quota re- stricted meat imports of 425.9 million pounds product weight for the first 4 months of 1970, which includes the two normally low import months of January and February. The adjusted base quota for the year-the amount which would trigger quotas-is 1.099 billion pounds, and the Department of Agriculture estimates for-the year are 1.062 bil- lion pounds. It is also to be noted that during the first 4 months of 1969, we were experiencing dock strikes on the Atlantic and gulf coasts, which no doubt kept imports down at that time. Otherwise, we should probably have had to trigger quotas by year's end. Mr. Chairman, what table II shows, is that with 425.9 million pounds of quota meat imports for the first 4 months-the first one- third-of 1970, we have already reached 39.3 percent of the total 1969 imports, 38.8 percent of the 1970 adjusted quota that would trigger restrictions, and 40.1 percent of the Department of Agriculture esti- mate for the year. At this rate, if the final two-thirds of the year were to have about the same amount of imports-assuming no imposition of quotas- total imports in 1970 would reach 1,277.7 million pounds of import quotas meats. That would be 193.6 million pounds, or 17.9 percent above the actual total 1969 imports; 178.7 million pounds, or 16.3 per- cent above the 1970 adjusted quota; and 215.7 million pounds, or 20,3 percent above the 1970 estimates. PAGENO="0082" 3682 Turning our attention now to imports of prepared and preserved meats, and canned and others from Canada, which are outside the quota restrictions, from table III we can see that these nonquota imports have risen nearly 60 percent in the last 5 years-from 115.5 million pounds in 1965, to 184.3 million pounds product weight in 1969. That is an average annual increase of 13.3 percent. (The table referred to follows:) TABLE III.-NONQUOTA MEAT IMPORTS (BEEF AND VEAL, CANNED, PREPARED, PRESERVED, AND FROM CANADA) [In 1,000 pounds product weight] Year Annual Percent Increase Percent Amount increase u change from 1965 change 1965 1966 1967 1968 1969 115,464 128,433 12,969 +11.23 12,969 11.23 137, 266 8, 833 +6. 88 21, 802 18. 88 187,655 50,389 +36.71 72,191 62.52 184,309 -3,346 -1.76 68,845 59.62 1 Average annual increase since 1965 equal s 13.26 percent. Mr. MA1rnN. I would just comment here that the slight decrease of 3.3 million pounds in 1969 from 1968, is probably accounted for in most part by those same dock strikes during the first half of last year. These imports will, without a doubt, be substantially larger this year. Already for the first 4 months of this year, they totaled 61,478,000 pounds compared to 49,235,000 for the first 4 months of 1969. Mr. Chairman, in the table III figures, we are looking at meat imports that are virtually unrestricted-dependent solely on demand and consumption, and without any form of restriction for import by the United States. Table number IV combines quota restriction meats and nonquota meats, to give the totals of meat imports into the United States for the years 1965 through 1969. With regard to quota meats, it is sig- nificant to note that except for the rather large increase in imports from 1965 to 1966, mutton and goat meat imports have remained about the same in recent years, at least without any large increases. How- ever, with beef and veal, this is not the case, and increases have ranged from less than 10 percent to more than 30 percent, annually. Compar- in~ all imports during this period, quota and nonquota-which is primarily all beef and veal-increases have ranged from less than 10 percent to more than 25 percent. From 1965 to 1969, total beef and veal imports have increased by 73.6 percent, with an average annual increase of 15 percent. (The table referred to follows:) TABLE IV.-TOTAL MEAT IMPORTS-QUOTA (ALL TYPES), NONQUOTA (INCLUDING FRESH, FROZEN AND CHILLED FROM CANADA, AND ALL OTHER BEEF AND VEAL, CANNED, PREPARED, PRESERVED), 1965 TO 1969 [In million pounds, product weight] QUOTA RESTRICTED MEATS Year Total Mutton and goat Beef Veal Beeffveal total Annual increase Percent increase 1969 1968 1967 1, 084. 1 1,001.0 894.9 54.2 62.0 54.3 1, 004.2 920.8 826.3 25.7 18.3 14.2 1, 029. 9 939.0 840.6 90.9 98.4 77.7 9. 7 11.7 10.2 1966 823. 4 60. 5 740. 9 22. 0 762.9 179. 0 30.7 1965 614. 2 30. 3 565. 1 18.9 583. 9 PAGENO="0083" Total Year Nonquota beef/veal Annual increase Percent increase Increase fr9m 1965 Percent increase 1969 184.3 1,214.2 87.5 7.8 514.8 73.6 1968 187.7 1,126,7 148.8 15.2 427.3 61.1 1967 137. 3 977. 9 86. 6 9. 7 278. 5 39. 8 1966 128.4 891.3 191.9 27.4 191.9 27.4 1965 115.5 699.4 Note: Average annual increase of beef and veal imports equals 15 percent. Mr. MARTIN. Again, we know that these imports, quota, nonquota, and total, are going to continue to increase under the existing situations. Mr. Chairman, in all of the: previous discussion and use of table concerning U.S. meat imports, we have been dealing with the subject of imports specifically as they are compared from one year to the next, and in terms of import increases. This has suited our purpose in view- ing the changes in imports into the United States, without any direct relation to the total meat situation within the United States. I believe, however, that comparisons and analysis should not stop with single import figures. If we are to have a true perspective of the relation of imports to domestic meat figures, consumption and related criteria, we need to make still a further comparison. This I have done in table V. For this comparison, to get this true perspective of the effect of meat imports on the entire U.S. meat situation, I have compared imports with U.S. beef consumption, and shown how much of the beef consumption in the United States these imports represent. Again, I have used U.S. Department of Agriculture figures. For 1965 and 1969 comparisons, the Agriculture Department uses popula- tion figures for the civilian population of the 50 States. And, since total and average consumption figures are maintained by carcass weight, the imports for these years are also presented in carcass weight figures. Furthermore, by using carcass weight figures, the Agri- culture Department is able to separate total mutton and goal meat imports from beef and veal, with which we are concerned in terms of beef consumption in the United States. (Table V follows:) TABLE V-U.S. BEEF CONSUMPTION: 1965-69, AND PERCENT OF FOREIGN IMPORTS IMPORTS: MILLION POUNDS CARCASS WEIGHT Mutton Quota Non- and Percent Year meats quota Total goat increase Beef and Percent veal increase 1965 842.2 159.3 1,001.5 59.9 1969 1, 502. 7 246. 3 1, 749. 0 108. 4 81. 0 941.6 1, 640. 6 74. 1 U.S. BEEF CONSUMPTION Total, billion pounds carcass weight Pounds per person, carcass weight Year With veal Without veal With veal Without veal 1965 20. 054 19. 056 1969 22. 786 22. 107 104, 5 99. 3 114.1 110.7 3683 NONQUOTA MEATS, AND TOTALS PAGENO="0084" 3684 BEEF IMPORT PERCENTAGE OF U.S. B EEF CONSUMPTION Percent increase of U.S. Year With veal Without veal consumption (with veal) 1965 1969 4.7 7.2 4.9 7.4 53.2 Note: Percentages in the without veal" column above include figures with veal imports; where these are not main- tained or recorded by U.S.D.A. separately from boot in nonquota import figures. Mutton and goat consumption figures are not included because they are not of primary or direct concern to beef and veal imports for consumption, and because consumption figures for mutton and goat are not maintained by U.S.D.A. Mr. MARTIN. You will note in table V, that beef and veal imports into the United States have increased by 74.2 percent carcass weight, from 1965 to 1969. And, from the beef import percentage of beef con- sumption listing, you will note that beef and veal imports into the United States in 1965 made up 4.7 percent of the consumption of beef and veal in the United States that year. In 1969, imports made up 7.2 percent of this consumption-and, that is an increase of 53.2 percent of import meat in total U.S. beef a.lld veal consumption. From earlier discussion, it becomes quite clear in these figures, that foreign meat imports may indeed one day take over the bulk of meat production for the United States. Imports are continuing, their re- spective percentages of U.S. consumption are jumping by leaps and bounds, and we have nothing to make us believe that this activity will be curtailed, by existing laws pertaining to imports. Mr. Chairman, the final table, No. VI, shows meat import figures for the United States from Canada., for the years 1965 through 1969, and for the first 4 months of 1970. I have included this table, with figures from this one country, because this country is singular among meat-importing nations. As you know, the United States does not have voluntary import restriction agreements with Canada. As such, that country does not have a quota restriction on the amount of meats it can import into the United States. Now, this discussion is not concerned with the merits of having or not ha.ving such an agreement with Canada, except that because of this situation at present., another most serious problem `has deve'oped concerning meat imports into the United States. That, Mr. Chairman, is in the so-called bootlegging of meat imports into the United States-the third-country shipments, the direct im- portation of meats into the United States by quota restricted nations that ship these meats to the United Staets, through Canada, and thereby bypass their respective quota agreement restrictions. In such cases, where these meats are not identified by country of origin, they are statistically recorded for the purpose of total meat imports, as being shipments technically from Canada. And, they are consequently re- flected in the nonquota restricted imports, which include imports from Canada of fresh, chilled, and frozen meats, along with the nonquota types of canned, prepared, and preserved meats. PAGENO="0085" 3685 (Table VI follows:) TABLE VI.-U.S. MEAT IMPORTS FROM CANADA [In million of pounds, product weight[ Year lotal Mutton and goat Beef and veal 1965 71.705 0.302' 71.403 1966 57.439 .239 57.200 1967 26. 699 .040 26. 659 1968 46. 698 46.698 1969 44.491 .503 43.988 1st 4 months, 1970 25. 598 .068 25. 530 Note: These imports are included in the nonquota imports of beef and veal, prepared, preserved meats in table IV of this statement, as recorded by USDA. Mr. MARTIN. You will note in table VI, that imports from Canada fluctuate greatly from one year to the next. Generally, with this single importing country with which the United States does not have volun- tary restriction agreements, imports are considerably down from 19~5, in the later years of the decade of'the 1960's. However, the upturn in imports reflected from 1968, with a near same amount in 1969, included 18, million pounds of meats from other countries that shipped through Canada thereby bypassing restrictions in quota agreements with those countries, according to the USDA. This has far-ranging impact when we view the imports for the first 4 months-one-third-of 1970. USDA reports, as recently as this month, that these shipments have' been coming into the United States at a rate of 1 million pounds per week in 1970. This means that 17 to 18 million pounds of such bootleg meats have come into the United States through Canada during the first 4 months of 1970, and some 22 million pounds by the end of May. In the Canadian import figures, the 17 to 18 million pounds from other countries would indicate that of the 25.6 million pounds listed from Canada, only 7 to 8 million actually represent imports of Canadian meat. It is important to note here, that the 25.6 million pounds from Can- ada already in the first 4 months of this, represents 57.5 percent of the total imports from that country for the entire year of 1969. At this rate, if these import shipments continue to come into the United States, by the end of 1970 they will represent an increase of 172.6 percent over 1969-or 76.8 million pounds. Mr. Chairman, in summary, the high allowances for quota-restricted imports, plus the nonquota imports that include these bootleg `ship- ments, pose a positive threat to the American cattleman. These have been rapidly increasing and appear~ to be going to continue to increase at such rates. They directly affect domestic meat prices. The USDA estimates of last year were nearly 50 million pounds too low for the actual imports for the year. In the most realistic comparison, im- ports are representing a vastly increasing percentage of U.S. beef consumption. What does all this mean? It means, Mr. `Ohairman, and members of the committee, that our present import laws are too loose, are weak, and are inadequate to perform the function for which they were in- tended. And, the solution lies in strengthening the law, in eliminating PAGENO="0086" 3686 the alternatives for importation that can and have in fact resulted in the ineffectiveness of the import restrictive portions of the law. And, it means that these imports must be combined by classifications as much as possible for maximum implementation of the law. At the same time, in view of the Agriculture Department's large margins of error in estimating imports, and in view of the high import restric- tion allowances at present, it means that we must eliminate from the law, the provision for adjustments of the base quota import allowances. Lastly, the law must be changed to prohibit such open evasion of our import laws as is occurring in the bootleg shipments of meat imports into the United States. Mr. Chairman, it is with these needs in mind that I have sponsored legislation to amend the law on limitation of meat imports, and that I urge swift aproval of this by the committee for enactment by the Con- gressofH.R. 6516. The legislation would accomplish three things: (1) It provides for the inclusion of beef and veal, canned, prepared and preserved meats (except sausages), in the meat import limitations subject to quota re- strictions. Where this formerly included only cattle and goats and sheep (except lambs) from importing countries with which the United States has had voluntary restriction agreements, it would by this legis- lation include all imports, whether fresh, frozen, chilled, canned, pre- served2 or otherwise prepared, of beef and veal, mutton and goat. The result is one category of major meats for consumption, excluding only lambs and such specialty items as sausage, for import control purposes. (2) The legislation removes the provision for adjustment by 110 percent of the aggregate quantity (base quota) allowed for the year, for total allowable imports before triggering the quotas. The amount of imports allowed within the base quota unadjusted is already very high, and by eliminating this 10 percent adjustment factor, the law can be most specifically applied as to amount of imports allowed for 1 year, thereby reducing the amount of difference with which the USDA has to consider in its estimates. Mr. Chairman, it is significant here, that if the two previous pro- visions had been in effect in the law in 1969, foreign meat imports into the United States would have been reduced by 280.4 million pounds product weight. The 1969 base quota for imports subject to quota re- strictions was 988 million pounds, and the adjusted base at 110 percent was 1.086.8 million pounds. But if the 110 percent adjustment had not applied, and if nonquota meats had been included in quota restrictions, there would have been 280.4 million pounds less of meat allowed, almost entirely beef and veal, before quotas would have been triggered last year. As it was, what we had instead, was virtually the reverse. By the context of our law in this important field at present, we allowed the importation of 280.4 million pounds of meat above and beyond the quota limits for which this legislation was intended in the first place. There can be little doubt that the reduction in imports this year would be much more, where already we have seen higher quota imports for the first 4 months, higher nonquota meat imports, and heavy bootleg shipments. And, with regard to these bootleg shipments, they would be brought PAGENO="0087" 3687 under control in my proposed legislation, where nonquota and pre- pared and preserved meats would be included in quota restrictions. (3) The final change proposed in this legislation is for repel of the provisions in the present law that would allow suspension of annual quantities (fixed quotas). This is an exception provided for within the present law, although it has never been applied. I view this as a po- tential danger to the American livestock industry, should it be im- properly or hastily invoked, and as it serves no direct purpose with regard to regulation of imports as to a schedule of fixed amounts, it is further unnecessary to the present law. At such time as any real na- tional emergency would exist by way of shortages of meat, the Con- gress can surely be expected to act to bring relief. But, this would be after appropriate deliberation in direct relation to the seriousness of the situation and the real danger, as opposed to the blanket authority now in the law that does not provide for any interpretation of the seriousness of meat shortages, or indeed, even the proof that there is real danger. M~. Chairman and members of the commitee, I have taken a con- siderable amount of your time on this subject, but it is time that has been required to deal with such a serious matter. The present law is haphazard in its administration, it is ineffective in import controls as witnessed by bootleg shipments into the United States, and it poses a very real threat to the American cattlemen who represent the last free segment of American agriculture, from regulation and subsidy. Unless we want to see the day when American tax dollars are poured into regulatory agencies and for price support and subsidy of meat pro- duction in the United States, we will have to take such legal actions as this proposed legislation and make every effort possible to protect our Nation's cattle industry. I ask that the committee give its approval to this legislation, and urge that Congress enact it as soon as possible. The CHAIRMAN. Are there any questions of Mr. Martin ~ If not, we thank you for your appearance tOday. Our next witness is Mr. McMillan. Mr. ULLMAN. Mr. Chairman, I would like to welcome before the committee a very distinguished citizen of my home county in Baker, Oreg., who, like his dad before him, is not only an outstanding cattle- man but an outstanding leader in, the community. I certainly want to welcome him before the committee. I commend you to all these members of the committee. Mr. PHILLIPS Thank you, Mr. Uliman. The CHAIRMAN. Mr. McMillan, you have been before the committee many times in the past but we would like you to again identify your- self for the record. STATEMENT OF C. W. MoMILLAN, EXECUTIVE VICE PRESIDENT, AMERICAN NATIONAL CATTLEMEN'S ASSOCIATION; ACCOMPA- NIED BY FRED PHILLIPS, PRESIDENT, OREGON CATTLEMEN'S ASSOCIATION Mr. MOMILLAN. Thank you. I am C. W. McMillan, the executive vice president of the American National Cattlemen's Association. PAGENO="0088" 3688 Mr. Ullman has already introduced Mr. Fred Phillips from Oregon who currently is the president of the Oregon Cattlemen's Association and who will augment my comments later on. The American National Cattlemen's Association sincerely appre- ciates this opportunity to augment testimony presented on June 24, 1968, to the Ways and Means Committee. The matter of meat imports into the United States continues to be a problem of deep concern to the domestic beef cattle industry. Al- though we feel that Public Law 88-482 is serving its purpose now, as was the case in our testimony in 1968 embracing the amendments then introduced by Chairman Mills, we still feel the need for strengthening amendments as those contained in H.R. 17540, introduced by Congress- man IJilman, and numerous other related bills. The testimony presented in 1968 still is valid. We stand solidly behind it, but there have been some new developments since that time which we wish to present to you now. Beef imports of the type covered under Public Law 88-482 have continued to grow. They have increased at an average rate of 9 per- cent annually since the law was pass~l. Table I outlines the annual quantities of all beef imports since 1958. QUARTERLY QUOTAS WOULD HELP STABILITY In 1068, 1969, and expected for 1970, imports of fresh, chilled, and frozen beef, veal, mutton, and goat meat under the law have exceeded the quota. by means of voluntary agreements entered into by the ex- porting nations. We know that in 1968 and 1969 there was severe hard- ship placed on cattle producers in the major exporting countries late in the year because of a cutback in exports imposed by those nations during the latter months of those years. Adoption of amendments which would establish quarterly quotas, as we discussed in our 1968 testimony, would alleviate this problem and would be of great stabiliz- ing influence to the domestic beef cattle industry as well as for our fellow beef cattle producers in foreign nations. CANNED, COOKED, AND CURED BEEF Paralleling the increases in imports of fresh, chilled, and frozen beef and veal has been a. sha.rp increase in the importation of canned, cooked, and cured beef. It has inc.reased at an average rate of 15.4 percent annually since 1964. Table I shows this increase. This product originates principally from South America and must meet stringent conditions which assure that it contains no live virus of foot-and- mouth disease. It must be cooked to an internal temperature suffi- ciently high to kill the foot-and-mouth virus. New techniques have been developed in canning and cooking, or cooking and then freezing or canning the product, so that today we are informed such firms as the Campbell Soup Co. are using nearly all imported beef in their soups and TV dinners. Although we have con- tended consistently that the so-called manufacturing-type beef is coin- petitive with all qualit.ies of our domestically produced beef, this use of cooked beef in such as T\T dinners make it even mome competitive with the domestic product, causing loss of demand for the so-called U.S. produced "table" or "block" beef. PAGENO="0089" 3689 HIGH PROPORTION OF GUTS The growth of franchise steak and roast beef houses has been phe- nomenal in recent years. We are informed that many of these establish- ments are also using practically all imported beef. Coupled with this has been the growth in imports of "cuts". We have reason to believe it has grown to such proportions that they make up at least 40 percent of all fresh, chilled, and frozen beef imports into the United States. Until recently, advocates of more beef imports have led us to believe that all of the beef coming into the United States was of manufactur- ing quality and found its way only into grinding. Obviously, if 40 percent of fresh, chilled, and frozen imports are "cuts," they do not find their way into grinding and may have the effect of creating an artificial "shortage" of grinding meat to go into such products as hamburgers and frankfurters. Added to this very large amount of fresh, chilled, and frozen beef cuts are the improved technologies of importing such cooked and frozen items as beef rounds from countries such as Argentina. This principally is used in roast beef sandwiches. This product is competi- tive with domestically produced beef of all qualities and does not find its way into the usage of "blending" with trimmings from our fed beef animals in the United States. The matter compounds itself, not only creating an artificial "shortage," but causing hamburger prices to be higher than they might be otherwise. This becomes quite important to U.S. taxpayers because duties ar~ not collected at the rate which should be assessed to this type of prod- uct. Most fresh, chilled, and frozen beef carries a 3-cent per pound duty. In reality, most cuts should carry a 10 percent ad valorem duty. Importers for their own financial gain prefer the 3-cent rate. They profit two ways-lower import duty and higher per pound sales-so the consumer loses twice. We are delighted that the U.S. Department of Agriculture and the Tariff Commission are embarking upon a joint study to develop figures as to the proportion of "cuts" of beef coming into the United States in fresh, chilled, or frozen form. We are confident this study also, will show need for changes in the Meat Import Act of 1964 to close the ever-widening "loopholes" as those cited above. We feel this could be accomplished easily by the adoption of the amendments in 1-1.R. 17450 which would add more TSUS numbers to the law. COLD STORAGE STOCKS OF FROZEN BEEF There has been a great deal of discussion recently about a "shortage" of manufacturing type beef in the United States. This is mentioned in the preceding paragraphs with respect to the proportion of cuts arriv- ing in the United States. In 1970, we had an interesting phenomenon develop. Generally, in the months of January-April, there is a large drawdown of stocks from cold storage. These stocks of frozen beef are generally of manufacturing quality. Table II shows the cold storage stocks as of the end of each month for the years 1968, 1969, and 1970. Note particularly that as of April 30, 1970, there were nearly 95 million more pounds of beef in cold storage than April 30, 1969, and it was 121 million pounds more in February 1970 than in February 1969. We contend there was not that much more domestically produced 46-127 0-70--pt. 13-6 PAGENO="0090" 3690 beef available to build up those stocks but that with the sharp rise of imports during the same period of time, there was a deliberate effort on the part of importers to manipulate the manufacturing type beef market. We also maintain that there is no shortage when you are building up stocks and particularly show such a substantial increase quantities in storage between the two years. ADEQUATE SUPPLIES DOMESTICALLY In contrast to what many people say, there are ample quantities of manufacturing or grinding type beef available in the United States. In recent years, we have increased domestic production of beef con- stantly. Table III shows the increase in cows, the increase in tonnage produced, and the increase in per capita consumption of beef. This growth is nothing short of phenomenal. Every time you increase do- mestic production it means that there also is more beef available for manufacturing purposes. It makes no difference whether it is from fed beef animals or nonfed beef animals. We often are reminded that dairy cow population is declining in the United States. This we admit, but the buildup of beef cows has more than replaced the decline of dairy type cows. Table IV shows the dramatic shift in cow mix that has taken place principally since World War II. About two-thirds of all our cows are beef type-just the opposite of what it was in 1947. The beef type cows are just as salvagable for manufacturing type beef as are dairy cows. They are just as lean and provide just as much product for use in grinding. As a matter of fact, we calculate that today there is about 8.5 billion pounds of beef available from domestic sources for manufacturing purposes. This compares to about 7.5 bil- lion pounds in 1964, and represents approximately a 13.5-percent in- crease in available manufacturing beef supplies since 1964 from domes- tic sources alone. This is in addition to the 9 percent average annual increase of fresh, chilled, and frozen beef imports since 1964. There is and will continue to be an increase in manufacturing type beef available from domestic sources which can he augmented by im- ports in reasonable quantities from foreign nations, so that the con- suming public will have ample supplies for hamburgers, hot dogs, et cetera. The American National Cattlemen's Association advocates a con- tinuing gradual domestic growth of production of beef. We think this can be achieved through a delicate balance of supply and de- mand and through the gradual buildup of beef cow numbers over a sustained period of time. If anything happens which would adversely change the beef cattle business economically or psychologically, do- mestic production will not come at an increased rate for the consumers to benefit. U.S. CATTLEMEN DEDICATED TO SUPPLY U.S. CONSUMERS The domestic beef cattle industry dedicates itself to supply the U.S. consumers with a continued increase in the supplies of all quali- ties of beef at reasonable prices. But, they will only do so as long as the economic incentive is there for them to accomplish this end. If more imports are permitted entry into the United States than those covered by Public Law 88-482, much of the incentive will be lost and PAGENO="0091" 3691 it will be the consumers of the United States who will suffer in the long run. EXPORT MARKET FOR BEEF We direct our closing comments to the development of an export market for U.S. produced beef. Frankly, this has been fraught with frus~trations principally because of the protectionist attitude of the countries that potentially might even be modest importers of our high quality beef. We are not talking about large quantities. We realize that the export marketS for our high quality beef is "thin" with the principal outlets probably only in the better hotels and restaurants. We do find it quite disturbing that countries such as Japan, wiuch seems to want to ship unlimited quantities of other commodities and manufactured goods to the United States, will not permit a greater quantity of U.S. beef into their nation. If we are to have consistency in trade, it seems to us there should be some consideration given to this. This same thing is true with the protectionist policies of the European Common Market countries. Even the two largest beef exporting countries to the United States do not permit U.S. beef into their countries because of the fear of blue tongue disease. We fully appreciate the fear of the people of New Zealand and Australia and we do not wish to be the cause of any blue tongue gaining entry to their nation's sheep herds. However, we feel the tests and other precautionarymeasures that can be taken to detect blue tongue virus in animals are adequate to protect this dread sheep disease from infecting their flocks. SUMMARY In summary, if we are going to have trade, it has to be a two-way street. We are strongly of the opinion that as trade has affected the U.S. beef cattlemen, it has been a one-way street, except for the ex- ports of hides, tallow, and variety meats which in dollar volume fall far below the value of beef imports. We are hopeful that ether nations of the world will assess this in the proper perspective and rather than only asking for more and more beef to be shipped to the United States, they will view the matter on the basis of the opportunity for their citizens to sink their teeth into some of the high quality, wholesome beef produced in the United States. Thank you. (The tables accompanying the statement follow:) TABLE i-U.S. IMPORTS OF BEEF [Product weight-In millions of pounds] Under Outside Year Total quote quota 195R 619.2 333.0 286.2 1959 722.3 524.5 197.8 1960 512.6 413.8 98.8 1961 689.2 569.0 120.2 1962 970.9 860.0 110.9 1963 1,121.6 985.3 136.3 1964 800.4 705.6 94.8 1965 701.0 583.8 117.2 1966 893.3 762.9 130.4 1967 979.0 840.6 138.4 1968 1,128.0 939.0 189.0 1969 1,216.2 1,029.9 186.3 Source: U.S. Department of Agriculture, Foreign Agricultural Service. PAGENO="0092" 0 H U) ~ E~) t~) C,, C,) C/) H H H C,) C C,). C~ .~ C CD p H) 0 C CD I I + I ~±~t±~i ±±~~ I C-) C,) H - )` ;~ C/C C,, 5. C~) - ~ ~ g C,, ~, H H a -` P -< ~ a -a CD _ H ~ CD~ C__p ~. H. C+ c+~ 4 CD o ~ a 3c C-, o a "C,) o -1 a C) PAGENO="0093" 3693 TABLE V-U.S. COW NUMBERS un thousandsj Year Dairy cows Beef cows Year Dairy cows Beef cows 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 25,453 26,313 27,138 27,704 27, 770 26,521 25,842 24,615 23,862 23,853 23,568 23, 060 23,549 23, 896 23,462 11,366 12,578 13,980 15,521 16, 456 16,408 16,488 16,010 15,919 16,743 18,526 20, 863 23,291 25, 050 25,659 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 22,912 22,325 21,265 20,132 19, 527 19,271 18,963 18,379 17,647 16,981 15,987 15, 198 14,644 13, 875 25,371 24,534 24,165 25,112 26, 344 27,327 28,691 30,589 32,794 34,238 34,433 34, 685 35,405 37, 433 Source: U.S. Department of Argiculture, annual livestock inventory. Mr. PHILLIPS. This import and export situation, in our opinion, is a two-way street. We should be able to participate at least to a small degree, not a large degree, in the export market for beef. We have been told and it has been demonstrated, I participated in a trade mission a little over a year ago, and I have heard reports from food fairs around the world that the American beef is received most enthusiastically by the people. Therefore, we would like to participate in a small degree in the exportation of choice and prithe cuts of beef. The objections that are raised before us-not raised before the beef importing people-is that, for example, in shipping to Japan there is a quota. I think the present Japanese quota now is something like 22,000 metric tons. Another Japanese restriction is that there is a 25 percent ad valorem duty on meat. The same situation, but not the same figures, exist in the exportation of our meats to the Common Market countries. So, I think we should all try to help remove these restrictions in the exportation of our beef to the foreign countries. That concludes my statement, Mr. Chairman. Mr. IJLLMAN. Thank you. Does that conclude your statement, Mr. McMillan? Mr. MCMILLAN. Yes, sir. Mr. ULLMAN. We appreciate very much your statement. As you well know, this committee was involved in this whole prob- lem a number of years ago and out of it came the Meat Import Act of 1964. We have been quite interested, in the progress of that act. You have not dealt in much detail with the Import Act. Would you say on the whole it has been a stabilizing influence on the meat industry? Mr. MOMILLAN. Yes, Mr. Chairman; by all means, it has. May I say also we did not dwell upon the present law in our state- ment inasmuch as we thought you were more interested in our `aug- menting the statement we presented in 1968. We were interested more in new materials, etc. The law that you and other members of the committee were very helpful in enacting in 1964 has been a stabilizing influence. We think, PAGENO="0094" 3694 however, that loopholes being closed would provide even a more sta- bilizing influence. We also feel that the reasonable protection that the law does afford assists in providing the opportunity for increasing domestic beef sup- plies which, of course, would be beneficial to the consumer and the overall economy of the United States. Mr. ULLMAN. Would you enumerate one, two, three, the recom- mended changes that are included in the bill that I have introduced? Mr. MCMILLAN. Yes, sir. The changes do this: Quarterly quotas which we have discussed in our statement today would be a part of the law. Another amendment would be the inclusion of canned, cooked, and cured which would help close the loopholes that do exist. A new base period for the stability of quotas would be determined. Instead of the present 1959 through 1963 levels, the changes would include the base years of 1958 through 1962. Another change would be the inclusion of offshore purchases. This only occurs in those instances where in combat zones there is the oppor- tunity for the purchase of beef or any other meats by the Defense Department from foreign countries. 1\Te are only asking that since it is a part of the "Buy American" Act, purchases would be included in the total of imports into the United States. The final amendment would make the trigger point and quota synonymous. Mr. ULLMAN. You are in the cattle business, Fred. What is the situ- ation in the cattle market today on various categories of beef? Mr. PHILLIPS. The live cattle market is not a rising market. It is sort of stabilized at the present time. It is what we might class right now as a rather "soft" market. Mr. ULLMAN. It is not certainly at the peaks that we have seen it at times in the past. Mr. PHILLIPS. That is right. It is not accelerating in price at all like it did in reference to a year ago. Mr. ULLMAN. What is the significance, Mr. McMillan, of the in- creased cold storage supplies of imported foreign chilled and frozen beef? Mr. MCMILLAN. Of course, it is difficult to find out just exactly who does have this product in storage. But the significance we attach to the increase in frozen beef in storage is the fact that domestic supplies were not that much greater this year than they were a year ago. The significance is that there was a sharp increase in imports coin- cidental with the months where we do have increased cold storage stocks this year versus a year ago. Therefore, we are of the opinion that most of the increase-maybe all of the increase-was the imported product being put into storage to hold off the markct, perhaps to artificafly raised the market for lean boneless beef, and make it look as though there was a so-called shortage of the beef in the United States. Mr. ULLMAN. Frozen beef does come under the voluntary quota arrangement of the Meat Import Act? Mr. MCMILLAN. Yes, sir. Mr. ULLMAN. Have we come close to triggering quotas under that program? PAGENO="0095" 3695 Mr. MCMILLAN. Yes. As a matter of fact, the final figures for 1969 came within about 10 million pounds of triggering the quotas m 1969. This is in the face of the voluntary agreements that were worked out. In 1970, the voluntary agreement with the principal exporting countries is at a point approximately 6 percent above the quota levels, or, putting it a different way, approximately 4 percent under the trigger point. This is getting to be a pretty fine line when you are deal- ing with those small percentages. Mr. ULLMAN. But it does show that the program does work. Mr. MCMILLAN. Yes, sir. Mr. ULLMAN. Because when they approach the triggering device, then they restrict their exports of beef. Mr. MCMILLAN. That is true, Mr. Chairman. Significantly, the law that we do have on the books is providing the vehicle by which these voluntary agreements could be reached. It occurred to me the other amendment in your bill is one which would make the trigger point and the quota synonymous. Mr. ULLMAN. Thank you. Mr. Schne~beli. Mr. SOHNEEBELI. Mr. McMillan, in discussing the growth of imports of the choice cuts, the better type of beef, you said we have reason to believe that it has grown to such proportions that they make up 40 percent of all our beef imports in the United States. Do you have any figures to substantiate the fact that 40 percent of our imports are in the choice area? Mr. MCMILLAN. No, Mr. Schneebeli. First of all, I think it should be made clear that even though this product might be cuts, it would not be comparable to our choice quality beef. Mr. SCHNEEBELI. I think the inference was that the growth of choice cuts being imported were impinging on our better market. Mr. MCMILLAN. They are more directly competitive; that is correct. Mr. SCHNEEBELI. With our better grade of beef; is that what you mean here? Mr. MCMILLAN. Yes. Mr. SCHNEEBELI. Do you have any figures to indicate that 40 percent of our imports are in the better type of beef? Mr. MCMILLAN. No; we do not. This is the purpose of the. joint study by the Agricultural Department and the Tariff Commission, tO determine what the makeup is Of the imports coming in, what proportion actually are cuts. Mr. SCHNEEBELI. I should think they almost could get that from the price of beef coming in, could they not? This would not seem to be so difficult to determine. Mr. MOMILLAN. Apparently it is and they are having a little, more difficult than they anticipated in determining within a degree of accuracy. Mr. SCHNEEBELI. You were talking about changing the base period from 1959-63 to 1958-62. I presume this would result in a reduction of your quota. Mr. MCMTLLAN. Approximately a 10-percent reduction. Mr. COLLTER. Where does most of this come from? Canada and South America? PAGENO="0096" 3696 Mr. M0MILLAN. Of the fresh, chilled and frozen? Mr. COLLIER. The better grade of cuts. Mr. MOMILLAN. Perhaps the higher proportion of cuts would origi- nate from countries such as Canada, Ireland, Central American coun- tries and New Zealand. Australia would be more dominant in terms of manufacturing or grinding quality beef. Australia, however, in this context, accounts for approximately 50 percent of the fresh, chilled and frozen beef imports into the United States. Mr. COLLIER. Then it would be that Latin America and Canada would be the prime exporters? Mr. MCMILLAN. On a proportionate basis, I would say you are probably correct. But we are hopeful that the joint study by the Tariff Commission and the U.S. Department of Agriculture reveal in more finite terms, not only the mix but also the origin of it. Mr. COLLIER. Thank you. The CHAIi~IAx. Any further questions? If not, again we thank you, Mr. McMillan, for coming, and also Mr. Phillips, for accompanying Mr. Mc.Millan. The Chair desires to break into the schedule of witnesses momen- tarily and call to the witness table Mr. Nelson Stitt. We are following this unusual procedure in view of action that occurred earlier this morning in the committee, in order to give Mr. Stitt an opportunity to respond to the statements that were made, and to enlighten us with respect to the situation. [The proceedings which occurred at this point, relative to the appearance of Mr. Nelson Stitt and his reappearance, appear in part 4, page 1126 of this printed hearing, on May 19, following Mr. Stitt's originally scheduled appear- ance. This testimony was printed at that point in accordance with a unanimous consent agreement.] The CHAIRMAN. \Vit.hout objection, tile committee will recess until 2 p.m. this afternoon. (WThereupon, at 12 :25 p.m. tile committee recessed, to reconvene at 2 p.m. of tile same day.) AFTERNOON SESSION Mr. BURLESON (presiding). The committee will come to order. Tile first. witness this afternoon is Mr. John E. Ward, chairman of the Meat Importers' Council. \~Till you come around, please, sir? STATEMENT OF DONS N. BENT, ATTORNEY ON BEHALF OF JOHN E. WARD, CHAIRMAN, MEAT IMPORTERS ASSOCIATION Mr. BENT. Good morning. Mr. Chairman. I first have to tell you I am not Mr. John Ward. My name is Donn Bent. I am an attorney with Barnes, Richardson & Colburn, tile law firm which represents Mr. Ward and the Meat Importers' Council. I will take only a minute of tile committee's time. My purpose is, with your permission. to submit Mr. Ward's written statement for inclusion in tile record in lieu of his personal appearance. PAGENO="0097" 3697 Mr. BURLESON. Without objection, it is so ordered. Just have a seat, Mr. Bent. Mr. BENT. Thank you very much, sir. (The prepared statement referred to follows:) PREPARED STATEMENT OF JOHN E. WARD, CHAIRMAN, MEAT IMPORTERS' COUNCIL OF AMERICA, INC. INTRODUCTION The Meat Importers' Council of America, Inc. (MIC) is a nonprofit trade as- sociation composed of over seventy-five regular and associate members, all of whom are actively engaged in the importation, sale, handling or use of imported fresh frozen meat. We urge the Committee to adopt the President's trade pro- gram as set forth in H.R. 14870 and register vigorous opposition to H.R. 17540 and similar measures designed to further restrict imported meat and meat food products. In June, 1968 the MIC testified before this Committee and filed a written brief setting forth basic facts supporting the need for free trade in meat imports. At that time we sought to establish that passage of then pending quota proposals applicable to imported meats would not aid U.S. cattlemen and feeders and would be to the detriment of American consumers as well as other segments of the U.S. meat and meat food industries who rely on adequate supplies of imported lean manufacturing meat. Since 1968~history has verified our position. We now submit to you again our urgent appeal to avoid any special-interest legislation such as new quota schemes increasing restrictions for imported meats. Further- more, it is believed that occurrences since 1968 demonstrate that the present meat import quota law, Public Law 88-482, has disserved the national interest by creating artificial U.S. market conditions at a time when available supplies of lean manufacturing grade meats have been, and will continue to be, inadequate to meet the needs of our consuming public. THE NATURE OF IMPORTED BEEF Notwithstanding requests submitted to Congress by cattlemen and feeders, it is clear that imported manufacturing beef does not directly compete with high- quality, grain-fed table beef produced by the domestic beef industry. The United States Department of Agriculture stated in May, 1969 (Livestoch and Meat Situation, p. 19) "Boneless beef imports are similar to and supplement the declining supply of U.S. produced cow beef. Both are used mainly in hamburger and processed meat products. Australia and New Zealand are the principal suppliers. "Imports of carcass beef and bone-in cuts are very small compared with bone- less beef imports.. . ." The same publication for May, 1970 states at page 19: "[Boneless fresh or frozen beef] is similar to domestic cow beef and is used similarly, mainly in hamburger and processed meat products.. ., [In 19691 bone- less beef imports amounted to 1,349 million pounds (carcass weight equivalent), 84 percent of beef imports, and more than three-fifths of total red meat im- ports. Imports of fresh or frozen bone-in beef totaled 19.6 million pounds, only a little over 1 percent of total beef imports." Certain domestic protectionist interests contend that table cuts are imported in significant quantities, estimated by them to be 40% of total imports! This statistic is `totally without foundation. Spokesmen for such interests have latched on to this argument in, we believe, an attempt to divert attention from the fact that manufacturing grade meat is absolutely essential to continued modestly priced convenience food products such as hamburgers, sausages, etc. At this time the U.S. Tariff Commission is undertaking an investigation pursuant to Section 332 of the Tariff Act of 1930 to review the meat industry, including, we under- stand, the extent to which imports enter into manufacturing of meat products in the U.S.A. The MIC welcomes this investigation because it will further prove the dangers inherent in continuing restriction of imported meat. Imported fresh frozen beef is a lean, grass-fed variety distinctly different from grain-fed beef produced in the Untied States and used for table cuts such as steaks and roasts. The bulk of imported fresh frozen beef is used strictly for grinding, i.e., PAGENO="0098" 398 combination with other materials to produce hamburger, sausage, etc., and virtually all imported fresh frozen beef not used in grinding is subjected to some form of manufacturing or processing operations in the United States. DECLINING AND UNRELIABLE SUPPLIE5 OF DOMESTIO COW AND BULL MEAT RESULT IN INSUFFICIE~T SOURCE OF MANUFACTURING BEEF The growing shortage of lean manufacturing beef available in the USA is recognized by all objective meat industry analysts. This Committee in par- ticular has been *beieged by certain cattle interests who refuse to recognize this fact and who claim that all imported red meat displaces domestic production. Imported beef displaces domestic production no more than does poultry, macaroni, fish, or anything else consumers eat when they are not eating domestic high quality steaks and roasts. The principal domestic source of manufacturing meat is cows (dairy and beef) and bulls. These animals are not raised primarily for beef, but for dairy purposes and the raising of `beef steers and heifers. The cow and bull source of manufacturing beef is essentially undependable because such meat is a by- product. The supply rises and falls as a direct result of production practices in the dairy and table beef industries. It is not controlled by consumer demand for manufacturing beef. Thus, beef producers tend to hold back slaughter of beef cows at times when they are expanding herds of `beef steers and heifers for grain feeding (as they are doing right now). This source of manufacturing beef has been in general decline for the past 5 years, and except for radical short-term fluctuations, has not changed materially for 25 years, despite the fact that our population has increased by well over one third. (See Appendix Table I, Column I and Table II.) In 1989, total production from this source equalled 2,668 million pounds (bone- less basis). It is estimated that this production will show a decline of around 41/2% during 1970. Actual figures are already available for the first quarter of 1970, showing production down 7~% from the comparable period in 1969. The current general decline may be expected to continue at least through 1972. MANUFACTURING BEEF SHORTAGES HAVE RESULTED IN INCREASED U.S. WHOLESALE PRICES It is axiomatic that short supplies of high demand consumer products result in chronic shortages accompanied by inflated price levels. Because of the short supply of manufacturing meat due, in major part, to the unnatural market conditions resulting from threats of quotas under P.L. 88-482, quotations for cow meat in the domestic market increased 7~ per pound (about 13%) over a period of one year, even though imports rose moderately.* Indeed, for the first time in history, wholesale prices paid for low-grade canner and cutter cow carcasses have been running higher than prices for good grade steer and heifer carcasses. Occasionally, these canner and cutter cow prices have actually surpassed prices for choice steer carcasses. Viewed in terms of the uses to which they are put, imports are directly competitive only with cow and bull beef. For all practical purposes, imported fresh frozen beef and domestic cow and bull beef are `fungible or commercially interchangeable commodities. Added together, imported frozen manufacturing beef plus domestic cow and bull constitute the basic U.S. supply of lean process- ing beef. MANUFACTURING BEEP FROM STEERS AND HElPERS IS NOT THE SOLUTION In addition to the lean processing beef derived from domestic cows and bulls plus imports, there is one other important domestic source of supply of `meat for manufactured products: fat trimmings, sometimes called "belly cuts," from high-quality, grain-fed steers and heifers. These are the left-over portions of the beef carcass after removal of salable retail `beef cuts, and are much too fat to be used by themselves in making manufactured products. The fat-lean ratio is just about 50-50 and the lean may not be economically separated from the fat. tMonthly averages for 90% lean boneless beef (domestic) Chicago carlot basis: March, 1969-$56.13; April, 1069-$57.60; March, 1970-$63.38; April, 1970-$64.50. (As published by The National Provisioner.) PAGENO="0099" In order to be utilized, trimmings must be "leaned up" with low-fat domestic or imported beef which have a fat content of only ten to fifteen percent. For 100 pounds of belly cuts, it takes about 132 pounds of 85% lean beef to produce hamburger which does not exceed the legal maximum 30% fat content. To reduce the fat content to 20%, the legal limit for "ground beef", it takes 610 pounds of such lean beef. Because U.S. production of high-quality beef steers and heifers has steadily increased, these fat trimmings have, of course, increased as well (Column II, Table I, Appendix). But, as Column III of the Appendix shows, since 1065 this increase has not even been sufficient to offset declines in domestic cow and bull beef production. For years the MIC has maintained that, far from Injuring domestic beef producers by direct competition, imports actually benefit U.S. producers of table beef by supplying lean material which is necessary for their fat trimmings or "belly cuts" to be upgraded into salable products. (This point was made at pages 23 and 25 of our brief before this Committee of June 24, 196&) The U.S. beef Industry has committed itself to continuing specialization by raising high-quality, grain4ed animals. In this area, it has enjoyed tremendous success virtually doubling production in fifteen years. But there is no quantity of fatty by-products, no matter how large, that can ever satisfy America's needs for manufacturing beef. As the cattlemen continue specializing, the gap between lean beef supply (domestic cow and bull plus imports) and fed beef becomes greater and greater. Without sufficient lean beef for combination, unusable ex- cesses of fat trimmings will necessarily cause prices received by cattlerhen to decline or, at least, fall short of potential return. This Is occurring at the present time, and a significant "cheapening" of fat~ belly cuts and trimmings may be currently observed. To demonstrate this, we set out below prices taken from The National Provisioner Daily Market Service for March 16 and June 5, 1070 for fat mateHals (full plates, navels, briskets, rough flanks and 50% lean trimmings) and 00% lean boneless beef: Prices in àents per poundj Mar. 16 , 1970 Juno 5,1970 Fatbolly cuts and trimmings: Full plates Navels Briskets Rough flanks 50 percent lean trimmings Boneless beef, 90 percent lean * 29 25 338% 24 31~% 63~ 223~ 20~ 268% 208% 25 63 During April, 1970, 50% lean trimmings from choice navels rose to around 35%~ per pound, up to only i1,~ from a year earlier, while 90% boneless ,beef averaged $64.50 per hundreweight-up nearly $7.00 from the April 1969 average of $57.60. The shortage of lean beef with which to mix the fatter materials was clearly a major factor in the relative weakness of prices for fat belly cuts and trimmings. It is believed in the industry, and is logical to assume (though no actual statatics are available) that excessive quantities of domestic fat `belly cuts and trimmings are largely responsible for very high cold storage warehouse stocks in recent months. Disproportionate supplies of fatty trimmings may help the consumer by reduc- ing the prices for soap and candles. But they won't help `by reducing overall cost of materials for the meat processor. Divergent opinons have been expressed as to the appropriate percentage of beef steer and heifer carcasses which constitute usable fat trimmings. U.S. pro- ducers and feeders have gone on record that as much as 26% of the average carcass is used in processing and manufacturing. This figure tends to distort actual percentages of fat trimmings available for meat production by the inclu- sion of bones, unusable kidney fat and waste. Any price and supply statistics for manufacturing meats based on such a fallacy are in error. A more accurate figure for usable fat trimmings is 12-14% of carcass weight, or about 9% of live weight. PAGENO="0100" 3700 THE U.S. MARKET FOR LEAN MANUFACTURING BEEF SHOULD BE RETURNED TO A NORMAL STATE BY REPEAL OF PUBLIC LAW 8 8_4 82 Sinëe 1964, Public Law 88-482 has menaced U.S. manufacturers of meat food products, food market chains, importers and brokers with the constant threat that increasing imports of sorely needed products to meet demand would trigger a quota which in turn would result in a substantial cutback in available supplies. During this same period of time the domestic cattle cycle has, as it has for generations, continued to reach peaks and valleys of production and profitability, without regard to meat imports. Concurrently, domestic and import prices paid for manufacturing beef have risen sharply. Importers and users of lean manufatcuring beef continue to com- pete hotly for limited available supplies of raw materials while Mrs. Housewife- the American consumer-finds herself paying skyrocketing prices in support of an artificial market condition created by an Act of Congress which has benefited no one. CONCLUSION During the course of these bearings by the Committee on Ways and Means many proponents of restrictive legislation have based their arguments on so- called "unfair" competition from low-wage countries. Repeatedly, these witnesses have suggested that quotas or orderly marketing arrangements for certain im- ported products would allow the United States industries competing therewith to recover and compete on a normal basis. In the case of manufacturing grade meat, normality is currently a dead letter because of the adoption of just such a misguided panacea. We. believe that the President's Trade Bill provides ample protection for U.S. industries while at the same time furthers the best interests of the United States continuing historic trade policy. Accordingly, we support HR. 14870. The Meat Importers' Council of America, Inc. respectfully submits that all proposals designed further to restrict imported meat are now obsolete due to the consumers' unsatisfied needs for modestly priced and freely available meat food products manufactured from domestic and imported lean meats. It is estimated than even if current quota controls were removed completely for the year 1970 only about 200 million pounds additional manufacturing meat could be found in the world market~1ace. If it were possible to obtain these supplies, which are badly needed, we predict that there would be an immediate and direct impact on wholesale .pr.ices for imported meat and a similar effect on `the retail prices paid by consumers for manufactured products such as hamburgers and sausages. We predict further that the decrease in wholesale prices for imported meat, should the voluntary scheme and quota system set forth under Public Law 88-482 be suspended, would be around 50 per pound and that the decrease in comparable U.S. canner and cutter grades would be somewhat less, possibly 1-20 per pound. There would be virtually no price depressing effect on wholesale prices paid for U.S. good, choice and `better carcasses. For the foregoing reasons we urge that supplies be allowed `to equal demand and that members of this Committee undertake to modify or repeal existing law and oppose any further quota measures for meat and meat products. In 1964, the `year Public Law 88-482 was enacted, average retail prices for ground beef and frankfurters (as reported by 40 regional and national chain stores) were 740 and 62.40 per pound respectively. In the third quarter of 1969 the price for ground beef was steady at a high of 660 per pound, a 40 percent increase, while the average September price for frankfurters rose 31 percent to 82.10 per pound. Earlier this year, (not `the period of peak deman'd) prices were maintained at less than le per pound below the records cited `above and are virtu- ally certain to set new record highs before this summer is over. A major cause of this price `trend is the shortage of lean beef from which hamburgers, frank- furters and similar food products are manufactured. It is, of course, a fact th'a't the strict quota set forth in Public Law 88-482 has never technically `been "triggered." At first this was because allowable jut- ports were well below the trigger point. Since 1968, however, technical triggering of `the quota has `been avoided only by voluntary self-imposed limitations of `ex- ports by principal supplying coun'tries. The law has operated to keep out badly needed meat since 1968 and has brought about shortages which in turn have driven up wholesale prices. The "surcharges" brought `about by special interest PAGENO="0101" 3701 quota legislation and laws such as Public Law 88-842 are borne by those who can least afford to pay-the low and middle income consumers. Imports of lean `fresh, frozen beef first became substantial during the period 1957-59 when domestic production declined sharply (see Appendix Table I). Until 1968, imports freely rose and fell in inverse proportion to domestic production, permitting a generally orderly and steadily increase in total supply. Since 1968, however, demand has exceeded maximum permissible imports under the quota law. Thus, under the present law and current insufficient U.S. supplies, imports may no longer act as the necessary supplement to U.S. production. Short sup- plies and sharply increased prices are the result. U.S. production of lean manufacturing beef will decline significantly during the next `few years. American usage of such meat (whether domestic or imported) has increased, in absolute `terms, an "average of `about 21/2 percent per year for several decades. In order to `satisfy a constant increase of 21/2 percent per year in supplies, increased imports of `between 200 to 300 million pounds per year will be required. Yet, under `the present quota law, `annual increases in allowable imports have not, and will not, average as much as 30 million pounds per year. If the threa't of a strict qu'ota under current statutory provision's has created an unnatural `and inflated market for manufacturing meat in `the U.S.A., Con- gress must, we submit, recognize the lesson of history and reject `any attempts to limit further available supplies `by means of so-called "orderly marketing" or quota schemes for imported meat andmeat food `products. Vigorous lobbying by the cattlemen `and other vested interests seek to mask the `sleeping rebellion if the consuming public. APPENDIX TABLE I-BASIC U.S. SUPPLY OF MANUFACTURING BEEF' Year Cow & bull beef 2 ~, (1) Belly cuts 3 (2) Domestic Domestic production Imports supply (3) (4) (5) 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 2,500 ` 2,884 2,573 2,101 2,236 2,122 2,101 2,745 2,976 3,144 3,118 3,072 2,314 1,959 2,217 1,981 2, 066 1,966 2,400 2,984 2,840 2,614 2,575 2,668 E2,550 E2,420 485 ` 521 , 451 , 545 ` 536 444 545 712 ` 731 754 847 ` 850 852 917 1,002 1, 065 `, 1, 056 `, 1,157 1,261 1,225 `, 1,347 1,411 ` 1,480 1,502 E1,550 E1,590 2,985 3,405 3,024 70 3,094 2,646 77 2,723 2,772 62 2,834 2,566 87 2,653 2,646 72 2,718 3,457 27 3 484 3,707 16 3,723 3,898 26 3,924 3,965 31 3,996 3,922 121 4,043 3,166 345 3,511 2,876 508 3,384 3,219 399 3,618 3, 046 553 3, 599 3, 122 838 3,960 3,123 960 4,083 3,661 679 4,340 4,209 584 4,793 4,187 762 4,949 4,025 811 4,836 4,055 939 4,994 4,170 1,004 5,174 E4,100 71,040 5,140 E4,010 71,055 5,065 1 All figures in millions of pounds, boneless basis. 2 Total commercial production from USDA figures. 3 Calculated from USDA figures for steer and heifer carcass Weight. Col. 1 plus col. 2. o Fresh, chilled and frozen beef from Department of Commerce figures. o Col. 3 plus col. 4. 7 Estimated, on assumption that Public Law 88-482 remains in effect. PAGENO="0102" 3702 APPENDIX TABLE II COW SLAUGHTER DOWN, PRICES HIGHER In the face of a ten percent decrease in cow slaughter during Tanuary-March 1970, as compared to the same period a year ago, prices on utility cows advanced sharply to $23.75, about $2.60 above a year earlier. This likely reflects the sig- nificant drop in the slaughter of dairy cows, which make up the bulk of cow slaughter in the winter and spring. The USDA predicts that the slaughter of dairy cows will continue downward in 1970, with slaughter of beef cows expected to be near 1969 levels. This reduced supply of cows for slaughter should result in prices well above a year earlier for the balance of 1970. As cow slaughter is a primary source of manufacturing meat, a reduction in its level will result in further shortages, as other sources cannot compensate for the reduction. THO' C~W A~JG~II~ 700 600 500 400 JAN. APR. CESTIMATED COMMERCIAL. U.S. DEPARTMENT OF AGRICULTURE JULY OCT. NEC. ERS 3642- 70(3) ECONOMIC RESEARCH SERVICE Source: U.S. Department of Agriculture Live8tock and Meat Situation, March and May, 1970. April 1970 slaughter estimated from USDA figures. PAGENO="0103" 3703 APPENDIX TABLE III COW INVENTORY STEADY The total inventory of cattle and calves on farms was at an alitime high of 112 million head at the beginning of this year, with a `beef herd of 91 million head and a dairy herd of 21 million head. The beef herd has been expanding every year since 1958, and last year increased by nearly 3 million head. The dairy herd, following a pattern of steady decline in numbers since 1945, decreased 421,000 head in the past year. The increase in beef COWS since 1955 has been offset by ~the decrease in milk cows and other milk stock, so that this' major domestic source of manufacturing meat has remained relatively constant since 1955. Source: U.S. Department of Agriculture Livestock and Meat Situation, March, 1970, p.5. Mu. C~TTL~ O~ FARMS, JANUARY ~ 100 80 60 40 20 0 U.S. DEPARTMENT OF AGRICULTURE 1925 1935 1945 1955 1965 1975 OCOWS AND HElPERS? YES. AND OLDER FOR MILK. tS YRS. AND OLDER NOT ~DP NILE CHEIFERS AND CALVES NOT FOR NILE AND ALL STEERS AND BULLS. £PREL~NINARl. NED. ERIUIR- `~ EONOMVT PYSFARCI.I S~PV PAGENO="0104" 3704 Mr. BIJRLESON. The next witness is Mr. G. L. Hadley, representing the National Livestock Feeders Association. Is Mr. Hadley present? STATEMENT OF DON F. MAGDANZ, EXECUTIVE SECRETARY- TREASURER, NATIONAL LIVESTOCK FEEDERS ASSOCIATION Mr. MAGDANZ. Mr. Chairman, Mr. Hadley was to appear with me. I am Don Magdanz of the National Livestock Feeders Association. I am here, but Mr. Hadley is detained. I am prepared to testify alone instead of in company with Mr. Hadley. Mr. BTJRLESON. If you will come around, sir. Do you have a written statement? Mr. MAGDANZ. I do, sir. Mr. BuimEsoN. Would you like to put it in the record and summarize? Mr. MAGDANZ. I would like to do this, Mr. Chairman, with your permission. I did prepare a summary of the. statement. However, I will even forgo going through this summary, which is rather short, and in deference to the committee's time and the other witnesses, since you are running a. little bit behind schedule I will be glad to merely ask that the complete text of our statement be included in the record. Mr. BURLESON. Without objection, it will be done. Mr. MAGDANZ. I would also like to offer this possibility and you make the decision as to what the committee would like to do. In the current statement that we have prepared which deals with both general trade policies, but more particularly with the problems created by meat and meat imports, we have referred to two previous statements. Since., I believe April 8, we sent these two previous state- ments to all members of the Committee on Ways and Means. One of them has to do with general beef supplies a.nd prices; the other one deals with processed beef supplies and prices. It would please us if the committee would be willing to include these two previous statements in the record along with the regular state- ment that we have prepared for this hearing. Mr. BURLE5ON. Wnithout objection, that will be. done. I think it is wise from your standpoint that we do that, because we have a way of getting these statements shuffled around and losing them. Without objection, that will be done. (The statements referred to follow:) STATEMENT OF G. L. HADLEY, PRESIDENT, AND Pox F. MAGDANZ, EXECUTIVE SECRETARY-TREASURER, NATIONAL LIVESTOCK FEEDERS ASSOCIATION SUMMARY No nation can long exist favorably in this world without engaging in foreign trade and we make it very plain that the National Livestock Feeders Association subscribes to this policy. On the other hand, we profoundly maintain that the United States cannot continue to import various competitive commodities with- out employing some reasonable restraints that will protect American industry and labor. This is particularly true as most other nations regulate their imports using a variety of standards and methods. Within the framework of this philosophy, the NFLA has long advocated the dire need to change the course of United States' trade policies. We have sup- ported these contentions in detail on numerous occasions including a documented statement to the Trade Information Committee on March 25, 1968, and in testi- mony before this Committee on June 4 of the same year. PAGENO="0105" 3705 In addition to our contention for adjustment in trade policy, we have rec- ognized the absolute necessity of import ceilings on many commodities in order to preserve a just a share of our domestic `market for United States industries. Whether it is meat, steel, glass, or some other manufactured products, the very simple truth of the matter is that our industry, operating in our cost atmos- phere, cannot compete with foreign production which has decidedly lower co'st~. We underscore the fact that we are `advocating ceilings on imports . . . not closed doors. For years, the United States has embraced a free trade policy while other nations have continued to exercise a variety of trade barriers to control their imports. We feel the time has arrived when the United States must solve the situation realistically by `saying to our `foreign competitors: 1. We will continue to offer you a share of the United State's' market. We are not interested in cutting you back to zero or gradually reducing to nothing your shipments to the United States; but, 2. We are no longer going to permit you to carve up our domes'tic industries by flooding the United States' market with any volume of goods you choose and whenever you choose to ship them. ~Foreign nations cannot fail to recognize the reasonableness of this position if they will re-examine their own actions over the many years, since they have long realized the effect of unrestrained Imports on their own industries. Ceilings on imports would n'ot deny `~foreign nations the opportunity to earn dollars in order to buy American commodities, either Agricultural or industrial. Agricultural exports from this country `have declined since `1966 by about $1 billion dollars because of expanded World Agricultural production and the im- plementation of restraints by foreign nations, and not because of U.S. trade policies. They will continue to buy Agricultural commodities if they need them, or want them, and if our prices are acceptable. To avoid injury to the domestic cattle business, the Congress passed the Meat Import Quota Law in 1964. The importance of restraining imports of beef, veal and mutton was clearly evident when cattle prices were seriously depressed in 1963 and beef imports reached the unprecedented `level of 10 percent of domestIc production. Unti'l 1969 the effectiveness of P.L. 88-482 was not tested, but it is being tested no'w, and its deficiencies as well as loopholes are plainly evident. Late in 1968, in order to supplement the provisions of the law, our Government implemented Section 204 of the Agricultural Adjustment Act of 1956 and sought agreements from the supplying nations w hich would limit their exports to a restrictive annual amount. Despite the agreements, nearly all nations `over-shipped the restricted level in 1969. Thus far in 1970, shipments from most of the 13 nations involved are run- ning-considerably ahead of the restricted level. Imports have been coming in at a projected annual rate of 1,277.1 million pounds, or more than 200 million pounds a'bove the agreed amount. It would appear, at least, that a number of the countries are ignoring the generous allotments that have been awarded under the agreements. It is also apparent from the record of shipments so far that some countries either do not intend `to abide by their agreements, or hope to pressure the United States into further relaxation of agreed levels. In addition to heavier shipments in early 1970, suppliers have made a change in the complexion of exported beef. At least 25 percent is now coming into the U.S. in primal cut form instead of strictly boneless beef for processing purposes. Another device being employed `by some co,untries in an attempt to circumvent our law is the practice of trans-shipments through a third country. These and other transparent `maneuvers `underscore the necessity tightening up the provisions of P.L. 88-482. The replacement of standby quotas with absolute ceilings on imports, and the establishment of these ceilings on a quarterly basis would accomplish much of that which is necessary. Thus, we strongly recom- mend favorable consideration of HR. 17540 by Mr. U'llman of this Committee, as well as numerous other like measures which `has been introduced in the H'ou'se of `Representatives and Senate. The financial returns to the domestic cattle industry are extremely sensitive to the `supply available and the `demand therefore. For some time, the National Livestock Feeders Association has been intense in its effort to counteract a deliberate program designed to influence consumers and officials, and encourage them to bring pressure for the relaxation or even elimination of the present restrictions on beef imports. 46-127 0-70---pt. 18-7 PAGENO="0106" 3706 During the past several months, members of this Committee have received two documented statements from this Association, one entitled "The Truth About Beef Supplies and Prices", and the other explaining "The Truth About Processed Beef-~Supplies and Prices". These statements have substantiated the fact that beef is a bargain as compared to other foods, other costs, con- sumer goods and services, hourly wages rates, and per capita disposable income. They emphasized that consumers continue to buy more beef for less and ex- plained why we cannot afford and do not need more imported beef. They went on to demonstrate that the domestic industry can supply necessary increases in production for both population expansion and projected per capita consumption provided competitive foreign beef is not allowed to flood our market and depress prices to the point where incentives for increased production are reduced or eliminated. We again emphasize the need for adjustments in the foreign trade policies of the United States, not to the extent of major reductions in foreign trade, but to the degree of recognizing the importance of a healthy domestic industry in this Nation's economy, and of preserving for American industry the just portion of our own market to which we are entitled. INTRODUCTION For the National Livestock Feeders Association, we compliment the Chairman and the House Committee on Ways and Means for conducting the present series of hearings on Foreign Trade Matters. Also we wish to express our gratitude for the opportunity to appear and present the views and comments of our mem- bership on these. important subjects. Though the Committee is well acquainted with the National Livestock Feeders Association, we would like to describe it briefly for the Record. It is a voluntary non-profit and non-political trade organization, sustained entirely by the mem- bership dues. Those who belong to the organization are engaged in the business of feeding and finishing livestock (cattle, hogs and lambs) for the slaughter market, and they have associated themselves to determine policy, to speak for the feeding industry, and to render such services to the membership that may be necessary and appropriate. Though membership does exist in some twenty states, it is most prominent in the vast midwestern area of the country, a region which still feeds 65 percent of the cattle finished for market in the United States and pro- duces about 75 percent of the hogs. While addressing remarks in more detail to the problem created by imported meat and meat products, we also want to make some overall observation with respect to the United States foreign trade in general. We do believe that the United States is at a turning point in the history of world trade, and it is neces- sary for the people and the Congress to appraise the situation very carefully based on past experience as well as anticipated future developments. No nation can long exist favorably in this world without engaging in foreign trade and we would like to make it very plain that this Association subscribes to such a policy. At no time, have we come forward and promoted the idea of clos- ing the door completely on the importation of any products except when the en- tire country might be endangered by disease infestations. On the other hand, it is our our profound belief that the United States cannot continue to import various competitive items and products without employing some reasonable restraints that will protect American industry and labor. These positions will be supported and elaborated upon as we proceed through the vari- ous sections of the statement that follows. PURPOSE OF APPEARANCE AND ARGUMENTS The livestock business is the major segment of agriculture. Its annual sales grossly exceed those of any other individual farm commodity in agriculture. In 1969 cash receipts of farmers for meat animals came to $17,584 million, 37 percent of total farm marketings which amounted to $47,434 million, not including gov- ernment payments. In fact, cash receipts from meat animals were almost as much as sales of all crops combined.1 Furthermore, the good economic health of the livestock business is essential to the entire nation. 1Farnv Thcome Rituation, Economic Research Service, U.S. Department of Agriculture, February 1970, p. 9. PAGENO="0107" 3707 Though the number of people actually engaged in the livestock business is small, as is the case with most other industries outside of agriculture, its contri- butions to the overall economy are far reaching. There are millions of people employed in the, processing, fabricating, transporting, distributing and retailing of the food from livestock producers and feeders. Furthermore, millions are em- ployed in providing the materials, equipment, and supplies utilized by this seg- ment of agriculture. Beyond this, livestock puts a value to the vast acres of grassland as well as the production of feed grains and roughages, thus stimulating the business and welfare of people. in rural areas, small cities and villages. The economic impact of the industry extends itself into large manufacturing centers, many larger cities and the country as a whole. Approximately 80% of the feed grain used domestically is for the purposes of providing the Nation with meat and meat products in a variety of kinds and quality unknown in the rest of the world. The perpetuation, growth and development of the livestock business, though, is heavily influenced by United States' foreign trade policies, particularly those pertaining to acceptance of exported meats from foreign nations. We appear to- day for the purpose of discussing these policies as well as certain general trade matters. THE NEED TO ADJUST UNITED STATES FOREIGN TRADE POLICIES The National Livestock Feeders Association has long advocated the dire need to change the course of United States' trade, policies. In our arguments before this committee on June 4, 1908, we pointed out the merits of reasonable protection for domestic industry, the failures for agriculture in the Kennedy round of ne- gotiations, and the import protection and import restrictions employed by foreign nations, all in defense of reasonable import control of meat and meat products. Earlier in 1908-on March 25-we submitted a comprehensive and documented statement to the TRADE INFORMATION COMMITTEE covering the arguments just enumerated, but also relating to overhauling our negotiating process and pointing out the shortcomings of several applicable statutes. Similar, though more confined arguments, were presented to the Senate Committee on Finance on October 18, 1967, at hearings on a bill to revise the quota system on importa- tion of certain meat and meat products. We see no need to repeat ourselves at this time, but do remind the committee that these documented presentations have been made. Most of the arguments and information, other than recent production and import figures, have not changed. We make no request for including any of these statements. in the present record, but do offer to make copies available to any who might like to have them. ESTABLIShMENT AND MAINTENANCE OF CEILINGS ON IMPORTS In addition to our contention for adjustment in United Sta!tes trade policies, the National Livestock Feeders Association has recognized the absolute neces- `sity `of ceilings on many items and `products in order to preserve U.S. industries as well as levels of employment. Obviously these views are `shared `by a great many. It is significant that `a large number of bills have been introduced in this Congress which would provide for ceilings eu imports of various commodities, if `and when the import level exceeded a certain hiStorical volume. It is further significant that the general approach through these bills is similar `to that embodied in `Public Law 88-482, commonly referred `to as the Meat Import Quota Act of 1964. The National Livestock Feeders Association subscribes `to and - supports `the `principles contained in the Fair International Trade Act of 1969 represented by some 65 to 70 bills now pendi'ng before this Committee. Desirable as this approach may be, `though, we submit it has certai'n deficiencies which will be explained by pointing out `deficiencies in the existing Meat Import Quota Act. Whether it is meat, steel, glass or most any other manufactured product, the very simple `truth `of the matter is that U.S. in'dustry cannot compete with for- eign `production which operates a't decidedly lower cos'ts. This is particularly true as more and more import's are in the form `of manufactured or finished goods instead of raw material's. The level of the United States' economy, including !the tax structure, labor coSts and nearly all costs that might be named, is such as to give foreign nations a greater competitive advantage over the United States induStry. Even our higher productivity per man h'our `tends to disappear as productivity improves in foreign nations resulting from technological `advancement and mass production methods. Many commodities coming into the United States as competitive items are PAGENO="0108" .3708 produced with wages that would be clearly illegal in the United States as well as being substantially below prevailing levels that have been negotiated. While consumers may seemingly enjoy the lower prices of imported manufac- tured goods, and would thus be prone to support present liberal U.S. trade pol- icies, they ignore the hard cold facts that jobs are simply being transferred from the United States' market to foreign nations with generally lower wage rates. This can be tolerated up to a point, bu:t when carried too far-~and we submit that we have gone too far already-our domestic economy is crippled and injured. CEILINGS ON IMPORTS-NOT CLOSED noons The Committee is fully aware of the historical record of tariffs and import restrictions. The Smoot-Hawley Tariff Act which was passed in 1930 has been blamed for many things including the depression of 1929, even though world economic conditions were building up long before. In 1934 the Law was changed and in the following thirty-six years we have proceeded on a course directed toward lower tariffs and fewer restrictions on the premise that free trade among nations would cure many difficulties in the world. Unfortunately, the free trade policy has been a rather one-sided affair. While we reduced tariffs, other countries granted only those concessions they could easily give up without injuring their own industries and people. We do have a few import quotas as well as a stand-by quota program for fresh, chilled and frozen beef, veal and mutton. On the other hand, most foreign na- tions still have and maintain a multitude of nontariff trade barriers which they implement at will. With respect to meat products and meat animals, these foreign barriers in- clude quotas, import licenses, import certificates, gate price systems, variable health restrictions, outright prohibitions, minimum price controls and others. Thus the United States is not only at a competitive disadvantage resulting from higher cost of production and higher wage rates, but also because the rules of the game are not alw-ays the same on both sides. We submit the necessity of evening the score and from now on insisting on the same rules for both sides in the game of international trade. We further suggest that higher tariffs, adjustment assistance to either industry or labor. and subsidies, are not the answer. Instead. we submit the solution to the problem realistically lies in the es- tablishment of reasonable ceilings on imported commodities which compete with domestic products according to a historical relationship of imports to domestic production. This is essentially what the Fair International Trade Act would do. It amounts to saying to our foreign competitors: 1. We will continue to offer you a share of the United States' market. We tire not interested in cutting you back to zero or in gradually reducing to nothing your shipments to the United States; but 2. We are no longer going to permit you to carve up our domestic industries by flooding the United States' market with any volume of goods you choose and whenever you choose to ship them. The fairness and reasonableness of such a position and warning is entirely justified. It encourages foreign trade in a truer sense of the word while still providing access of foreign goods to our U.S. market. To do otherwise amounts to denying domestic industries their rightful share of our own market expansion, and could even cause them to accept a declining proportion of their existing share. Such action would amount to nothing more tl1an w-hat foreign nations have been doing for years. In fact, it w-ould not be as much. Appreciation and under- standing of the necessity of ceilings can be impressed upon them by the sug- gestion they re-examine their own actions over a long period of years. They have set the examples and should realize fully the undesirable impact of unre- strained imports. UNITED STATES AGRICULTURE AND WORLD TRADE It has been argued that for many years the United States has enjoyed a favor- able balance of Agricultural trade. and that Agriculture, business and labor alike do benefit from liberalized Agricultural trade. It has been further con- tended that ceilings on imports of individual products-Agricultural as w-ell as industrial-would seriously injure American Agriculture. There is the additional PAGENO="0109" ~37o9 argument that foreign nations must not be denied the opportunity to earn dol- lars in order to pay for our Agricultural products, nor should they be provoked into imposing retaliatory restrictions. We have pointed out previously that many nations have already imposed re- strictions in various ways on many U.S. products and still maintain them. By admission of our own Government, the Kennedy Round of Negotiations made little, if any, progress toward eliminating non-tariff barriers imposed by other nations. For them to justify additional barriers to U.S. products as a result of ceilings on U.S. imports is certainly unwarranted if not unthinkable. Ceilings on U.S. imports would in no way deny foreign nations the opportunity to earn dollars to buy American products. Ceilings do not mean absolute restric- tions nor even roll backs, depending on circumstances. Unfortunately, there is a strong tendency on the part of many who advocate free and unlimited access of all foreign products to the U.S. market to confuse ceilings or restraints with absolute prohibition. Nothing could be farther from the truth. There is no validity to the argument that ceilings on imports would seriously injure the export opportunity for American Agriculture. As a matter of fact, even though the new U.S. ceilings of which we speak have not been in existence, Agricultural exports have declined at least $1 billion since 1966. In 1986 Agri- cultural exports amounted to $6.9 billion according to the reporting procedure used by our Government. Exports in 1967 declined to $6.4 billion, and registered a further decline in 1968 to $6.2 billion. In calendar year 1969, exports went down to $5.9 billion.~ These declines took place, not as a result of import ceilings by the 13.5., but because of expanded Agricultural production in other countries of the world, and because other countries have established and maintained trade barriers designed to protect their own production at high prices. The United States will not improve the situation by maintaining a free and open market as long as other countries hold up their trade barriers and take from us only the quantity of U.S. products they want or need. The real problem is to break down these foreign barriers, but experience demonstrates rather con- clusively we can accomplish little by negotia;tion. The only answer is to adopt some of the same policies. Foreign nations will continue to buy U.S. Agricultural products if they need them, or want them, and if our prices are acceptable. The latter requires farm programs that will not boost the prices of exportable commodities beyond a cer- tain level. Our current farm programs rely heavily on an export market which means price supports that are not so high that we will price ourselves out of the world market. In the meantime, foreign nations con;tinue to protect high guar- anteed prices for their producers. At this time it would seem appropriate to point out that trade barriers to the importation of certain meat products employed by the European Economic Com- munity and some other trade areas have contributed to the meat import problem the U.S. now has. If the EEC and others would accept some of the meat now avail- able for export by such countries as Australia and New Zealand, the United States would not be subjected to the extensive pressure being applied to break- down our modest restraints on imports of beef, veal and mutton. A basic principle of international trade is that commodities move from one nation to another according to needs and supplies. In other words, surplus com- modities produced in one nation would move to countries where these com- modities are in short supply or do not exist at all. While realizing that this would be an idealistic situation and amounts to over simplification of what does and can occur in the complexities of world trade, we do have the obligation to domestic industries to be sure the import volume of supplementary or competitive commodities not in short supply does not get out of hand or too far out of balance, and thereby inflict serious injury on any par- ticular commodity or group of commodities. To minimize or avoid injury to the domestic cattle business the Congress passed the Meat Import Quota Law in 1964. The importance of restraining imports of beef, veal and mutton was clearly evident when cattle prices were seriously depressed in 1963 as beef imports reached the unprecedented level of 10 percent of our domestic production. It is important, though, that the operation of the Meat Import Quota law be examined. Foreign Agricultural Trade of the United States, Economic Research Service, U.S. Department of Agriculture, March 1969, p. 8, and February 1970, p. 7. PAGENO="0110" 3710 EXPERIENCE WITH PUBLIC LAW 88-482, THE MEAT IMPORT QUOTA AC7I OF 1964 It is a fact that the Meat Import Quota Act of 1964 is a ceiling type restraint pertaining to fresh, chilled and frozen beef, veal and mutton. In fact, the Fair International Trade Act of 1969 is patterned after this law. Seemingly, Public Law 88-482 accomplished its purposes from 1964 through 1968, but during that period at least, there was no real test of its effectiveness. It is now being tested and there is obviously a need to eliminate deficiencies and close loopholes. The table below, containing figures on a product weight basis and in millions of pounds, contains data on annual quotas and shipments since 1965. (In millions of poundsj - Year Base quota USDA estimate Actual shipments 1965 1966 1967 1968 1969 1970 890.1 890.1 904.6 950.3 988.0 998.8 630.0 800.0 860.0 990.0 1,035.0 21,061.5 613.9 823.4 894.9 1,001.0 11,070.6 ? 1 Shipments in the aggregate of 1,084,100,000 pounds less rejections of 13,500,000 pounds, leaving net of 1,070,600,000 pounds. 2 Summation of individual country commitments and/or the voluntary restraint program. Note that imports did not reach the quota level until 1968. In that year the amount exceeded the estimate of 990 million pounds by 11 million pounds and the extra volume was insufficient to trigger the quotas. In 1968, however, apprehen- sion developed over possible shipments in 1969. In the fall of 1968 a new approach came into play to supplement the provisions of Public Law 88-482. This new approach embraced Section 204 of the Agricultural Adjustment Act of 1956 which authorized the President to enter into agreements with foreign nations limiting the exports from such countries and the importation into the United States of any agricultural commodity or product manufactured therefrom. The Section also authorized the President to issue such regulations governing the entry or withdrawal from warehouses of any such commodity in order to carry out the agreements. The Administration entered into agreements with supplying nations to restrain their exports in 1969 to a total of 1,035.0 million pounds and each country was allotted a restrictive level. A concession was made by our government to allow a volume above the quota figure of 998.0 million pounds, but below the ten percent trigger level of 1,086.8 million pounds, in return for their acceptance of agree- ments. It seemed this approach would be effective, but in the final analysis all nations except Panama, Haiti and Mexico over-shipped the restraint level. An executive order under the agreements was issued against Honduras to stop shipments. However, the order was too late to prevent that country from over-shipping by 6.7 million pounds-nearly 50% above the agreement figure. Australia then over-shipped 16.5 million pounds, apparently concluding that she was entitled to similar leeway. In the aggregate, the thirteen supplying countries sent us 1,070.6 million pounds of accepted product, which was 33.5 million pounds over the adjusted restraint level of 1,037.1 million pounds in 1969. Actual ship- ments came to 1,084.1 million pounds, but rejections totaled 13.5 million pounds. This brings us to the current situation in the early part of 1970. THE 1970 IMPORT SITUATION Our government set about to obtain agreements from nations involved to restrain shipments this year to 1,061.5 mu. lbs. Each country was awarded a restraint level based on shipments in previous years. Our latest information revea1s that all countries asked to sign agreements have done so except two. One of these has executed an agreement, but language clarifications were pending. Be that as it may, it is apparent from the record of shipments so far this year that many of the 13 countries involved either do not intend to abide by their agreements, or hope to pressure the United States into further relaxation in the agreed levels. The record provides support for these contentions. Furthermore, there has been public declaration by persons in Australia, at least, that they intend to make `approaches' this year seeking to ease the quota PAGENO="0111" 3711 restrictions on meat imported by the United States. It is quite obvious that methods employed up to this time to over-ride our restrictions amount to something far beyond approaches. During the first 4 months of 1970 (imports as of April 30 are latest actual figures available), nine of the thirteen countries overshipped one-third of their annual restrictive level . . . some by substantial amounts. Restrictions were not re- quired or agreed to on a quarterly or four-month basis, but the comparison serves to emphasize the high rate of shipments that have been arriving. The table on the next page shows the restrictive amount assigned to each country, one-third of the restrictive volume, shipments from each country in the first four months of 1970, and the overage or shortage according to census reports. All figures again are in millions of lbs. and are product weight. [in millions of poundsj Restricted 3~ of restricted Shipments in Overage or Country amount amount 4 months shortage Australia 527. 2 175. 7 202. 7 +27. New Zealand 220. 3 73. 4 0 -8. 4 Mexico 68. 7 22. 9 2 +14. 3 Ireland 65.5 21.8 27. 1 +5. 3 Canada 45.0 15.0 25.2 +10.2 United Kingdom 5. 0 1. 7 1. 0 . -. 7 Nicaragua 39. 3 13. 1 17. 4 +4. 3 Guatemala 22. 3 7. 4 12. 0 +4. 6 Costa Rica 34. 9 11. 6 19. 7 +8. Honduras~ 14. 7 4. 9 11. 8 +6. 9 ominican Republic 11. 0 3. 7 7 -1. Panama 5. 4 1. 8 3. 5 +1. Haiti 2.2 .7 .4 -.3 Total 1, 061. 5 353. 7 425. 7 +72. 0 Total volume of imports received in the first four months of 1970 at 425.7 million pounds is 41 percent of the total restricted figures for this year. Collec- tively countries have overshipped one-third of their annual volume by 72.0 million pounds. Imports under the 1964 law have thus been coming into the United States at a projected annual rate of 1,277.1 million pounds or more than 200 million pounds above the agreed levels. It would appear, at least, that a number of countries are ignoring the generous allotments that have been awarded under the restrictive agreements. On April 30 Honduras was within 2.9 million pounds of the restricted level of 14.7 million pounds and probably by this time . . . June 11 . . . has either reached 14.7 million pounds or overshipped that amount. Mexico, Guatemala, and Canada, at the same projected rates of shipment earlier this year, would exceed their restricted amounts by August. Costa Rica would reach the level by the end of July. Australia, the largest supplier, would arrive at its restricted level by November. The projection, based on "the same rate of shipments earlier this year", can- not be precise because monthly shipments as a whole or indiivdually are not regular. As a matter of fact, though, many countries may reach their restricted levels earlier than suggested. In every year since 1965, shipments have been heavier during the middle and latter part of the year. Moreover, there has been a change in the complection of imports of fresh, chilled and frozen beef. Historically, the product we have received has been strictly boneless beef suitable for grinding and processing, meaning uses were largely for hamburger and manufactured meat products. In recent months, at least some imported beef has been reecived in the form of primal cuts, or bone-in, which beef is not neecssarily being processed. It can be sold as table beef either for use in low-priced restaurants or through retail stores. It has been reliably concluded that as much as 25 percent of the beef being imported by the United States is now in cut form. Some estimates run higher. While we have always been able to substantiate that manufacturing type beef competes directly with all domestically produced beef, regardless of quality, beef coming to us in cut form competes absolutely and beyond any shadow of doubt. A study is currently underway to determine exactly how much beef is to be shipped to the U.S. in a form other than boneless manufacturing type beef. Another device is now being employed by some supplying countries in an at- tempt to circumvent our preesnt law. It is the practice of trans-shipment through a third country. Australia and New Zealand are those primarily engaged in this PAGENO="0112" 3712 device at the preesnt time and are trans-shipping through Canada. In 1969 the United States received 18.8 million pounds through this route. Thus far in 1970 we have received about 19 million pounds from Australia and New Zealand through Canada. After the domestic industry and the United States Government have been most generous and even lenient to these foreign nations, it is not only dis- appointing, but down-right disguisting, that supplying countries would resort to such devices in what is obviously an attempt to circumvent our law. All of these transparent maneuvers underscore the necessity of tightening up the provisions of P.L. 88-482. The replacement of standby quotas in the law with absolute ceilings on imports, and the establishment of these ceilings on a quarterly basis would accomplish much of that which is necessary. In fact, we strongly reommend favorable consideration of H.R. 17540, by Mr. Ullman of this Committee, as well as numerous other like measures which have been introduced in the House of Representatives and in the Senate. ATTEMPTS TO PROPOGANDIZE UNITED STATES CONSUMERS AND THE FEDERAL GOVEBNMENT There is another aspect of the beef business I would like to bring to the atten- tion of the Committee. It involves a planned program deliberately designed to influence domestic consumers and officials, and encourage them to bring pressure for the relaxation or even elimination of the present restrictions on beef imports. Beginning some time late year, there was another wholesale attack upon the cost of beef even though the record clearly shows that live cattle prices, whole- sale beef prices, `and even beef at retail, have not risen in price during the past ten years as much as other food items, nor nearly as much as consumer goods and services, hourly wage rates, or per capita disposable income. It is apparent that importers and foreign nations, through their agents, are trying desperately to create alarm in order to gain a bigger slice of the U.S. market at the expense of the American citizens and taxpayers engaged in the domestic cattle industry. They have made, through publications and otherwise, all sorts of unwarranted, misleading and inaccurate charges designed to build up a case against U.S. restrictions on meat imports. Among the charges are these: Imported beef is definitely not competitive with American meats; Meat is imported only when needed; The value of imported beef is approximately the same as the value of U.S. exports of all meat and meat products; The U.S. needs to supplement a diminishing domestic production of man- ufacturing grade meat; Cattle prices reached the highest in U.S. history; and even that Inspection of foreign meat is generally more thorough than for domestic ment. There were others, but it is not our intention to go into detail in refutation of these ill-advised charges at this time. We have already done that. The point is, though, that there has been a certain degree of consumption of the arguments which were designed to perpetrate a hoax on the American consumers and embarrass the Administration. THE TRUTH ABOUT BEEF SUPPLIES AND BEEF PRICES Under date of April 8, 1970,, the National Livestock Feeders Association made available a documented statement entitled, "The Truth About Beef Supplies and Beef Prices". The members of this Committee, `as well as all members of the Congress, received a copy. The many special responses were extremely gratifying, and we were highly complimented by the fact it appeared in the Congressional Record several times. The statement substantiated the fact that beef is a bargain as compared to other foods, other costs, consumer goods and services, hourly wage rates and weekly earnings, and per capita disposable income. It emphasized that con- sumers continue to buy more beef for less, and explained why we cannot afford and do not need more imported beef. It outlined sources of increased beef production in the United States during the next five years, and declared such increases would take place provided there was sufficient price incentive to producers and feeders. Beyond this, we projected population figures to 1975, as well as per capita consumption, and demonstrated that the domestic industry can supply both PAGENO="0113" 3713 increases, and will do so unless competitive foreign beef is allowed to flood our market and depress prices. It has always been very perplexing to us how proponents of increased imports will argue that restricted imports will raise prices while claiming at the same time that more foreign meat in our market will not depress prices. The document clearly stated that beef production is a business operating in the United States under all the conditions of the United States economy. In this atmosphere we cannot be expected to supply products at low figures when nearly all costs and incomes are inflated. As is the case with most other industries in the United States, neither can we be expected to compete beyond a point with low wage rates and costs prevailing in most supplying countries. THE TRUTH ABOUT PROCESSED BEEF SUPPLIES AND PRICES On April 24, 1970, the National Livestock Feeders Association circulated a sequel to its initial statement whch was entitled, "The Truth About Processed Beef-Supplies and Prices". This document was directed toward the production and availability of processing beef about which numerous inaccurate state- ments had been made, both as to price and volume. Likewise, a copy was sent to all members of this Committee as well as the members of the Senate Finance Committee and members of the Committee on Agriculture in both Houses of Congress. Responses to our second statement were equally gratifying. It pointed out the attempt at obvious distortion of the supply and price situation and went into detailed refutation of charges made by the Importers Council of America, Inc., as contained in a booklet published last September. We went on to prove that the actual supply of processing type beef had increased substantially from 1964 to 1969 (8,519 million pounds to 9,953 million pounds) and that the domestic source of manufacturing beef was not drying up as charged. We documented the facts that while the total per capita supply of beef rose from 99.8 lbs. in 1964 to 110.6 lbs. in 1969, the per capita supply of processing beef also went up from 44.3 lbs. to 49.0 lbs. The claim by proponents of more imports that a shortage of processing beef exists in the United States, is refuted by the fact that over periods of time the price of hamburger and other manufactured products have not risen any more than cuts of beef nor as much as other consumer costs. Furthermore, it was pointed out that the general price of chucks puts a ceiling on the price of ham- burger. Had there been any real shortage, the price of hamburger would have gone up materially. In conclusion, the statement revealed the fact that while imports in the first three months of 1970 ran about 109 million pounds above the first quarter of 1969 and 71.9 million pounds above one-third of the restricted level, frozen beef in cold storage in the U.S. was 101.4 million pounds above a year earlier as of March 31, 1970. Frozen beef in cold storage was 121.3 million pounds above a year ago on February 28 and 90.7 million pounds above last year on January 31. For this record, frozen beef in cold storage amounted to 90.0 million pounds more than a year ago on April 30. The statement put the question, "If there is such a terrible demand for proc- essed beef (that is not being satisfied), why is this greater volume of frozen beef being held in cold storage?" CONCLUSION In conclusion, Mr. Chairman, we again emphasize the need for adjustments in the foreign trade policies of the United States, not to the extent of curtailing foreign trade, but to the degree of recognizing the importance of a healthy do- mestic industry in this Nation's economy, and of preserving for American industry the major portion of our own market to which we are entitled. The cattle industry, consisting of both growers and feeders, is among those extremely vulnerable to the devices of outside interests. The actual production of a choice steer commenced some two years ago, and actually was started long before if the time for maturity of ii heifer and the gestation period are taken into consideration. Flexibility in production is at a minimum and, `besides this limitation, the resulting consumer product is extremely perishable. Beef has become recognized as the Nation's most popular food. It remains a bargain today, by comparison. The best interests of consumers will be served if policies are embraced which do not injure or cripple the economic well~belng of the domestic cattle industry. Without reasonable price incentives, encouragement for expansion and development of beef production will be lacking. Foreign nations PAGENO="0114" 3714 can be relied upon to take advantage of our higher price levels, but cannot be relied upon for regular quantities of the kind of beef our people want. It will be a dark day for this Nation if consumers ever become dependent on foreign production for any appreciable quantity of their basic food supply, or if other countries are allowed to beat down the domestic cattle producers and feeders to the point where increased beef production may be discouraged or even economically impossible. TUE TRTJTH ABOUT PROCESSED BEEF SUPPLIES AND PRICES, BY DON F. MAGDANZ, EXECUTIVE SECRETARY-TREASURER, NATIONAL LIVESTOCK FEEDERS ASSOCIATION This document is a sequel to that prepared by this Association on April 8, 1970, entitled, "The Truth About Beef Supplies and Beef Prices". Our statement of April 8 referred primarily to total beef supplies and over-all prices as well as the prospect for future production through 1975. This document is directed toward the production and availability of processing beef about which numerous inac- curate statements have been made recently both as to price and volume available. OBVIOUS DISTORTION OF SUPPLY AND PRICE SITUATION It is obvious that a determined effort is being made by the Meat Importers Council and by agents for foreign nations to distort the supply and price situa- tion of processing beef in the U.S. In so doing, they are deliberately propagandiz- ing the American consumer for the sole purpose of doing away with the modest import restrictions we now have. If these restrictions are relaxed, supplying nations could then load our market with frozen boneless `beef and a relatively few local importers would benefit personally by handling a substantial increase in volume of product. They obviously have no concern for our domestic beef industry and, while posing as great benefactors to American consumers, they have no concern for the future welfare of consumers. Should the domestic beef industry be crippled to the extent it cannot fulfill future requirements of this Nation as a result of ex- panded competition from foreign production, the beef supply would be in serious jeopardy since foreign nations could supply neither the quantity or quality of `beef desired by the growing and affluent population in the U.S. In September of 1969 the Meat Importers Council of America, Inc., circulated a booklet entitled, "The Case Against Restrictions on Meat Imports." The booklet is full of misleading statements, twisted analyses and inaccurate conclusions, designed to propagandize the consumers of the U.S. The introduction contains the argument that, "The U.S. needs to supplement a diminishi~ng domestic produc- tion of manufacturing-grade meats." The facts and records show that since 1964 we have had an increasing amount of processing meat available to con- sumers both in absolute quantities and per capita supply. Seizing upon a short-lived bulge in cattle prices during mid-1969. the booklet refers to, "The highest cattle prices in U.S. history." This rise in price which did occur was of short duration beginning in April and ending the second week in June. Prices then receded to levels that prevailed in the first three months of 1969. Even at the highest point, however, live cattle prices had not reached levels that prevailed in 1952. eighteen years before. Be that as it may, we wonder what is so wrong about beef cattle prices reach- ing their highest point in history in 1969. Certainly cattle were not the only commodity that attained highest prices in history during that year. since every- thing else also set record prices as the general price level climbed. By 1969 we had record hourly wage rates, record disposable income, record prices for consumer services, record payments of Social Security benefits, record welfare payments and the highest figures for practically everything that can be men- tioned. How can anyone justify picking out cattle prices and condemn them for reaching the highest level in history, particularly when it was not true. At another point, the booklet states, "It (imported fresh-frozen beef) is definitely not comparable to or competitive with American meats of higher grade which are used as table beef and classified as `Prime', `Choice' and `Good'. While not necessarily being comparable to the better grades of beef being produced in the U.S., foreign beef is directly competitive with domestic supply because a great deal of processing beef is derived from our better grade animals. Further- more, not all fed animals are finished to the choice grade and some of them do not even reach good grade. Moreover, processed meat products in the retail counters, such as haniburger or frankfurters, are definitely competitive with PAGENO="0115" 3715 steak, ribs and roasts as consumers make their selection according to price as well as their particular needs and desires at the moment. The argument that imports do not affect fed beef (and thus fed cattle prices) to any degree because such imported products are used primarily in the manu- facture of processed products is ridiculous. Also, the contention imports do not affect fed prices overlooks the very im- portant fact that over one-half of the domestically produced processing meat comes from fed carcasses (See Table 2). This portion of beef available for proc- essing has been steadily increasing, not only because larger numbers of cattle are being fed, but also because the grade standards were relaxed a few years ago requiring less finish for an animal to reach the Good, Choice and even Prime grades. Beef is its own closest competitor regardless of the form in which it's marketed. Attempts are often made to draw a fine line between the factors which affect the fed market and the so-called cow or processing type market, and to treat these as two separate and distinct markets as far as price is conceriied. Such an analysis is not valid because there is a very definite and intertwined relationship among the various segments of the cattle and beef market. Any factor which affects one class of cattle or beef very definitely does not do so at the ex- clusion of the other classes. The above conclusion is logical in view of the very real competition between various cuts and/or products in the retail counter and the substitutability among classes of beef. The unfair competition of foreign beef, however, does not stop with its in- fringement on the domestic cattle industry. It also competes unfairly in the market for other domestic meat animals and products such as hogs, pork, lamb, as well as domestic poultry and fish. At another point the booklet argues. "It is largely the drying up of this domestic source of manufacturing meat and the soaring demand for convenience low cost meats which has made the importation of meat necessary." Again the record shows that the supply of manufacturing and processing meat in the U.S. is not drying up. but, as mentioned before. has actually increased. We could go on and on with refutation of statements contained in the booklet; however, that appears unnecessary. Let's examine the facts. THE ACTUAL SUPPLY OF PROCESSING BEEP Manufactured or processed beef from domestic production comes largely from two sources. First. there is the production of cow and bull beef. much of which is extremely lean because the animals slaughtered have been produced on grass and not in the feedlot. The other source is that portion of steers and heifers, both fed and non-fed, which is not sold as fresh beef cuts in the retail counter as table beef. Fresh beef cuts largely come from the loins, rounds, ribs and chucks. Much of the remaining parts of the carcass, including the plates, shanks, brisket and trimmings, wind up as ground fresh beef which may be sold as hamburger or is used in other processed products. Even part of the chuck may find its way into hamburger instead of being sold as chuck roasts, since prices of this particular cut are often comparable or close to prices received for hamburger. Table I contains the figures to show the proceesing beef produced domestically from 1964 through 1969, which volume, when added to imported beef, gives the total supply of processing beef available to tT.S. consumers. TABLE 1,-COMMERCIAL DOMESTIC BEEF PRODUCTION-STEER AND HEIFER BEEF PRODUCTION-COW AND BULL BEEF PRODUCTION-DOMESTIC PROCESSING BEEF PRODUCTION-I MPORTS EIn millions of poundsj Total beef production 1 Steer and heifer beef production 2 Processing beef from steers and heifers3 Cow and bull beef production 2 Imported beef carcass weight equivalent 1 Total processing beef 1964 1965 1966 1967 1968 1969 18. 456 18,693 19,726 20,212 20,875 20,953 15. 023 14,457 15,662 16,478 17,034 17, 150 3,906 3,759 4,072 4,284 4,429 4, 459 3,433 4,270 4,064 3,741 3,841 3,880 1, 180 923 1,182 1,313 1,500 1, 614 8,519 8,952 9,318 9,338 9,770 9,953 1 Livestock and Meat Statistics, Statistical Reporting Service, U.S. Department of Agriculture, Statistical Bulletin No.333. 2 Computed from total-domestic beef production, steer and heifer slaughter, and cow and bull slaughter. 3 Computed from domestic production of steer ond heifer beef using accepted fact that 26 percent of all steer and heifer beef is used in processing and manufacturing. PAGENO="0116" 3716 The information in Table I clearly shows the increasing volume of processing beef from steers and heifers in the domestic slaughter from 1964 through 1969. In addition, cow and bull beef have been increasing since 1967, although by 1969 had not quite reached the highest figure in 1965. The last column in the table adds the processing beef from steers and heifers, domestic cow and bull meat produc- tion, and the volume of imported beef (carcass weight equivalent) to show the total volume of processing beef that has been available to consumers in each of the six years. Note the steady increase from 8,519 million pounds in 1964 to 9,953 million pounds in 1969, an increase of 1,434 million pounds or 16.8%. Table II below uses some of these same figures to show the per capita supply of beef in the United States as well as the per capita supply of processing beef, including that which is imported. TABLE Il-PER CAPITA SUPPLY OF DOMESTIC BEEF AND IMPORTED BEEF-PER CAPITA SUPPLY OF PROCESSING BEEF [In millions of poundsj Total beef production 1 Imported beef, carcass weight equivalent Total supply (minus exports) Per capita supply2 pro Total cessing beef° Per capita supply processing bee 1964 1965 1966 1967 1968 1969 18, 456 18, 693 19,726 20, 212 20,875 20,953 1, 180 923 1,182 1, 313 1,500 1,614 19, 545 19, 525 20,908 21, 437 22,267 22,485 99. 8 99. 3 104.0 105. 9 109.4 110.6 8, 519 8, 925 9,318 9, 338 9,770 9,953 44. 3 46. 0 47.3 46. 9 48.6 49.0 I Livestock and Meat Statistics, Statistical ReportingService, U.S. Department of Agriculture, Statistical Bulletin No. 333 2 National Food Situation, Economic Research Service, U.S. Department of Agriculture, February 1970, p. 15. From table I. Note that since 1964 per capita supply of all beef has risen from 99.8 pounds to 110.6 pounds. At the same time, the per capita supply of processing beef has gone up a like percentage from 44.3 pounds to 49 pounds. The contention there is a gap in the supply of processing beef in the United States is an absolute myth and cannot be supported or substantiated. PROCESS BEEF DEMAND IS "CREATED" It has sometimes been stated that the principal reason for substantial increases in meat imports in the United States is the increased demand in this country for processed products. It must be realized thiit ~this so-called demand is a "created demand" and a large tonnage which has moved from foreign nations is prompted as the result of offering a vast array of processed products to consumers, rather than any specific "call" from consumers for this type of product. Instead, foreign nations desiring to export beef products have poured them into the United States and, along with the importers of these products, are now trying to convince United States consumers that they need more processed meat. They are also encouraging consumers to insist on the relaxation or elimination of import restraints. SHORTAGE DOES NOT EXIST If there is or has been a serious shortage of processing beef in the United States, why has not the retail price of hamburger, for instance, changed much more than prices of table cuts such as sirloin steak or beef ribs. According to Bureau of Labor Statistics the average price of hamburger in the United States during 1968 was 56.10 per pound. In August, 1969, when hamburger reached its peak price, the average was 65.6~ per pound, an increase of 9.5ç~ or 16.9%. The average price of sirloin steak in 1968 was 119.50 per pound. During the highest months in 1969, which happened to be July, the average price of sirloin steak in the United States was 141.90, an increase of 22.40 per pound or 18.8%. If there was such a shortage of processing beef, as has been alleged, why is it that hamburger did not rise much more in price on the average than the example of sirloin steak that has been used. By February, 1970, the average price of sirloin steak in the United States did come down to 130.90 which was 11.40 per pound over the average in 1968 or 9.5% higher. The average price of hamburger did hold fairly steady at 65.30 per pound PAGENO="0117" 3717 or 9.20 per pound over 1968, which was 16.4%. It's true that the price of hamburger did not decline as much as certain fresh table cuts, but neither did the price increase as much during the temporary price bulge in 1969. If there is any validity to the allegation made by proponents for increased imports, why has not the price of hamburger gone up materially to reflect this contended shortage of processing meat? The truth of the matter is the shortage does not exist. So far we've demonstrated there is no shortage in the normal sources of the supply of processing beef. There is still another source of beef available for sale as hamburger which tends to provide a ceiling on the price of hamburger. We refer to chucks from both steers and heifers. For quite a number of years, the price of chuck roasts at retail has closely par- alleled the retail price of hamburger at figures from 4c to lOc above. Further- more, most of the time domestic boneless chuck is sold in the wholesale market for less than domestic boneless bull beef and at times is sold for less than im- ported boneless bull beef. For example, on August 4, 1969, domestic boneless bull sold at $63.75 per cwt; imported bull beef was $62.50 and domestic boneiess chuck was $62.75. On November 3, domestic bull beef was $60.00, imported bull beef was $58.00, and boneless chuck $57.50. Continuing with examples, on February 2, 1970, domestic bull beef was $65.50, imported bull beef was $61.75, and boneless chuck was $63.50. On April 16, do- mestic bull beef sold at $68.00; imported bull beef brought $63.75, and domestic boneless chuck sold at $67.00. CONSUMER DECEPTION The National Livestock Feeders Association contends that those who are in- sidiously attempting to bring about relaxation of import restrictions and open the door for increased volume of foreign beef, are perpetrating a hoax on con- sumers of the United States, and are using it as a device to bring pressure on the Administration. This is a highly organized and carefully planned maneuver that should be stopped cold by complete exposure of the facts. Table III (See Page 8) containing the record of frozen beef in cold storage at the end of each month since January 1968 vividly exposes the deliberate attempt to falsify the supply situation. In 1970 foreign nations have been shipping us products (covered by the 1964 Meat Import Law) at the unprecedented annual rate of 1.3 billion pounds. This annual rate contains an estimated volume for March, 1970, of about 100 million pounds. In so doing, an attempt is being made to show that this high rate of imports has little or no effect on our domestic market. There is more to the `situation than meets the eye. TABLE 111.-FROZEN BEEF IN COLD STORAGEI [As of the end of each monthj [Million poundsj 1968 1969 1970 Change from previous year January February March 261.369 239. 542 211.145 265.860 356.540 256.979 378. 300 261.656 363.012 90.680 121. 321 101.356 April May June July August 202. 376 182. 325 186. 769 200. 923 218. 268 254. 428 234. 055 2~8. 614 227. 203 254. 255 52. 052 51. 730 31. 845 26. 280 35. 987 September 227. 454 251. 775 292. 862 321. 888 65. 408 70. 113 October November 282. 255 281. 549 320. 938 340. 515 38. 683 58. 966 December 1 Cold Storage Reports, Statistical Reporting Service, U.S. Department of Agriculture, Feb. 1, 1969, through Apr. 1, 1970. Column 4 of Table III shows the increased volume of frozen beef in cold storage as of the end of each month compared to the same month a year earlier. Note that PAGENO="0118" 3718 on January 31, 1970, frozen beef in cold storage was 90.680 million pounds above January 31, 1909. February, 1970, was 121.321 million pounds above a year earlier, and March was 101.356 million pounds higher. Cold storage holdings of frozen beef in the last nine months of 1969 were only modestly above a year earlier with the exception of October which was 70.113 million pounds above 1968. If there is such a terrific demand for processed beef, why is this much greater volume of frozen beef being held? We submit that frozen beef is being deliberately held out of market channels after it has been recorded as imported, in an attempt to force prices of manufactured products to go up, thus providing more ammu- nition to use in an effort to repeal the 1964 Act or prevail for the suspension of qutoas once they might be put into effect. In the opinion of this Association, those who are attempting to hoodwink the consumers of our Nation need to be told bluntly that it is not going to work. Not only are they advancing arguments that do not hold water, there is evidence of a deliberate attempt to force a situation on American consumers that is con- trary to actual circumstances. To be equitable to American consumers and the domestic cattle industry, the facts must prevail. APRIL 8, 1970. THE TRUTH ABOUT BEEF SUPPLIES AND BEEF PRICES BY DON F. MAGDANZ, EXECUTIVE SEcRuTARY-TREASURER, NATIONAL LIVESTOCK FEEDERS AssocIATIoN With all of the clamor being heard again about beef prices and what appears to be the beginning of another wholesale public attack upon the cost of the Na- tion's most important food item, it would seem the time has come to state a few hard, cold facts and set the record straight. As suppliers of the fed animals from which consumers enjoy Choice beef, as well as Good and Prime, it is disgusting that whenever the cattle feeders and cattle growers realize or approach receiving prices for fed animals that allow them a decent return for effort, investment and risks incurred, some persons feel called upon to scream at the top of their lungs about the price of beef. Sometimes this hue-and-cry comes from individual consumers or small groups of consumers. At other times, it comes from over-zealous writers who apparently are trying to "whip something up". Through United States citizens registered as foreign lobbyists, foreign nations are trying desperately to create alarm in order to get a bigger piece of the U.S. market for their clients at the expense of American citizens and taxpayers engaged in the domestic cattle industry. U.S. importers are also in on the act. Some manufacturers, who would like to expand markets for their products in the nations who want to ship us more beef, are fanning the fire. Always the fingers are pointed at high beef prices with apparent disregard for the facts in the case. Are beef prices high compared to other consumer items, services, wages, taxes, disposable incomes, etc.? The answer must be an emphatic, NO! And there isn't any justification for all of the alegations poured forth from a variety of sources. BEEF IS STILL A BARGAIN The evils of inflation have brought about price and cost increases of practically every item we might name. In the past 10 years-since 1960-many of these increases have been substantial. But the price of fed cattle, wholesale beef, and even retail beef, have not nearly kept pace with the rest of the economy. All that cattle feeders and growers want is a fair shake. They're not getting it and, except for occasional brief periods, haven't realized a return for nearly 20 years commensurate with inflated costs and prices. Even in mid-year 1969, when cattle prices and wholesale beef did move upward temporarily, the average price of fed steers, Choice grade, at the peak time was slightly less than in 1952-18 years ago. Prices were, for two weeks in June, 1969, about 30 percent above the average in 1960. In less than 4 months, Choice steers were back down to only 10 percent above 1960. Wholesale beef prices declined similarly. Retail beef prices also came down, though not as much. But this is the fourth.month of 1970. What is the situation now? It's simply this. At today's prices, beef is still the best bargain in the food stores. The same was true last summer and fall even though prices were higher than now. PAGENO="0119" 3719 In February 1970 the average price of Choice steers at Chicago was $30.27 per cwt. It was $26.24 in 1960.1 If Choice steer prices had gone up during the 10 year period and kept pace with the cost of consumer services (less rent), Choice steers would have brought $38.39 per cwt., a figure $8 higher than they actually were, and $4 above the highest average for Choice steers at the peak time last year. If `the average price per lb. of beef at retail had gone up as much since 1960 as these same consumer services, the average cost of beef to the consumer in February would have been $1.18 per lb. instead of the actual 97.4 cents. Sirloin steak would have been selling on the average at about $1.60 per lb. instead of $1.31 and hamburger (not to be confused with ground beef) would have cost 80 cents instead of 64.5 cents (actual figures from Bureau of Labor Statistics, January 1970). Had Choice steer prices gone up since 1960 as much as the hourly earnings of labor (non-agricultural), Choice steers at Chicago would have sold for $39.54 per cwt. instead of $30.27. If Choice beef at retail had kept pace with these hourly earnings, the average over the nation would have been $1.22 per lb. Sirloin steak would have been selling for at least $1.65 and hamburger at about 83 cents. In the fourth quarter of 1969 (latest figures available) per capita disposable income in the U.S. stood at $3,172.00, an increase of 63.8 percent from 1960. If the price of Ohoice steers had moved up relatively, feeders would have been getting $43.00 per cwt. The average,price of Ohoice beef at retail would have been $1.32 per lb. Sirloin steak would have had to `bring about $1.80 and ham- burger around 89 cents per lb. A comparison of prices in 1960 to those in February 1970 shows that neither Choice steers, nor Choice beef in the wholesale market, nor even the average price per lb. for Choice beef at retail, have gone up nearly as much as other foods, consumer services, hourly earnings, disposable income, etc.2 Choice steers rose from $26.24 per cwt. to $30.27, an increase of 15.3 percent, while per capita disposable income went from $1,937.00 to $3,172.00-an increase of 63.8 percent. The average price per cwt. of Choice beef carcasses at Chicago went from $43.98 to $46.74, an increase of 6.3 percent, while the average hourly earnings of non-agricultural labor went up 50.7 percent and average weekly earnings rose 45.2 percent. The average price per lb. of Choice beef at retail went from 80.7 cents to 97.4 cents (in the highest month of 1969, the price was only 1.021/2), an increase of 20.7 percent, while hourly earnings of labor in the manufacturing industry went up 63.0 percent, and the per capita expenditures for other goods and services went up 67.7 percent. Meanwhile, still covering `a 10-year period, 1960 to February 1970, Average consumer price index-all items-went up 28.5 percent. Average cost of all food purchased by consumers, up 29.6 percent. Average cost of all consumer services rose 41.4 percent. Average cost of consumer services, less rent, up 46.3 percent. Average hourly earnings, non-agricultural, went up 50.7 percent. Average hourly earnings of labor, manufacturing, up 45.1 percent. Average hourly earnings of labor,' construction, up 63.0 percent. Average hourly earnings of labor,' retail trade, up 57.9 percent. Average weekly earnings, non-agricultural labor, up 45.2 percent. We wonder how anyone can defend a charge that beef prices are too high. MORE BEEF FOR LESS But this is not the whole story. The ~cattle feeding and producing industries, even though often operating in a marginal or submarginal profit climate, in- creased beef production from 14.75 billion lbs. in 196O~ to 20.95 billion lbs in 1969,~ an expansion amounting to 42 percent. On a per capita basis, the industry supplied each man, woman and child in' the United States with 103.1 lbs of beef in 1969. Adding 7.5 lbs. of net imports of beef per capita, the total supply per person amounted to 110.6 lbs., an increase of 30.2 percent from the 85.0 lbs. of beef available in 1960. 1 See Appendix, Table I, with complete referenceq. 2 See Appendix. Table I, with complete references. Livestock and Meat Situation, Economic Research Service, USDA, November 1968, p. 26. 4Ibid., March 1970, p. 24. PAGENO="0120" 3720 But to buy this Increase of 30.2 percent (25.6 lbs. more per person), con- sumers were able to drop the percentage of disposable income spent for all food from 20.0 percent in 1960 to only 16.4 percent in 1969-3.6 percent less or a de- cline of 18 percent. Meanwhile, with a 63.8 percent increase in per capita dis- posable income, they spent 2.5 percent more of it for other goods and services. In fact, per capita expenditures for food rose $131.00, or 33.8 percent, while expenditures for other goods and services went up $956.00, an increase of 67.7 percent. At this point it is appropriate to explain differences in domestic production and consumption-per-capita figures since many who argue the meat price case do not differentiate. Production of beef is total dressed weight from U.S. slaughter which, in 1969, was 20.95 billion lbs. Consumption per person figures results from dividing the population into the total supply available, the latter being produc- tion plus imports less exports. In 1969 imports of beef amounted to 1.614 billion lbs. (carcass weight equivalent) and exports were 82 million lbs. The resulting total supply available for consumption amounted to 22.485 billion lbs. in 1969. Division by the population of 203.2 million persons in 1009 produces per capita consumption of 110.6 lbs. of which 103.1 lbs. was domestic production and 7.5 lbs. was imported beef.° WE CAN'T AFFORD MORE IMPORTS Obviously, to generate pressure for modification of the 1964 Meat Import Law, doubt is being raised that the beef supply from domestic production will be adequate to meet demand by 1975. In other words, fear is being aroused that there will be a shortage of beef by or before 1975 sending beef prices to much higher levels unless we open the doors for expanded foreign shipments. We challenge these suggestions. We further contend that such tactics are being used to create a situation that will lower beef prices from present levels even though we have shown clearly that beef prices have not kept pace with other costs and prices and, frankly, are too low now. Suggestions (in the atmosphere of present livestock and beef price relationships) that some new commission be charged with the responsibility of determining future demand and domestic supply, and the volume of foreign meat that should be admitted under these determinations, smack heavily of a move to deliberately lower beef prices to consumers. This is true despite the language in the suggestion that proper recognition be given to a reasonable profit for the domestic beef industry. In the face of rising costs of production, including labor, taxes, equipment, supplies, services, etc., and increased costs of slaughtering, processing, fabri- cating, distribution, and sales, we don't see how anyone can expect the domestic industry to furnish quality beef to consumers at lower figures per pound. Par- ticularly is this true when consumers are demanding more services at the meat counter including extra trimming, more boning, and special treatment, and with higher disposable income more of them are wanting the more popular cuts, such as steaks and ribs. The record will show that the domestic industry has demonstrated it will supply consumers with the quantity of beef they want and need. It is safe to say that the domestic industry will continue this supply in the future, provided consumers are willing to pay what it costs to produce, process, and distribute this supply for them. At the same time, we suggest certain discouragement among cattle feeders and cattle growers from consumer resistance to what are still reasonable prices for beef. Should such discouragement become wide spread, the industry as a whole may not supply the increases which may be necessary to completely fill the demand of consumers. It is like anything else; industry will furnish the product, but only if consumers are willing to pay the cost. In order to meet demand in the future, it is obvious that some expansion in beef production will be necessary. There are differences in opinion on how much expansion will be required. Reserving comment on these differences until a later paragraph, let's first look at sources of increases in beef production. Economic Indicators, prepared for the Joint Economic Committee by the Council of Economic AdvIsers, March 1970, p. 5. Livestock and Meat Situation, Economic Research Service, USDA, March 1970, p. 24. PAGENO="0121" 3721 WHERE DO WE GET MORE DOMESTIC BEEF? Expansion in beef production arises from several sources. It results from in- creasing the number of fed cattle through a reduction in the slaughter of calves and from the reduction in slaughter of non-fed steers and heifers; and finally, from an increase in the production of more cattle (meaning more cows to pro- duce calves). Since 1960, calf slaughter in the United States has declined from 8,225,000 head to 4,858,400 head 8 in 1969. Most, if not all of these calves found their way to feedlots and produced about 630 lbs. of beef per head instead of about 130 lbs. of veal. It is reasonable to predict that calf slaughter will decline still further to the point where we may be slaughtering only about 2,800,000 head of calves in a given year adding some 2,000,000 head of cattle which will yield about 500 lbs. more beef animal. In the same year, 1960, the slaughter of non-fed steers and heifers totaled 5,664,- 000 head.° By 1969 this number had been reduced to 3,Ø33,ØØØ10 Again, these cattle found their way into feedlots, and each yielded about 630 lbs. of beef per head instead of about 360 lbs. considering the non-fed animals had been slaugh- tered at 700 lbs. It is again reasonable to predict from past experience that the number of non-fed steers and heifers in the slaughter will be reduced still further and soon amount to only 2,000,000 head per year. This would throw something over 1,000,000 head of additional cattle into feedlots and a corresponding increase in beef production would result. In fact we can calculate an approximate amount of increased beef that will result from these two changes in slaughter. Adding 2,000,000 head of cattle to the feeding operation as a result of reduced calf slaughter with 500 lbs. more beef produced per animal above what was produced as veal, we come up with an increase of 1.0 billion lbs. of beef. Likewise, redirecting 1,000,000 head of non-fed steers and heifers into feedlots and realizing 630 lbs. of beef per head instead of 360 lbs., we come up with an additional increase of 270 million lbs. of beef. These two sources alone, within the space of 1 or 2 years, would add 1.270 bil- lion lbs. of domestic beef for consumers. It is reasonable that these changes will take place very soon based on the pattern in recent years. It's a foregone con- clusion, though, that the slaughter of calves will probably never be reduced to zero, nor are we apt to ever feed all of the steers and heifers now produced in the United States. Some of the latter will always be slaughtered as what we call non-feds, although the number in this classification will undoubtedly decline. As indicated, a third avenue for increased beef production is through the pro- duction of more cattle-meaning more cows to raise calves. This source of ex- panded production requires more time than the other two, but the process is already underway. With rather stable cow numbers on January 1, 1966, 1967, and 1968 of just a few more or less than 50,000,000 head, an increase in cows and heifers two years old and older of 330,000 head took place by January 1, 1969. On January 1, 1970, the estimated inventory of cows rose another 390,000 head to 51,308,000.11 Increases in these two years represent the first significant change in cow numbers we have seen since about 1964 and is the basis for l'lie previous statement that expansion in the cow herds is already underway. The change in cow numbers from January 1, 1969 to January 1, 1970, however, was a modest 1.8 percent. We are not suggesting the same rate of increase of cow numbers will take place in the next three years, but a reasonable rate of 1.5 per- cent would place 53,652,000 head of cows in the inventory on January 1, 1973. Calves from these cows on hand would be reaching the market as fed beef in 1974 and 1975. Such an increase, along with the other changes in patters which have just been reviewed, would easily be sufficient to supj~ly the nation with an adequate amount of beef per capita, and more than is available to them today. 7Livestock and Meat Stati8tic8, Economic Research Service, USDA, Star~istlcal Bulletin No. 333, August 1964, p. 64. 8 Live8tock Slaughter, Statistical Reporting Service, USDA., December 1969, n. 2. Calculated from total Slaughter of Cattle in 1960, Ibid., No. 7, of 25 224 000 head less slaughter of fed marketings and slaughter of cows and bulls. 10 Calculated from total of cattle in 1969, Ibid., No. 8, of 35,224,000 head, less slaughter of fed marketings and slaughter of cows and bulls. 11Livestoclt, and Meat Situation, Economic Research Service, USDA, March 1970, p. 6. 46-127 0-70-pt. 13-8 PAGENO="0122" 3722 Cattle producers, however, will need some definite encouragement to retain additional numbers of she-stock in their herds in order to produce the increase in calves from which consumers can eventually obtain additional beef supplies. This encouragement must come from prices sufficient to compensate them for their production and will not result if wide-spread public resistance to meat prices appears whenever returns from live animals approach a favorable level. HOW MUCH BEEF DO WE NEED? As indicated previously, there is a difference of opinion as to how much beef will be needed by 1975. Some projections call for as much as 27 billion pounds. Others range down to 26.3 billion and still lower to 25.8 billion. Frankly, it's only reasonable to assume that 25.8 `billion pounds by 1975 is a higher volume than can be sold to consumers `at prices providing reasonable returns to producers. We suggest that the very maximum that can be available without seriously de- pressing the domestic market would be 25.3 billion pounds. In order to arrive at a possible figure five years hence, though, `two projections need to be made- population and consumption per capita. Seemingly, population projections can be made with reasonable accuracy. According to Government sources the population since 1967 has been increasing at `about 1 percent per year. Prior to that time, over a `two year period the in- crease was at the rate of 1.1 percent per annum. With the population of 203,216,- 000 in 19G9,~ a 1 percent increase per year would mean a population by 1975 of 215,690,000 persons. Under modern circumstances this projection appears far more realistic than some which would indicate 219 million people, or more, five years hence. The volume of beef that persons will buy at prices favorable `to producers pres- ents a more speculative projection. We believe it a foregone conclusion they would not accept a rate of increase per capita anywhere near that which took place from 1960 to 1970, which actually amounted to over 25 pounds per person. In fact, an increase of per capita supplies of more than 6 pounds to 7 pounds per person would be the outside limit which could be sold at `present prices, or levels more favorable. Beginning with 110.6 pounds per capita consumed in 1969, a 1 percent increase per year would mean 117.4 pounds per capita by 1975. Anything more than this, we contend, would `be unrealistic and exceedingly dangerous to the domestic industry. Arguments tha't the consumption of `beef in foreign countries may `be 120 pounds per person to as mu'ch as 190 pounds per person, thus indicating that the U.S. has not even begun to reach its potential, are not realistic or justified. Per- sons in these other countries `are largely `beef consumers whereas `the U.S. has a wide variety of other meat products which are being consumed. In addition to 110.6 pounds of beef consumed per capita in the U.S. in 1969, the civilian popula- tion also consumed 3.4 pounds per person of veal, 3.4 pounds of lamb and mutton and 64.8 pounds of pork, for a total of 182.2 pounds of red meat per person. Over and above this they consumed 47.6 pounds of poultry and 11.0 pounds of fish for a gran'd total of at least 240.8 pounds of high protein food `per capi'ta.~3 Without question, beef has become the most popular of any of these products mentioned. But we cannot ignore the fact that `there is a practical limit `to `the amount of `food which humans can consume and will pay `a fair price for. Recall now our projected population of 215,690,000 persons `by 1975. Applying possible maximum per capita consumption of beef `at 117.8 pounds per person. it is 1o~ical that the total supply of beef in the U.S. by 1975 should not exceed 25.322 billion pounds if the domestic industry would realize reasonable returns for its production. The quantity of additional beef that would be required from domestic production by 1975 and its sources of availability are clearly demon- strated in the calculations that follow: ~ Economic Indicators, prepared f~r Joint ~ommittee by Council of Economic Advisers, March 1970. p. 5. ~ National Food Situation, Economic Research Service, USDA, February 1970, p. 15. PAGENO="0123" 3723 Estimated maximum permissible supply of beef in 1975___bil. lbs._ 25.322 Volume of imports allowable in 1975 in same proportion to supply as in 1969 (carcass weight equivalent) do__ -1. 823 Net volume of beet permitted from domestic production in 1975 do~ 23.499 Domestic production in 1909 do____ -20. 953 Additional domestic production needed by 1975 to make avail- 117.4 lbs. of beef per person for 215,690,000 do__ 2. 546 Anticipated increase in domestic production from increased slaughter of fed animals (transfer from calf slaughter and non- fed steer and heifer slaughter) (see page 8) do~~ -1. 270 Additional domestic production needed from increased num- ber of cattle (more cows and calves) do~~ 1. 276 To produce 1.276 bil. lbs. of beef, additional number of head in slaughter at 630 pounds slaughter weight per head head__ 2, 025,400 Projected possible increase in number of cows by January 1, 1973; their calves would be slaughtered in 1974 and 1975 (see page 9) do~_. 53, 652, 000 Cows in the inventory January 1, 1970 do____ -51, 30~, 000 Possible number of additional cattle available for slaughter by 1975 do_ 2,344,000 Thus, it can be readily realized that the~addition'al beef which may be required by 1975 is completely within the realm of possibility through increased fed cattle slaughter as a result of both reduction of calf slaughter and lower non-fed slaughter of steers and heifers, as well as from increased number of calves from a reasonable increase in beef cows. In fact, to produce the volume of beef needed for a 1 percent increase in per capita consumption and a 1 percent annual increase in population, less than the anticipated rate of increase in beef cows which we have projected would be required. In other words, the rate of increase in beef cows could even fall short of that explained earlier and we would still have available for consumers a suffi- cient supply of beef. With fulfillment of all projected increases from domestic sources, there would be more reason than ever to restrict imports further. Along with increased production of domestic beef which can be expected to occur, at least up to limits prescribed if consumers will pay for the produc- tion, it must be emphasized that foreign nations will have a share in this ex- panded market in accordance with the guidelines set up in the Meat Import Law of 1904. In the opinion of this Association, this is more than they are entitled to, and any fracture of the restrictions now in force can have a devas- tating economic effect on the domestic industry. The establishment of a con- sumer oriented commission with authority to project domestic production and allow for an increased volume of imports, would endanger the most important segment of agriculture industry in the U.S. In our atmosphere of high costs, U.S. producers can in no way compete with the low cost production possible in most foreign countries who are supplying us with beef, and should not be expected to. BEEF PRODUCTION IS A BUSINESS It may be argued that some beef prices, even at fair levels, are beyond what low income families can afford to pay. This may be true, and those in the beef producing industry are sympathetic to those whose incomes are not adequate to satisfy their wants and desires. But, the more popular cuts of beef are not the only items these people can't buy. Furthermore, there would be many less popular and less expensive cuts of meat within the financial reach of these families. `The cattle feeders and cattle producers are in `business for a livelihood. To stay in business and expand their production they have to meet higher costs, higher taxes, higher wages, and higher everything. They can't stand these inflated figures if their returns are geared to what lower income people can afford to pay. They won't be able to stay in business, nor could any other industry sur- vive in the United States under those' circumstances. PAGENO="0124" 3724 APPENDIX-TABLE Date Amount Percent Average price of choice steers, Chicago, per hundredweight_ - 1960 February 1970 Average price per hundredweight, choice steer beef, Chicago, 1960 600 to 700 pounds wholesale. February 1970 Average price per pound, choice beef at retail (cents) 1960 February 1970 Consumer price index, all items 1960 February 1970 Average cost all food purchased by consumers 1960 February 1970 Average cost all consumer services 1960 February 1970 Average cost all consumer services, less rent 1960 February 1970 Average hourly earnings, nonagricultural 1960 February 1970 Average hourly earnings, manufacturing 1960 February 1970 Average hourly earnings, construction 1960 February 1970 Average hourly earnings retail trade 1960 February 1970 Average weekly earnings nonagricultural 1960 February 1970 Per capita disposable income 1960 4th quarter 1969 Per capita expenditures for food 1960 4th quarter 1970 Per capita disposable income spent for food, percent 1960 4th quarter 1969 Per capita expenditures for other goods and services 1960 4th quarter 1969 Per capita disposable income spent for other goods and 1960 services, percent. 4th quarter 1969 Food consumption per capita 1960 1969 Pounds of beef consumed per capita 1960 1969 1$26,24 2$30,27 +15.3 `$43.98 3 $46. 74 +6. 3 480.7 0974 +20.7 67103.1 ____~. 67132,5 +28.5 67101.4 67131.5 +29.6 67106.6 67150.7 +41.4 67107.4 67154.1 +46.3 8 $2. 09 8$3,15 +50.7 8$2.26 8 $3.28 +45.1 $ $3. 08 8 $5. 02 +63. 0 81.52 8 $2. 40 +57. 9 8 $80.67 8 $117.18 +45.2 a $1,937.00 `°$3, 172. 00 +63. 8 "$388.00 12 $519. 00 +33. 8 1~ 20.0 ~216.4 -18. 0 "$1,412.00 17 $2, 368. 00 +67. 7 `372.9 1674,7 +2.5 615 100.5 015106.0 +5.5 (11) +5.8 (17) -5. 1 IS 85. O "110.7 +30.2 I Livestock and Meat Statistics, Statistical Bulletin No. 230, U.S. Department of Agriculture, June 1960, pp. 112 and 127. 2 Livestock, Meat & Wool Market News, weekly summary and statistics, U.S. Department of Agriculture, vol. 38, No. 6, p. 130; No. 7, p. 153; No.8, p. 177; No.9, p.201. 3 Ibid., vol. 38, No. 6, p. 138; No. 7, p. 161; No. 8, p. 185; No. 9, p. 209. 4 Livestock and Meat Statistics, Statistical Bulletin No. 230, U.S. Department of Agriculture, June 1961, p. 132, and U.S. Department of Agriculture information not published. o U.S. Department of Agriculture, information available, but not published as of Apr, 10, 1970. 6 Index. 7 Economic Indicators, Council of Economic Advisers, prepared for the Joint Economic Committee, March 1970, p. 26. 8 Ibid., March 1970, p. 15. a Ibid., December 1969,p. 5. 10 Ibid., March 1970, p. 5. 11 Marketing and Transportation Situation, U.S. Department of Agriculture, August 1969, p. 10. 12 Ibid., February 1970, p. 2. 13 Ibid., August 1969, p. 10. 14 Ibid., February 1970, p. 2. 15 National Food Situation, U.S. Department of Agriculture, February 1970, p. 13. 15 Animal products. 17 Crop products. 18 Livestock and Meat Situation, U.S. Department of Agriculture, November 1968, p. 26. la National Food S tuation, U.S. Department of Agriculture, February 1970, p. 15. Mr. MAGDANZ. We appreciate the courtesy. With that unless there are questions that someone would like to ask us, that will conclude the oral presentation we make. Mr. BURLESON. Mr. Schneebeli, do you have any questions? Mr. SCHNEEBELI. No, Mr. Chairman. Mr. BURLESON. Thank you very much. We are pleased to have you. Our next witness is Mr. Ira H. Nunn, representing the National Restaurant Association. Will you identify yourself and those accompanying you, please, sir? PAGENO="0125" 3725 STATEMENT OP IRA H. NUNN, COUNSEL, NATIONAL RESTAURANT ASSOCIATION; ACCOMPANIED BY ROBERT B. NEVILLE, AND JOHN S. MOORCONES Mr. NUNN. Good afternoon, Mr. Chairman and gentlemen of the committee. First, I would like to thank the committee on behalf of the restaurant industry for permitting us to testify today on this very important mat- ter to us. We appreciate the opportunity very much. Mr. Chairman, my name is Ira H. Nunn. I am the Washington coun- sel for the National Restaurant Association. I am accompanied here today by Mr. Robert B. Neville, on my right, and by Mr. John S. Moor- cones, on my left, both of whom are attorneys in the office of the Wash- ington counsel for the National Restaurant Association which I rep- resent today. This association is a trade association with approximately 13,000 members of its own and which through its affiliation with 137 State and local restaurant associations represent about 110,000 eating and drinking establishments in all parts of the country. The National Res- taurant Association has members in all types of food service, institu- tional feeding and industrial catering as well as drive-ins and restau- rants of all types. Our members do not import meat. Our interest in this matter is views on legislative proposals now pending before Congress which would place more stringent limitations on the quantity of fresh, frozen, and chilled meats that can be imported into the United States. Our members do not import meat. Our interest in this matter is identical to that of the American housewife who seeks to provide nourishing, palatable foods to her family at a cost consistent with her budget. In other words, we are here as consumers. The restaurant in- dustry is the second largest consumer of food in the United States. We are second only to the American housewife in that regard. We buy from 20 to 25 percent of all food bought in this country and we pass it along to those who eat it, that is, to our customers. It happens that perhaps beef as a commodity is the largest single item that we buy and sell. We believe that, with the current market demand for beef, any further restriction in the supply is certain to raise the price of ham- burger and hot dogs. To the best of our knowledge, those who are in favor of greater restrictions on imports `of meat do not contend otherwise. I refer specifically to beef, because beef is the central issue in this matter. Over 90 percent of all imported meat is beef. The target of lower quotas is beef. There is a sound reason why beef is the leading imported meat product. It is in great demand by the consumers. The per capita consumption of beef in the United States in 1945 was 59.4 pounds. By 1957 this had risen to 84.6 pounds, and per capita consump- tion today is over 109 pounds. `During this same period, the population has grown from about 130 million to over 200 million. Mr. Chairman, when we observe this phenomenal rise in demand, it seems we might he better occupied in assessing the adequacy of our sources of supply and expanding them, rather than considering methods to reduce that supply. The law of PAGENO="0126" 3726 supply and demand operated to illustrate this point dramatically less than one year ago when ground beef rose from 55 to 66 cents per pound in a year's time and frankfurters rose from 69.6 ceiits to 78.4 cents a pound during the same period. This is our principal concern in this matter. V~Te believe it is possible to price a product out of a market. 1-however, appealing hamburgers and hot dogs may be to the American palate, prices can and do operate to change tastes. Economic pressures have induced the acceptance of substitutes in other commodities and can do the same for beef. We would prefer to avoid this and we believe it is in the best interest of our meat industry to avoid it. To our industry, the issue assumes even greater significance for we know that eating away from home, the pleasure of eating out, can diminish when the cost becomes too high. We know, too, that the principal products from manufacturing beef, hamburgers and hot dogs, are a mainstay of the low income family's diet. High prices for these high protein, nourishing meat products hit our low income families the hardest. It is our understanding that American cattle raisers want greater limitations placed on imported beef because they believe such im- ports compete with their product. We do not believe this to be true to any significant degree. Let me explain why. Imported beef is the product of lean, grass-fed cattle. Its normal fat content runs to about 10 percent. The great majority of such lean beef is of cutters or can- ners grade and is used principally in the manufacture of hamburger, hot dogs, and sausage where fat content is restricted by Government regulations. Our domestic source for this type of beef has been retired dairy herds. The number of cattle in these herds has been steadily de- clining from a peak of about 41 million in 1945 to about 20 million today. I heard a witness who preceded me this morning suggest that the supply of such cattle was becoming greater through the use of range cows. My information is contrary to this. I would like to read from the February 1970, Livestock and Mean Situation, on page 28-this is a document produced by the Economic Research Services of the U.S. Department of Agriculture-the material I want to quote is this: "In the mid-1950's more than a third of all steers and heifers slaugh- tered were marketed off grass."-one-third in the mid-SO's off grass- "the balance was marketed through feed lots. By the mid-1960's, the proportion of non-feds dropped to a fifth of the total, and in the past 5 years the accelerated growth of cattle feeding sharply reduced the non-fed category to about one-tenth of the total." Coincident with this decline in supply has come a spectacular in- crease in demand. The efforts of our meat industry have been directed toward satisfying the ever-increasing demand for the more tender, fat marbled, table beef that is the product of our grain-fed catfie. The great bulk of our domestically produced beef, with .a fat content of about 25 percent, is the product of our grain-fed cattle. This isa na- tural approach to the problem by our cattle raisers. The production of grain-fed cattle is more consistent with the decline in available graz- ing areas and, furthermore, grain-fed cattle bring higher prices to our meat producers. The lean, grass-fed imported beef is used, by and large, for manufac- turing purposes. It does not compete in the marketplace with the high PAGENO="0127" 3727 quality table cuts produced from our grain-fed animals. If a housewife finds that hamburger and frankfurters have become too high, she is not going to purchase a more expensive item such as a cut of steak or roast. She will turn to a lower: priced food such as fish or poultry, or perhaps a macaroni and cheese caserole. These are all good foods and are available to her at lesser prices than beef. To place the issue in perspective it is worth noting that meat import law of 1964 (Public Law 88-482) is designed to limit imports to ap- proximately 6.7 percent of domestic production. In actual operation, since the passage of that law in 1964, beef imports have represented 5.3 percent of domestic beef production in 1964; 4.4 percent in 1965; 5.5 percent in 1966; 5.9 percent in 1967; and 6.5 percent in 1968. Over that 5-year period, imported beef averaged but 5.5 percent of do- mestic production. So you see, Mr. Chairman, we are already operating under a statu- tory quota which works. It keeps imports down. it is effective. More than that, we are operating under a superimposed voluntaiy quota which also serves to keep us within the quota. According to the best information we can obtain on the subject, there has been an annual increase of about 2½ percent in consumer demand for hamburgers, frankfurters, and sausages. In contrast to this steadily rising demand, the Department of Agriculture predicts a 4-percent de- crease this year in cow slaughter, our principal domestic source of man- ufacturing beef. This fact simply reflects a pattern that has been in progress for many years. The predictable result of this steady. decline in domestic supply during a period of consistently rising demand, and with import limits based upon domestic production, is a shortage of manufacturing grade beef. Some estimates of this shortage place it at 350 to 400 million pounds. With supplies falling short of consumer de- mand to this extent, higher prices are not just predictable-they are an absolute certainty. A short while ago a subcommittee of the House Government Opera. tions Committee held hearings on meat prices, in October 1969. The subcommittee's report of its findings was not accepted by the full com- mittee, I understand, and it was not published for reasons which were not announced. From press reports of the contents of this unpublished report, we are told that the subcommittee found that the supply of beef, including available imports under current restrictions will be inadequate to meet demand for at least the next 6 years, and that sharply rising beef prices are in prospect to 1975. We are also told that the subcommittee recommended immediate amendment of the Meat Import Quota Act to increase the supply of imported beef. I cannot verify the accuracy of the press accounts of `this subcommittee's conclusions. However, I mention `them to you with the thought that you may find it useful to do so. All of the predictions we have heard or read agree that demand for beef will rise at the rate of 2½ or 3~percent per year. Projections on the supply available to meet this demand vary, but all knowledgeable sources known to us agree that our current sources of supply, at opti- mum, will be hard put to match demand. With a market of this char- acter, it seems clear that any further restrictions on imports would force the use of domestic high quality and high priced cuts for manti- PAGENO="0128" 3728 facturing purposes. Of necessity, this will mean a markedly higher price for hamburger and other processed meat products. Since this committee and the Congress will be considering this issue from the standpoint of national policy, it seems appropriate to observe that the principal sources of our imported beef are Australia, New Zealand, Ireland, and Mexico. These countries are allied to us polit- ically and economically. Our balance of trade with each of them is now heavily in our favor. Australia, for example, buys twice as much in American goods as she sells to us. By further restricting `the oppor- tunity of these trading partners to sell to us, we invite restrictions by them on our products. The risk of such retaliation will not be borne by our own meat producers. Any retaliation would fall upon producers of other agricultural products or upon manufacturers of hard goods. Aside from the risk of retaliation by countries whose friendship and political alliance we need and treasure, we need also to look to the future of our protein supply. We must assess carefully whether our current restrictions are impairing supplies for future years when the need will be even greater than it is now. Since Australia may not send us all the meat she has to sell, she is seeking markets elsewhere and Russia is becoming such a market for Australian beef. In brief, Mr. Chairman, all the beef we produce today and all that we are allowed to import is consumed. No part of our production is lacking a market, even at today's prices. If importation of beef is further restricted, the higher grade and higher priced domestic prod- uct must be substituted in manufacturing. The family of modest in- come which has come to rely upon hamburgers, hot dogs, and other processed meats as `diet staples will be faced with higher prices. So will the establishments in our industry which try' to keep meals away from home within the means of all segments of our society. We believe that in today's economy, marked as it is by inflation, any action de- signed to raise food prices makes no sense at all. That ends my prepared statement, Mr. Chairman. I would like to make a few more remarks by way of refuting testimony which I have heard here today. First of all, in the Congressional Record in the month of April there appeared two articles placed in the Congressional Record by a Member of the House of Representatives, alleging that imported meat is not adequately inspected and might well be unclean. This was a very distressing thing to see. Inquiry was made of the Department of Agriculture and a letter from the Secretary of Agriculture stating that inspection of imported meats is as good or better than that of domestic meats was placed in the Congressional Record on June 4. We have heard mention made of the fact that imported meat may be used for other than grinding and for manufacture. It is true that some of it is. We believe it is very little. We believe it is an insignificant part. We do not know how much it is, Mr. Chairman. No one else knows at the moment, because the Department of Agriculture has iust asked the Tariff Commission to make a survey of the field and find out exactly what is done in this country with meat that comes to us from abroad. Preliminary documents have been circulated by the Tariff Commission and one day we will know. There are su~- &estions that it may be as much as 40 percent; I seriously doubt it. There are suggestions that it may be as much as 25 percent; I seriously PAGENO="0129" 3729 doubt this. But in any case, Mr. Chairman, I have this observation to make with respect to such meat, however it is used. My members tell me that if, they can find a steady supply of good domestic lean meat with a price differential between the lean and the fed, they will be happy to use it. It just does not exist, Mr. Chair- man. It is not available to us. If there is an adequate supply in this country of grass-fed beef for our commercial needs, it is not available to us and we do not know where to get it. We would like to have more imported meat come into the country. Reference was made by a preceding witness to the fact that com- pared to last year our freeze lockers are pretty full right now. Well, this is true, Mr. Chairman. You will remember last year we had about a 3-month maritime and dock strike, and at the time to which the previous witness refers our lockers were almost empty. So, we have a great deal more in them now than we had at this time last year. Another thing about this quota that should be borne in mind is that the quota causes our people who import meat and sell it and use it here to get their meat as early as they can in the season, because we realize that this supply is in jeopardy and the man who has con- tractual commitments to meet tries to get his supply early in the game. So undoubtedly now people who want meat and use it and have commitments that they must meet have gotten as much meat as they could get in. About that shipping strike of last year within a 10-day period after that shipping strike, maritime and dock strike, took effect, the price of hamburger from certain suppliers rose 10 percent. This shows how sensitive this market is. During the first 10 days of the strike, of course, there was no shortage of meat, but during that 10 days nevertheless prices of hamburgers from some suppliers, principally those who get meat through gulf ports in this country, rose 10 percent. I suggest therefore it is not altogether objective to compare the condition of our freeze lockers now with the way they were this time last year. The quota system causes, not the hording of meat, but causes our people to buy it as, early as they can in the game. That concludes my remarks, Mr. Chairman. Mr. BURLESON. Thank you, Mr. Nunn. Do your associates have anything to add? Mr. NUNN. No, sir; that is our entire presentation. Mr. Bunr.~EsoN. Mr. Scheneebeli? Mr. SOHNEEBELI. Mr. Nunn, at the present time our law limits imports to approximately 6.7 percent of domestic production. In the light of what you say, is this adequate for the next 2 or 3 years? Is it adequate to take care of your needs? Mr. NUNN. It is not, Mr. Schneebeli. Mr. SGHNEEBELI. Do you have any figure in mind that might be adequate? Have you thought of any percentage figure that might do the iob? Mr. NUNN. The formulation of a new formula is a thing which we have considered quite a bit. I do not know how to do it, myself, at this moment, Mr. Scheneebeli. Mr. SCHNEEBELI. But you would be opposed to shifting the base period back? Mr. NUNN. Yes; we would be opposed to any device which would PAGENO="0130" 3730 limit the imports at all. We are experiencing a 21/2-percent increase each year with a rising population and an increased appetite for this wholesome, palatable product. The thing that this industry would like to see done is to repeal the quot.a. altogether. Mr. SCHNEE1IELI. Repeal it or increase it? Mr. NUNN. Preferably repeal it. If we can't do that, give us more beef which may come in under that quota. Mr. SCHNEEBELI. Do you think 10 percent is too high? Mr. NUNN. Pardon? Mr. SCHNEEBELI. Do you think 10 percent is too high? What figure do you have in mind, if not 6.7? Mr. NUNN. I think an increase to 10 percent of the same base period would probably be all right. We also face this situation. If there were no quota at all and there had been none and we were free to import all the beef from abroad that we could get and they could sell to us freely, we could only import now about 10 percent more. Mr. SOHNEEBELI. What would be the limitation? Price? Mr. NUNN. No; it doesn't exist. Mr. SOHNEEBELI. The supply? Mr. NUNN. That is right. We are facing a worldwide shortage in beef within the next 6 years, worldwide. Mr. SOHNEEBELI. Thank you, Mr. Chairman. Mr. BURLESON. Thank you, gentlemen, for being with us. (The following statements were received for the record:) STATE OF SOu'rH DAKOTA, OFFICE OF THE GOVERNOR, Pierre, June 1, 1970. Hon. WILBuR D. MILLS, state Representative of Arkansas, House Office Building, Washingtoii, D.C. DEAR CONGRESSMAN Mn~T~s: You and your constituents deserve the highest quality meat products available. The public spirited farmers and ranchers of South Dakota and all beef producing states have dedicated their talents to sup- plying such products. The cattlemen of South Dakota supported the Wholesome Meat Act of 1967 which was passed by the Congress. In 1968, the cattlemen of South Dakota supported the South Dakota Meat Inspection Act, which was passed by the South Dakota Legislature and I signed it into law. Thus, you can see our interest in supporting and maintaining the highest standards for the protection of the American Consumer. Unfortunately, this system that has served the American Consumer so ad- mirably, is now in jeopardy. A few special interest groups are now engaging in an effort that will permit an increase in the imports of beef into our country. If successful, this clandestine effort can only result in eventual chaos to our effi- cient and effective supply system of today. The American Consumer is being buffeted by several arguments that are subtly utilized to disparage the present system and to advance the cause for more im- ported beef. I shall discuss them briefly. A. "The price of beef is too high". This argument is fallacious. A comparison of prices in 1960 to those in February 1970. shows that the average price per pound of choice beef at retail went from 80.7 cents to 97.4 cents (in the highest worth of 1969. the price was only $1.02'/2), an increase of 20.7% while hourly earnings of labor in the manufacturing industry went up 63.0% and the per capita expenditures for other goods and services went up 67.7%. In the face of rising costs of production. including labor, taxes, equipment, supplies, services. etc., and increased costs of slaughtering, processing, fabricating, distribution, and sales, it is inconceivable that anyone could expect the domestic industry to fur- nish quality beef to consumers at lower figures per pound. I wonder how anyone can defend a premise that "beef prices are too high". PAGENO="0131" 3731 B. "There will be a shortage of beef by 1975". This argument is fallacious. The record will show that the domestic industry has demonstrated it will supply con- sumers with the quantity of beef they want and need. Expansion in beef produc- tion arises from several sources. It results from increasing the number of fed cattle through a reduction in the slaughter of calves and from the reduction in slaughter of non-fed steers and heifers, and finally, from an increase in the production of more cattle (meaning more cows to produce calves). Through close scrutiny it is evident that an additional 1.27 billion pounds will result from these sources within the space of 1 or 2 years. Close analysis of the beef situation assures us that the additional beef which may be required by 1975 is completely within the realm of possibility. Here are a couple of situations that apparently exist and have existed for sometime. They need our attention because they are inconsistent with the 1964 Meat Import Law. A. The Japanese Government has just opened two huge packing plants down under that are strictly packaging and canning plants. Australian beef is being bought, packaged in cans, and shipped to the United States. Also similar prepared products are entering the United States through Canada. As you know, there is no embargo or controls on the amount of canned meat that can be shipped into the United States. B. Some of the imported meat has been processed in plants not conforming to our federal specifications for our domestic supply. The American cattleman is personally committed to the supplying of whole- some and nutritious beef to the American Consumer-you and me. It seems to me it is imperative to assure them every consideration in their efforts to continue this service to American Consumers. Therefore, I am asking you to support the following principles set forth in pending legislation. A. To establish `a 100 per cent quota trigger point rather than the present 110 per cent. B. To require that all imported meats-whether fresh, frozen or canned-meet the same specifications regarding cleanliness, purity, and health of animals at slaughter that exist in the federally inspected plants in the United States. C. To include canned, cured and cooked meats in the import quota. D. To charge against the country of origin, any canned, cured and cooked meats that enter the United States through a country other than country of origin. If you have any questions, I would welcome an opportunity to provide addi- tional information that would remove the cloak of misunderstanding with which our elected representatives, public officials, and American Consumers, are being veiled. Your interest and cooperation in supporting a proven production and market- ing system for beef, will be greatly appreciated. Sincerely yours, - FRANK L. FARRAR, Governor. CONGRESS OF THE UNITED STATES, HOUSE OF REPRESENTATIVES, Washington, D.C., June 23,1070. Hon. WILBUR D. MILLS, Chairman, Committee on Ways and Means, U.s. House of Representatives, Washington, D.C. DEAR CHAIRMAN MILLS: I am today introducing legislation identical to H.R. 17540 (revising the quota-control system on the importation of certain meat and meat products), which is now before your Committee. There is great concern in my congressional district that a more equitable sys- tem of import controls for beef and other meat products should be provided to better protect our own farmers. I trust you will express my interest in this legisla- tion to your distinguished Committee. I respectfully request this important legislation will be given careful consideration. With best regards, I remain Sincerely yours, WILLIAM L. HUNGATE, M.C., Missouri. PAGENO="0132" 3732 STATEMENT OP MARTIN B. RIND, PRESIDENT, MILWAUKEE SAUSAGE COMPANY, SEATTLE, WASHINGTON SUMMARY Meat processors need adequate supplies of lean beef. In recent years, supplies have become increasingly scarce, and production has suffered. High prices for lean beef and beef products result directly from import restrictions. Therefore, Congress should remove the restrictions on imported beef currently imposed by Public Law 88-482. I am president and part owner of a meat products manufacturing company which has been in business in Seattle since 1916. My own participation dates since 1933. Our company employs approximately 60 people, manufacturing and dis- tributing over 2.5 million dollars of products per year. The basic raw material used in our industry, lean beef, is produced in the United States primarily from aged cows and bulls no longer suitable for milking or breeding. Most industries are able to increase their available raw materials through increased efforts at drilling, digging, or planting in the ground. Our domestic source of raw material, however, is essentially a by-product of the dairy and cattle feeding business, and cannot be extracted from the ground, sea, or atmosphere. In earlier days, that is until 10 or 15 years ago, all needed lean beef raw mate- rials were supplied to us by local meat packers who purchased cows and bulls from surrounding dairy farms. Today, the dairy herds are long gone, and the pastures where they grazed are paved with cement. The few meat packers remaining in business slaughter pri- marily grain fattened cattle shipped from Eastern Washington. The Yakima `~Talley and Columbia Basin areas of Eastern Washington once supplied those packers with substantial quantities of lean grass fed beef, but high land prices have long since made such operations uneconomic. This local situation has been repeated nation-wide. In 1955, our country's popu- lation of dairy animals had held at about 35 million for around ten years. By 1964, when imports were restricted by law, the figure had shrunk to about 27 million, and by 1969 was down to less than 22 million. Imports currently provide about one billion pounds of lean beef for manufacturing per year, but thetotal supply available to us is substantially less than 15 years ago. As the total amount of lean beef available from domestic sources has dimin- ished, and as the demand for this type of beef has increased, ceilings imposed by Public Law 88-482 have created an inflexible supply situation. Those of us in the business of manufacturing processed meat products and hamburger have bid up prices of lean beef to an historic high level where meat from old cows commands a higher price than meat from choice steers.* As we have raised our selling prices to consumers to compensate for higher costs, our tonnage volume has fallen-a normal adjustment in a free market whereby demand reduces to compensate for reduced supply. Reduced volume is poison to any manufacturing industry, of course, *but our own company has weathered the storm so far. The reason, reduced cost of fat materials, may be of interest to those in the livestock industry who in my opinion have conducted such a blind vendetta against meat imports. The following quotation from my remarks at the convention of the Western States Meat Packers Association in February seems `appropriate: "Restrictions on imports are reducing our capacity to manufacture sausage and hamburger. Cattle feeders are paying part of the price of those restrictions be- cause reduced sausage production means reduced demand for fat trimmings. Reduced demand means lower prices, and lower prices for fat trimmings means lower prices for fat cattle." Within the past two months, the price of 50% lean `beef trimmings has fallen sixteen percent. The price of sO% lean pork thimmings has fallen nineteen per- cent. Opponents of meat imports will point out that this market drop has occurred during a period when a "Flood" of foreign beef has arrived-the highest rate in history. This of course is true, but it is also true that the price of lean manufac- turing beef, the product against which the `alleged "Flood" will compete, is also at the highest level in history. Imported lean meat has arrived in response to the demand which has caused the price level to be bid up. The decline in fat *On Mac' 15, 197G, the National Provisioner Daily Market Service quoted full carcass cow meat (il) 67~ lb. Cholee Steers were 47~ lb. The yield of the boneless steer would be about 85%. 47~ ÷ 85 % = 55c~ lb. cost of the boneless steer meat. PAGENO="0133" 3733 meat prices is caused by the scarcity of lean meat which is needed `to utilize the fat meat. It is my hope that Congress will remove the restrictions on meat imports.. While reduced prices for fat trimmings have tended to off-set our losses from falling volume thus far, our industry will eventually suffer if volume declines further. Small operators such as ourselves will be the first to fail. `It seems to me a tragedy that Public Law 88-482, which has raised costs to manufacturers, raised prices to consumers, and may even cause the failure of legitimate businesses, benefits no one-least of all its proponents. STATEMENT OF GEORGE R. VAIL, PRESIDENT, MORTON FROZEN FooDs DIvIsIoN, ITT CONTINENTAL BAKING COMPANY, INC. ITT Continental Baking Company, Inc. and its Morton Frozen Foods Division respectfully submit thait the liberalization of the present re~trietions `on the im- porba'tlon of frozen beef would be in' the best intereSts of the consuming public. We also submit that reatrictions `on the importation of cooked beef, primarily from South America, would he contrary `to the public intereSt. Expert testimony `demonstrating `the need to increase imports of `beef will be offered `to the House Committee on Ways `and Means. I shall not duplicate this testimony, but rather will limit myself to pointing out how import restrictions affect my own company and the consumers it serves. First and most important `to us is the fact `that the USDA has a uniform inspec- `tion system for all foreign `plan'ts prOducing meats which `are imported to this country, and `of course the MID inspects `the meat again at the Port `of En(try. Imported meait `ha's `the same inspection sbanda'rds a:s `domestic meat at its plant of production and again in `the U.S. We believe `this to be of critical importance, and in recommending liberalization `of meat imports we recommend `th'a't Congress commit whatever funds may be necessary `so `that `all imported meat in the future will be subject `to the highest standards. At `the present `time, there is `an insufficient quantity `of range fed manufactur- ing grade beef in `the United States to meet consumer demands and nutritional requirements. Supplies fell from 27 `pounds per person in 1955 to 14 in 1963, and the per capital figure is much lower `today. Traditionally, imported frozen beef ha's `taken up `the `slack. However, present import quotas are `so low that a halt in import's will be man'dat'ory later this yea'r unless `relief is forthcoming. Phi's would `trigger a `tremendous `rise in' `the prices `of frozen goods, frankfurters, sau- sage, canned meat, `soup and other `products which rely on `the low cost manufac- turing beef. `The Morton Division of ITT Continental Baking Company uses million's of pounds of raw frozen meats for the manufacture `of economical frozen dinners, casseroles and boil-in-bag products. These products provide excellent protein nu- trition, `an'd `their `low cost makes `them `readily ;availtble to even ~oor families. If Morton were forced to use `domestic beef, `their m'anufacture and sale would be greatly curtailed, if not prohibited, because `of `the cost factor `and the `added poundage necessary `to make up for the `higher moisture c'o'nitenlt of domestic `beef. Consumer cost `would necessarily `skyrocket. In additi'on (to the a'bove `products, Morton also u'ses million's `of pounds of frozen Sou'th American cooked beef in `the manufacture `of `beef dinners and pelt pies. If domestic beef were `substituted, consumer prices would `double, not only because of `the vastly increased cost `o'f beef per pound, `but again because of the millions `of ad'di'ti'on'al pounds needed `to correct (the moisture content. Further, availability `of these consumer favorites (a't any price) would be sharply cur- tailed. Last year, Morton estimated that its cost would be about $5 `million annually t'o substitute domestic `beef `for imported bee'f. The amount is a't least that (today, and is probably much grealter due `to `the higher `price `of domestic hamburger. Even `thi's figure is illusory, since many products would be priced `out of `the market. These figures `are only for one company. What `the to'bal would `be for all im- ported meat u'sers, `I am not prepared `to say. Also, I realize `th'a(t curren't pro- posals `do not `seek `t'o `shut `off all imports. Nevertheless, increased costs are in- evitable if an artificial shortage i's crca't'ed, `and `these costs would have to be passed on (to consumers-in m'any cases to `those consumers who can least afford them. The vast majority of food products using imported beef are in `the lower price range. PAGENO="0134" 3734 At a time when the fig4ht against `hunger `and malnutrition `is assuming great `importance, it seems unwise, `to say the `ie'a'~t, to fail to take any action which would `help insure a supply of inexpensive, wholesome, nourishing food. At a time when the country is struggling `to keep price's down. it is untenable to `allow an `artificial situation to `develop which will send prices &~ari'ng. At a time when unemployment is rising, it is hardly wise `to shut `down plant operation's which rely on `a supply of manufacturing beef unobtainable in the United States. Creating a `~horhage of manufacturing beef by failing to permit `sufficient im- port's is clearly inflationary, and would coSt consumers, `particularly those in the iow~r iileom~ brackets, m'iilions of dollars. Benefits to domestic producers would `be negligible, `since the type of beef now imported is in critically `short supply. And any `reduction in imports would be a blow to the economies of the exporting countries, many of which need all `the `help `they can get. For `these reasons, and the many others which `have `been offered `by food ex- J)erts appearing before the House Ways and Mean's Committee, the Morton Di- vision believes that the situation call's for positive actions. It respectfully `sub- m'i'ts `that a liberalization of beef import quotas `is critically necessary in the be~t `intereSts `of `the food processing industry and its employees, and, above all, `the consuming public. Mr. BURLESON. May I mention that we have a quorum call and I re- gret Mr. Schneebeli and I will have to go over and answer it. We will recess. I hope that we can be back in 15 minutes. We are sorry that we have to delay all of you, but this is the way things go around here. We have to stay on the payroll. (Recess.) Mr. BURLESON. We will resume our hearings. Is Mr. Richard J. Goodman present? Will you come around, Mr. Goodman? Again I regret, sir, that. we do not have more members. I don't imagine it is too inspiring to look at one sitting up here. But I think we will have some more. Since we do have a number of other witnesses to follow, if you will proceed. Do you wish to read your statement or summarize it or place it in the record? STATEMENT OP RICHARD J'. GOODMAN, MEMBER, INTERNATIONAL TRADE COMMITTEE, NATIONAL `GRAIN & PEED ASSOCIATION Mr. GOODMAN. Yes, Mr. Chairman. I understand the situation. I have here a final copy of my statements for the record. I will try to brief it down to as short a period of time as I can, with your permission. Mr. Chairman and members of the committee, I am Richard J. Goodman, vice president of Cook Industries, Inc., of Memphis, Tenn. I am appearing on behalf of the National Grain & Feed Association. I am a. member of its International Trade Committee. The association represents more than 1,300 grain and feed firms ranging in size from the smallest country elevators to the largest. grain and feed complex and includes exporters and processors of grains an'd feeds a.s well. The association also has 52 affiliated State and regional associations repre- senting more than 15,000 local grain and feed firms, plus 100 associate members. Our regular members and those of the affiliated associations engage in one or more of the following operations: collection, condi- tioning, blending, storing and distribution of raw commodities at country and terminal elevators; exporting grain and grain products; and milling or processing of grain for feed or food. We much appreciate t.his opportunity to express our views on trade PAGENO="0135" 3735 legislation pending before this :committhe, and with greater concern, to focus on agricultural trade policy, particularly the problems, trends, dangers and opportunities associated with our exports to Western Europe. I should say parenthetically, Mr. Chairman, that my testimony comes under the heading of "Meat" in the list of witnesses here. I am not here a.t all to talk about meat, but rather on grain exports includ- ing soybeans to some extent. We fully support the proposed Trade Act of 1969. At the same time we are opposed to any legislation that adds new restraints on foreign trade, whether it be quotas on imports into the United States or taxes, embargoes or flag shipping requirements on exports from the United States. We believe that the liberalized "escape clause" provision con- tained in the proposed Trade Act of 1969 represents procedures far more desirable and superior in dealing with problems arising out of increased imports for all segments of our economy, than would quan- titative import restrictions required by legislation. Also, we wish to express our support for the proposed legislation authorizing the use of Domestic International Sales Corp. (DISC). We believe the DISC proposal would, if authorized, help stimulate U.S. agricultural exports by improving the competitive position of U.S. firms engaged in the `farm export business. On agricultural trade, we would reiterate what several previous wit; nesses, including Secretary of Agriculture Hardin, have said to the committee. Agriculture is currently our single most important trade policy problem area. Threats to foreign sales of farm products are likely to persist, if not worsen, iii the years just ahead. Agricultural trade issues need and deserve the highest priority in consideration of our Government's international eConomic policy now and through the early 1970's. A brief review of U.S. farm exports in recent years serves to remind us of both the importance of foreign trade to American agriculture, and the difficulties being faced in major farm export markets, particu- larly the European Economic Community and the United Kingdom. U.S. agricultural exports reached their historic peak in calendar year 1966 at nearly $6.9 billion. This represented 23 percent of total U.S. exports. While total exports were only 5.8 percent of gross na- tional product, agricultural exports were 15.9 percent of total U.S. farm marketing. Unfortunately, since 1966 farm exports have declined each year to a level only slightly more than $5.9 billion in 1969 and only 16 percent of total exports. Thus, nearly $1 billion of farm exports have been lost in the last 3 years. At the same time, nonfarm exports increased from $23 billion to $31.7 billion. I make this point to demon- strate that major problems in maintaining and expanding farm ex- ports lie ahead. They clearly require a higher priority of attention and action than other segments of the economy. The cost of declining farm exports is more than simply the loss in value of trade and adverse effects to our balance of payments. There is also a substantial public cost directly connected to the operation of our Federal farm programs. For example, during crop year 1967, after agricultural exports had dramatically increased to record levels, crop- land diverted under Government programs was 41 million acres. As exports declined and farm productivity continued to climb, our Gov- PAGENO="0136" 3736 ernment was forced to increase acreage diversions to avoid a'bui1dup of costly surpluses. Diversions increased to 48 million acres in 1968, and to 58 million acres in 1969. As you know, cropland acreage diversions are paid for from the Federal agricultural budget under commodity stabilization programs. When we consider the effects of declining or even stagnant farm exports on the U.S. agricultural economy and the cost of farm pro- grams, we must also recognize that productivity in American agricul- ture is continuing to increase rapidly. Corn yie1ds have increased regu- larly all during the 1960's and promise to continue to do so during the 1970's. National average yields per harvested acres of corn increased from 54.7 bushels in 1960 to 81.2 bushels in 1969. Grain sorghum yields increased from 40 bushels to 55 bushels in the same period of years. Compared to feed grains, yields of wheat have increased more slowly but still significantly, from an average of 25 bushels per acre during the early 1960's to nearly 31 bushels in 1969. Both corn and grain sorghum growers have been exploiting the benefits of hybridization with respect to yields. Wheat is just on the threshold of this process, and when the breakthrough comes-I believe within the next few years-we can expect to see wheat yields increase in proportion similar to corn and grain sorghum during the 1960's. All of this is simply to say that with our capacity to produce with continually increasing productivity and production efficiency, Ameri- can agriculture must export, and substantially expand exports, in the years ahead in order to sustain healthy economic growth and minimize the sectorial and human costs of adjustment. Western Europe has confronted us with our most difficult problem and disappointing experience in expanding agricultural trade, and presents us with our greatest immediate challenge in the trade policy field. The effects of the European Economic Community's common agri- cultural policy with its high internal harmonized prices and absolute levels of protection through its variable levy system, began to take its toll on U.S. farm exports beginning in 1967. With the incentives of high guaranteed prices behind the variable levy wall, EEC farm- ers increased grain production from 38.0 million tons in 1966 to 69.7 million tons in 1969. The results on grain imports from other coun- tries, particularly the United States have been traumatic. Total EEC imports of grains fell from 20.5 million tons during 1965-66 to 14.7 million tons during 1969-70-nearly all feed grains. While EEC im- ports of wheat declined slightly, their exports of wheat to countries outside of the Community increased from 4.5 million tons during 1966-67 to over 6.6 million tons during 1969-70. Because of EEC policies, the U.S. has lost over 5 million tons of feed grain exports to the EEC since 1966 and at the same time, along with other wheat exporting countries, has lost over 2 million tons of wheat exports in other parts of the world to EEC wheat dumping. After the EEC, the United Kingdom is our second largest agri- cultural market in Western Europe, and is an important market for U.S. feed grains and soybeans. As I am sure you know, the United Kingdom, along with Ireland, Denmark, and Norway, has applied for membership in the EEC. Negotiations between the United Kingdom and EEC on entrance will begin next month. If in the PAGENO="0137" 3737 process these countries slip behind the EEC high agricultural price- variable levy wall, an unmitigated farm export disaster for U.S. agri- culture would be in the making. Our exports would quickly shrink in the wake of the higher price incentives for greater agricultural self- sufficiency that the EEC's common agricultural policy would bring. In addition, trading preferences among EEC member countries would mean that French, German, and Dutch wheat and barley surpluses would immediately take up much, if not all, of the grain import needs of these new member countries, and relieve the pressure these surpluses have borne on EEC agricultural financing; thus further prolonging the life of the common agricultural policy, all at the. expense of U.S. grain exports. I am sure you will recall the recent strong efforts necessary by the *United States to stop the EEC from extending their protective sys- tem to soybeans by way of an internal consumption tax on vegetable oils and protein meals. If the United Kingdom, Ireland, Denmark, and Norway join the EEC with its present common agricultural policy, we would have to expect our soybean exports again to be put in jeopardy by stronger and broader efforts of the larger community to extend protection to oilseeds and products. The EEC's common agricultural policy ha's proven to be a trade disaster for the United States. A larger EEC, including the United Kingdom and others, presents the danger of extending this trade disaster to more markets and more commodities. While it would seem that the United Kingdom joining the EEC is totally dangerous to U.S. farm trade interests, if the United Kingdom insists on joining, and EEC desires to increase its membership, the negotiations required to consummate this marriage could" present an opportunity to bring about useful changes in the EEC's common agricultural policy, with a more liberal agricultural trade policy emerging for the new, larger community. What clearly is called for in order to make an agricultural trade policy opportunity out of what otherwise promises to be a farm export disaster is an unmistakable expression by our government of our trade and economic interests involved in the accession of the United King- dom and others to the EEC. First of all, we should call for the re- adherence to GATT rules by the EEC, not only with respect to enlarge- ment of the community, but also with respect to the EEC's preferential trading arrangements with several Mediterranean countries, including Tunisia, Morocco, Israel, Algeria, Spain, Greece, and Turkey, and the many associated African states and overseas territories. At the same time, we should reestablish the tariff bindings we have available to us on grains with both the United Kingdom and EEC when these bindings come back into force on July 1, 1971. Then when the EEC and United Kingdom take up the question of the common agricultural policy we should stand ready with suggestions on agricul- tural trade policy in the interests of all parties concerned, most par- ticularly consumers in Europe and taxpayers on both sides of the Atlantic. All of this should be exercised within the context of United Kingdom-EEC negotiations. We shOuld not be entrapped in the hollow prospect that our trade and economic interests will be satisfac- torily dealt with after the United Kingdom and others have joined the Community at the EEC's present common agricuPurai policy. 46-127 0-70-pt. 13-9 PAGENO="0138" 3738 Generally, we must take the position that any prospective political integration arising from an enlarged European community does not outweigh our agricultural trade and general international economic interest,s. I should say, perhaps parenthetically at this point, that we must also strive for an increasing export market-oriented domestic farm program. I know that Secretary Hardin and Chairman Poage of the House Agriculture Committee have been working hard to get such legislation. When we consider the great dependence American agricul- ture has on expanding export markets we can see why farm legisla- tion that maximizes export opportunities and exploits general mar- keting potentials is so important to achieve this year. We should say something as well about our agricultural trade with Japan, our largest single farm export market in the world. In contract to the EEC and the United Kingdom our agricultural exports to Japan have grown rapidly and promise to continue to grow through t.he 1970's as long as we maintain a competitive and aggressive export sales policy. There are opportunities to further improve exports of grains and soybeans to Japan by the reduction of some remaining import barriers and the gaining of greater merchandizing rights within the Japanese economy. A solid basis for optimism exists that substantial progress can be made along these lines with the Japanese; again, as long as we maintain a strong liberal trade policy with them. In this atmosphere there is every reason to believe that our over all trade with Japan will grow even more mutually beneficial in the years ahead. Finally, some closing remarks about the international grains ar- rangement of 1968. Negotiated in 1967 toward the end of the Kennedy round, the IGA was a last ditch effort to produce something out of nearly 4 years of near fruitless talks on agricultural trade. Appar- ently, our top negotiators at the Kennedy round thought it necessary to package up some kind of wheat agreement for the appearance of bringing something home for American agriculture, even if it was known to be worthless. Unfortunately, the IGA proved to be worse than worthless. It set minimum world trading prices at levels sub- stantially higher than the previous International Wheat Agreements, completely out of any realistic relationship with trading values of wheat in a world of increasing 1)roductivity. The immediate result for the TJnited States was the loss of competitive position in world wheat markets and sharply reduced export sales from mid-1968 until the snring of 1969, when the pricing l)rovisions finally had to be abandoned altogether. Contrary to some mistaken editorial comment, world wheat prices have been exceedingly stable since IGA pricin~ was com- pletely abandoned in the suring of 1969. To be sure, world wheat prices have been lower but markets have responded, export sales have in- creased, and wheat acreage in the industrialized world has begun to recede back to more economic and balanced levels. In short, the ifiA was an uneconomic and harmful experience for both ourselves and Canada, only an illusion to Australia and a mis- direction to the EEC. Nevertheless, the International Wheat Counc~hs beginning to talk about renewing or extending the IGA beyond its present expiration date of June 30, 1971. We should heed the hard ex- perience we had with IGA and let them know that we are not interested PAGENO="0139" 3739 in any further attempts to administer world wheat prices through formalized international arrangements. Thank you, Mr. Chairman. Mr. BURLESON. Thank you, Mr. Goodman. Mr. Schneebeli? Mr. SOHNEEBELI. You think our experience in the Kennedy round was an economic disaster. You seem to `be in agreement with many of the people who preceded you on the same subject, be they in the manufacturing or agricultural area, that they were not assisted very much at the GATT. Mr. GOODMAN. I think that in the case of agriculture there was virtually nothing gained of value to the United States, not at least in the major commodities. In certain cases there were definite negative outcomes. Mr. SCHNEEBELI. Thank you very much. Mr. BURLESON. The thrust of your general statement over all, Mr. Goodman, is that if we wish to export we have to import; is that correct? Mr. GOODMAN. Yes. It is obvious that we must have a balanced trade situation with most of our major trading partners in the world. Mr. BURLESON. Do you think that we are doing all that we can do to encourage agricultural exports ? Mr. GOODMAN. Agricultural exports? Mr. BURLESON. Yes. Mr. GOODMAN. No, I think not. I think we should be doing a great deal more than we are doing. Mr. BURLESON. Have we failed to be, using your word, aggressive? Have we failed over the years in being a salesman for our products? Mr. GOODMAN. No, I think our record except for perhaps a bad situa- tion on wheat under the international grains arrangement, that we have done a rather good job of being aggressive in the sale of agricul- tural commodities, at least in the grains field that I am addressing my- self to. I think where we have fallen short in large measure in maximizing our agricultural export potential1 is in the policy field in dealing with the protective devices that have been used to keep our exports out of certain markets. I make reference to the EEC, the United King- dom. We have some problems in that regard with Japan. I am more optimistic about working those out than in Europe, although I think we sought to get at this business in Europe in a strong and decisive way. We have not done that, in my opinion, at all in the last 10 years. The fact is that I think our policy on trade generally has let that drift into its present highly unsatisfactory state. Mr. BURLESON. You make mention of the present farm bill that is now in the Agriculture Committee, and doubtless you are familiar with the so-called coalition bill. Do you think that bill is conducive to greater opportunities for exports of agricultural products? Mr. GOODMAN. There is less difference between the administration or the so-called concensus proposals and the coalition bill directly in- volved in exports. I think the major, differences in those two pieces of legislation are with respect to commodity program operations domesti- cally and the costs associated with running those programs. There is some difference, however, in the effect on our exports. I PAGENO="0140" 3740 am simply saying I think they are less pronounced than the other dif- ferences. Here in that regard I would simply say that I believe that what the Secretary and the chairman of the House Agricultural Com- mittee definitely have had in mind in pursuing the bill that they have pursued together is that it provides a maximum amount of flexibility and competitiveness towards export markets than they felt they could get in legislation at this time. It is better in that regard than the coali- tion bill, in my opinion. Mr. BU1~LESON. You would agree that we need to have a farm bill since the present act expires at the end of this year, and that we are not getting a new bill very fast? You will agree with that? Mr. GOODMAN. Yes. I understand that there is a little difficulty there. Mr. BURLESON. A few differences of opinion? Mr. GOODMAN. That is what I understand. Mr. B1IRLESON. Thank you very much, Mr. Goodman. We appreciate your statement. Mr. GOODMAN. Thank you. Mr. B1IRI~EsON. We continue with some related subjects we have had here before. Mr. William S. Mahoney, chairman of the Anti-Fric- tion Bearing Manufacturers Association. STATEMENT OF WILLIAM E. DECAULP, CHAIRMAN, FOREIGN TRADE COMMITTEE, ANTI-FRICTION BEARING MANUFACTURERS ASSOCIATION Mr. DECAULP. Mr. Chairman, Mr. Mahoney was called out of the country on business. I am chairman of the Foreign Trade Committee of the association and secretary and general counsel of the Fafnir Bearing Co., a member of the association. With your permission, I will substitute for Mr. Mahoney. Mr. BuRr~sON. Very good, sir. Would you like to present your state- ment in total or summarize? Mr. DECAULP. We have filed with the committee our total statement. I would like to summarize and shorten it just a bit. Mr. BITRLESON. Very well. You may summarize if you wish. Mr. DECAIJLP. Mr. Chairman, the Anti-Friction Bearing Manu- facturers Association (AFBMA) is a national association comprised of domestic producers who account for more than 80 percent of the Nation's output of antifriction bearings and parts. A list of the asso- ciation's membership is attached as appendix A. This industry cur- rently produces approximately $1.3 billion worth of bearings with a work force of more than 60~000 in some 20 States. POSITION OF THE ASSOCIATION Our association has requested this time to appear in the very real hope that the Ways and Means Committee will recognize the essen- tiality of the antifriction bearing industry and the immediate need for some type of import adjustment. In past appearances we have pointed to serious import penetrations in specified size and precision categories. An investigation with respect to miniature and instrument precision ball bearings has been pending for the last 16 months before the Office of Emergency Preparedness. This investigation has been described in more detail by Congressman Cleveland. PAGENO="0141" 3741 While imports from Europe are serious, Japan is the country threat- ening the future life of the U.S. antifriction bearing industry. Expansion of Japanese bearings productive capacity has resulted in an increase in exports to the United States (65 percent of imported dollar volume in 1969) and an attendant rise in the overall ratio of imports to apparent consumption and production. Price still is the major cause for imports of bearings. While the difference in wage rates is a substantial factor in pricing, our industry believes that the ration- alization of the industry, a practice illegal under U.S. law but sanc- tioned by the Japanese Government, has produced an economy in production costs that supports predatory pricing practices. Also we are aware of the support given to the bearing exporters by way of subsidies, mostly indirect, from the Japanese Government. We have pursued administrative remedies, such as an application to OEP under national security~ amendment, supplying information in anti-dumping investigations, requesting better statistical iriforma- tion from Department of Commerce and Bureau of Customs. However, only in securing more complete import statistics have we had any success. While we have been seeking an administrative solution we have not ignored our internal efficiencies; that is, we have to the best of our re- sources developed the latest in machinery and equipment, maintained sophisticated engineering staffs both for improving manufacturing techniques as well as design of bearings, and pursued research into usage of new materials. All this aimed at raising efficiency, reducing costs, and maintaining and increasing sales of domestically produced bearings At our request, Congressman Meskill introduced H.R. 11910, Anti- Friction Bearing Orderly Trade Act of 1969. This bill which is now before the Ways and Means Committee is designed to permit foreign manufacturers, such as the Japanese, a fair share of the U.S. market while also providing for the continued existence of the domestic indus- try in its historic form. Thus, H.R. 11910 is consistent with the import adjustment intended for the textile and leather footwear industries by~ the Mills bill (H.R. 16920). We are not questioning the impOrtance to the Nation of the textile and leather footwear industries and the serious import problems they ~re experiencing. However, we submit that this committee should not overlook the antifriction bearing industry which is absolutely vital to the nationl security and economic health of this Nation in its considerations of statutory protection for basic American industries. Our efforts to obtain import adjustments have made clear to us two facts: First, our ability to compete against imported bearings is severely curtailed by the assistance, given to the foreign competitor by two strong allies-the Japanese Government and the U.S. Govern- ment; second, unless the Congress provides statutory protection, the domestic industry must seriously consider whether to export American jobs and import bearings. Every administration appears to be surprised that at every oppor- tunity, such as this very hearing, industry after industry pleads for consideration of its trade problems and for import adjustment. To date the result has been only that they are described as "protectionist." Gentleman, if being a protectionist means that we are attempting to PAGENO="0142" 3742 protect American jobs, American communities, the American ideals of fairplay, yes, we are "protectionists." We urgently request, therefore, that this committee report out H.R. 11910 or amend title I of HI.R. 16920 to include antifriction bearings along with textiles and leather footwear. INDUSTRY ESSENTL&L TO NATIONAL DEFENSE While the products of the antifriction bearing industry, in a very real way, are one of the cornerstones of any industrialized society, their posture in our program of national defense is even more im- portant. Without bearings airplanes would not be able to fly to their targets, missiles could not be guided, communications would flounder. It would be safe to say that the defense capability of this country would not only be crippled, it would be ruined. There is no one who seriously questions the paramount role of bear- ings as the controlling element in: the manufacture of practically every item of defense hardware which has moving parts-in truth this is the basic "pacing component." This historical record of this industry in times of national crisis provides indisputable evidence of the interrelationship between national security and a healthy, viable antifriotion bearings industry. This interrelation again received re- affirmation with the military buildup in Southeast Asia. Increased requirements precipitated by active military operations pushed indus- try production to new, a.fltime high. An important consideration was the demand for spare bearings necessary to support military equip- ment, particularly aircraft and helicopters in service. These require- ments increased with the number of hours flown; hence, the need for spare bearings increased to many times the number required for new production. This is typical, and to `be expected, during any period of actual military combat. In all past wars the production capacity has served as a mobilization base to supply defense needs. As imports have captured an ever- increasing share of the U.S. market, domestic bearing productive capacity has not built up at the same rate as the national lemand for these items. Careful consideration should be accorded this threat that the capacity of the bearing industry will not be sufficient in the next wartime buildup. IMPACT OF IMPORTS ON BALL BEARING INDUSTRY Ball bearings have a history of export-import movement. There are thousands of sizes, each with expensive tooling requirements. A pro- ducing country can expect to export a portion of its high volume sizes and will import other less widely used sizes. In the years following World War II, the United States annually exported about 5 percent of its ball bearing production. Early in this period imports were minor. When imports started growing rapidly they concentrated on a relatively few basic high volume types on which the product engineer- ing had been accomplished. Ball bearings of these types provide the volume and profit which enables the producers to engineer and de- velop, at a reasonable price level, the more specialized lines upon which our defense effort is so reliant. By 1969, reported imports of ball bear- ings exceed exports of 47 percent ($15 million). Also in 1969, statistical PAGENO="0143" .*3743 data became available on the number of imported ball bearings of various size groups. We are alarmed to find that more than one-third of domestic consumption of ball bearings in the high production sizes are imported. (See app. B, p. 3744.) The United States has significant exports of ball bearings to Ger- many, France, and the United Kingdom. This is not true for Japan. Here artificial barriers to trade are raised in the form of import li- censes and currency controls. Is this free trade? Certainly, it is not fair trade. IMPACT ON ROLLER BEARING INDUSTRY The roller bearing industry is in the fortunate position of having, at present, a favorable balance of~ trade, as compared with ball bearing subindustry where the imports exceed exports by some 47 percent and in fact, gentlemen, in certain significant high-production sizes of ball bearings one-third of the U.S. consumption now is supplied by im- ported bearings. But even with roller bearings the imports continue to rise each year. In 1969 the increase over all was 17 percent, mainly from Japan, which increased its exports into this country of roller bearings by some 54 percent. IMPORT STATISTICS While import statistics are not a direct subject of these hearings, their importance in demonstrating the effects of imports makes them a matter of great concern. In 1969 the units of ball bearings were re- ported for the first time which made it possible to quantify the serious- ness of import penetration. Present import statistical categories, while of great value, are still not sufficient. One cause is that the U.S. Bureau of Customs has not been given the money and people to collect the necessary information. The number of employees simply has not increased with the growth of imports. We recommend an increased budget to support the Bureau of Customs. CONCLUSION Mr. Chairman, there is no question that international trade and the numerous factors which are inherent in trade po]icies are extremely complex. We have no all-encompassing proposal to establish a new frontier in this area. Rather, in these few minutes I hope I have con- veyed a sense of urgency for the Congress to legislate fair trade pro- tection for our basic and vital industry. Trying to stay within the allotted time, I have not included statistics and other data. Also, we will be happy to supply to the committee, or its staff, at your convenience all data available to us. We are grateful for this oppOrtunity to appear before this com- mittee. While recognizing the complexities of the problems, and the need for thoughtful review of the views expressed during this hearing, nevertheless our industry cannot afford a prolonged continuation of our deteriorating position. We urge, therefore, early enactment of meaningful protection. Thank you, sir. Mr. BURLESON. Thank you very much. That is a very impressive statement. Are there any questions from either Mr. Schiieebeli or Mr. Pettis? PAGENO="0144" 3744 Mr. PETTIS. No questions. Mr. BTJRLESON. Thank you very much, sir. Mr. DEOAULP. Thank you, Mr. Chairman. (App. A and B referred to follow:) APPENDIX A-LIST OF MEMBERS OF ANTIFRICTION BEARING MANUFACTTJRERS ASSOCIATION, l~7O The Abbott Ball Co., West Hartford, Conn. Aetna Bearing Co., a Textron Division, Chicago, Ill. American Roller Bearing Co., Pittsburgh, Pa. The Barden Corp., Danbury, Oonn. Brenco, Inc., Petersburg, Va. The Fafnir Bearing Co., Division of Textron, New Britain, Oonn. The Federal Bearings Co., Inc., Poughkeepsie, N.Y. Federal-Mogul Corp., Detroit, Mich. FMC Corp., Link-Belt Bearing Division, Indianapolis, md. Freeway Washer & Stamping Co., Cleveland, Ohio. General Bearing Co., West Nyack, N.Y. Hartford-Universal Co., Division of Virginia Industries, Inc., Rocky Hill, Conn. Hoover Ball & Bearing Co., Ann Arbor, Mich. Industrial Tectonics, Inc., Ann Arbor, Mich. Keystone Engineering Co., Los Angeles, Calif. L & S Bearing Co., Oklahoma City, Okia. Marlin-Rockwell, Division of TRW Inc.. Jamestown, N.Y. McGill Manufacturing Co., Valparaiso, Inc. Messinger Bearings, Inc., Philadelphia, Pa. MPB Corp., Keene, N.H. National Bearings Co., Lancaster, Pa. New Departure-Hyatt Bearings Division, General Motors Corp., Santhisky, Ohio. New Hampshire Ball Bearings, Inc., Peterborough, N.H. Norma FAG Bearings Corp., Stamford, Conn. Orange Roller Bearing Co., Inc., Orange, N.J. Pioneer Steel Ball Co., Inc., Unionville, Conn. Rex Ohainbelt, Inc., Bearing Division, Downers Grove, Ill. Rollway Bearing Co., Inc., Syracuse, N.Y. SKF Industries, Inc., Philadelphia, Pa. Smith Bearing Division. Garwood. N.J. Sterling Commercial Steel Ball Corp., Sterling, Ill. The Superior Steel Ball Co., New Britain, Conn. The Timken Roller Bearing Co., Canton, Ohio. The Torrington Co., Torrington, Conn. Winsted Precision Ball Corp., Winsted, Conn. APPENDIX B PRODUCTION, EXPORTS, IMPORTS, AND DOMESTIC CONSUMPTION OF BALL BEARINGS, BY TYPE AND SIZE, 1969 [Quantity in thousands of units] Consumption within Imports as related to Imports as related to Type and size U.S. pro- duction Exports Imports United States (2) minus (3) plus (4) consump- tion (percent) produc- tion (percent) (1) (2) (3) (4) (5) (6) (7) Radial, O.D.: o to 9 mm 9 to 30 mm 30 to 52 mm Over 52 mm Other than radial Total 6, 232 66, 561 85, 939 75, 080 49, 499 373 3, 988 5, 149 4, 499 2, 966 2, 916 33, 871 39, 077 12, 749 3, 038 8, 775 96, 444 119, 867 83, 330 49, 571 33 35 33 15 6 47 51 45 17 6 283,311 16,975 91,651 357,987 26 32 Note: This tabulation does not include (1) ball bearings from Canada for assembly into automobiles. Total of these (ball and roller bearings) in 1969 was $3,419,678; (2) unground (nonprecision) ball bearings. Totals believed to be small. Source of data: U.S. production-Department of Commerce, BDSA preliminary data. Exports-Bureau of Census data on value of exports has been used as a base. It has been assumed that exports are subdivided by size in the same ratio as domestic production. Imports-Bureau of Censes data. PAGENO="0145" 3745 Mr. B1~RLESON. The next witness is Mr. Edward M. Rhodes, special consultant to American Sprocket Chain Manufacturers Association. We are glad to have you, Mr. Rhodes. I see you have brought samples. STATEMENT OP EDWARD M. RHODES, SPECIAL CONSULTANT, AMERICAN SPROCKET CHAIN MANUTACTURERS ASSOCIATION Mr. RHODES. I thought you might like to know what a sprocket chain looks like. Mr. BURLESON. Proceed, Mr. Rhodes. If you wish to file your own statement you may do so. Mr. RHODES. We ask that our written statement, which we have filed with the committee, be included as a part of the record. Mr. BURLESON. Without objection, it is so ordered. Mr. RHODES. In my oral testimony I should like to condense and summarize. My name is Edward M. Rhodes. I am a founder and past president of the American Sprocket Chain Manufacturers Association. I was active in the sprocket chain business for 26 years with Rex Chain Belt, Inc. At present I am consultant for the association. The American Sprocket Chain Manufacturers Association is a voluntary nonprofit association. The 12 member companies of ASCMA. and a number are represented in the hearing room today, account for substantially all of the domestic production of sprocket chain. We have chain plants in Connecticut, Illinois, Indiana, Massa- chusetts, New York, North Carolina, Ohio, Pennsylvania, Tennessee, and Wisconsin. This statement is limited to the types of sprocket chain known as transmission roller chains, and leaf chains, which are covered by American National Standards Institute Standards B29.1, B29.3, B29.4, B29.5, and B29.8. These types of chains are known as roller chain. Roller chain built to these specifications range from quarter-inch pitch to chains which can weigh over 60 pounds a foot and have a breaking strength of half a million pounds. Seven U.S. companies, all members of ASOMA, account for all the roller chain manufactured in the United States. A 15-year history of U.S. production assembled by ASMOA, is given on page 3 of our written statement. Roller chain manufactured in the United States in 1969 weighed 65 million pounds. totaled $90 million, and employed 4,850 people. These production fig-ures are illustrated on page 5, figure 1, of our written statement. In units, domestic roller chain has aver~i~e 63 million pounds an- nually for the past 5 years. The U.S. production peak was in 1966 at 68 million pounds, and has been below this ever since even though the economy has grown in this period. But imports of roller chain, shown on page 4 of our written statement, in tabular form, have grown rapidly throughout this whole period. In the last 14 years domestic uroduction has grown less than 50 percent, from 44 million pounds in 1955 to 65 million pounds in 1969. But in these same 14 years, imports PAGENO="0146" 3746 have grown from one a.nd a half million to 2~ million pounds, a 1,360- percent increase. Now, where is all this roller chain used? You probably first saw a roller chain on a bicycle where it is used to transmit power from the pedals to the rear wheel. Later on you may have seen chain in a bot- tling plant or dairy or on a power shovel or lift truck. Roller chains are used as an essential component part of a multitude of machines, from photographic, radio, and office equipment. to agricultural combines for harvesting wheat or corn and for picking cotton, to huge slings for handling hundred-ton forgings. Typical military uses for roller chain include aircraft, both combat and cargo, military trucks, tanks, all sorts of naval craft, amphibious vehicles, missile launchers, military construction equipment and sup- ply depots. All these require cha.in. To feed troops we need food processing and packaging equipment and water purification machinery. To clothe them, cotton gins, spin- ning mills, looms and sewing machines. And to house them, construc- tion equipment of all kinds. Saw mills and woodworking machinery are required. In hospitals, elevators and even X-ray equipment use roller chain. To transport men we need trucks, automobiles, locomotives, commer- cial aircraft. To move material, lift trucks and hoists. All these use roller chain. And to build military and strategic equipment takes roller chain for machine tools, for industrial furnaces and ovens, industrial machinery, automatic a.ssemblying machines, material handling equipment. To provide and transport raw materials and fuels, coal mining and processing, ore mining machinery. Steel mills, oilfield drilling, cement mills, all depend on roller chain. So to maintain U.S. productive facilities replacement chains are essential. The largest market category for roller chain is agricultural imple- ments. Chain drives and conveyors are used on machines for seeding, fertilizing, mowing, harvesting, handling, conveying and elevating almost every farm crop-grains, fruits, and vegetables. Our human foods as well as feed for cattle and poultry are again handled after harvesting on chains or chain driven machinery when they are prepared and packaged. Another large market for chain is construction equipment. Power cranes, shovels, ditch diggers, concrete mixers, gravel plants all use chain. Road building machinery, from earth moving to final paving, de- pends on chain conveyors and chain drives. But the replacement market is the largest of all. Chain drives can be selected to outlast the equipment on which they operate, but many applications of roller chain are made on a "limited life" basis to save space, weight, and original cost. On t.hese limited lift applications, which include construction, agricultural, and most mobile equipment, the chains must be replaced from time to time during the life of the machine, just as new t.ires and batteries must be installed in an auto- mobile occasionally. PAGENO="0147" 3747 Roller chain is essential to the TJ.S. economy. In all these machines roller chains are the tendons that connect the muscles, the power source, with the fingers that grasp and twist and lift and carry and turn and position. Roller chains wear out and must be replaced if the equipment is to function. In an emergency we must continue to have the ability here at home to produce chain and to design and build chainmaking machinery. This capability cannot be created overnight. For example, it takes 4 to 6 years experience after college to train a designer of chain ma- chinery. We think it is essential that the United States maintain a strong chain manufacturing capacity. Roller chains are indispensable in our economy. Now we in the industry have seen what happened to bicycle chain. In 1948 U.S. manufacturers produced over 14 miles of bicycle chain every working day for the domestic market. But imports, first from Europe and then from Asia, damaged this domestic production so much so that 10 years later, in 1958, U.S. production went from over 14 miles a day to about half a mile a day. Today, U.S. production of chains for bicycles is practically zero. All but one manufacturer has abandoned this item completely. The special machinery to produce chains for bicycles has been junked or dismantled. It is too late to do anything about bicycle chain, but we can profit from our bicycle chain experience because today we see the same importS trends in the whole industry that we saw 20 years ago in bicycle chain. The growth of imported chain ~s a percent of the total U.S. chain market-that is, U.S. production plus imports-is given on page 3748 and illustrated on page 3749 of our written statement. In 1955 imported chain amounted to only 3.3 percent of domestic consumption. Last year in 1969 imported chain was over 25 percent of U.S. usage of roller chain, more than ~½ times the 1955 percentage. This means for every 3 pounds of chain that we made here in the United States we imported 1 pound. If this trend continues, if imports continue to take over more and more of our domestic market, U.S. plants will not be able to support our needs in .an emergency. We need chains not only for essential military and strategic equip- ment but for feeding and housing our civilian population and our mili- tary forces. In our business we have a saying that you need chains wherever wheels turn. We won't be able to meet these needs domestically if the entire chain industry continues this way and goes the way of bicycle chain. Our statement is intended to furnish the committee with current and accurate information as to the impact of imports on one small but vital segment of American industry. It is not intended to present a legal or political analysis of all the various trade proposals pending before the committee. But we want to state our general position as to three of those proposals: First, we strongly endorse the proposal advanced by both the admin- istration and Chairman Mills to liberalize the escape clause and to make relief against injury caused by imports more readily available. We think relief should be available when an industry can show that imports have played a substantial role in causing or threatening injury. PAGENO="0148" 3748 Second, we urge that serious consideration be given to the enactment of omnibus quota legislation. It may be that some form of potentially available, across-the-board, quantitative restrictions on imports is the only practical way to stave off the further injury that threatens not only chain manufacturers but many other producers of important in- dustrial products. Third, and less controversial, we favor amendment of the Anti- Dumping Act of 1921 to make relief against dumping more practically available. It appears likely that many foreign chain sales in the United States are at prices below those in the home market. To provide a realistic procedure for obtaining relief in the event that further studies confirm our assumptions, we urge enactment of legislation which would eliminate significant weaknesses in the 1921 statute. We appreciate the opportunity to present this testimony, Mr. Chairman. (Mr. Rhodes' prepared statement follows:) STATEMENT OF EDWARD M. RHODES, SPECIAL CONSULTANT, AMERICAN SPROCKET CHAIN MANUFACTURERS ASSOCIATION I. This statement is presented by the American Sprocket Chain Manufacturers Association (hereinafter referred to as ASCMA). The ASCMA is a voluntary nonprofit trade, association comprised of U.S. firms and corporations engaged in the design, manufacture, `and sale of sprocket chains for the mechanical transmis- sion of power and for conveying and elevating. The 12 member companies of ASCMA account for substantially all of the domestic production of sprocket chain, and have chain plants in Connecticut, Illinois, Indiana, Massachusetts, New York, North Carolina, Ohio, Pennsylvania, Tennessee, and Wisconsin. ASCMA speaks on behalf of the industry in matters of general concern, such as the establishment of standards for chains and sprockets. II. Description of roller chain: This statement is limited to the types of sprocket chain known as transmission roller chains (and leaf chains) as covered by American National Standards Institute Standards B29.1, B20.3. B29.4. B29.5. and B29.8. These types of chains are known in the trade as "roller chain" and will be referred to as such hereinafter. Seven 11.5. companies, all members of ASCMA, account for all the roller chain manufactured in the United States. TABLE 1 III. ROLLER CHAIN MANUFACTURED IN UNITED STATES Year ` Quantity (thousand pounds) Amount (thousand dollars) Employment 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 43,700 45,700 40,700 34, 100 47,500 42, 800 40,400 46, 200 48, 400 56, 200 60, 300 68, 100 60, 800 62, 100 64,900 45, 600 51, 500 49,700 45, 500 63,200 57, 100 56,700 62, 200 65, 800 74, 400 78, 300 89, 600 80, 400 84, 300 90, 200 3, 410 3, 730 3,710 3, 300 3,990 3 850 3, 750 3, 820 3, 950 4, 41 0 4, 530 4, 980 4, 690 4, 540 4, 850 Statistics on domestic production of roller chain are assembled by ASCMA and represent all or substantially all of the roller chain produced in the United States of America. PAGENO="0149" 3749 TABLE 2 IV. ROLLER CHAIN IMPORTED Year Quantity (thousand pounds) Amount (thousand dollars) 1955 1956 1957 1958 1959 1960; 1961 1962 1963 1964 1965 1966 1967 1968 1969 1,500 1,900 3,600 3,300 5,500 5,900 5,700 6,400 7,300 10,600 13,400 14,200 13,300 18, 200 22,000 500 600 1,200 1,400 2,700 2,800 3,000 3,400 3,700 5,200 6,500 7,400 7,200 9, 500 11,100 Note: 1969 Imports weighed 14.7 times 1955 imports. Imports statistics are based on: U.S. Bureau of the Census Report No. FT-135, Group 698-Manufacturers of metal, not shown elsewhere; item 6983020, chains used for the transmission of power and parts thereof, of iron or steel. Imports of power transmission chains, other than finished roller chains, included in these statistics are insignificant and undoubtedly amount to less than 1 percent of the total. PAGENO="0150" FIGURE 1 ROLLER CHAIN: DOMESTIC AND IMPORTED (in Millions of Pounds) 1955 through 1969 ~ ~ ~ ~T~IT~1LTT I I I H 1 I I ~.. .~ I J~tAI&i4irI i&. `` I. . I I* ~`~~1~RJ2 !=--1~~- ~ .`. . : . : : I : : ~ i~1 I .!...~........_! J).14'I ;I:I:I.::iI~t~~ I. .~ I :..~.\.fJ ~ ________________________________________________________ 4c~ 1 F-i + ~ T4~ - I'~ ~I 3750 H ~.. I *1 . I :,:::::4: I hhi7o I.- - 55 S?~ S7 £& GO ~( ~4 ~5 G(o ~7 G9 ~9 Figures from Tables 1 and 2, Pages 3 and PAGENO="0151" 3751 TABLE 3 V. IMPACT OF IMPORTS ON TOTAL U.S. ROLLER CHAIN MARKET Total market Year (thousand pounds) (from tables 1 and 2) Percent imported 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 45, 200 47,600 44,300 37, 400 53,000 48,700 46, 100 52, 600 55,700 66, 800 73,700 82, 300 74, 100 80,300 86, 900 3. 3 4.0 8.1 8. 8 10.4 12.1 12. 3 12. 2 13.1 15. 9 18. 2 17. 2 17. 9 22.7 25. 3 Note: For every 3 pounds of U.S-made roller chain in 1969, we imported 1 pound. Had this imported roller chain been made here, 1,600 more people would have been employed by the industry. PAGENO="0152" FIGURE 2 3752 GROWTH OF IMPORTED ROLLER CHAIN as a percent of Total United States Usage (U.S. Production plus Imports) in pounds. :L. ~FI ~1I~ 1..J~I. T. 2O~ ~ *~:** T [~ I5~~ LT~ lO~ k~4 ~ / - -- ~ r~r ~J7 *.. -- ~_ L ~~H- I .JJ..J:_ ~ .J~_ ~ - ~!= ~i"iii i±~T. .~. ~ - iI5~ ~ `H H E~ H .ii~LI ~ HE ~.-. HE .J.... [TIlE ~ i 55 .% 57 ..% 59 GO Cl (~Z ~ ~4 ~5 ~é 68 69 I I:~ Figures From Table 3, Page 6 PAGENO="0153" 3753 VI. Typical uses of roller chain: You may have first seen a roller chain on a bicycle where it is used to transmit power from the pedals to the rear wheel. Later on you may have seen chains in a bottling plant, on a power shovel digging a foundation, or on a lift-truck in a warehouse. Roller chains built to specifications of the American National Standards Institute range from quarter-inch pitch requiring 192 parts to form 1 foot with a total weight of less than one and one-half ounces, to chains weighing over 60 pounds per foot with a breaking strength of half a million pounds. Roller chains like these are used as essential component parts of a multitude of machines-from photographic, radio, and office equipment to agricultural "com- bines" for harvesting wheat or corn and for picking cotton, to huge slings for handling hundred-ton forgings. (a) Typical military uses of finished roller chain: Aircraft, combat-control linkages; canopy mechanism; radio tuning drive; stabilizer control. Aircraft, cargo-kneeling mechanism; conveyors. Military trucks-engine timing drive; propel drive. Battle tanks-ammunition conveyor; gun charging mechanism; engine timing drive. All terrain vehicles-propel main drive. Naval craft-steering mechanism; elevator; ammunition conveyor; sonar equipment; diesel engine timing; pump drives; winch drives; torpedo storage; hoists. Communications-radio mechanisms; radar mechanisms; radar dome rotator; radar calibration equipment; reconnaissance camera synchronizer. Amphibious vehicles-Track mechanism; various drives. Supply depots-Conveyor chain; lift truck chain. ~Explosives manufacturing-Curing Conveyor. Ammunition manufacturing-conveyor mechanism. Missile launching (land and ship based)-hoist mechanism; positioning mechanism. Airport runway maintenance-sweeper drives; sweeper conveyors. Military construction equipment-main drive; propel drive; hoisting drive; conveying mechanism; digging mechanism. (b) Typical strategic uses for finished roller chain: 1. Feed ( clothe, house, and care for trOops- a. Feed- (1) Agricultural equipment. (2) Food processing equipment. (3) Food packaging equipment. (4) Kitchen equipment. (5) Water purification machinery. b. Clothe- (1) Cotton harvesting machinery. (2) Cotton gins. (3) Spinning mills. (4) Looms. (5) Sewing machines. c. House- (1) Construction equipment. (2) Earthmoving equipment. (3) Concrete mixing and placing machinery. (4) Air compressors. (5) Saw mill machinery. (6) Woodworking machinery. d. Care- (1) Hospital equipment. (2) X-ray equipment. 2. Transport men and material- a. Trucks `and automobiles. b. Locomotives. c. Commercial aircraft. d. Lift trucks. e. Conveyors. f. Cargo handling. g. Cranes and hoists. 46-127 0-70-pt. 13-1O PAGENO="0154" 3754 3. Establish operational bases- a. Airport runway construction. b. Roadbuilding. c. Paving. d. Earthmoving. 4. Build military and strategic equipment- a. Machine tools. b. Industrial furnaces and ovens. c. Metalworking. d. General industrial machinery, such as: (1) Plating. (2) Automatic assembly machines. (3) Cutting and sawing machines. (4) Straighteners. e. Waste disposal. f. Material handling. 5. Maintain and repaid military equipment- a. Maintenance equipment. i. Replacement chains. 6. Provide and transport raw materials and fuels- a. Coal mining and processing. b. Metallic ore mining. c. Steel mill equipment. d. Oilfield drilling equipment. e. Pipeline construction and operating equipment. f. Lumbering and sawmill machinery. g. Cement mill equipment. 7. Maintain U.S. productive facilities- a. Replacement chains. Q. Maintenance equipment. (c) Typical industrial uses of roller chain: The largest market category for roller chain is agricultural implements. Chain drives and conveyors are used on machines for seeding, fertilizing, mowing, harvesting, handling, conveying, and elevating almost every farm crop-grains, fruits, and vegetables from peas to potatoes. Our foods as well as feed for cattle and poultry, are again handled, after harvesting, on chains or chain-driven machinery when they are prepared and packaged. Milk containers, for example. are manufactured, sterilized, filled, and conveyed by machinery utilizing chain. Construction equipment is another large market for chain. Power cranes and shovels, ditch diggers, concrete mixers, and gravel plants all use chains. Road-building machinery-from earthmoving to final paving with asphalt or concrete-depends on chain conveyors and chain drives. The replacement market is the largest chain user of all. While chain drives can be selected to outlast the equipment on which they operate, many applica- tions of roller chain are made on a "limited life" basis to save space, weight and original cost. On these limited life applications (which include construction, agricultural, and most mobile equipment) the chains must be replaced from time to time during the life of the machine. For this reason roller chains must be readily available for replacement wherever such equipment is used-just as new tires, batteries, and mufflers must be installed in an automobile occasionally. \TJJ Roller chain essential to U.S. economy: In all these machines roller chains are the tendons that connect the muscles-the power source-with the fingers that grasp or twist or lift or carry or turn or position. Roller chains wear out and must be replaced if the equipment is to function. In an emergency we must continue to have the ability here at home to produce chain and to design and build and maintain chanmaking machinery. This capa- bility cannot be created overnight. It takes 4 to 6 years' experience after college to train a designer of chain machinery. After an apprenticeship it normally re- quires more than 5 years of training before a man can build the machinery to make chain. Skilled setup and repairmen need years of training. Operators usually require 6 months to become proficient. We think it is essential that the United States maintain a strong chain manu- facturing capacity. Roller chains are indispensable in our economy. We have seen what happened to bicycle chain. Bicycle chain was really the be- ginning of the roller chain industry in the United States back in the 189O'~ By PAGENO="0155" 3755 1948 U.S. manufacturers produced over 14 miles of bicycle chain every working day for the domestic market. But imports, first from Europe, then from Asia, damaged this domestic production so much that 10 years later, in 1958, U.S. produtcion went from over 14 miles ~ day to about one-half mile a day. Today, U.S. prouction of chains for bicycles is insignificant. All but one manufacturer has abandoned this item completely. The special machinery to produce chains for bicycles has been junked or dismantled. Pt is too late to save these jobs and skills. But we can profit from this experience. VIII. Trend of imports: Today we see the same import trends in the whole industry that we saw 20 years ago inbicycle chains. In the last 14 years imports have grown from 1.5 million pounds (750 tons) in 1955 to 22 million pounds (11,000 tons) in 1969-almost 15 times as much. Pounds of domestic production of roller chain have grown less than 11/2 times in this same period. Actually, domestic output in 1967, 1968, and 1969 was below 1966. In 1955 imported chains on which duty was paid amounted to only 3.3 percent of the total U.S.. roller chain consumption. Last year, 1969, imports accounted for 25.3 percent of the U.S. usage of roller chain, more than 71/2 times the 1955 percent. If this trend continues, if imports continue to take over more and more of our domestic market, U.S. plants will not be able to support our economy in an emergency. We need chains not only for essential military and strategic equipment but also for feeding and housing our civilian population and mili- tary forces. We need chains to maintain our factories throughout the Nation. We will not be able to meet these needs domestically if the entire chain industry goes the way of bicycle chain. IX. Recommendations: This statement is intended to furnish the committee with current and accurate information as to the impact of imports on one small but vital segment of American industry. It is not intended to present a legal or political analysis of all the various trade proposals pending before the committee. We do, however, want to state our general po~ition as to three of those proposals. First, we strongly endorse the proposal, advanced by both the administration and Chairman Mills, to liberalize the "escape clause" to make relief against injury caused by imports more readily available. Under the present law, as we understand it, it is necessary, in order to secure relief, to show that serious injury, or the threat thereof, has resulted in major part from imports attrib- utable to tariff concessions. We think relief should be adavilable when an in- dustry can show that imports, whether or not resulting from tariff concessions, have increased to the point where they are causing or threatening serious injury. Also, we think it should be necessary only to show that imports have played a substantial role in causing or threatening that injury, not necessarily the "major" or "primary" role. second, we urge that serious consideration be given to the enactment of omnibus quota legislation, such as HR. 13975. We realize that such proposals may have significant foreign policy ramifications and that, in arriving at a position with respect to them, competing and sometimes conflicting national interests must be balanced. But today we are witnessing, as perhaps never before in our history, the real possibility of our losing, because of the pressure of imports, important segments of our vital industrial base. it may be that some form of potentially available across-the-board quantitative restrictions on imports is the only practical way to stave off the further injury that threatens not only chain manufacturers but many other producers of important industrial products. Third, and less controversial, we favor amendment of the Anti-Dumping Act of 1921 to make relief against dumping more practically available. We have no specific information `to present `at this time as to the comparative selling prices of foreign (particularly Japanese) chain in the United States and in the home market, though it appears exceedingly likely that many foreign chain sales in the United States are at prices below what is charged at home. To provide a realistic procedure for obtaining relief in the event that further studies confirm our assumptions, we urge enactment of legislation, si.mch as H.R. 17605, which would eliminate significant weaknesses in the 1921 statute. \Ve appreciate the opportunity to present this testimony. PAGENO="0156" 3756 MEMBERS OF THE AMERICAN SPROCKET CHAIN MANUFACTURERS AsSoCIATION Acme Chain Division, North American Rockwell Corp., Holyoke, Mass. Atlas Chain & Precision Products Co., Inc., West Pittston, Pa. Diamond Chain Co., Indianapolis, md. Hewitt-Robins Inc., Stamford, Conn. Jeffrey Manufacturing Co., Columbus, Ohio. Link-Belt, Chain and Conveyor Components Division, FMC Corp., Indianapolis, md. Moline Malleable Iron Co., St. Charles, Ill. Morse Chain, Division Borg Warner Corp., Ithaca, N.Y. Peoria Malleable, Division of Woodward Co., Peoria, Ill. Ramsey Products Corp., Charlotte, N.C. Rex Chainbeit Inc., Milwaukee, Wis. Webster Manufacturing, Inc., Tiffin, Ohio. Mr. BURLESON. Thank you for coming, Mr. Rhodes. Mr. Pettis, do you have a question? Mr. PErrIs. Thank you, Mr. Chairman. I would like to ask one question in relation to that chart. Has the technology, I guess that is the right word, the technology in the manu- facture of these chains, had any significant advance in the last few years from the standpoint of metallurgy and so on? M~. RHODES. No, I don't think so. This is not a new industry. There have been advances and there have been improvements made, but I don't think there have been any major breakthroughs. Mr. PErrIs. You mention in your testimony that replacement is an important factor in this. Mr. RHODES. Yes, sir. Mr. PETTIS. Is it possible one day to make a chain that will last as long as the machine on which it operates? Mr. RHODES. We can do that today but it would make the machine too heavy. It would take more fuel to operate it. It would make it heavier and it would take more space. It is more economical to put on a chain that must be replaced. Mr. PETTI5. Really improving the chain is not going to help this declining market? Mr. RHODES. No. Imports show a growth rate of about 17 or 18 percent over the last 14 years. The domestic industry has been on the decline since 1966. This year for the first few months for which we have statistics domestic production is down and imports are up compared to last year. So this is getting worse. Mr. PETTIS. Thank you, Mr. Chairman. Mr. BURLESON. Thank you again, Mr. Rhodes. Just let me add that I know more about roller sprocket chains than I knew before. That may not be saying a lot. Mr. RHODES. What, on drilling equipment? Mr. BURLESON. No, generally. Thank you again, sir. Mr. RHODES. Thank you. Mr. BURLESON. Our next witness is Mr. James A. Graham, chair- man of the Government & International Affairs Committee of the Industrial Fasteners Institute and Frank Masterson, president of the institute. PAGENO="0157" 3,757 STATEMENT OF PRANK MASTERSON, PRESIDENT, INDUSTRIAL FASTENERS INSTITUTE, AND' JAMES A. GRAHAM, CHAIRMAN, GOVERNMENT AND INTERNATIONAL AFFAIRS COMMITTEE Mr. GRAHAM. The Industrial Fasteners Institute has submitted a statement, a summary statement which I would like to submit for the record, and I will confine my remarks to highlighting some of the points. Mr. BURLESON. Your statement will be included in the record in its entirety. Mr. GRAHAM. Thank you, sir. Mr. BuRLESON. You may proceedS, sir. Mr. GRAHAM. I am James A `Graham, vice president of Standard Pressed Steel Co., an international company engaged in the manufac- ture of mechanical fasteners, headquartered in Jenkintown, Pa. I am also chairman of the Government & International Affairs Committee of the Industrial Fasteners Institute. I am accompanied today by Frank Masterson, who is the president of the Industrial Fasteners Institute. Mr. BURLESON. I assume fasteners are zippers, is that right? Mr. GRAHAM. That is a type of fastener, sir, but we do not include it in the mechanical fastener industry that we are representing here today. The Industrial Fasteners Institute represents the industry that pro- duces mechanical fasteners of the threaded type, including rivets, nuts, bolts, that type of fastener. Our industry serves a variety of all industry including aerospace, automotive, appliance, construction, communications, electronics, petrochemicals, with a great deal of activity in both the military and civilian industrial areas. This product that we represent is in the `broadest sense used in prac- tically every type of mechanical assembly, including much of the elec- tronic industry. Wherever something has to be held together with a strength requirement there would be a mechanical fastener application involved. Our association represents an industry that has sales of about $2 billion per year in the United States. Our association represents 50 members with about 125 plants and the Institute includes about 50 percent of the $2 billion in sales. The total employment in our industry is approximately 75,000. My remarks on behalf of the Institute are directed primarily to the increasing problem of the great imbalance of fastener trade with Japan. Now I would refer in our prepared statement to exhibit 1 where statistical information is given regarding the trend on fastener exports and imports and in this exhibit it is apparent that since 1964 through 1969 that the imports of mechanical fasteners from Japan into the United States have just about tripled, a little more than tripled. In listening to some of the testimony earlier today from industries that are related to ours in a mechanical sense, it seems to me that more and more we find evidence that wherever there is a high degree of standardization involved in a product such as a nut or bolt or bearing or a roller chain, that you will find that that particular market is par- PAGENO="0158" 3758 ticularly attractive to imported products because generally with a high degree of standardization goes an opportunity for volume sales. This country has done an extremely good job of standardizing hard- ware parts such as fasteners. We lead the world in our engineering standards and for all types of threaded products. Our standards are accepted throughout the world as the leading type of engineering document for the product involved. `What we are requesting considera- tion for here is to primarily set up a control so that the Japanese fastener exports to the United States would be leveled off at least at the 1968 level which was approximately $40 million until such time as U.S. fastener exports to Japan reach a level of approximately $30 million. In our statement here we are asking for a fair trade opportunity. We seek reciprocal fairness. Fair international trade is now not possible with Japan because of their punitive nontariff barriers and licensing practices. The U.S. fastener industry is unique. It has worldwide leadership in engineering development and documentation, use of materials and nonmetals. Most of the development on fasteners has taken place in this country. `We supply more than 200 billion engi- neered assembly components annually. Our industry is best represented in markets where heavily docu- mented engineering performance standards for assembly are required. The reason we are asking for such action is that nontariff barriers in Japan preclude any equitable balance of trade in fasteners. The Japanese Government acts as a state monopoly. They have rationalized their fastener industry, providing for allocation of mar- kets both domestic and foreign, determination of prices, and have given Government inducements to export and for the protection of their domestic fastener industry, very similar to the comment made by the bearings people. U.S. fastener manufacturers at the request of our Government have cooperated with fastener study teams from Japan. Included in our statement is an exhibit from the fasteners institute publication out of Japan and quoting from this statement, "Fasteners industry"-this is in Japan-"is now playing an important role in the improvement of the fastener balance of trade in Japan," and "Importation of fasteners into Japan is limited to those of special types and naturally the amount is very low." For the year 1969 there is a U.S. deficit of fastener trade with Japan of over $50 million. For the years 1965 through 1969 there is a U.S. deficit of fastener trade with Japan of over $200 million. This is a sub- stantial and growing trade deficit for the United States with only one important trading partner. `We feel that this trade deficit with Japan is not caused by U.S. inefficiency. We have included in our statement certain productivity factors which would indicate that there is a good possibility for the U.S. fastener industry to sell on a competitive basis in Japan. Our pro- ductivity per man-hour is considerably higher than the Japanese statistics indicate. So we feel that the deficit is not coming from U.S. inefficiency, lack of innovation or development. Most of the develop~ ments are coming from here. But due primarily to factors that are I)llnitive in nature, nontariff barriers. In 1969 the United States was PAGENO="0159" 3759 able to meet world competition with a variety of national nontariff barriers because of superior product and strong exporting market effort. Excluding Japan for 1969 the United States would have had a favorable fastener balance of $21 million plus. With the unfavorable balance with Japan of $50 million plus, our net advantage was wiped out and we wound up with a deficit of $29 million for the year. One thing more to clarify the value of shipments into this country. We have not incorporated the disadvantaged to the United States of using the CIF/FOB value differences which would add roughly 15 to 20 percent to the figures that we show here in our statistics. It is a major goal and an urgent necessity for the United States to increase exports and secure favorable balance of trade. The Industrial Fasteners institute supports the need to increase exports. If we achieve the stated goal of increasing exports to Japan to $30 million, and this is our industry's goal, our industry would be doing its part to secure an overall favorable balance of trade for the United States. We feel that Japan can accept increased amounts of fastener im- ports from the United States. They have unchallenged leadership in shipbuilding. They ale ranking very high, second or third, in auto- motive, electronics, cameras, et cetera. So they do have a good fastener market and we think we can compete. Indications lead us to believe that the voluntary Japanese steel quotas which have been in effect will result in a shift of Japanese steel exports to the United States from raw material to some other form such as finished goods like fasteners, perhaps even bearings or roller chain. And this shift could rapidly widen the adverse balance of trade which is already unjustifiably high in our opinion. Our industry is in favor of fair international trade when both partners are bound by the same rules. This is not the situation in the case of fastener products which are virtually excluded as imports into Japan by nontariff barriers and which are subject to little or no restriction as imported products in the United States. For example, a standard hexagon nut, which is the most basic product of our indutry, used in billions of pieces per year, has a tariff in the United State.s of less than three-tenths of a cent a pound at this time. Incidentally, that is a product line on which we have had severe concentration by the Japanese fastener industry. We have virtually stopped any further expansion and caused, as a matter of fact, a regression of the capacity to produce that type of product in the United States over the last 4 to 5 véars. The U.S. fastener industry's overall position with reference to trade with Japan can be summarized as follows: Almost 54 percent of the total fastener imports to the United States are from Japan and are valued at a little over $52 million per year, whereas only 2.4 percent of the total fastener exports from the United States are to Japan and are valued at slightly under $2 million, and I can add parenthetically that this type of fastener that is being exported to Japan is predominantly for the aerospace industry where there are U.S. airplanes in Japan that need servicing and it comes in the area of spare parts and also for the military and certain electronic PAGENO="0160" 3760 equipment which requires maintenance where the fastener is available only from the United States. Our industry knows the necessity to export, has the capability to export and both the strength and desire to increase exports. We favor international trade and a reasonable sharing of U.S. markets. Our industry record for exports excluding Japan is good. The Japa.nese trade in fasteners in the United States we estimate has cost approximately 2,500 U.S. jobs in the fastener industry. So in summary I would like to say that our industry, which is SIC Code 3452, supports the goals and philosophy of the Mills international trade bill, H.R. 16920, and we respectfully request that these goals be extended to include all products in our SIC Code. At present "we have some relief for the U.S. industry available in the form of adjustment assistance and escape clause action, very difficult to come by, however. A .third and valuable addition would be to provide fair and reciprocal trading rules which would automatically go into operation once certain ceilings do occur. We seek `from your committee the type of U.S. job protection for our industry and fair play in international trade that your `bill pro- poses to secure for textiles and shoes. The Industrial Fasteners Institute urges Government and legisla- tive action for the fasteners industry following the goals and objectives of the Mills bill especially in trade with Japan. We urge legislative action which would maintain the level of Japa- nese fastener exports to the United States at a~ rate of not more than $40 million annually, the high value reached in 1968. I might add that there is a higher value in 1969 that was added as a very recent statistic not available when we prepared this statement. But the level was $40 million in 1968. We propose that we hold it at that level. At such time if the U.S. fastener exports to Japan reach $30 million annually the increase of the U.S. market available to Japan would be proportional to the growth of U.S. fastener exports to Japan. Mr. `Chairman, that is in summary our statement. We appreciate the opportunity to present it to the committee. (The prepared testimony of the Industrial Fasteners Institute follows:) PAGENO="0161" 3761 STATEMENT OF THE INDUSTRIAL FASTENERS INSTITUTE CONCERNING FAIR INTERNATIONAL TRADE HR 16920 Our industry - SIC 3452 - supports the goals and philosophy of the Mills International Trade Bill. lie respectfully request that these goals be extended to include all products in SIC 3452. At present, relief to U.S. industry is available in the form of Adjustment Assistance and Escape Clause action. A third and valuable addition would be to provide fair and reciprocal trad- ing rules which would automatically go into operation once cer- tain ceilings or conditions occur. We seek from your Committee the type of U.S. job protection for our industry and fair play in international trade that your bill proposes to secure for textile and shoe industry workers. The Industrial Fasteners Institute urges government and legis- lative action for the Fasteners Industry following the goals and objectives of the Mills Bill, especially in trade with Japan. We urge legislative action which would: Maintain the level of Japan fastener exports to the U.S. of $40 million dollars annually the high value reached in 1968. At such time, if U.S. fastener exports to Japan reach $30 million dollars annually, increase of the U.S. market available to Japan would be proportional to growth of U.S. fastener exports to Japan. PAGENO="0162" 3762 The Industrial Fasteners Institute is the association of manufacturers of products in SIC 3452: nuts, bolts, screws, rivets and special engineered assembly components which are vital to the safe performance of all vehicles, electronic systems, machin- ery and structures. The Industrial Fasteners Institute urges government and legislative action which would: Maintain the level of Japanese fastener exports to the U.S. at $40 million annually, the high value reached in 1968. At such time as U.S. fastener exports to Japan reach $30 million annually, increase of the U.S. market available to Japan would be proportional to the growth of U.S. fastener exports to Japan. We seek reciprocal fairness. Fair international trade now is not possible with Japan because of their punitive nontariff barriers. The U.S. Fastener Industry is unique, has world-wide leadership in engineering develop- ment and documentation, use of metals and nonmetals, and serves as a problem-solving industry to all other manufacturing, construction and servicing industries including all war materiel. The U.S. Fastener Industry supplies more than 200 billion engineered assembly compo- nents annually. U.S. world leadership is greatest in mass assembly which relies heavily on documented engineering performance standards for fasteners and assembly components. PAGENO="0163" 3763 Our Statement will show the request to the U.S. Government to maintain Japanese fastener exports to the U.S. at $40 million annually until U.S. fastener exports to Japan reach $30 million annually is fair, reasonable, attainable and in the best interests of both trading partners. Such action is needed now: 1. Nontariff barriers in Japan preclude any equitable balance of trade in fasteners. 2. The Japanese Government acts as a State monopoly. They have `rationalized" their Fastener Industry providing for allocation of markets - domestic and foreign, determina- tion of prices, government inducements to export and pro- tection of the domestic fastener industry. 3. U.S. fastener manufacturers, at the request of our govern- ment, have cooperated with Fastener Study Teams from Japan. Please study Exhibit VII from the Fasteners Insti- tute of Japan. Quoting from this statement - "Fastener Industry is now playing an important role in the improve- ment of fasteners of balance of trade of Japan", and "Importation of fasteners into Japan is limited to those of special types and naturally the amount is very low." 4. For the year 1969, there is a U.S. deficit of trade with Japan of $50,847,000. For the years 1964 through 1969, there is a U.S. deficit of fastener trade with Japan of $200,981,000. Please refer to Exhibit I. PAGENO="0164" 3764 This is a substantial and growing trade deficit for the U.S. with only one important trading partner. This trade deficit with Japan is not caused by U.S. inefficiencies, lack of innovation or development, low productivity, pro- duct reliability or other factors but only by punitive non- tariff barriers. U.S. fastener manufacturers have more engineering documenta- tion, work in more sophisticated areas with all metals and some nonmetals than any other country, including Japan. If it were not for Japanese trade, our world import/export situation would be: 1969 Only U.S. Exports (excludinq Japan) $66,704,000 U.S. Imports (excluding Japan) 45,254,000 U.S. Favorable Balance of Trade $21,450,000 In 1969, the U.S. was able to meet world competition with a variety of national nontariff barriers because of superior product and strong export marketing effort. Excluding Japan for 1969, the U.S. would have had a favorable fastener balance of trade of $21,450,000. With the unfavorable balance with Japan of $50,847,000, our total net advantage was wiped out and a world deficit of $29,397,000 resulted. PAGENO="0165" 3765 These figures show a strong effective export capability by the U.S. blunted by unfair nontariff barriers by Japan. The adverse results do not incorporate the disadvantage to the U.S. of CIF/FOB differences. 5. It is a major goal and an urgent necessity for the U.S. to increase exports and to secure a favorable balance of trade. The Industrial Fasteners Institute supports the need to increase exports. If we achieve the stated goal of increasing exports to Japan to $30 million, our industry will be doing its part to secure an overall favorable U.S. balance of trade. Japan can accept increased amounts of fastener imports from the U.S. Japan has unchallenged leadership world-wide in shipbuilding, is second or third in automotive, in electronics, in cameras, increasing machinery production, and is preparing to enter prominently in the light jet aviation industry ... a major U.S. export. 6. Indications lead us to believe that the voluntary Japanese steel quotas will result in a shift of Japanese steel exports to the U.S. from raw material to finished goods, such as fasteners. This shift could rapidly widen the adverse bal- ance of trade which is already unjustifiably high. PAGENO="0166" 3766 U.S. markets, unlike foreign markets, do not have the anti- competitive environment of cartels and ~rationalization with the result that the full impact of this Japanese steel conversion will be aimed primarily at the American market. 7. Our industry is in favor of Fair International Trade when both partners are bound by the same rules. This is not the situation in the case of fastener products which are virtually excluded as imports in Japan bec~se of nontariff barriers, and which are subject to little or no restriction as imported product in the USA. This position, based on growing unfavorable trends in fastener trade between Japan and the USA, is best illustrated by the statistical data and charts attached to this statement. The U.S. Fastener Industry's overall position with reference to trade with Japan can be summarized as follows: (1969 figures are used) 53.7% of total fastener imports to the U.S. are from Japan and are valued at $52,551,584. 2.4% of total fastener exports from the U.S. are to Japan and are valued at $1,705,000. o Our industry knows the necessity to export, has the capability to export and both the strength and desire to increase exports. o We favor international trade and a reasonable and equitable sharing of U.S. markets. PAGENO="0167" 3767 o Our industry record for exports, excluding Japan, is good. o There is a net minimum loss of 2,500 U.S. jobs in our fas- tener trade with Japan. o The relationship of our industry with Japan does not repre- sent Fair International Trade. o Most economic factors now are distorted by stress caused by the war. It is unrealistic to measure imports and their impact on the economy as though all economic factors in the U.S. were now normal. Action is needed now to provide jobs and opportunities to the whole U.S. work force and especially for our military men returning to civilian life. We appreciate this opportunity to present the views of our industry to members of the Ways and Means Committee of the House of Representatives in support of govern- ment action to encourage Fair International Trade. PAGENO="0168" Total Imports to U.S. From All Countires $ 34,793,000 51,313,000 59,769,000 70,334,000 78,232,000 97,806,000 $392,247 ,000 Imports to U.S. From Japan $17,221,000 28,075,000 32,220,000 36,538,000 38,755,000 52,552,000 $205,361 ,000 Total Imports to U.S. Excluding Japan 1964-1969 $186,886,000 Total Exports from U.S. To All Countries $ 29,223,000 36,614,000 49,307,000 55,826,000 63,377 ,000 68,409,000 $302,756,000 Exports to Japan From U.S. $ 217,000 285,000 387,000 785,000 1,001,000 1,705,000 $ 4,380,000 Total Exports from U.S. Excluding Japan 1964-1969 $298,376,000 U.S. Deficit Balance of Trade $ 5,570,000 14,699 ,000 10,462,000 14,508,000 14,855,000 29,397,000 $ 89,491,000 U.S. Deficit Balance of Trade With Japan $ 17,004,000 27,790,000 31,833,000 35,753,000 37,754,000 50,847,000 $ 200,981,000 U.S. Favorable Balance of Trade Excluding Japan $111,490,000 In this 6-year period the Japan Fastener Industry created a deficit balance of trade for the USA of $200,981,000. In the same 6-year period, excluding Japan, the U.S. Fastener Industry produced a favorable balance of trade for the USA of $111,490,000. Again, in the same 6-year period, including Japan: Total U.S. fastener exports were $302,756,000 Total U.S. fastener imports were 392,247,000 Unfavorable U.S. Balance of Trade $ 89,491,000 3768 Exhibit I UNITED STATES - JAPAN TRADE 1964-1969 The U.S. Government changed its statistical-gathering formulas beginning with the year 1964. We, therefore, have a current precise set of statistical data for industrial fasteners from 1964 through 1969. These data are: 1964 1965 1966 1967 1968 1969 1964 1965 1966 1967 - 1968 1969 Prepared by: Industrial Fasteners Institute .1505 East Ohio Building Cleveland, Ohio 44114 PAGENO="0169" 3769 Exhibit II TOTAL FASTENER IMPORTS TO THE UNITED STATES TOTAL FASTENER IMPORTS FROM JAPAN 1969 TSUSA No. ~ Product Description " Total U.S. Imports $ Imports From % Japan $ of Total `Imports % From Japan 646 5600 Nuts Iron & Steel 32 192 803 18 662 476 32 8 58 0 646,5400 Bolts & Bolts & Their Nuts:Iron & Steel 16,033,733 8,813,704 16.4 55.0 646,6320 Cap Screws) 0.24 : Iron & Steel ` 11,064,133 5,923,59811.3. 53.6 646,6040 Iron & Steel Screws Not Elsewhere Described ~ 0.24' Machine Screws? 0.375" length 6,217,727 , 5,123,206 6.3 ` 82.3 646,5800 0.125" diameter: Iron & Steel 5,740,879 5,444,494 5.8 94.7 646,4940 Other Wood Screws of Iron & Steel Iron & Steel Screws Not Elsewhere 4,131,839 `2,002,675 4.2 48.5 646,6340 Described >0.24" 3,253,162 1,329,440 3.3 40.8 646,4100 Other Rivets of Base Metal Canadian Article & Original Motor- 1,463,253 218,237 1.5 14.8 646,7900 Vehicle Equipment 5,504,000 5.5 646,5700 Iron & Steel Studs and Studding ` `2,615,176 151,939 2.7 5.8 646,7000 Other Washers: Iron & Steel ` Spiral and Other Lock Washers: 1,606,048 600,771 1.6 37.4 646,6500 ` Iron & Steel ` Screw Eyes, Hooks, Rings, Turn 1,229,355 965,226 1.2 78.5 646,7200 Buckles: Iron & Steel , 1,056,780 752,253 1.7 71.1 646,7400 646,4920 Muntz or Yellow Bolts ` Lag Screws or Bolts of Iron or Steel 682,523 1,152,243 156,404 0.7 l,D63,460 1.2 22.9 92.1 646,7500 Bolts, Nuts, Screws, Washers Having Holes, Shanks ~O.24" Not Iron or Steel Bolts, Nuts, Screws, Washers Having 775,236 308,874 0.7 51.3 646,7600 Holes, Shanks > .24" Not Iron or Steel 396,793 170,594 0.4 43.1 646,6020 Cap Screws 0.24" : Iron & Steel , 846,043 191,250 0.85 22.6 646,4200 Cotters, Pins & Holders of all Materials 766,032 339,687 0.77 44.2 646,5300 Wood Screws) 0.12' Not of Iron or Steel Screw Eyes, Hooks, Rings, Turn 426,320 92,056 0.43 21.6 646,7800 Buckles of All Materials 247,163 66,509 0.25 26.9 646,4000 Rivets of Iron & Steel Not Machined 299,781 51,991 0.30 17.3 646,5100 Wood Screws ~- 0.12' Not of Iron & Steel 45,324 23,183 0.04 51.0 646,7700 Studs & Studding of all Materials TOTALS I 60,017 $97,806,363 9,562 0.06 $52,551,589 100.0 15.9 53.7 Prepared by: Industrial Fasteners Institute 1505 East Ohio Building Cleveland, Ohio 44114 46-127 0 - 70 - pt. 13 - 11 PAGENO="0170" 3770 Exhibit III TOTAL FASTEHER IMPORTS TO THE UNITED STATES TOTAL FASTENER IMPORTS FROM JAPAM 1968 Total Imports From % TSUSA No. Product Description U.S. Imports Japan $ of Total From Japan $ Imports _________ 13,783,319 53.0 _________ 7,184,554 47.0 ________ 3,914,375 51.0 _________ 3,037,095 73.0 _________ 4,185,092 95.0 ________ 1,759,132 54.0 ________ 1,097,637 39.0 258,244 16.0 Nuts: Iron & Steel 25,808,423 33.0 Bolts & Bolts & Their Nuts:Iron & Steel 15,274,581 Cap Screws > 0.24 : Iron & Steel 7,682,878 Iron & Steel Screws Not Elsewhere Described ~0.24" 4,138,219 5.3 Machine Screws ~ 0.375 length > 0.125 diameter: Iron & Steel 4,393,779 5.6 Other Wood Screws of Iron & Steel 3,243,653 Iron & Steel Screws Not Elsewhere Described >0.24' 2,797,890 3.6 Other Rivets of Base Metal 1,656,411 Canadian Article & Original Motor- Vehicle Equipment 4,376,230 5.6 Iron & Steel Studs and Studding 1,625,705 71,482 2.1 Other Washers: Iron & Steel 1,304,308 342,457 2.1 Spiral and Other Lock Washers: Iron & Steel 976,099 745,053 1.2 Screw Eyes, Hooks, Rings, Turn Buckles: Iron & Steel 641,144 422,197 0.8 Muntz or Yellow Bolts 713,791 149,164 0.9 Lag Screws or Bolts of Iron or Steel 750,142 700,990 0.9 Bolts, Nuts, Screws, Washers Having Holes, Shanks ~ 0.24 Not Iron or Steel 616,885 269,835 0.8 8~its, Nuts, Screws, Washers Having Holes, Shanks ? .24" Not Iron or Steel 451,741 173,827 0.6 Cap Screws S0.24' : Iron & Steel 640,126 77,167 0.8 Cotters, Pins & Holders of all Materials 422,407 323,064 0.5 Wood Screws ~O.l2' Not of Iron or Steel 409,667 90,548 O~T Screw Eyes, Hooks, Rings, Turn Buckles of All Materials 103,681 77,751 0.1 - Rivets of Iron & Steel Not Machined 120,703 58,180 0.15 Wood Screws f- 0.12' Not of Iron & Steel 53,571 29,846 0.02 Studs & Studdina of all Materials 29,548 4,279 0T0T TOTALS 78,231,582 38,755,288 100.0 49.5 Prepared by: Industrial Fasteners Institute 1505 East Ohio Building Cleveland, Ohio 44114 646 ,5600 646,5400 646,6320 646.6040 646,5800 646,4940 646,6340 646,4100 646,7900 646,5700 646,7000 646 ,6500 &46 ,7200 646 ,7400 646,4920 646,7500 646,7600 646,6020 646 ,4200 ~4~6,5300 646 ,7800 646,4000 646,5100 646 ,77111) b.U 76.0 66.0 ~TO 44.0 38.0 75.0 14.0 PAGENO="0171" SUMMARY OF IMPORTS FROM JAPAF 1964-1969 Exhibit IV Prepared by: Industrial Fasteners Institute 1505 East Ohio Building Cleveland, Ohio 44114 % FROM JAPAN DOLLAR VALUE FROM JAPAN TSUSANo. Product Description 1964 1965 1966 1967 1968 1969 1964 1965 1966 1967 1968 1969 646,5600 Nuts: Iron & Steel 42.6 50.1 56 53.9 53 58 5,202,072 10,389,278 13,001 ,986 14,198,761 13,783,319 18,662,476 646,5400 Bolts, Bolts & Their Nuts:Iron & Steel 55.3 54.6 49 47.7 47 55 4,860,83l 6,469,168 5,680,209 7,213,594 7,184,554 8,813,704 646,6320 Cap S~~ws> 0.25 : Iron & Steel 64.4 68.2 75.5 66.9 51 53.6 1,448,975 2,491,931 3,279,305 3,970,597 3,914,375 5,923,598 Iron & Steel Screws Not Elsewhere 646,6040 Described~0.25' - 46.6 67.1 67.6 70.1 73 82.3 386,127 952,971 1,748,248 2,411,806 3,037,095 5,123,206 Machine Screws ? 0.375 length 646,5800 ~` 0.125' diameter: Iron & Steel 39 93.4 93.6 91.7 95 94.7 1,778,255 3,152,500 3,055,539 2,778,611 4,185,092 5,444,494 646,4940 Other Wood Screws of Iron c~~eT 60.6 55.6 57.4 59.3 54 48.5 1,475,224 1,575,444 1,662,370 1,301,854 1,759,132 2,002,675 Iron & Steel Screws Not Elsewhere 646,6340 Described > 0.25" 23.2 34.1 37.5 36.3 39 40.8 233,362 365,490 616,296 792,524 1,097,637 1,329,440 Spiral and Other Lock Washers: 646,6500 - Iron & Steel -~ - 68.4 75 84.6 83.7 76- -78.5- - 322,216- -- 447,164 -- 711,004 ----- 757,300 745,053 965,226 Screw Eyes, Hooks, Rings, Turn 646,7200 Buckles: Iron & Steel 52 83.9 84.9 78.5 66 71.1 136,702 313,677 490,915 671 .738 422,197 64 4920 [~Screws or Bolts of Iron or Steel 95 96.5 93.4 98 93 92.T 543,319 735,923 521,364 726,100 700,990 1,063,460 Bolts, Nuts, Screws, Washers Having 646,7500 Holes, Shanks~O.25" Not Iron or Steel 43.3 54.3 44.6 50.3 44 51.3 - 173,907 200,987 227,206 315,403 269,835 398,874 Bol ts, Nuts, Screws, Washers Having 646,7600 Holes, Shanks , .25' Not Iron or Steel 29.3 49.1 42.3 41.6 38 43.1 84,528 124,964 132,543 195,708 173,827 170,594 Cotters, Pins & Holders of all 646 ,4200 Materials 44.8 63.2 75.5 61.4 76 44.2 68,779 128,107 220,895 202,379 323,064 339,687 Screw Eyes, Hooks, Rings, Turn 646,7800 Buckles of all Materials 33.2 64.6 71 70.7 75 26.9 10,116 31,630 34,056 69,387 77,751 66,509 646,4000 Rivets of Iron & Steel Not Machined 41.1 54.5 49.9 52 48 17.3 22,652 31,698 35,055 45,244 58,180 51,991 646,5100 Wood Screws~0.l2' Not of Iron & Steel 28.2 32.1 49.7 41.4 56 51 13,305 27,368 31,343 28,685 29,846 23,183 All Other Products 15.7 17.5 11.1 10.9 9.4 2.7 460,362 636,794 771,811 858,624 993,341 1,420,219 Total percent from Japan for all products 49.5 54.7 62.7 51.9 49.5 53.7 17,220,732 28,075,094 32,220,145 36,538,315 38,755,288 52,551,589 752.253 PAGENO="0172" SUMMARY OF IMPORTS FROM JAPAN 1964-1969 (continued) Prepared by: Industrial Fasteners Institute 1505 East Ohio Building Cleveland, Ohio 44114 % INCREASE FROM YEAR TO YEAR BASED ON DOLLAR VOLUME INCREASE FROM DOLLAR VOLUME FROM JAPAN 1964 to 1969 TSUSA No. Product Description 1964 1965 1966 1967 1968 1969 1964 1969 $ 646,5600 Nuts: Iron & Steel - 99.5 25.2 9.2 - 2.9 35.4 5,202,072 18,662,476 $13,460,404 258 646,5400 Bolts & Bolts & Their Nuts: Iron & S88r - 33.1 -12.2 27 - .4 22.7 4,860 831 8,813,704 3,962,873 81 .2 646,6320 Cap Screws >0.25" : Iron & Steel - 72.1 31.6 21.1 -l.4 51.4 1,448,975 5,923,598 4,474,623 309 Iron & Steel Screws Not Elsewhere 646 ,604O Described ~ 0.25" - 147 83.7 37.9 26 68.7 - 386,127 5,123,206 4,737,079 1250 Machine Screws 0.315 length 646,5800 2' 0.125" diameter: Iron & Steel - 77.4 - 3.1 - 9.1 50.7 30.0 1,778,255 5,444,494 3,666,239 206 646,4940 Other Wood Screws of Iron & Steel Iron & Steel Screws Not Elsewhere 646,6340 Described ->0.25" - 6.8 5.5 -21.7 35.1 13.8 - - 56.7 68.5 28.6 38.5 21.1 1,475,224 2,002,675 527,451 35.7 . 233,362 1,329,440 1,096,078 470 Spiral and Other Lock Washers: 646,6500 Iron & Steel - - 38.8 59 6.5 - 1.6 29.5 322,216 965,226 643,010 200 Screw Eyes, Hooks, Rings, Turn 646,7200 Buckles: Iron & Steel - 130 56.5 36.8 -37.1 78.2 . 136,702 752,253 615,551 450 646,4920 Lag Screws or Bolts of Iron or Steel - 35.5' -29.2 39.3 - 3.5 51.6 543,319 1,063,460 520,141 96 Bolts, Nuts, Screws, Washers Having 646,7500 Holes, Shanks ~ 0.25" Not Iron or Steel Bolts, Nuts, Screws, Washers Having 646,7600 Holes, Shanks > .25" Not Iron or Steel - 15.5 12.9 38.8 -14.5 47.9 - 47.4 6 47.7 -11.2 - 1.9 . 173,907 398,874 224,967 129 . 84,528 170,594 86,066 102 646,4200 Cotters, Pins & Holders of all Materials - 86 72.5 - 8.4 59.7 5.3 68,779 339,687 270,9U8 394 Screw Eyes, Hooks, Rings, Turn 646,7800 Buckles of all Materials - 213 7.6 104 12.1 -14.4 - , 10,116 66,509 56,393 555 646,4000 Rivets of Iron & Steel Not Machined - 39.7 10.4 29.1 28.8 -10.6 22,652 51,991 29,339 129 646,5100 Wood Screws~ 0.12" Not of Iron & Steel - 106 14.7 - 8.3 4.1 -22.3 13,305 23,183 9,878 74 All Other Products - , - 38.3 21.3 11.3 15.7 43.0 460,362 1,420,219 959,857 208 - Total percent from Japan - for all products - +63 +14.7 +13.4 + 6.05 - 35.5 ` 17,220,732 52,551 ,589 $35,330,857 205% PAGENO="0173" 3773 Exhibit V INDUSTRIAL FASTENERS * IN JAPAN 1967 The Featonere InfltitUte of Japan 46-127 0 - 70 - pt. 13 - 12 PAGENO="0174" 3774 The Industrial Fasteners Institute has for years cooperated with our counter- parts - The Fasteners Institute of Japan. Here is a quote from the `Preface" of INDUSTRIAL FASTENERS IN JAPAN, 1967 prepared by the Fasteners Institute of Japan: "Fastener Industry in Japan has made a rapid and remarkable pro- gress during the last several years. Both quality and precision in production techniques and mass productivity by specialized method are attained as the result of this progress. "In 1959, the first, in 1964, the second, and in 1965, the third Small Business Industrial Fasteners Study Teams visited fasteners manufacturing industry in the United States of America.* As the result of their active efforts towards the improvement of fas- teners industry in Japan, upon their return from this inspection tour, a great deal of improvement in the establishment of effi- cient machines and the production management was brought about. The designation of the fasteners industry by the Government as as important item involved in the Machine Industry Development Provisional Measure Law also encouraged the modernization and the rationalization of the industry. "In accordance with the rapid growth of economic power in Japan, demands for fasteners and investments on the business have shown a great increase, and the fasteners production has expanded to such a big scale as we see today." (The Industrial Fasteners Institute cooperated with the U.S. Department of Coriuiierce and the U.S. State Department in working cooperatively with five Study Groups from Japan.) * The fourth visit to U.S.A. was in 1967 and their fifth visit to the Industrial Fasteners Institute was May, 1969. Quoting from the same 1967 Annual Report under "Production": "Fastener industry has expanded year after year through the intro- duction of mass production system. High economic growth of Japan, expansion of capital investment and mechanization of heavy indus- try created an increased demand for fasteners and naturally the production also showed a great increase. The development of machine industry since 1956 has made the fastener industry all the more important and the industry is now required to improve the quality of its production so as to help to maintain the precision and efficiency of machine industry. PAGENO="0175" 377*5 "Continuous efforts exerted by the fastener industry to meet this requirement through rationalization and modernization of enter- prises with the cooperation of the Government under the Law for Machine Industry DevelopmentTemporary Measures, and importation of highly advanced machines from Europe and America have now resulted in improvement of both quality and quantity of production." Quoting from same 1967 Annual Report "Present Condition of facilities In Fasteners Industry":. "This means that we are determined to perform our duties and responsibilities to the international comity of nations. In order to contribute towards prosperity of the world, it is absolutely necessary for us to endeavour ourselves to improve our own industries by means of rationalization, modernization of enterprises and readjustment of distribution system of manu- factured goods." (IFI note): We understand the word "rationalization" in Japan means a govern- ment approved monopoly - cartel - government assistance to increase exports and protect domestic imports and a pricing system acceptable in Japan and not acceptable under the laws of the U.S~. "Rationalization" is a potent nontariff trade barrier. Quoting from same 1967 Annual Report "Standardization": "Industrial standardization (as well as rationalization and high productivity) played an important role in rehabilization of Japanese economy after the end of World War II." Quoting from Section 6 of same report under "Export and Import" "Export of fasteners increasedgradually keeping abreast of the remarkable progress of rationalization and modernization of fas- teners industry. "The liberalization of foreign trade, set out by the J~panese Government helped by its poliçy for encouragement of export, gives way for increased outflow of fasteners products to foreign countries. "Fasteners industry is now playing an important role in the improvement of fasteners of balance of trade of Japan PAGENO="0176" 3776 `The fasteners Institute of Japan have been exerting efforts for the the orderly increase of fasteners exports through the cooperation of the government and fasteners industrialists of the importing countries. `Importation of fasteners into Japan is limited to those of special type and naturally the amount is very low.' PAGENO="0177" 3777 Exhibit VI SUMMARY OF FOREIGN TRADE WITH JAPAN Industrial Fasteners Institute I. Domestic Japanese Fastener Production In 1961, Japanese fastener shipments* were $110,000,000. By 1966, these shipments had grown to $240,000,000 or an average annual increase of approximately 17% in the dollar value of shipments. It is estimated that in 1968 Japanese fastener shipments reached $328,000,000. These shipments were produced by 3,634 firms employing a minimum of 77,560 employees. The vast majority of these companies employ less than fifty persons and only nine employ over three hundred. These figures reflect average annual shipments in Japan of $4,000 or less per employee. This compares with United States production of approximately $27,000 per employee. II. Japanese Exports to the United States Japan exports approximately 20~ of its total domestic production. 68% of all Japanese exports reach the United States. Approximately 14% of the total domestic production is exported to the United States. In 1969, exports from Japan to the United States were at a level of $52,550,000 (FOB Value). These exports to the U.S. had an average value of 23~ per pound. The following table reflects values for bolts, nuts, and wood screws imported from Japan during 1969: Weight or ~uantity Average Value Bolts 7,185,000 66,651,000 lbs. l0.8~ per lb. Nuts 13,786,000 63,302,000 lbs. 2l.8~ per lb. Wood Screws 2,460,000 12,031,000 gross 20.5~ per gross III. Exports by the United States toJapan In 1969, the United States exported $1,705,000 of product to Japan. This results in a trade deficitwith Japan of approximately $50,847,000 during 1969. For each dollar received by United States fastener manu- facturers, Japanese fastener manufacturers received $30 based on this trade deficit. In terms of domestic production, United States manu- facturers exported to Japan less than .11% of domestic shipments; thus, in terms of percent of domestic production exported, the Japanese enjoyed a 127 to 1 advantage. IV. Job Loss The Bureau of Labor Statistics estimated in 1965 that 91,000 workers were required for each $1,000,000,000 of goods exported. 54% of these workers were considered primary workers and 46% indirect. Using these yard sticks, our industry lost 3,000 production jobs to imports during 1969. This represents approximately a 5% decline in the U.S. Labor Force employed in fastener manufacturing operations. * Shipments means Japanese domestic production including exports. PAGENO="0178" 3778 Industrial Fasteners Institute V. Traffic Cost The Far East Ocean Shipping Conference rates are as follows: A. Tokyo to New York -- $33.00 per net ton. B. Tokyo to Great Lakes Shipping ports -- $35.75 per net ton or $33.50 per net ton on pallets. C. Tokyo to West Coast ports -- $28.00 per net ton. The above figures are those rates published by the Far East Ocean Shipping Conference and do not reflect subsidies pro- vided by the Japanese Government. Japanese imports average $316 per net ton; thus, the following factors can be used to calculate shipping cost: A. Add 10.4% to FOB Values for product entering New York ports. B. Add 11.3% to product entering at Great Lakes ports. C. Add 8.9% to product entering West Coast ports. In general terms, this would add an additional $5,250,000 to the $52,552,000 imported into the United States during 1969 to yield an equivalent CIF Value of imports totaling $57,802,000. VI. Legislation In 1949, Japan enacted the Industrial Standardization law to support the standardization of the industry as a whole, and Japanese Industrial Standards were set up in conformity with this law with the object of raising production efficiency, lowering cost, and improving quality of product. The symbol, JIS, on product indicates quality product guaranteed by the Japanese government. Exported product is subject to standards specified in the Export Control Law. Product designated for export must go through the inspection of the Japanese Machines and Metals Inspection Institute, which is the government approved inspection organi- zation. Only products which pass this inspection are authorized for export. VII. Consumers of Industrial Fasteners in Japan The four largest single consumers of Japanese fastener shipments are: 1. Automotive - 36% 2. Electrical Instruments (probably including appliances) - 14% 3. Wholesalers (use unknown) - 13% 4. Aircraft Industry - 5% PAGENO="0179" 3779 Industrial Fasteners Institute VIII. Valuation of Exports 1956-1963 In 1956, Japan exported 15,173 metric tons having an FOB Value of $5,030,000. This reduces to about l8.4~ per pound. In 1963, Japan exported 69,212 metric tons having a value of $19,924,000. This has a value of approximately l5.9~ per pound. These figures reflect a drop of 2.5~ per pound of exported product for the period. IX. Advanced Mechanical Fasteners In 1964, Japan produced 28,300 metric tons valued at $15,800,000 having a value of approximately 3l~ per pound. In the same year United States exports to Japan were 90~ per pound. The commence- ment of Domestic Production in 1962 of the F 104 jet fighters under United States license has been the major cause for increased fastener imports into Japan. It is estimated that nearly 70% of the imported fasteners are consumed by the Aircraft Industry, for both domestic manufacture and, repair of aircraft owned by air- lines, and planes maintained by the United States Air Force in Japan. Prepared by: Industrial Fasteners Institute 1505 East Ohio Building Cleveland, Ohio 44114 PAGENO="0180" TABLE I DOMESTIC PRODUCTION of INDUSTRIAL FASTENERS IN JAPAN Product $ 1961 $ 1962 $ 1963 $ 1964 $ 1965 $ 1966 Bolts 55,300,000 64,400,000 - 78,408,000 95,733,000 113,316,000 124,638,000 Nuts 29,400,000 30,300,000 31,622,000 39,383,000 46,902,000 56,277,000 - lachine Screws 22,300,000 25,500,000 29,047,000 34~86l,OOO 41,166,000 53,513,000 Iood Screws 2,900,000 3,600,000 - 3,950,000 6)838,000 6,755,000 5,526,000 OTAL $ 109,900,000 123,800,000 143,027,000 176,815)000 - 208,139,000 239,954,000 (Table I continued) Average growth rate Production in Japan is 16.96% annually; mated that in 1967, $280,554,000 and in of $328,154,000. of Domestic Fastener for the period 1961-1966 therefore, it is esti- Domestic Production was 1968 it reached a level Prepared by: Industrial Fasteners Institute 1505 East Ohio Building Cleveland, Ohio 44114 Product $ 1966 1966 Exports To U.S.A. % of Dom. Prod. olts 124,638,000 6,328,433 5,687 ,723 2,399 ,595 14,415,751 11.6 uts 56,277,000 13,002,000 23.2 achine Screws 53,513,000 3,055,539 - 5.7 ood Screws 5,526,000 - 1,746,710 31.6 OTAL $ 239,954,000 32,220,000 13.5 PAGENO="0181" EXPORTS OF INDUSTRIAL FASTENERS BY JAPAN TO WORLD AND PERCENTAPES OF DOMESTIC PRODUCTION (FOB Values) TABLE II Product $_~ports %of Dom. Prod. $ T~3T %of Bolts Nuts 9,100,000 10.7 Exports Dom. Prod. $ Exports Dom. Prod. tlachine Screws 2,000,000 6.8 13,800,000 14.6 17,506,000 15.9 Wood Screws 1,300,000 45.0 2,100,000 8.2 2,036,000 6.8 TOTAL$EXPORTS 12,400,000 11.3 1,500,000 41.7 17,400,000 14.1 1,630,000 40.0 21,172,000 14.7 (TABLE II continued) ~ % of % of~ Product $~ports Dom. Prod. Bolts Nuts 22,349,000 16.5 Exports Dorn. Prod. $ E~ports Dom. Prod. Machine Screws 4,252,000 12.2 19.2 36,977,000 20.4 ood Screws 2,072,000 - 45.4 9,079,000 22.1 7,945,000 14.8 OTAL$ EXPORTS 128,673,000 16.4 2,461 ,000 36.4 -~ 2,155,000 39.0 :~ Assuming 1967 and 1968 Japanese Fastener Exports are at a level equal $56,000,000 and 1968 were $65,000,000. Prepared by~ Industrial Fasteners Institute 1505 East Ohio Building Cleveland, Ohio 44114 to 20% of Domestic Production; Exports for 1967 were PAGENO="0182" TABLE III SU~1F4ARY OF DO~1ESTIC PRODUCTION AND EXPORT OF INDUSTRIAL FASTENERS FROM JAPAN 1961 1962 1963 1964 1965 1966 lotal Japanese $ Domestic Production 109,900,000 123,800,000 143 ,027,000 176 ,815,000 208,139,000 239,954,000 Total Japanese World 12,400,000 17,400,000 21 ,172,000 28 ,673,000 42,277,000 47,077,000 % of Exports To Total Production 11.3 14.1 14.7 16.4 20.3 19.6 Total Japanese E~p9r1sto U.S.A. 6,316,000 10,914,000 13 ,263,000 17 ,220,000 - 28,075,000 32,220,000 % of Total Japanese Exports to U.S.A. 49.0 62.8 44.8 50.9 66.5 68.3 otal Japanese Exports To U.S.A. as a % of )omestic Japanese Production 5.7 8.8 9.3 9.8 13.5 13.5 United States imports from Japan in 1967 were $36,538,000 or 13% of total Domestic Production. In 1968, total United States imports from Japan were $37,630,000 or an estimated 12% of Domestic Production. Prepared by: Industrial Fasteners Institute 1505 East Ohio Building Cleveland, Ohio 44114 PAGENO="0183" Exhibit VII FAIR INTERNATIONAL TRADE USA - JAPAN Net Trade Deficit, Prepared by: Industrial Fasteners Institute 1505 East Ohio Building Cleveland, Ohio 44114 U.S. - Japan 1953-1969 249 ,36O ,000 ~783 A consideration of these statistics clearly illustrates trends in fastener trade between Japan and the USA: Total Domestic U.S. Total Domestic U.S. Production 1953 (SIC 3452) Production 1969 ( Increase 1969 vs. 1953 Increase 1969 vs. 1953 the year 1953 the year 1969 1969 vs. 1953 1969 vs. 1953 U.S. Exports to Japan for U.S. Exports to Japan for Increase Increase the growing unfavorable $ 826,939,000 $ 1,752,469,000 $ 925,530,000 % 112 $ 151,000 $ 1,705,000 $ 1,554,000 % 1,029 $ 478,000 $ 52,551,000 $ 52,074,000 % 10,892 $ 254,456,000 $ 5,096,000 U.S. Imports from Japan for U.S. Imports from Japan for Increase Increase Total U.S. Imports from Japan the year 1953 the year 1969 1969 vs. 1953 1969 vs. 1953 for the years 1953 thru 1969 Total U.S. Exports to Japan for the years 1953 thru 1969 PAGENO="0184" TOTALS lO854,767,000 004,322,000 533,220,000 254,456,000 5,006,000 S Increase 1953-1969 925,030,800 02,544,000 93,330,000 02,074,000 1 554,000 Increase 1953-1969 112 331 2,005 10,892 TOTAL TRADE DEFICIT WITH JAPAN 1953-1069 (IMPORTS TO U.S. 111305 EXPORTS TO JAPAN) IS $249,360,000. 1. Includes all product reported in SIC 3402, Census of Manufactures. 2. U.S. eoport values are taken from U.S. Department of Commerce report FT 410. The valuation is the value at the seaport border point or airport of evportation. Valuation is based on the selling price and includes inland freight, insurance, and other charnes to the point of evportation. Product lines included are similar to those included in import totals (refer to 3). 3. U.S. import values are taken frcm U.S. Department of Commerce reports FT 110 and FT 246. The dollar value shoan is defined generally as the market value in the foreign country and therefore, evclsdes U.S. import duties, freight charges from the foreign country to the U.S., and insurance. Products includes all TSUSA numbers shown in 1968 summary attached. 4. Independent research firms have estimated that nearly 70 percent of the presently imported fasteners in Japan are consumed by the aircraft industry for both domestic manufacturer and repair for the crafts of air lines as yell as U.S. Air Force in Japan. Prepared by: Industrial Fasteners Institute 1505 East Ohio Building Cleveland, Ohio 44114 3784 SUMMARY OF UNITED STATES DOMESTIC FASTENER PRODUCTION AND IMPORTS - EOPORTS II]CLODINP TRADE 11TH JAPAN 1953-1069 Evhibit VIII U.S.] Domestic Production S Total 2 U.S. Evports S Total3 U.S. Imports S U.S. Imports from Japan S 3 of Total Imports from Japan U.S. Evports4 to Japan S of Total Evports to Japan 1953 026,939,000 15,865,003 4,476,003 478,000 10.6 151,000 0.9 1954 706,392,000 12,513,033 4,073,000 592,000 12.6 18,800 0.1 1955 950,681,800 16,975,000 6,732,000 1,843,000 24.5 33,000 0.2 1956 940,897,800 19,509,003 8,578,000 2,109,000 24.6 54,000 8.3 1957 954,454,003 19,849,000 9,732,000 1,723,000 17.7 62,000 0.3 1958 859,446,000 16,490,000 10,316,000 2,376,000 22.9 57,000 0.3 1959 l,80l,2l8,00U 17,254,000 17,794,000 5,033,800 28.6 52,000 0.3 1960 1,805,919,000 17,748,800 17,494,000 5,725,000 32.7 18,000 U.l 1961 969,612,000 18,838,000 15,241,000 5,665,880 37.1 78,000 8.3 1962 1,113,788,808 21,431,800 23,235,000 10,438,000 44.8 180,880 0.4 1963 1,175,719,800 25,594,000 22,707,000 13,263,030 58.4 181,000 8.3 1964 1,288,615,000 29,223,000 33,793.000 17,221,000 49.6 217,000 8.7 1965 1,434,514,000 36,614,000 51,313,000 28,075,800 54.7 285,000 0.8 1966 1,623,874,000 49,307,000 59,769,000 32,220,000 54.0 387008 0.7 1967 l,Sll,575,UUO 55,826,000 70,334,000 36,530,808 52.0 785,009 1.4 1968 1,659,535,000 63,377,000 78,232,000 38,750,000 49.5 1 001 800 1.6 1969 1,752,469,008 O$,4Q9,000 93,.5a6,o.o.LL 52,552,008 53.7 1.785,800 2.4 1 029 PAGENO="0185" 3785 Statement of the Industrial Fasteners Institute OBJECTIVE The Industrial Fasteners Institute is in favor of international trade - the free flow of goods in international commerce. The U. S. has made many contributions to attain this objective. However, there do exist foreign nontariff trade barriers as well as tariff restraints which prevent a fair and equitable exchange of goods for U. S. manufacturers. Our objective, then, is the eliminatiori of foreign nontariff trade barriers and an equitable tariff schedule so that U. S. manufacturers can operate on the same basis as foreign manufacturers. To maintain U. S. sales, and jobs affecting the hardcore unemployed, it is crucial that foreign nontariff trade barriers be eliminated and tariff schedules be equalized. The alternative to reciprocal fairness is unhealthy for the industry as well as for employment in the U. S. - manufacturers of fasteners may be increasingly forced to move their operations abroad to take advantage of lower wage costs and to avoid the trade and tariff barriers inimical to U. S. manufacturers. if it is not possible to eliminate punitive foreign tariff and nontariff trade barriers, we strongly favor exploring the use of countervailing duties on a country-by-country basis and, in addition, as a less desirable but necessary alternative, the creation of export incentives for U. S. manufacturers that are equal to the deterrents imposed by foreign countries. PAGENO="0186" 3786 PURPOSES The Industrial Fasteners Institute (IFI - an Association of manufacturers in the U.S.) has prepared this Statement in support of the elimination of artificial trade barriers which now substantially prevent export sales of Standard fasteners. The purposes of this Statement are: (1) to place the fastener industry in sharp focus- with reference to its importance to all other manufacturing industries, the govern- ment, and military establishments, (2) to present the manufacturing and im- port-export facts regarding fasteners, * . . (3) to document the high tariff duties im- posed on United States fastener exports and the significant nontariff trade barriers that face United States fastener exports, (4) to explain that United States exports are high-value special fasteners that do not enter normal, competitive foreign market- places, * . . (5) to emphasize that the United States market is as encouraging to imports as foreign markets are discouraging to exports, (6) to state what the consequences will be if the present inequities in trade opportunities continue, and (7) to sugg~st that, if United States fasten- er manufacturers were able to operate under the same rules and conditions in exporting to foreign countries that foreign manufacturers operate under in exporting to the United States, then U. S. exports of fasteners could be substantially increased. Foreign tariff and nontariff barriers are cumu- latively preventing United States manufac- turers of indu~trial fasteners from competing fairly for export sales with foreign manufac- turers overseas selling in their own markets, to third countries, and to the United States. One immediate result is a needless harmful effect on the United States balance of trade. On nontariff barriers alone, the President of the United States has declared it national policy to realize an improvement of $500 million to the trade surplus by international consultation and new domestic legislation. The export market sought to be opened to United States manufactures is not only of great significance to the expansion of the fastener industry, but to the United States balance of payments. The IFI believes that exports could be expanded about 2Y2 times - an increase of $135 to $140 million. A second result of foreign trade barriers higher than domestic tariffs is that imports into the United States displace United States sales without a reciprocally fair opportunity to replace those sales in foreign markets. Imports of standard fasteners at the low end of the product line will continue to enter United States commercial markets in quantity and have an impact out of all proportion to their reported dollar value. On the other hand, United States manufacturers cannot enter foreign commercial markets with stand- ard fasteners and are limited to exporting fasteners of special kinds that are not pro- duced in foreign countries. The volume of imports is increasing rapidly. United States firms, if they are to malntain their relative market share, must be able to sell top-of-the-line fasteners with a higher per-unit cost abroad. These higher-cost, more specialized fasteners are the ones most subject to cumulative tariffs and taxes. PAGENO="0187" 3787 1. MANUFACTURING AND IMPORT-EXPORT FACTS REGARDING FASTENERS The annual United States production of fasteners' (in round numbers) is as follows: Standard fasteners sold commercially $1 100,000,000 Special and proprietary fasteners sold commercially 500,000,000 Total sold commercially $1,600,000,000 Fasteners manufactured by companies who use them in assembly and do not sell them commercially (estimated) 200,000,000 Total commercial production $1,800,000,000 More than two million fasteners of many well as in atomic submarines, helicopters, sophisticated types are used in the production tanks, naval vessels, weapon systems, and all of one United States Air Force Lockheed military hardware. Table I summarizes the C-5A aircraft. Many sophisticated and com- 1967 import-export facts regarding ferrous plex fasteners are used in other jet aircraft, as fasteners. Table FASTENERS* IMPORT-EXPORT FACTS-~967 SUMMARY (FERROUS NUTS, BOLTS, SCREWS, RIVETS, ETC.( IMPORTS EXPORTS NET DIFFERENCE TOTAL U.S. AVG. U.S. $ TOTAL U.S. AVG. U.S. $ IMPORTS VS EXPORTS $ VALUE VALUE/lOS lb S VALUE VALUE/100Ib (U.S. $) OTHERS TO U.S. $ 64,520,000 $17.30 U.S. TO OTHERS $ 55,000,000 $ 69.40 U.S. DEFICIT $ 9,520,000 EEC TO U.S. 12,573,000 18.45 U.S. TO EEC 7,276,000 367.45 U.S. DEFICIT 5,297,000 JAPAN TO U.S. 35,457,000 16.45 U.S. TO JAPAN 785,000 168.65 U.S. DEFICIT 34,672,000 CANADA TO U.S. 6,615,000 20.05 U.S. TO CANADA99 32,663,000 U.S. GAIN 26,048,000 * S~C C*t*g*,y 3452 ~*p,~,*,t* f*,,*,*~ p~*d~ti~,, ~, U.S. T*~~ff S*h*d~~I* 6 p~. 3 (It*~~* 646.45-646.42 ,*d ,.ith *,,~,, b&t,, m. lw, 646.49-646.78 ~ b~lo, u, ** C***d* ,*p,~,*,l, ,p**i*l ,iu&S,~, ~.hkh ul~*,*,,*,i*!ly f,** p*,,*g~ *1 f*,,***~, ~ 59% *1 U.S. f,,,t ~ p*,t* g* C*,d~. The products listed bear SIC classification 3452 and include bolts, nuts, screws, studs, threaded rods, rivets, pins, washers, and other headed or threaded mechanical fastening devices. In the Tariff Schedules of the United States, they are covered in Schedule 6, Part 3, by Items 646.40 through 646.42 (rivets, cotters, fasteners used with screws, bolts, etc.) and Items 646.49 through 646.78 (wood screws, bolts, nuts, studs, screws, and washers, etc.). PAGENO="0188" 3788 It is important, throughout this Statement, to know that the product mix for imports is made of standard fasteners that are small in size and unit value. Exports are an entirely different product mix; they are special fasten- ers involving exotic metals and configurations. U. S. fasteners with high value per hundred weight do not enter the foreign commercial marketplaces to compete with foreign fasten- ers but are special replacement parts for machinery and vehicles originally made in the U. S. or for use in foreign countries that do not manufacture the advanced U. S. special fastener. Succeeding tables and illustrations in this Statement show (1) the punitive use of tariff and nontariff trade barriers to prevent fair and reasonable competition by U. S. manufac- turers of standard and other fasteners in foreign markets and (2) the incentives given by foreign governments to increase penetra- tion of low-unit-cost fasteners in the U. S. marketplace. Even if a country has no tariffs or taxes against imports, the requirement to have an import license for fasteners - as in Japan - could and does effectively prevent exports of fasteners to such a country. In Figure 1, some of the known trade barriers in the major countries to which American manufacturers export are compared with the duties that foreign manufacturers encounter in the United States. Perhaps the most im- portant conclusion that can be draivn from this comparison is that the size of the barriers alone has a chilling effect on the incentive of U. S. manufacturers to enter the export business, notwithstanding the domestic sales that are being increasingly displaced by imports. Figure 1 also illustrates the major impact of a number of policies discussed separately in this Statement. It is shown that: (1) foreign tariffs alone are a serious impediment to exports from the United States; (2) many desirable foreign markets impose taxes and other non- tariff trade barriers, which, as applied to United States exports, significantly add to the economic and practical burden upon U. S. fastener exports; and (3) the combined effect of both tariff and nontariff burdens is severe on a U. S. exporter manufacturer. Figure 1 does not show (because the problems cannot be readily quantified) that (I) the U.S. exporter-manufacturer must also contend with a variety of barriers other than tariff duties and internal taxes, and (2) in third- country markets, United States exporters frequently must sell in competition with export subsidies and other tax and financial advantages not accorded to the United States companies. Removing trade barriers will not permit U. S. manufacturers to compete in foreign markets across the board. However, U. S. manufac- turers can extend their sales of more sophisti- cated, top-of-the-line fasteners or other fas- teners that require specialized manufacturing capabilities. The effect of such an extension of sales would be the opportunity to replace sales lost in the United States with other sales abroad. The IFI's position is that, if the nontariff and tariff trade restraints cannot be substantially reduced, a system of export incentives should be adopted so that U. S. fastener manufacturers (among others) can compete fairly in the markets of the world.2 If trade barriers are not reduced or if counter- vailing export incentives, one alternative, are not adopted, the U. S. Fastener industry must move increasingly abroad. Only by such action will the industry increase sales to foreign markets and compete for sales to the United States markets - but in so doing both technology and jobs will also move abroad. The remaining sections of this Statement amplify the Institute's position and document the unequal foreign trade burdens its mem- bers encounter. 2 The Australian Government has recently decided to follow this course. A rebate of payroll taxes and of income taxes to exporters will be made for money spent promoting export markets. PAGENO="0189" I- z U a- I- z U 0. 3789 Figure 1 TRADE BARRIERS AGAINST FERROUS FASTENERS AVERAGE PERCENTAGES ASSESSED AGAINST VALUE 46-127 0 - 70 - pt. 13 - 13 ~~77] NONTARIFF BARRIERS: LaLLI~L1 Sates Taxes Added Value Taxes Turnover Taxes Compensatory Taxes Purchase Taxes Transmission Taxes LICENSE REQUIRED TO IMPORT fflflfl~ TARIFF BARRIERS: LLLLUJJI Import Duty See Table III footnote. PAGENO="0190" 3790 2. HIGH TARIFF DUTIES IMPOSED ON UNITED STATES FASTENER EXPORTS United States manufacturers of industrial fasteners desire to export to the European Economic Community (EEC) countries, Great Britain, and Japan. Although these countries are not the only ones to which export sales must be developed, they are the principal markets to which this Statement can usefully pertain. Tariff duties in these markets impose a substantial burden on the United States exporter.3 Table II and Figure 2 illustrate the burden in ad valorem equivalences that the exporter must bear. Table II summarizes duties and taxes, by type of iron and steel fastener, imported into the markets under study. The EEC tariff duties range from 8 through 12 percent now and will diminish only 1 to 2 percentage points, from 7 through 11 percent, when the staged reduc- tions under the Kennedy Round are over. United Kingdom duties now average 14 to 17 percent and will be reduced to 12 percent by January 1, 1972. Canadian duties range from 23.5 to 27.5 percent, exluding the recently enacted "free trade" for automotive produc- tion. Figure 2 compares in graph form the average tariffs assessed against the value of ferrous fasteners in the markets under study with the effect of low United States tariffs. Although the Kennedy Round, as President Johnson said, was a "great success," the present situation cannot be allowed to persist - a situation in which the tariffs of the other principal industrial-fastener consuming and producing nations are from P/s to more than 5 times higher than those of the United States. Refer to the IFI's `Memorandum in Support of Elimination of Tariff and Trade Barriers Abroad Affecting Industrial Fasteners," in which Attachments 2 through 7 state in some detail the pre-Kennedy Round tariff schedules for fasteners in the FederaiRepublic of Germany, France, Italy, United Kingdom, Canada, and Japan. PAGENO="0191" 3791 Figure 2 * See Tab'e III footnote. PAGENO="0192" Country Tax __________ Apptied Tariff Duty 73.32 Total Tax % Tariff Duty 73.32 GERMANY Added Value Total Tax Tariff Duty 73.32 tTALY Sales Tax Compensatory Total Tax Tariff Duty 73.32 BELGIUM Transmission Tax July 1, t968 28.2 Jan. 1, 1972 27.0 t, 1968 Jan. 1, 1972 7.0 _______________ IC July t, 968 18.2 12 17.0 8.2 7.0 4.0 6.6 18.8 July 1968 2L2 Over 1/4' & Over 1/4" Under 1/4" It.8 8.2 1.8 10.0 7.0 _______ 20.0 20.0 3t.8 28.2 31.8 30.0 27.0 30.0 2t.8 18.2 20.0 17.0 20.0 lt.8 8.2 11.8 7.0 tO.0 4.0 11.8 8.2 10.0 7.0 10.0 13.0 13.0 13.0 24.8 21.2 24.8 23.0 20.0 23.0 *All data relating to duties, sales taxes, pure/zest taxes, transmission taxes, turnover taxes, added value taxes, and compensatory taxes supplied by the U. S. Department of Commerce, Bureau of International Commerce. ttAll sizes refer to diameters where applicable. 3792 Table II - Summary of Duties and Taxes Applied to Ferrous Fasteners* Initial/Final Tariff Adj. Dates: Gatt FRANCE Sales Tax __________ 1/4" & Under Rivets Cotter Pins _July 1, 1968 8.2 Jan. 1, 10.0 11.8 8.2 11.8 . 10.0 7.0 10.0 10.0 10.0 too 21.8 July July 6.6 6.6 1968 Jan. 1972 Total Tax 22.4 18.8 22.4 8.2 17.6 20.6 17.6 20.6 7.0 13.0 11.8 Jan. 1, 1972 20.0 NETHERLANDS Tariff Duty 73.32 July , 1968 Jan. 1.1972 8.2 7 0 16.1 24.3 23.1 11.8 8.2 11.8 10.0 16.1 27.9 26.1 7.0 10.0 TurnooerTax 161 16 1 Total Tax % July 1968 24.3 27.9 Jan. 1, 1972 23.1 26.1 SWEDEN Tariff Duty 73.32 TurnoverTax July , t968 7.2 7.2 7.2 7.2 Jan. 1, 1972 6.0 6.0 6.0 10.0 17.2 16.0 6.0 10.0 17.2 16.0 12.0 7.5 Two Rows 10.0 10.0 Total Tax ¶7 July 1, 1968 17.2 17.2 Jan. 1, 1972 16.0 16.0 JAPAN Tariff July 1,1968 12.0 12.0 12.0 Duty 73.32 Total Tax ¶7 No Jan. 1, 1972 Additional Taxes Exi 7.5 Total Tax 7.5 %as Given 7.5 n Previous CANADA Tariff Duty Sched.A43000..t Jan. 1, 1968 23.5 23.5 23.5 23.5 Jan. 1,1972 17.5 17.5 SalesTax - No t'urlher Mfg. 2.0 12.0 35.5 29.5 3.1 1.4 5.0 8.1 12.0 17.5 120 TotalTax % Jan. 1968 35.5 35.5 35.5 Jan. . , 1972 29.5 3.1 1.4 5.0 29.5 29.5 UNITED STATES (See Note I) Tariff Duty Sched. 6 646 Jan. Jan. .1968 , 1972 17.1 9 5 5.0 22.1 17.1 9 5 50 22.1 State Sales Tax'Ms.Possibte Vat. Total Tax ¶7 Jan. 1, 1968 8.1 Jan. 1, 1972 6.4 64 14.5 14.5 UNITED KINGDOM (See Notes 2 and 3) Tariff Duty 73.32 July 1, 1968 13.8 13.8 16.8 16.8 Jan. 1, 1972 12.0 12.0 12.0 12.0 PurchaseTax 11.0 11.0 tt.0 11.0 Total Tax % July t, 1968 24.8 24.8 27.8 27.8 Jan. 1, 1972 23.0 23.0 23.0 23.0 PAGENO="0193" Wood Screws Bolts Nuts Lock Washers Machine Screws 1/4" & Under 28.6 Over 1/4" 32.8 1/4" & Under 28.6 Over 1/4" 32.8 1/4" & Under 28.6 Over5 1/4" 32.8 1/4" & Under 28.2 Ooer5' 1/4" 31.8 1/4" & Under 28.6 Over5 1/4" 32.8 28.0 31.0 28.0 31.0 28.0 31.0 27.0 10.0 18.2 4.0 30.0 10.0 4.0 28.0 31.0 8.6 12.8 8.6 12.8 8.6 12.8 SM 2.0 8.0 11.0 8.0 11.0 8.0 11.0 8.0 11.0 - 10.0 4.0 10.0 228 4.0 10.0 ~6 4.0 10.0 4.0 10.0 4.0 - 10.0 4.0 10.0 4.0 10.0 4.0 6.6 8.6 6.6 12.8 6.6 6.6 6.6 6.6 6.6 8.2 6.6 11.8 6.6 ~ 8.. 6.6 .....23~4.. 21.6 12.8 11.0 19.2 23.4 19.2 23.4 18.6 21.6 18.6 21.6 8.6 12.8 8.6 12.8 8.0 11.0 8.0 11.0 8.0 11.0 7.0 10.0 UQ JLQ 13.0 21.6 25.8 21.6 25.8 21.6 25.8 21.2 24.8 21.6 25.8 21.0 24.0 21.0 24.0 21.0 24.0 20.0 23.0 21.0 24.0 8.6 12.8 8.6 12.8 8.6 12.8 8.2 11.8 8.6 12.8 8.0 11.0 8.0 11.0 8.0 11.0 7.0 10.0 8.0 12.5 11.1 12.5 12.5 12.5 12.5 16.1 16.1 12.5 12.5 21.1 23.9 21.1 25.3 21.1 25.3 24.3 27.9 21.1 23.3 20.5 22.1 20.5 23.5 20.5 23.5 23.1 26.1 20.5 23.5 7.2 7.2 7.2 7.2 7 ` 7.2 7.2 7.2 7.2 7.2 6.0 T~ 7.2 16.0 6.0 ~ - I 16.0 6.0 16.0 6.0 16.0 6.0 I , 16 0 6.0 - 16.0 6.0 16.0 60 10.0 7.2 16.0 6.0 6.0 10.0 10.0 17.2 17.2 16.0 16.0 ~0 ~0 ~0 ~0 ~0 J.2~ 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 27.5 27.5 23.5 23.5 23.5 23.5 23.5 23.5 27.5 27.5 17.5 17.5 17.5 17.5 17.5 17.5 17.5 17.5 17.5 17.5 12.0 1 2.0 1 2.0 I 2.0 1 2.0 1 2.0 1 2.0 12.0 12.0 12.0 J~ 1~5 29.5 29.5 * 29.5 29.5 29.5 29.5 29.5 29.5 79 6 1 ~5.Q 12.5 -* 17.5 12.5 S-I 17.5 3.52 8.52 3.52 8.52 1.26 6.26 1.26 6.26 18.0 23.0 18.0 100 ~ 23.0 25.2 8.85 17.5 17.5 6.6 6.6 5.48 5.48 15.0 15.0 16.0 8.85 21.0 21.0 16.8/ 13.8 16.8/ 13.8 16.8/ 13.8 16.8/ 13.8 13.8 13.8 16.8/ 13.8 16.8/ 13.8 12.0 12.0 12.0 1 2.0 12.0 12.0 12.0 12.0 12.0 12.0 11.0 11.0 11.0 11.0 11.0 11.0 11.0 11.0 11.0 32.0 32.0 27.8/ 24.8 27.8/ 24.8 27.8/ 24.8 27.8/ 24.8 24.8 24.8 27.8/ 24.8 27.8/ 24.8 23.0 23.0 23.0 23.0 23.0 23.0 23.0 23.0 23.0 23.0 NOTES: 1. Percentages for rivets, bolts, nuts, and machine screws are ad valorem equivalents based upon dollar and weight in pounds of respective product imports to U. S. for month of April, 1967. Data supplied by the Trade Relations Council of New York City. 2 Percentages for wood screws are ad valorem equivalents based upon dollars and gross of wood screws imported into the U. S. in April 196Z Data supplied by the Trade Relations Council of New York City. 3. For bolts, nuts, and machine screws, the higher percentage is charged for all products whose value does not exceed 44 cents per hundred weight or 0.44 cents/pound. The lower percentage is applied to products exceeding a value of 0.44 cents/pound. 3793 PAGENO="0194" ~3794 3. SIGNIFICANT NONTARIFF TRADE BARRIERS The Industrial Fasteners Institute endorses the President's concern about "the problem of nontariff barriers that pose a continued threat to the growth of world trade and to our competitive position."4 The Institute finds it exceedingly difficult to document the variety and range of nontariff trade barriers. An individual exporter has even greater diffi- culty in predicting the exact effect of trade barriers on his attempts to export to major markets in Europe, Japan, and Canada. In the EEC, the internal tax system imposes high turnover taxes at the point of sale to the customer. As applied to a United States export, therefore, the base for the turnover tax includes such cost factors as transporta- tion to the entry port of the EEC country, insurance, high customs duty, markup of the agent handling the shipment, and freight to destination. Turnover or similar taxes add at least 15 percent to the fmal price to the customer in the European markets. But the vital point is that the high turnover tax is applied to a tax base already inflated by a high tariff. The combination of the tariff duty plus the turnover tax applied to it, as well as the other elements of the tax base, adds about 25 percent to the other transportation handling charges. Therefore, the European competitor of the American exporter is at a substantial advantage, because the turnover tax he pays is not applied to a high tariff element. The application of the tax to the tariff, in addition to the other costs and charges for transporting goods, imposes an additional tax comparable to the tariff and, in effect, doubles this particular form of burden on exports. Please note that statistics referring to imports into the United States are valued on a lower and different system than that valued on exports from the United States. In other words, the effect in the United States of $1 million imports is much greater than the effect in the foreign country of $1 million exports from the United States. Figure 3 shows nontariff barriers in percent assessed against the value of ferrous fastener imports in the countries under study. Where (as in the United Kingdom) tariff duties are higher than those in the EEC, the cost imposed by the purchase tax over and above its imposition on domestic manufacture may not be as high as the tariff. Taken together, however, the impact on exports in the United Kingdom appears greater than the impact in the EEC. The very high Canadian duty on nonautomotive fasteners, plus the high sales tax, means that the burden in Canada is even greater. No percent or amount can be applied to Japan, which has a complete and positive control of imports by not permitting them without a license. Japan also uses maximum incentives to increase exports. In third-country markets within the EEC, ex- port incentives or subsidies make competi- tion an even more unequal contest. Not only does the EEC product have less distance to travel and need not bear the external tariff of the EEC, but its transportation and sale are further facilitated by special tax reliefs and by special export insurance and services. In all probability, the most substantial pro- gram of export benefits exists in Japan. This program accounts for the fact that the bulk of imports into the United States market are Japanese (53.6 percent in 1967). Other for- eign markets have a similar variety of diverse but exceedingly effective laws and practices that discourage the importing of United States products, plus incentives to increase their own exports. These laws and practices (discussed after Section 6) are currently the subject of study by the United States Govern- ment, and the Institute supports and encour- ages such study. Message of January 1, 1968, to the Congress on the balance of payments. I PAGENO="0195" 3795 Figure 3 AVERAGE NONTARIFF BARRIERS BY COUNTRY AVERAGE PERCENTAGES ASSESSED AGAINST VALUE 24 JAPAN* NONTARIFF BARRIERS INCLUDE: Sales taxes 22 / Added value taxes 2O~ ~ FRANCE Transmission taxes ~ Turnover taxes //// // Purchase taxes 1 8 - 7/// / LICENSE REQUIRED TO IMPORT 16//// /~ NETHERLANDS / / BELGIUM - CANADA K~~M ITALY GERMANY SWEDEN 1.1.1.1.1.1.1 BARRIERS AS OF JULY 1, 1968 °Jopon hos maximum nonlariff barriers and maximum export incentives. No imports ore permitted without special license. PAGENO="0196" 3796 4. UNITED STATES EXPORTS ARE HIGH-VALUE-PER-HUNDREDWEIGHT SPECIAL FASTENERS THAT DO NOT ENTER THE NORMAL COMPETITIVE FOREIGN MARKETPLACE Several tables arid graphs presented in this Statement demonstrate the burden carried by United States exports. Table III dramatizes the cumulative burden on United States exports by summarizing the total percentage of duty plus other taxes assessed against imported iron and steel fasteners in the markets under study. Figure 1 (see Section 1) contrasts the high assessment in the markets under study with the low assessments in the United States. The main point illustrated in Table III and Figure 1 is that the range of such combined charges in the EEC is now from 19 to~ 30 percent and, after the deductions in the Kennedy Round have taken full effect, will continue to be in the range of 17 to 28 percent - a decrease of only 2 percentage points. Parallel charts have been developed to show the inequitable burden that is borne by United States exports as against the tariff burden borne by United States imports. Figure 4 shows, in the markets under study, the high total percentage assessed on bolts of all sizes - and contrasts the quite low United States assessment. Figures 5 and 6 show comparable data for ferrous nuts and rivets, respectively. With these tariff and tax figures in mind, one can examine the actual fastener exports of the United States in order to demonstrate the inability of exporters to place United States manufactured fasteners~ in the European markets. In 1967, about $55 million in exports were reported - about 3.6 percent of all domestic fasteners sold commercially in terms of dol- lars. But these exports are even less significant than the 3.6 percent figure suggests: 1. Only about 16.8 percent of the United States exports go to the mar- kets under study, such as the United Kingdom, France, Germany, and Italy. (Exports to South America ac- count for 11.6 percent, and 13.1 percent go to about 40 other coun- tries. Japan imports an insignificant 1.4 percent [$785,000] of U. S. fastener exports. Yet, Japan is one of the most highly industrialized coun- tries in the world.) 2. In 1967, 58.5 percent of these U. S. exports went to Canada, which is a highly specialized market for a num- ber of reasons, including the U. S.- Canadian Automotive Treaty. 3. In non-Canadian foreign markets, United States exports do not enter the normal competitive markets. The ex- ports are limited to (a) replacement parts for United States equipment, (b) proprietary items, and (c) specialty items of limited applicability, such as those of very-high-alloy steel. A comparison of the cost per hundred weight of the United States products exported with the overall average price per hundred weight for fasteners manufactured in the United States corroborates the reported finding that manufacturer-exporters are selling only spe- cialty items abroad. The overall average price per hundred weight for fasteners manufac- tured in the United States is about $38.00. United States exports at $69.40 perhundred weight for 1967 averaged nearly twice the value per hundred weight of domestic manu- factures but about four times the value per hundred weight of imports. Note that the product mix is especiaily different. And this comparison is somewhat PAGENO="0197" July 1, 1968 35.5 35.5 Jan. 1, 1972 29.5 29.5 TABLE III. SUMMARY OF TOTAL PERCENTAGES OF DUTIES AND TAXES ASSESSED AGAINST FERROUS FASTENERS BY COUNTRY 35.5 35.5 35.5 35.5 39.5 29.5 29.5~ 29.5~ 295 - 29.5 Country Total Tax % On Rivets Cotter Pins 1/4" & Over 1/4" & under 1/4" under Wood Screws Over 1/4" Bolts 1/4" & Over 1/4" & Over under 1/4" under 1/4" Nuts 1/4" & under Lock Washers Machine Screws Over 1/4" & Over 1/4" & Over 1/4" under 1/4" under 1/4" Avg. %* F rance July 1, 1968 Jan. 1, 1972 28.2 27.0 31.8 30.0 28.2 27.0 31.8 30.0 28.6 28.0 32.8 31.0 28.6 28.0 32.8 31.0 28.6 28.0 32.8 31.0 28.2 27.0 31.8 30.0 28.6 28.0 32.8 31.0 30.4 29.07 * United Kingdom July 1, 1968 Jan. 1, 1972 24.8 23.0 24.8 23.0 27.8 23.0 27.8 23.0 32.0 23.0 32.0 23.0 27.8/ 24.8 23.0 27.8/ 24.8 23.0 27.8/ 24.8 23.0 27.8/ 24.8 23.0 24.8 23.0 24.8 23.0 27.8/ 24.8 23.0 27.8/ 24.8 23.0 26.90 23.0 Netherlands July 1, 1968 Jan. 1, 1972 24.3 23.1 27.9 26.1 24.3 23.1 27.9 26.1 21.1 20.5 23.9 22.1 21.1 20.5 25.3 23.5 21.1 20.5 25.3 23.5 24.3 23.1 27.9 26.1 21.1 20.5 25.3 23.5 24.3 23.0 Canada Belgium 35.5 29.5 35.5 29.5 39.5 29.5 July 1 1968 21 2 24 8 21 2 24 8 21 6 Jan. 1, 1972 20.0 23.0 20.0 23.0 21.0 39.5 29.5 35.5 29.5 35.5 29.5 25.8 24.0 21.6 21.0 25.8 21.6 24.0 21.0 25.8 24.0 21.2 20.0 24.8 23.0 39.5 ~29.5 25.8 24.0 21.6 21.0 36.6 29.5 23.4 22.1 Ital y July 1, 1968 Jan. 1, 1972 18.8 17.6 22.4 20.6 18.8 17.6 22.4 20.6 19.2 18.6 23.4 21.6 19.2 18.6 23.4 21.6 19.2 18.6 23.4 21.6 18.8 17.6 22.4 20.6 19.2 18.6 23.4 21.6 21.0 19.7 Germany July 1, 1968 Jan. 1, 1972 18.2 17.0 21.8 20.0 18.2 17.0 21.8 20.0 18.6 18.0 22.8 21.0 18.6 18.0 22.8 21.0 18.6 18.0 22.8 21.0 18.2 17.0 21.8 20.0 18.6 18.0 22.8 21.0 20.4 19.1 Sweden July 1, 1968 Jan. 1, 1972 17.2 16.0 17.2 16.0 17.2 16.0 17.2 16.0 17.2 16.0 17.2 16.0 17.2 16.0 17.2 16.0 17.2 16.0 17.2 16.0 17.2 16.0 17.2 16.0 17.2 16.0 17.2 16.0 17.2 16.0 apan July 1, 1968 Jan. 1, 1972 12.0 7.5 12.0 7.5 12.0 7.5 12.0 7.5 12.0 7.5 12.0 7.5 12.0 7.5 12.0 7.5 12.0 7.5 12.0 7.5 12.0 7.5 12.0 7.5 12.0 7.5 12.0 7.5 12.0 7.5 United States July 1, 1968 Jan. 1, 1972 8.1 6.4 8.1 6.4 22.1 14.5 22.1 14.5 17.5 17.5 17.5 17.5 8.5 6.6 8.5 6.6 6.3 5.5 6.3 5.5 23.0 15.0 23.0 15.0 25.2 16.0 8.9 8.9 9.3 7.7 * Values shown for all countries except the U S. are simple numerical averages of sveighted to more accurately reflect the svide spread in U S. assessment percentages. duties and taxes by product size alone. Average values shown for the U S. are This spread is four times greater for the U S. than for other countries (see Table II). PAGENO="0198" Figure 4 TRADE BARRIERS AGAINST FERROUS BOLTS = TOTAL PERCENTAGE ASSESSMENTS AGAINST VALUE 1968 (TARIFF AND OTHER TAXES) 1972 BOLTS OVER 1/4-IN. DIAMETER PERCENTAGE ASSESSMENTS 0 10 20 30 I I I I JAPAN CANADA FRANCE UNITED KINGDOM BELGIUM NETHER- LAN DS ITALY GERMANY SWEDEN U.S. JAPAN CANADA FRANCE UNITED KINGDOM BELGIUM NETHER- LANDS ITALY GERMANY SWEDEN U.S. I I I I I 1 I I I I I I I I I I I I I I I j I I I I 3798 BOLTS UNDER 1/41N. DIAMETER PERCENTAGE ASSESSMENTS 10 20 ~ 30 °Japan has maximum nontariff barriers and maximum expott incentives. No imports are permitted without special license. PAGENO="0199" Figure 5 TRADE BARRIERS AGAINST FERROUS NUTS TOTAL PERCENTAGE ASSESSMENTS AGAINST VALUE (TARIFF AND OTHER TAXES) 3799 NUTS OVER 114-IN. DIAMETER PERCENTAGE ASSESSMENTS 10 1968 1972 NUTS UNDER ¼-IN. DIAMETER PERCENTAGE ASSESSMENTS 0 10 20 30 I I I UNITED KINGDOM I I NETHER- LANDS ITALY GERMANY SWEDEN - U.S. I I I I * I I I I I ajapan has maximum nontariff barriers and maximum expart incentives. No imparts ane permitted withaut special license. PAGENO="0200" 3800 Figure 6 TRADE BARRIERS AGAINST FERROUS RIVETS TOTAL PERCENTAGE ASSESSMENTS AGAINST VALUE (TARIFF AND OTHER TAXES) 1968 RIVETS OVER V4-IN. DIAMETER 1972 PERCENTAGE ASSESSMENTS 1~D 20 30 I I - I I NETHER __________________________________________________________________- LANDS I - UNITED KINGDOM BELGIUM I ________ GERMANY I cwrnni ~ RIVETS UNDER ¼-IN. DIAMETER PERCENTAGE ASSESSMENTS 0 10 20 3C IAPAII4 - I I FRANCE4 NETHER LANDS 1~~~ UNITED KINGDOM M I ITALY 4 MANY~ I EDEN I ~ I _______________ _______ °Japon tat maximum nontariff borriers and maximum export incentixe S. No imports are permitted without special license. PAGENO="0201" distorted by Canadian experience: if Canadian exports are removed from the comparison, the average value per hundred weight for United States exports is significantly increas- ed. For example, in 1967 the average value per hundred weight for the United States exports to the EEC was $367.45, or 20 times the value per hundred weight of imports. As a consequence, trade in fasteners with such desirable markets as the EEC is out of balance. Table IV reveals the favored position of imports and the high costs at which United States manufactures must enter the European market. Table IV Fasteners Balance of Trade 1962-1967 EXPORTS IMPORTS TO* U. S. FROM* U. S. Belgium $ 5,822,000 $ 4,770,000 France 9,077,000 5,025,000 Italy 21,960,000 3,543,000 Netherlands 7,375,000 2,247,000 West Germany 10,553,000 7,831,000 Total S54,787,000 $23,416,000 If allowance is made for proprietary items, special fasteners, and replacement parts, which are indicated by the disparity in the average value per hundred weight, Table IV indicates that the EEC countries export to the United States possibly ten times the volume of standard fasteners the United States ex- ports in competition to the EEC markets. A comparable situation exists in the United Kingdom, to which United States exports in the same five-year period amounted to $10,869,000, while United Kingdom imports into the United States amounted to $15,200,000. The $226.20 average value per hundred weight of United States exports to the United Kingdom clearly shows that our exports did not enter the stream of commerce in the United Kingdom but were special parts and replacement parts not manufactured in Europe or the United Kingdom.5 The Institute concludes that there is a serious deficit in export trade. Overall, for the five years discussed above, total exports amounted to $174 million, and total imports amounted to $245 million. Since trade with Canada is in a special category, largely influenced by the automotive industry, we believe that the truer balance is in comparing the balance with other markets. With Canada eliminated, total exports for these five years were $49 million, and total imports were $223 million - a ratio in terms of dollars of about 4.6 to 1. We believe this deficit can be overcome in substantial part through increased exports at the "top of the line" of United States products. The removal of the barriers dis- cussed in this Statement, we believe, would permit true competition in foreign markets on a price-quality basis. It is, of course, impossible to prove that the added cost deriving from a high tax on a tax base that includes, among other uncompeti- tive charges, a high tariff, is the reason why American manufacturer-exporters cannot penetrate major desirable markets. However, it is the judgment of the members of the Institute that removal of the barriers would permit an appreciable increase in United States exports.6 - 3801 U. S/EEC EEC NATION *Average value of exports from the U S. to these EEC nations is $192.55 per hundred sveight svhile the average value of exports from these nations to the U S. is $15.95 per hundred weight. However, since foreign exports are based on foreign value, rather than a c.i.f value, their value should be increased by 10 to 15 percent to be stated more realistically. Fasteners exported to Canada in 1967 under the special circumstances relevant to the market had an average value per hundred weight of $53.55. 6 This judgment does not apply to Japan. Japanese imports, because of their volume, low price, and national policy of export subsidy, pose issues of particular seriousness to the U S. fastener manufacturer. In terms of dollars, Japanese imports into the U S. currently represent 53.6% of total U S. imports. While 75% of all Japanese exports go to the U S. market, only 1% of U S. exports go to Japan. Recent reports indicate that Japan intends to increase substantially its exports to the United States. PAGENO="0202" 3802 5. UNITED STATES MARKET IS AS ENCOURAGING TO FOREIGN IMPORTS AS FOREIGN MARKETS ARE DISCOURAGING TO U. S. EXPORTS High tariff and nontariff barriers are only one-half the total picture facing a United States manufacturer-exporter. One of the strong incentives for him to develop exports is the impact of fastener imports upon the United States market. The experience of the members of the Institute has been that this impact is appreciable, both in terms of the market gained by the imports, the effect on the prices of American fasteners, and the displacement of American sales with attend- ant loss of jobs in the United States. With one exception, the United States im- poses oniy minimal or nominal tariff duties. There are no nontariff barriers that discrimi- nate against imports competing with domestic manufactures. The product entering the United States enters directly the market with which it competes and displaces United States sales. Although previous statements of the Institute have documented each of these points, a brief recapitulation may be helpful. The relatively low United States tariff duties include virtually no duty on the common fastener items and, in general terms, oniy a 20 percent duty, which will be halved by the Kennedy Round, on other fasteners. This tariff system no longer reflects the Congres- sional intent behind the original treatment of fasteners. In the 1922 and 1930 Tariff Acts, Congress accorded bolts and nuts a specific duty (i.e., Paragraph 330 of the 1930 Tariff Act), while other fastener products, including screws, were given a comparable duty stated in terms of an ad valorem rate (i.e., Paragraph 397 of the 1930 Tariff Act). Congress' inten- tion, we believe, was to protect United States manufacturers of bolts and nuts by a specific duty that would increase in protection during a depression (a consideration that proved initially successful in the 1930's). However, since World War II, an infiltration of unanticipated proportions has had the effect of lowering the initial duty approxi- mately 25 to 30 percent in ad valorem equivalency to one that has no present com- mercial effect. Screws and other fastener items, not specifically provided for, have maintained only a part of their relative position, because the duty with respect to them was imposed on an ad valorem basis under former Paragraph 397 of the 1930 Tariff Act.1 Using import figures for the month of April 1967, we have computed the weighted aver- age tariff of. fastener items to be approxi- mately 4.6 percent, as based on current TSUS rates. As of January 1, 1972, the weighted average for the importations (applied for the same imports) will be reduced to 2.8 percent. United States duty in terms of the weighted average is less than half of the duties in the EEC countries, less than a third of the duties in the United Kingdom, and less than a fourth of the duties in Canada. To repeat, the U. S. has virtually no duty on the common fastener items, and the duty after negotiated concessions on screw and However, the actual burden imposed on importers is effectively less than this statement suggests because of classification problems. The Institute is quite certain that many imports subject to the screw rate are invoiced and dutied at the lower bolt rate. The disparate rates are an incentive to circumvent the screw duty by misclassification and to pass fasteners into the United States without any real tariff burden. This conclusion is verified by import statistics which show that, in 1965, bolts and nuts of iron and steel (which carry an average duty of 0.4 cents per pound) in and of themselves accounted for 64.5 percent of imports by dollars, and 83.4 percent of imports by hundred weight. PAGENO="0203" other nonspecified Paragraph 397 items will be reduced from 20 to 10 percent under the Kennedy Round agreements. If United States tariffs decline further, the United States will have no bargaining position with which to reduce foreign trade barriers through negotiation. The Institute thus strongly opposes any further disintegration in the United States tariff duties unless and until a fair balance in duties can be obtained. The several items carrying the screw level duties represent virtually the only bargaining lever- age available to the United States, and it should be retained to negotiate reciprocably fair conditions. The impact of imports on the United States market is more significant than their market- share percentage would indicate. In 1967, fasteners manufactured in foreign countries and imported into the United States account- ed for approximately 4 percent of the domes- tic fasteners sold commercially (65 million of 1.6 billion). There are two important reasons why the impact of foreign imports is more significant than their percentage share of the U. S. market indicates. First, these imports are low-value-per-hundred-weight standard prod- ucts and directly displace sales of United States manufactured fasteners (and the jobs those sales represent). The imports also have a disproportionate depressing result on the en- tire commercial market. The average value of imports in 1967 was $17.30 per hundred weight This figure is to be compared with the average value of United States products of $38.00 per hundred weight Thus, all the imports carry an average value of 45 percent of the United States manufacture. Second, the imports are exceedingly respon- sive to opportunities in the United States market. The decade 1952 to 1962 witnessed an eightfold increase in bulk items under Paragraphs 330 and 332 of the 1930 Tariff Act (bolts, nuts, rivets, and other common fastener items on which a specific rate of duty has been imposed and on which the ad valorem equivalency became commercially insignificant). Because of the change in statis- tical reporting under the 1962 Tariff Act, there is some difficulty in continuity of import statistics. Nonetheless, the accelerating impact of fasteners on the United States market is clearly evident There has been at least 1350-percent increase in the dollar value of imports during the last 14 years, as Table V reveals. Table V INCREASE OF U. S. FASTENER IMPORTS 1953-1967 Imports Increase Year into U. S. (5) from 1953 (%) 1953 $ 4,476,000 ... 1954 4,673,000 4.4 1956 8,578,000 91.6 1958 10,316,000 130.5 1960 17,494,000 290.8 1962 23,235,000 419.1 1964 34,492,000 670.6 1966 58,411,000 1205.0 1967 64,520,000 1350.0 In summary, the low average value of imports and their increasing volume does not permit an opportunity for price competition, and there is no way for the domestic manufac- turer to recoup lost sales except by obtaining the opportunity to compete in foreign mar- kets. The Institute's members are willing to match their competitive know-how with for- eign competition in America or abroad, but they must also be given a fair opportunity to sell in the foreign markets as well. In short, a reciprocal opportunity to participate in the world-wide market is mandatory; such an opportunity has been utterly prevented by existing foreign trade barriers. 3803 TABLE V INDICATES THAT IMPORTS DOUBLE IN VALUE EVERY OTHER YEAR -A DANGEROUS RATE OF INCREASE! PAGENO="0204" 3804 6. CONSEQUENCES OF PRESENT INEQUALITY IN TRADE OPPORTUNITIES The result of continued trade barriers is clear. United States manufacturers must shift their manufacturing operations to foreign markets. In so doing, they would by one move avoid the trade barriers and have the benefits of the lower cost of manufacture. Under present competitive conditions, such a shift in the locale of manufacture would not only permit competition in foreign markets but would also permit a much greater volume of imports into the United States from United States- backed foreign manufacturers. The fastener industry in the United States has maintained technical leadership in the science JAPAN In this study, Japan is the only country that does not have any additional tax over and above the established duty rate. There are several reasons for the absence of this tax. To export fasteners from a given country to Japan, it is necessary for the importer in Japan to obtain an import license from the Japanese government. Several attempts were made to determine what restrictions and cost might be placed upon an importer trying to obtain an import license. No satisfactory answers were obtained. It has been currently established by a Department of State report that the Japanese government maintains elab- orate export promotion programs. of producing fastener products for aerospace vehicles and other sophisticated manufac- tures. As an example, United States manufac- turers will supply the most complex fastener items for the assembly of the Concorde supersonic aircraft - one of the applications for which there is no adequate substitute for United States technology. Any move of technical know-how and capital to foreign soil can only erode the technical capacity of the United States fastener industry. Such a move would severely diminish in the United States the capability of an industry that lies at the heart of virtually all assembly operations for aerospace, military, and consumer products. I. Favorable Tax Treatment A. Reserve for Foreign Market Develop- ment Japanese exporters are permitted to account up to one percent of their profits from exports as a reserve for foreign market development, which is considered as an expense for tax purposes, whether it is spent or not. If the exporter is also the manufacturer of the exported product, he may place up to 1.5 percent of his income from export contracts into this reserve under the same condition. These re- serves must be written up with equal credits of income in the succeeding five years after their establishment. The above is the statement of the Government and International Affairs Committee of the Industrial Fasteners Institute. SUPPORTING DATA-EXPORT INCENTIVES AND SUBSIDIES IN JAPAN, FRANCE, ITALY, BELGIUM, NETHERLANDS, AND GERMANY PAGENO="0205" B. Small and Medium Enterprise Re- serves for Foreign Market Develop- ment A small or medium enterprise, which is a member of a commercial or industrial association that has been authorized by the Ministry of Inter- national Trade and Industry to accum- ulate a joint reserve for foreign market development, may count as a tax- deductible expense up to 1.5 percent of its income from foreign trade, if a like amount is deposited in its associa- tion's foreign market development reserve. The association may count the entire amount of this fund as a tax-deductible expense if it is actually used to develop foreign markets. C. Special Depreciation Allowances A firm designated as an enterprise contributing to national export pro- motion is issued a special depreciation rate for its plant and equipment. This rate is 80 percent of the normal rate multiplied by the ratio of export sales to total sales (maximum multiplier is 2). D. Reserve for Overseas Investment Losses A firm investing abroad may accumu- late a fund equal to 50 percent of its investments abroad as a reserve against overseas investment losses. The money placed in this reserve is counted as a tax-deductible expense. E. Special Exemptions for Technical Exports A tax exemption is granted in the amount of either 1 or 2, below, whichever is lower. 1. 70 percent of the amount paid for the use of the patent or other technical knowledge. 2. 50 percent of the income ac- cruing from the above con- tract. F. Entertainment Expense A certain percentage for expenses for the entertainment of foreign buyers may be authorized as tax-deductible expense on a case-by-case basis. G. Tax Refund for Exporters Exporters and export manufacturers may be refunded a portion of the import duties paid on raw material and components to be used in the manufacture of products that are sub- sequently exported from Japan (up to a maximum of 0.5 percent of the price of the exported product may be refunded). II. Special Financial Treatment A. Export Trade Bill System At the direction of the Finance Minis- try, an export trade bill drawn by an exporter with the letter of credit as security may be discounted at 4.645 percent per annum, if it qualifies for rediscount by the Bank of Japan. 1. A nonsecured export trade bill may also qualify for a loan from a city bank. If an export trade bill, drawn by an export- er after the conclusion of an export contract is qualified for rediscount by the Bank of Japan but is secured by a letter of credit, a city bank may loan money against the export trade bill at 5.475 per- cent per annum. 2. Under this system there is no limit on either the size of the applicant company or the value of the letter of credit, but loans cannot be granted more than one year before shipment. Foreign Trade Exchange Fund Loan System The bank of Japan maintains a fund from which loans can be made to city banks to facilitate the purchase of export bills by foreign exchange banks. When a city bank purchases an export bill that is a time draft, the equivalent of the export bill may be loaned to the city bank at an annual interest rate of 2.555 percent. This policy allows the city bank to release more funds for the purchase of addi- tional export bills. 3805 B. 46-127 0 - 70 - pt. 13 - 14 PAGENO="0206" 3806 C. Overseas Economic Cooperation Fund This fund can loan and invest in projects to Japanese firms engaging in industrial development that will accel- erate economic interchange between the recipients and Japan. The rate of interest on these loans is 3.5 percent per annum or higher, and normal maximum terms are for 20 years. D. Japan Development Bank If a private enterprise contributes appreciably to national economic growth through foreign trade, and if the modernization for that enterprise is considered important for the growth of the national economy, Japan Development Bank loans may be available to that company for the purchase of new equipment. Firms qualified for this financing are general- ly capitalized at less than S5.6 million. III. Export Insurance System There are eight insurance plans adminis- tered by the Ministry of International Trade and Industry under the Japanese Export Insurance Law of 1950: Ordinary Export Insurance, Export Price Insurance, Export Bill Insurance, Export Loan Insur- ance, Consignment Sale Export Insurance, Overseas Advertising Insurance, Insurance on the Principal of Overseas Investments. Of these, approximately 62 percent of the total insured amount occurs under the first plan of Ordinary Export Insurance. IV. Wage Differences The current wage scale in the Bolt, Nut, and Rivet Industry in Japan has been reported as approximately $150 per month. This rate compares to the average monthly wage in the Bolt, Nut, and Rivet Industry in the United States of $550 per month. Thus, it is readily apparent that Japan does not require any other taxes beyond duty to establish significant barri- er to the importation of foreign fastener products. In 1963 Japan exported fasten- ers to the United States for a total Lo.b. value of $13,263,000. Total fastener exports to Japan in 1963 had a value of $1,820,000. Thus, a ratio of almost 12 to 1 exists between exports of fasteners to the United States and all imports entering Japan. V. Summary Fasteners exported by Japan to the United States: 1962 -$11,205,000 1965 -$29,494,000 1963 - $13,680,000 1966- $32,270,000 1964 - $18,751,000 1967 - $35,457,000 Total fastener exports from Japan to the United States for the six-year period: $140,857,000 Fasteners exported by the United States to Japan: 1962 - $100,000 1965 - $289,000 1963 - $101,000 1966 - $387,000 1964 - $217,000 1967 - $785,000 Total fastener exports by the United States to Japan for the six-year period: $1,879,000. Total trade deficit: $138,978,000 FRANCE I. Exemptions from Sales Tax All exports are exempted from~ sales tax. II. Tax Relief Measures Producers exporting at least 20 percent and merchants exporting at least 50 per- cent of their total sales volumes may be allowed to delay payment of taxes be- yond the due date if they can show that their temporary inability to pay is due to their efforts to export. Expenses connect- ed with services and market research carried out with the view of establishing a sale abroad may be deducted from a firm's taxable income over a period of three years, but must be put back into taxable income later. The restitution may be spread over a period of five years and may be waived with respect to certain countries designated by the Administer of Finance. Exporters may establish a tax-free reserve to recover possible losses on exports made on medium-term credit, but reserves not used to cover such losses must be taken back into taxable income in the last tax year. III. Export Insurance A. Credit Risk Insurance The French Export Insurance Com- pany issues insurance to cover risks PAGENO="0207" 3807 for nonpayment of goods exported on credit, when risks cannot ordinarily be covered commercially. This company is a quasi-governmental organization. B. Export Promotion Insurance Export insurance is provided by the French Export Insurance Company against financial risks arising from export promotion projects in foreign markets. The insurance enables firms, if their export programs fail wholly or in part, to recover up to 50 percent and more in some cases, of the amount disbursed and not amortized. C. Exhibitors Insurance The same French company covers firms against risks involved in efforts to sell abroad through participation in foreign trade fairs. An insured firm receives an advance of 50 percent of authorized expenses. If the firm's effort is successful, it reimburses the advances in installments, over a period of a year or two, as a percentage of sales in the area where the trade fair took place. D. Credit Term The Bank of France provides a special rediscount rate of 3 percent on ex- ports payable. The regular rate is currently 3.5 percent. Loans with terms of over eight years may be granted by French commercial banks directly to foreign companies to finance export sales of equipment valued at more than $5,000,000. The portion of the loan in excess of five years is drawn from government funds. E. Export Awards Export awards are given annually for outstanding export performance to firms employing less than 5000 work- ers. The first prize in each category (of which there are eight) consists of 6000 miles of air travel credit with Air France. turnover taxes levied on the product during the course of its production and distribution. The rates vary from one to 6.5 percent, calculated on the f.o.b. or the actual sales price, as proved by the expor- ter to the Italian Customs. II. Export Credit A. Mediocredito Direct participation by Mediocredito consists of refinancing 75 percent of the export credit principal financed by an Italian medium-term lending institute. The interest rate applicable to financing by Mediocredito Centrale is 3 percent. The interest rate to the foreign importer for the amount refi- nanced by Mediocredito must not exceed 5.9 percent. The balance of credit is charged the normal rate of 8.5 percent. B. Interest Rate Subsidy An interest rate subsidy of 2.6 percent to cover part of the interest payable on credit exists. The maximum allow- able rate of interest on export credit is 8.5 percent. If the interest rate sub- sidy ,is paid, the effective rate charged a foreign importer may not exceed 5.9 percent. C. Combined Participation through Refi- nancing and Subsidy Mediocredito may refinance 25 per- cent of the export credit principal financed by the lending institute, and may grant a subsidy toward payment of interest of 2.3 percent per annum on the remaining 75 percent of the principal. BELGIUM I. Exemptions and Rebates An exemption from the transmission tax is granted on sales of goods by manufac- turers or traders to destinations outside Belgium and on the purchases by manu- facturers or traders on goods for export. Partial or total exemptions from the transmission tax are given at the time of re-exportation of imported goods, whether they have been altered or not. H. Preferential Discount Rate for Export Acceptances The Belgium International Bank discounts ITALY I. Tax Rebates Exporters receive a rebate of turnover on their sales. Different rates of rebate are established according to the amount of PAGENO="0208" 3808 export acceptance at a preferential margin below its normal discount rate for com- mercial acceptance of up to 120 days term. For acceptance of 120 days or longer term, the Institute of Rediscount and Guarantee offers a similar preferential margin. HI. Export Credits The Belgian Government aids export pro- motion by granting credits to exporters through the Institute of Rediscount and Guarantee, Credit Export, and the Export Financing Pool. NETHERLANDS I. Tax Rebates An exporter may obtain a rebate on turnover taxes paid on goods exported and on raw materials and semimanufac- tures used in their production. Provision is also made for rebates of taxes paid on solid fuels, gas, and electricity consumed in the manufacture of exports. II. Reinsurance Facilities for Export Credit Insurance The Dutch Government reinsures export credits granted by the Netherlands Credit Insurance Company, a private firm. There is no ceiling on the amount the govern- ment may reinsure, and all categories of goods and services are eligible for this insurance. III. Netherlands Council for Trade Promotion This Council is financed on a 50-50 basis by the government and private industry. Government contributions amount to over $400,000. The Council covers the following subjects to promote Dutch exports: Market Analyses, Trade Fairs, Trade Missions, Trade Directory, and Economic Information Services. GERMANY In June, 1967, Germany published its new Added-Value Tax Law, which became effec- tive January 1, 1968. The purpose of this law is to eliminate the tax-upon-tax situation that had existed under the previous turnover tax structure. Under that tax structure, imported goods were taxed at 6 percent, while under the new value-added structure they will be taxed at 10 percent. The new added-value tax on imports is a deductible pre-tax, and there- fore, a transmitted item. By comparison, the old import equalization tax was the base for a pyramid of accumulated taxes. Thus, the difference between the new rate and the old rate could be less than appears obvious, depending upon the number of stages be- tween importer and consumer. As under the old system, the computation of tax on imports is based on the customs value. Both systems include in the customs value the duty and excise taxes, but not the import tax itself. The value-added tax system also in- cludes the transportation costs in Germany to the first point of destination, if these costs are not already included in the invoice price. Indications are that the value-added tax adopted by Germany could be the forerunner of a new taxing method to be used by all EEC participants to replace their present turnover tax structure. At the time of import, an equalization tax equivalent to the added-value tax applicable to domestic goods will be levied, together with the customs duty. Import equalization tax rates are identical with added-value tax rates. PAGENO="0209" 3809 The Industrial Fasteners Institute gratefully acknowledges the gracious help received from: 1. U. S. Department of Commerce 8. Notice by the Commissioners Bureau of International Commerce of Customs & Excise Washington, D. C. Great Britain Notice No. 78, November, 1966 2. U. S. Department of Commerce Field Office 9. International Commerce Cleveland, Ohio U. S. Department of Commerce Weekly July 31, 1967 July 17, 1967 3. Canadian Consulate January 22, 1968 Cleveland, Ohio 10. German American Trade News 4. British Consulate Volume 21 #9 Sept. 1967 Cleveland, Ohio #10 Oct. 1967 #11 Nov. 1967 #12 Dec. 1967 5. Office of the Special Representatives for Trade Negotiations: Report on U. S. Negotiations, 11. Consulates General of Japan Volume I East 42nd Street New York, New York 6. Trade Relations Council 122 East 42nd Street 12. Ernst & Ernst New York, New York Union Commerce Building Cleveland, Ohio 7. Overseas Business Reports OBR 65-11 March, 1965 13. Bureau D'Etudes Economiques OBR 67-70 November, 1967 10, Rue St. Augustin (U. S. Department of Commerce) Paris, France PAGENO="0210" 3810 The Government and International Affairs Committee of the Industrial Fasteners Institute* has, to the best of its abilities, verified the schedules and other data that support the analysis given in this Statement. However, member companies of significant size and experience in exporting have encountered a number of difficulties in assembling the necessary data. The information presented is as precise as possible but can be supplemented (and extended to other markets) if useful. The Institute will respond to any questions raised by the material presented in this Statement or to supplement it in any way that might be helpful in further developing the significant points which it believes the Statement raises. Respectfully submitted, James A. Graham, Chairman, Government and International Affairs Committee, Industrial Fasteners Institute ~ Industrial Fasteners Institute is an association representing United States manufacturers of fasteners. It is particularly concerned with technical matters, such as United States and international standards, standardization, and engineering, but also serves as the trade association representative of the mechanical fastening indust,y. PAGENO="0211" 3811 Mr. BtrRLESON. Thank you very much, Mr. Graham. It is a most interesting and informative statement. Mr. Masterson, do you have anything to add? Mr. MASTERSON . No, sir. Mr. B1JRLESON. Mr. Pettis, do you have some questions? Mr. PETTIS. Thank you, Mr. Chairman. I would like to pursue one point~ that you make where I think you state that our exports to Japan amounted to approximately $1,750,000 last year. Mr. GRAHAM. That is correct. Mr. PETrIS. And that was primarily in the area of replacing fas- teners on military equipment, probably American military equipment, things of that nature. Mr. GRAHAM. That is correct. Mr. PETTIS. I gather little or none of this was used in Japanese manu- facture or in products that originate in Japan. Mr. GRAHAM. That is our impression. Mr. PETTIS. Is it possible that some of the products that we see on the American market made in Japan with American labels on them could use these fasteners or are their prohibitions against that today, the fasteners? Mr. GRAHAM. I do not know that we are really prepared to answer that question, but I can offer an opinion that if there is a Japanese product on the market in the United States in an assembly of some type that was assembled with mechanical fasteners the chances are very high that the fasteners included are Japanese in origin. Mr. PErrIs. This is certainly not intended to pose a solution to your problem. I was just wondering where the American companies got their fasteners who are producing products in Japan, at least with an American label on them. Mr. GRAHAM. My impression is that they would get them either in Japan or some other country other than the United States because our export into Japan is so small that we could not support much of a product export program for any company; $1.7 million worth of fas- teners is a very small amount. We have analyzed the mix of products involved in the $1.7 million and you will find fasteners in there of beryllium, titanium, very, very exotic types of fasteners mostly related to the aerospace industry, or the electronics industry, where the price per pound is extremely high; $1.7 million represents very few fasten- ers in number. They are exotic special fasteners, in other words? Mr. PErrIs. I have just one more question, Mr. Chairman. Where does the great bulk of the exporting of fasteners go? To what countries? Mr. MASTERSON. Mostly to Europe and again they are mostly pat- ented or proprietary items. Low value per ton standard. fasteners com- ing into the United States have a depressing effect on the entire mar- ketplace. Exports are essentially high value per ton special fasteners that cannot be produced in Europe but the biggest user would be European countries, to some extent as replacement parts for U.S. vehicles and machinery and so forth, in Europe. We do not penetrate foreign markets. They penetrate us at will. Mr. PETTIS. This is non-Japanese markets? PAGENO="0212" 3812 Mr. MASTERSON. This is correct.. Bitt we do have an export capability and would have a favorable U.S. balance of trade in spite of European non-tariff barriers. In Japan with the export licensing required we can not jump over that wall. In their own statement which they have given to us they say that they have created a very favorable fastener balance of trade with the United States while the imports of fasteners are very low. This is in their own language and this is quoted in the text. At the request of our State Department and Department of Com- merce the last. 12 years we have been very cooperative w-ith the Japanese fastener industry. They have set up an institute somewhat similar to our own. We are friendly and helpful to them. They have markets behind the Iron Curtain and they can sell wherever they want to w~here we do not have free access because either we do not w-ant to or the Government says you should not.. This is not true with the Japanese. They sell to Red China, any market in the world. Mr. PErrIs. If you exclude the items you talk about as replacement items you really have a zero market, then, in Japan? Mr. MASTER5ON. This is corrcet.. Mr. BURLESON. Thank you, Mr. Graham and Mr. Masterson, for coming. Mr. GRAHAM. Thank you, Mr. Chairman. (The following statements were received for the record:) STATEMENT OF BUILDERS HARDWARE MANUFACTURERS ASSOCIATION, CLYDE T. NISSEN, EXECUTIVE DIRECTOR PURPOSE OF STATEMENT 1. It is the purpose of this statement to present viewpoints of the builders' hardware manufacturing industry relative to proposed Bill H.R. 14870, The Trade Act of 1970. With qualifications, the builders' hardware manufacturing industry favors the broad purposes contained in the proposed legislation. It is believed that the in- terests of the American Economy and of American industry can be advanced through legislation of this type provided proper safeguards to prevent unwar- ranted damage to industry are also enacted. 2. We urge that that basic objectives outlined in the proposed legislation be accomplished without serious and needless injury to American industry. Such damage can, w-e believe, be kept to a minimum through retention of adequate safeguards and the clarification and strengthening of Congressional powers and control. INTRODUCTION Builders' hardware includes hinges, cabinet hardware, door controls, locks and lock trim, exit devices, sliding and folding door hardware, padlocks, archi- tectural door trim and a wide variety of miscellaneous shelf hardware such as coat hooks, window locks, door stops, key blanks, etc. The Builders Hardware Manufacturers Association is a trade group of Ameri- can companies who manufacture builders' hardware items. The membership of the association accounts for approximately 75% of the total dollar value of builders' hardware items manufactured and shipped in the United States. In general, the industry is composed of more than 200 manufacturing organi- zations, ranging in size from those who employ less thna 2h~i to companies whose employment exceeds 3,000. The companies are located nation-wide, with special concentrations in the lower New England area, in the Chicago area, and in Cali- fornia. In 1969. the net shipments of the industry amounted to approximately $700,000,000 according to projected survey figures of the Department of Com- merce. Although industry members are sympathetic with the over-all purpose of the proposed legislation, we believe it necessary that the following points should he made clear: PAGENO="0213" 3813 1. Oontinued reductions in tariff rates on builders' hardware products may well cause irreparable economic injury to American producers of builders' hard- ware. 2. Foreign producers of builders' hardware need no additional import duty reductions to become competitive in the domestic market. Under current tariff rates, foreign producers of builders' hardware have been able to increase their share of the American market by 824% over the past `ten full years, according to government reported import statistiès. 3. The reduction or elimination of foreign tariffs and non-tariff barriers to American-made builders' hardware products will not assist this industry in the expansion of its export markets. In August 1963, representatives of the builders' hardware manufacturing industry met with Department of Commerce repre- sentatives for the purpose of advising the Department relative to specific foreign tariff and non-tariff barriers to the export of industry products. The meeting report substantiates the statements contained herein and supports the conclu- sions reached. REASONS FOR LIMITED INDUSTRY EXPORTS Exports of builders' hardware products have continued to decline during the past decade. The reasons for the low export position of this industry are numerous. a. Wage rate differentials. High production cost for American builders' hard- ware products tend to make such products non-competitive in European and other foreign markets. A major portion of these costs are labor charges, includ- ing soical benefits, which in the Common Market countries are only about one- third of the rate in the United States and even lower in other markets. b. ~tylc differences. American builders' hardware styling has little acceptance in foreign markets. The streamlined, clean cut of many American designs does not appear to fulfill the foreign desire for builders' hardware that is heavy and decorative, extra costly by American standards. American style cylindrical locks, slim surface-applied door closers and hardware for lightweight doors appear to create little interest in the European marketplace. For American hardware manu- facturers to tool-up for production of European styles and standards would be prohibitively costly in view of the available market size and other deterring elements. c. Diverse standards. Technical standards for builders' hardware items in the various foreign markets `differ from American standards. The cost of tooling to produce the different types to meet foreign standards solely for export sale would be uneconomic and prohibitive for American manufacturers. d. Nationalistic tendencies. In most European countries, small but well estab- lished manufacturing plants satisfy the needs of the market for builders' hard- ware items. Their market is protected by local product standards, a preference by consumers for products of their own country and a favorable price differential already noted. THREAT OF INCREASED FOREIGN IMPORTS As previously noted, foreign producers of builders' hardware are presently en- tering the American market and obtaining an increasing volume in spite of the existing import duty rates. The volume of imports has been increasing heavily over the `last five years and certain foreseen elements would indicate that this cx- pansion of builders' hardware imports will continue. European hardware manu- facturers, since the close of World War II, have been working at capacity to answer the needs of a re-building Europe. Now that this boom is over, foreign hardware manufacturers can be expected to turn their attention to the American marketplace. H Even in meeting the current competition of foreign imports, American builders' hardware manufacturers are faced with certain unquestioned facts. Builders' hardware specifications published by the Department of Commerce tend to make for a huge, mass market of builders' hardware products to which a foreign manu- facturer may quickly and easily gear his production. The less complicated products manufactured by the domestic builders' hard- ware industry such as hinges, cabinet hardware, sliding and folding door hard- ware, shelf and closet items, etc., have no important differences in general ap- pearance or `obvious performance characteristics to shield them from being displaced by closely competitive foreign imports. Foreign manufacturers are mechanized and have equivalent productive skill. Their production per man hour is equal to ours;. however, their labor charges, including soical benefits, as noted. PAGENO="0214" 3814 are only about one-third or less of the American rate. The effect of this tre- mendous disparity in wage rates can be judged by the fact that payroll represents a major percentage of the industry dollar volume. Among the more complicated items manufactured by the domestic builders' hardware industry such as door closers, floor checking hinges, cylindrical and tubular door locks, exit devices, etc., increased labor is required to fabricate products to meet American standards of quality. Accordingly, because of the high percentage of labor cost in the finished product, the industry's competitive position against imported merchandise is vastly weakened. It is becoming more difficult for performance characteristics and design features to overcome the heavy price advantage enjoyed by imported hardware, even w-ith present small import duty rates. Another problem which faces the American builders' hardware manufacturer is the requirement that he comply with certain Federal enactments not binding upon the foreign manufacturer. An example is a recent purchase order by the Navy Department open to bid by both domestic and foreign manufacturers. American bidders are forced to meet U.S. product standards, comply w-ith min- imum wage and hour laws and adhere to applicable sections of the Waish-Healy Act. Foreign competitors need not meet these restrictions, with the result that the foreign supplier can usually submit the lowest bid. The continued lowering of domestic import duty rates is usually a one-way street. Imports increase substantially w-hile exports, for reasons previously noted, struggle to hold their own or fall off. In time this can substantially affect the balance of trade in builders' hardware products. CONCLUSIONS It is the opinion of industry members that foreign tariff and non-tariff barriers to the import of American-made builders' hardware products are not factors of major importance in limiting the amount of industry exports. The present barriers to the export of builders' hardware items are not those imposed by foreign gov- ernments. The true barriers to export are, as already indicated: a. The lower production costs enjoyed by competing foreign manufacturers, mainly because of vastly lower wage rates, an advantage which cannot be com- pensated for by so-called American know how and efficiency. b. The lack of ready acceptance in European markets of American-style hardware. c. The prohibitive ëosts which an American manufacturer faces if he decided to tool-up to meet the diverse technical standards of each nation of the European community. d. The nationalist tendencies of both purchasers and installing craftsmen which make the sale of competing foreign builders' hardware products practically impossible. Continued cuts in the U.S. tariff rates on builders' hardware items which w'ould probably be sought should the United States reque~t removal of foreign tariff barriers, could be most damaging to the American industry and w-ould most certainly open our doors to increased, harmful, low-cost imports of builders' hardware items. It should be noted that the barriers to export of builders' hard- w'are items noted above, are mainly non-governmental, involved w-ith labor rates, styling, consumer preferences and differing standards. w-hile the barriers to im- ports are solely the small existing tariff rates (already reduced by more than 75% of the rates of 20 years ago) imposed by the United States government. There are no w-age rate advantages, no nationalistic approaches to builders' hardw-are preferences, no particular style objections, and no discriminatory standards, only those published by the government-an invitation to participate in the greatest mass market the world has ever known. The builders' hardware manufacturing industry of the United States currently enjoys no effective protection against low--priced foreign imports. We would support legislation under which the indu~try can continue to grow and serve the American public with fine quality hardware products at economical prices. In pursuit of this goal, the industry is confronted w-ith these hard facts: a. The import duty on all important classifications of builders' hardware has already been reduced more than 75% under the Reciprocal Trade Agreement Acts and their extentions. (In addition, it should be recalled that the effectiveness of the remaining specific duties have been greatly weakened through years of monetary inflation.) b. The industry's products are articles of prime essentiality and of strategic PAGENO="0215" 3815 necessity. The industry, because of its primary product and its manufacturing versatility, is essential to the national welfare in times of war and peace. c. Since the industry faces serious difficulties due to rising costs, loss of export markets, excess manufacturing capacity and intense domestic competition, a large influx of foreign builders' hardware, which would follow a further reduction in import duty rates, could be fatally damaging to American manufacturers. d. The American builders' hardware manufacturing industry cannot readily convert its main productive facilities into the manufacture of other products. For these reasons, the builders' hardware manufacturing industry respectfully recommends that (a) adequate safeguards for American industry be included in any proposed legislation which involves a further reduction of import duties; and (b) provision be made in any new trade legislation to require appropriate government agencies to hear representatives of affected industries before and/or during negotiations with foreign governments concerning the import duty rates of industry products. Uxn'im SPATES WOOD SCREW SERvICE BunEAu, New York, N.Y., June 5, 1970. Subject: Urgent Appeal for Legislation to Prevent Plant Closings Due to Imports. HON. WTn~BIn~ D. MILLS, Chairman, Committee on Ways and Means, U.S. House of Represent a~tives, Longworth House Building, Washington, D.C. DEAR Mn. MILLS: On behalf of the domestic manufacturers of wood screws, machine screws, rivets, aircraft locknuts and related threaded fastener prod- ucts, we respectfully request and urge that the Committee on Ways & Means of the U.S. House of Representatives add an amendment to Import Quota Bill HR 16920 which would include in that Bill an absolute import quota on the above mentioned threaded fastener products. This urgent appeal is made to you because of the critical conditions which, as a result of substantial increases in imports, have arisen in the domestic threaded fastener industry and which now threaten to completely eliminate our domestic industry and eliminate thousands of American jobs. The facts of this situation are as follows: 1. As indicated by the enclosed chart marked Exhibit "A", in the period from January 1, 1964 through 1970 imports of all types of screws, nuts, bolts, and rivets entering the USA will increase more than 254%. Back up figures on the chart indicate that in 1964 the annual imports of these products amounted to $34,123.536.00 while in 1970, projected, they will increase to approximately $120,900,000.00. 2. A glaring example of the serious erosion `of our domestic induStry by imports now in progress is clehrly `shown by the atttached black and red chant marked Exhibit "B". This `shows that `IMPORTS OF WOOD SCREWS HAVE ALREADY CAPTURED 72% OF THE AMERICAN MARKET. 3. Based upon recent statistical `Studies by `the domestic industry, where an- nual sales of `$26,218.00 are required to support the job ~f one employee, we find that the `impact of imported `screws `on `the U;S. market, prevents employment of between 8,000 `and 9,000 factory workers. 4. Three `appeal's for "escape" and relief from injury filed with the U.S. Tariff Commission by the U.S. Wood Screw `Ser~ice Bureau have been of no avail. Accordingly, we respectfully submit `that the only solution to this problem is quota legislation Ito protect our American producers `and their employees as sug- gested by the addition of an absolute quota provision `on these thi-eaded fastener products to Import Quota Bill HR 16920. We respectfully `request that this letter be included in the Record bf the Inter- national Tm do Hearings now being conducted `by `the `Committee on Ways & Means of the U.S. House of Representatives. I'n accordance with your Committee requiremen't~s three copies of this letter are sent to you `herewith. Please note lth!ait this appeal is submitted `to you on behalf `of the manufacturing concern's appearing on the li'~t also attached to this letter. Yours very truly, GEORGE P. BYRNE, Jn., E~ecreiary. PAGENO="0216" 9.5 9.0 8.5 8.0 7.5 7.0 6.5 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 3816 FROM GEORGE PBYRNE,JR EXHIBIT `A" R*RRRRR,NR ~T0TAL IMPORTS OF SCREWS.NUTS.BOLTS&RIVETS INTO U.S.A~ DATA FROM BUREAU OF CENSUS - U 5 DEPT OF COMMERCE THESE LEVELS COMBINED TOTAL DOLLAR VALUATION OF 17 MAJOR GROUPS IN 1971? AS CALCULATED FROM IMPORTER'S OWN OPTED LOW-LOW DECLARED VALUA1~ON FOR EACH ITEM SUB~CT TO DUTY 198 C ~ 9.5 9.O----------------- ii i - III~~~" 4.0 3.5 3.0 2.5 1964 $ 34,123,536 $ 2,843,628 1965 49,940,088 4,161,674 1966 56,141,580 4,678,465 1967 65,568,828 5,464,069 1968 70,979,256 5,914,938 1969 97,547,231 7,295,634 *1970 120,900,000 10,075,000 MONTH & QUARTERLY COMPARISONS 1968 1969 1970 JAN $6,469,584 $2,596,956 $10,196,344 FEB 4,580,346 5,141,059 8,335,563 lStQO. ~441 ~ ~ APR 5,025,213 7,259,391 MAY 5,704,985 8,309,160 JUN 5 823 248 7 514 948 QU. 3~3TT~8os 7~EQT~3oo QT1~ooo* JUL 5,300,190 8,700,432 AUG 7,237,629 7,074,744 3PSQO ~ 07593,000* OCT 6,444,305 8,316,947 NOV 5,895,370 8,164,459 AtOM. ~ ~ 11,224,000* YEAR 5,914,938 7,295,634 10,075,000* *1970 Rh,t pP*J~RR~d RN PAGENO="0217" 3817 PAGENO="0218" C,) I- w > Cl) 0 I- 2 C,~ L~J U 0 Cl U F- Cl I- Cl I- 0 0~ 3818 PAGENO="0219" U) F- w > U) 0 U) F- z U) U U) 0 U) U F- 3819 PAGENO="0220" EXHIBIT "B" W7O PROJECTED MO. AVG. RATE-' DOMESTIC WOOD SCREW MANUFACTURERS NEED AN IMPORT QUOTA NOW IN ORDER TO MORE FACTORY CLOSINGS AND EMPLOYEE LAYOFFS IMMINENT! -WOOD SCREWS IMPORTED - IN NUMBER OF GROSS - 000 OMITTED FROM: 2000 JA~..Y.~OOD SCRE~5ERVICE BUREAU IMPORTS OF WOOD SCREWS INTO U. S. A. 1:800 DATA FROM U. S. DEPT. OF COMMERCE 1,700 Note! HN THOUSANDS OF OROSS 1600 ..~ THIS CHART SHOWS ENORMOUS INCREASE IN IMPORTS OF WOOD SCREWS INTO U.S. A. IT REPRESENTS THE SUM TOTAL IMPORTS FROM ALL OF THE FOLLOWING LOW LABOR 1,500--~ ~ .~ ,,-... -.,.. & LOW MATERIALS COST COUNTRIES: 1,400 BELGIUM UNITED KINGDOM HONG KONG INDIA 1300 SWEDEN NETHERLANDS TAIWAN DENMARK 1200 ~. JAPAN AUSTRIA YUGOSLAVIA & GERMANY ITALY MEXICO OTHERS 1,100 US. TARIFF ACT OF 1930 DUTY RATE 1,000 - ___ --- - COMMODITY NO. 6200820 900 - --- .. -. 800 700 600 500 400 300 200 100 JI --SE YEA,,. ~ TO LESS THAN 1/~ OF l.% OF TOTAL U.S.A. SALES DURING WORLD WAR II DURING THE FOST WAR PERIOD, FOREIGN WOOD AMERICAN WOOD SCREW SCREW FRODUCERS OFERATING UNDER A TWICE FRODUCERS BUILT LIF THEIR REDUCED (G.A.T.T.) TARIFF RATE OBTAINED 42% OF PLANTS AND SUFFLIED THE THE TOTAL U.S. MARKET IN 1962. WHEN PROJECTED FOR TEAR 1970-IT IS ÷72% FREE WORLD WITH SCREWU FOR WAR FRODUCTU PAGENO="0221" U.S. WOOD SCREW SERVICE BUREAU 331 Madison Avenue New York, N. Y. 10017 3821 WOOD SCREW~ CONSUMPTION IN THE U.S.A. 43 YEAR COMPARISON - IMPORTS vs. DOMESTIC YEAR 1928 1929 1930 ORDERS JGross) 4,658,837 4,651,367 (1) 14 DOMESTIC MANUFACTURERS MONTHLY AVERAGE RATES OF: (U.S. Wood Screw Service Burppp,) - (2) IMPORTS OF WOOD SCREWS INTO THE U.S.A. -Monthly Average Rates -- PERCENT OF ..`- c (U.S. (Gross) 4,900,829 4,740,092 `~ nsa ~flQ (Gross) 7,879 29,204 17~9~ .177. .63 36 .167. .62 .58 1931 1932 1933 2,293,745 1,570,658 2,397.476 2,339,854 1,627,570 12:923 5,342 10,671 .56 .34 .44 .55 .33 .46 1934 1935 1936 2,254,589 3,140,866 3,049,753 2,277,835 2,891,017 3,031,882 14,491 27,155 43,852 .64 .86 1.44 .64 .94 1.45 1937 1938 1939 2,344,171 1,925,929 2,749,412 2,654,333 1,936,490 2,621,773 48,782 13,918 12,042 2.08 .72 .44 1.84 .72 .46 1940 1941 1942 2,803,477 4,540,936 3,810,778 2,668,931 4,351,851 3,812,598 2,229 11 None .08 -- -- .08 -- -- 1943 1944 1945 3,744,580 3,153,931. 3,337,249 3,791,818 3,247,862 3,199,669 None None 5 -- -- -- -- -- -- 1946 1947 1948 5,253,600 3,874,916 3,029,845 3,936,848 4,210,695 3,637,110 41 156 57 -- -- -- -- -- -- 1949 1950 1951 2.674,422 4,992,249 4,053,356 2,628,030 4,239,436 4,365,027 . 776 146,689 528,~2l4 .03 2.94 13.03 .03 3.46 12.10 1952 1953 1954 3,238,101 3,530,049 3,405,458 3,301,706 3,578,088 3,362,306 T394,448 460,141 336,896 12.18 13.03 9.89 11.95 12.86 10.02 1955 1956 1957 3,255,423 2,829,452 ~ 3,147,195 2,807,322 2,408,141 744,026 816,558 605,489 22.86 28.86 25.30 23.64 29.09 25.14 1958 1959 1960 2,290,339 2,453,429 1,914,835 2,201,109 2,454,731 1.922.138 603,836 985,537 972.422 26.36 40.17 50.78 27.43 40.15 50.59 1961 1962 1963 1,902,043 1,614,901 1,441,717 1,930,188 1,637,345 1,419,717 804,826 1,198,476 1,146,422 42.31 74.21 79.53 41.70 73.20 80.75 1964 1965 1966 1,436,517 1,504,597 1,447,618 1,428,761 1,489,656 1~4Q~,~09 1,410,828 1,592,144 1,690,476 98.21 105.82 116.77 98.74 106.88 119.99 1967 1968 1969 1,159,635 1,148,731 1,005.972 1,217,691 1,147,939 965.396 1,232,069 . 1,691,625 . 1,989,570 106.25 147.26 197.77 101.18 147.36 206.08 `~l970-lst Qu. 751,319 By Months. 823,062 1,956,218 ~ 260.37 237.67 1969-Jan. 1,175,025 - Feb. 1,041,916 Mar. 1,199,117 *1st Qu. 1,138,686 Apr. 1,091,913 May 1,203,457 Jun. 1,086,454 1,074,633 1,026,566 1,136,603 1,079,267 1,128,016 1,037,455 1,082,Q~.6 555,031 1,413,665 2,078,816 1,349,170 2,610,860 2,154,726 2,280,166 47.24 135.68 173.36 IT8Z8~ 239.11 179.04 209.87 51.65 137.71 182.90 125.01 231.46 207.69 210.73 Jul. Aug. Sep. 921 533 904,895 840,654 798,925 826,109 899,006 z'Uub,ozO 1,601,279 ~ ngg ngg O~T Nov. Dec. 1,154,671 826,081 625,945 I~f03 843,355 6~~~59 2,504,105 1,893,995 2,687,294 216.86 229.27 429.31 240.98 224.57 387.79 LI I. 11 176.95 74g - 39 193:83 232 27 1970-Jan. 736.534 Feb. 703,012 Mar. 814,410 *1st Qu. 751,319 828.827 773,240 867,121 823,062 2,382,066 1,485,325 2,001,264 1,956,218 323.42 211.28 245.73 ~65~7 287.40 192.09 230.79 ~T7T~7 * NOTE (1) TOTAL U.S. MARKET FOR WOOD SCREWS DURING let QUARTER OF 1970 AMOUNTED TO - 2,707,537 GROSS. IMPORTED SCREWS OBTAINED 1,956,218 GROSS OR 72.0% WHILE AMERICAN MANUFACTURERS RECEIVED ORDERS FOR ONLY 751., 319 GROSS ~ (2) COMPARING TRENDS DURING let QUARTER OF 1969 WITH let QUARTER OF 1970, IMPORTED SCREWS GAINED +457. WHILE DOMESTIC MANUFACTURERS ORDER VOLUMES DECLINED 337~~ 46-127 0 - 70 - pt. 13 - 15 PAGENO="0222" U.S MANUFACTURERS OF SCREWS AND RELATED FASTENER PRODUCTS LOCATION LANCASTER, PA. OARTF0RN, CORN. UNION, N.J. WATERRURY, CONN. FRANKLIN PARK, ILL. OETIIEVILLE, VA. RERFORW OEICIITS, 01110 WAT005000, CONN. REDFORD 1IEICI1TS , 01110 hARTFORD, CR1111. CL.EVE1.RND, 01110 REA1IFOOT, S.C. SOUTI1 CATE, CALIF. CIIESTER, COND. ROCKFOOII, IlL. 1100ADVIER, ILL. RELL000R, 11.1.. DUO I1EOFO11D, MASS. LAKE000D, CALIF. 1IASS ILLON, 01110 I1OCISFWRD, ILL. ChICAGO, IL!.. DETROIT, MICII. ClEVElAND, 01110 ClEVElAND, 01110 CIIICACO, ILL. MOIITON 000VE, ILL. COMDERLAND, II. 1. WEST 11R1ITF000, CORN. 1IRIDGEFOICC, CONN. CIIICAEO, ILL. ROCIIESTER, IND. FULLERTON, CALIF. ClEVELAND, 01110 CLEVElAND, 0111W STUOLING, ILL. STERLING, ILL. MICIIICAN CITY, INC. lANCASTER, PA. IIIALEAII, FLA. C1IICAGR, ILL. MIL,FOOD, CONN. WALTIIAM, MANN. I1OC1CF000, ILL. OOCICFORD, ILL. GREENVILLE, MISS. NATIONAl. I1IVEY P. MANRFACTURIRG COMPANY NATIONAL SCIIUW U. MANUFACTURING COMI'ANV I'IANT - CLEVELAND lIly. - CA1.IFI)IUNLA lIly. - CIIANI1I.ER l'OURUCTS CRRPOOATIUN - S1)11L11E11N IIIVIS ION ULYRI'IC SELlER P. IIIVET CORPORATION OR. II. O1UEMIL.LILR CISM1'ANV I'AIUKCO-KAlON CIII1FORA'CION 1'. II. FASTENERS FIIEI1I,l, MANUFACTURING COOlANT (IF NEW ENGLAND l'IONEEIl SEllER 0. NUT COR1'ANY l'llECIS ION I1IYET CISMI'ANY 11EED U I'IlLNCE MRN1JFAGTORING COMPANY 11E1'IJDI.IC STEEl, COIlIRRATION DOCKF1IR11 AEIRIS1'ACE FU000CTS, INC. 110CKF1SI1D SCREW I'IIODUCTA COOlANT SAFETY S1)COE'C SC 11CR CRRI'OOATION SC. 1.O1IIS SCREW P. 001.0 COMI'ANY SEllER U llOL;r DIV. 0001II.ES CORPORATION SC1O~O U. IIIII;r lILY. MUI)Yl,US CORI'ORATNON SET BElIER P 1IAN1IFRETURING COMPARE AOTTIIINETWR IIAI1IIRWIIE DIV. MODULUS COWL'. SOUTIIEION SCI1EW C1101'ANO STAN1AI1I1 l'IlESSED STEEL COMPANY - CLEVELAND CAl' SCREW PLANT STANDAI111 SCIOUW COMI'ANO STANSCI1UW FASTENE11S TEAL.E MWCIILNE COMI'ANY J. L. EIIOMSON RIVET CORPORATION TIME AChIER U. MANUFACT1JRING COOP. TORNE 000INSOD FASTENEO COMPANY TOWNSEND CRMI'ANY TOWNSEND COMI'ANT - ROOTS AI1SCDAFT NUT DIVISION - CIIERRT 1110EV DIVISION TOIIOLRR IIIYUT & STUD DIV. TROJAN RIVET COMI'ANV 11110-FIT SCREW PRODUCTS COOP. UNITED SCOUR AND DOLT CORPORATION ONI0000AL SCREW COMI'ANV VRI-NIIAN/DIV. OF VSI CORPORATION OALER-UEECI1 CORI'ORATION OEJ-IT EXPANSION PRODUCTS, INC. WILITNEY SC1IER COIIPORATION LOCATION WA1IFUD, RISC. CLEVELAND, 01110 MUNTOI1, 0111W Cl.EVEIANW, 01110 LOIS ANGELES, CALIF. CLEVELAND, 01110 CULL.MAN, AIADAMA EL, SEGUNDO, CALIF. YOI1K, IA. CLIFTON, N.J. EARI)ENA, CALIF. CIILCAGR, 11.1.. T1)11I1INGTON, CONN. ELK GIU)VE VILLAGE, ILL.. WORCESTER, MASS. CIJIVE1ANI1, 1)1110 SRNTA ADA, CALIF. OOCKFISOII, 11.1.. CIIICAUII, 11.1.. ST. 1.1)1)15, MR. 1'ITTSIIOIlGII, PA, CII ICUEW, ILL.. I1AIICL.ESC, 11.1.. SOIJTIIINGT11N, CONN. STACESVIL.L.E, D.C. JENKINTOWN, PA. CLEVELAND, 01110 ILAIEUFOIIII, CONN. IIELL500D, ILL. I1I1CIIESTEII, N.Y. RALTILADI, MANS. IIOCKPUIIL1, ILL. DEAI1I1RIUN, RLICII. IIEAVEIL FALLN, PA. SANTA AMA, CALIF. SANTA ADA, CALIF. DOAINTI1EE, MAWR. GLENDALE, CALIP. CLEVELAND, 01110 CLEVELANI, 01110 FRANKLIN PARK, ILL. COLVER CITY, CALIF. I1DCKFORD, ILL. DI100MFIELD, 01110 NAWIIOA, Nil. COMPANY WOOD SCREWS - MACHINE SCREWS - TAPPING SCREWS - SOCKET SCREWS - CAP SCREWS - RIVETS - AIRCRAFT LOCKNUTS - RELATED THREADED ITEMS /98 FACTORIES7 ______________ COMPANY ACCURATE TUII1EA000 FASTENERS, INC. AILED MAN0JFACTORING CUMI'ANY AVUIIACE-ESNA CORPORATION ADUI1ICAN CIIAIN & CARLO CODIPANV, INC. AMEIIICAN I1IYET COMPANY, INC. AMEIIICAN SCI1EW COMPANY AYERICAN SCREW I'RODUCTS COMPANY ANCIIOII FASTENEIIS, DIV. OP DUELL IND. , INC. ANCIIIU FASTENEIS, DIV. UP RUELL IND. , INC. ATlANTIC SEllER ROOKS, INC. llEl.L,i'URD METAL, l'IlODUCTS , INC. TIlE (LAKE U. JUIINSON EOMI'ANY (LAKE 1110EV COI)I'ANO Dl. S. Dll(II)KS & SODS, INC.. CAMCAII SCIUEW U. MANOFACTOR1NG Ci!) TOOL. SCI0EW COMI'ANY CIIICAGO I1IVET U. MACIIINU COMPANY CONTINENT.\I, SCI1UW COMPANY OUMONT AVIATION ASSOCL,TES, INC. EATON YALE U. TOONY, INC. ELCO TOO!. U. SEllER COlll'WMATIUN EYEIILOCK CIIICACO, INC. FELIEIIAL, SCREW OOIIKS U. UI. FEI1I1Y SCREW PRODUCTS COMI'ANY, INC. TIlE FEI1RY CAl' P. SET SCREW COMI'ANV EIIEAT LAKES SCREW, DIV. U.S. INDUSTRIES, INC. 11. M. IIAI1I'Ehl COMI'ADY IIINDL.EV MANOFACTIIIIINU COMPANY 1IIILR-KROMU COMI'ANY IIIIILIIELL DIV ISbN, 1LA000Y II0000LL, INC. ILLINOIS TOOL. 0011KW, INC. INDIANA OUTAL I'RONOCTN INTEI1NATIONAL, SCREW COMPANO KAUNAR MANUPAETODIDG COMPANY, INC. KERR-LAKESIRE INDUSTRIES, INC. LAKE ERIE SCREW COIIPOMATIRN CIIAOL.ES 0. LARSON COMPANY LAWI1ENCE DROTIIERN LUIGII PR000CTS, INC., GERWIN INDUSTRIES DIV. MAE-IT I'AIITS COMPANY MERRILL MANOPACTERING COOPOVATION MIAMI RIVET COMI'ANV, INC. PLIDIAND NEREW CORPORATION MILFOI1D RIVET & MAChINE COMPANY GEORGE W. MOORE, IDE. NATIONAL. LOCK COMI'ANY - FASTENER DIVISION - DElTA METAL-FORMING DIV. - STEEL INDUSTRIES DIV. PAGENO="0223" ~3823 DESIGN PRODUCTS, INC., Sarasota, Fla., May 20, 1970. JOHN MARTIN, Jr., Chief Counsel, House Ways c~ Means Committee, Longworth Building, Washington, D.C. DEAR Mn. MARTIN: I am writing to you regarding the hearings on foreign trade competition. I am president of Design Products, Inc. and wish `to `lodge my pretest regarding merchandise which we manufacture and which `has been copied by Japanese manufacturers. The result `has been that we have lost our customers to `this unfair competition. Why `should `these people be permitted to ship into `this country manufactured goods made with lalyor costs far below `our standard? A tariff `should be placed on this merchandise to protect the American manufacturer. The `items `in question are the various rod holders shown on `the enclosed catalog. I am `sorry that I cannot attend `the hearings, as I would like to voice my concern. I am sending a copy of this letter to Congressman J. A. Haley. Also enclosing a j~h'otostat of `our letter to Mr. Halely, mailed 6/22/67. With bent regards, I am Very truly yours, HARRY GOODMAN, President. Mr. BURLESON. The next witness is Sidney Silver, vice president of Foreign Trade Division of the National Association of Secondary Material Industries, Inc. We are glad to have you, Mr. Silver. STATEMENT OF SIDNEY SILVER, VICE PRESIDENT, FOREIGN TRADE DIVISION, NATIONAL ASSOCIATION OF SECONDARY MA- TERIAL INDUSTRIES, INC. Mr. SILVER. Mr. Chairman, we have submitted a full brief of our position. I would like to give a more concise one in the interest of keeping within `the time designated. Mr. BURLESON. Very good, sir. Thank you. Mr. SILvER. Mr. Chairman, my name is Sidney Silver and I am the vice president of the Foreign Trade Division of the National Associa- tion of Secondary Material Industries, a national trade organization now in its 58th year. The Foreign Trade Division represents the lead- ing importers and export; of secondary materials in the United States, including such commodities as nonferrous metals, paper stock, and secondary textiles. The Foreign Trade Division strongly believes in the principle of free international trade. It is firmly convinced that U.S. trade policy must move in the direction of free trade through the elimination of restrictive export controls, as well as oppressive tariff and tax laws. Our `members have, over a period of many years, built very excellent relations with foreign `customers. They travel abroad, on a regular basis, to maintain their contracts with these foreign customers; many of the companies have offices abroad; and many exporters are mem- bers of the Bureau International de la Recuperation, the international secondary materials trade association. Our U.S. export firms have been able to develop overseas markets and maintain them despite sharp world competition. 1. This has aided the United States balance-of-payments position. 2. It has helped strengthen `the U.S. economy. 3. It has established outlets for certain secondary materials which PAGENO="0224" 3824 either had no market iii this country or had limited demand domesti- cally. As a result, it has played a vital role in the concept of recycling secondary materials which otherwise would have to be dumped or destroyed. This has aided our country in removing obsolete and dis- carded materials from the streets and highways and thus helped in the program of beautification. 4. It has led to the cementing of good will with other nations and friendly relations with U.S. allies broad. 5. Helps to maintain worldwide equilibrium in supply demand which, in turn, helps stabilize the price in the United States. The rapid rate of industrialization abroad has given impetus to the worldwide demand for secondary materials. This is particularly true of many of the Western European countries, as well as Japan. Tradi- tionally, the United States has been the major exnorter of scrap to overseas consumers, who have been dependent on U.S. supplies. By not making scrap available to them, these consumers have had to search for other sources of raw material, thus depriving the United States of those copper sources in the form of ores and concentrates. Because of the inability of U.S. exporters to meet commitments as a result of embargoes and quotas, the relationships developed by U.S. suppliers over many years are slowly being eroded. We might point out here that secondary metals, for example, nlay a vital role within the total metal industry operations. Over 3 million tons of nonferrous scrap metals are annually processed by dealers and consumed by the domestic consuming industry in the United States. Approximately 45 percent of the total available copper is recovered from scrap, as is about 30 percent of all aluminum and 18 percent of all zinc. More than 50 percent of the total domestic lead supply is recovered from scrap and approximately 15 to 20 percent of all nickel. The United States remains the largest exporter of nonferrous scrap metals in the world and many of our allies in Western Europe and the Far East depend on our supplies of secondary metals to help them in the process of industrialization. Unless these countries-and many of the emerging nations, too-can secure these available secondary materials, they will be forced to turn to other countries to meet their requirements. Some of the Soviet satellite nations have already begun to compete w-ith the United States in foreign markets. A loss in U.S. export business will mean a loss in the balance of payments for this country. One of the major problems facing us today is the need to reutilize and cycle secondary materials in order to help create an improved environment. Unless the effort is made to recycle vast tonnages of secondary resources `back in the industrial mainstream, we will be. faced with a pileup and accumulation of staggering quantities of solid wastes in this country. One of the ways to stimu'ate this recycling process is to export those secondary materials which cannot be readily utilized in the United States but which have markets abroad. It is apparent that this will become an important phase of the entire recycling effort. The more material we can export. or reuse overseas, the better for our economy and the better for our environmental man- agement. It is therefore vitally important that every effort be made to encourage the movement of secondary material to those outlets w-here it can be recycled. Unless this encouragement, is forthcoming, there will be a break- PAGENO="0225" 3825 down in the collection machinery in the United States among scrap dealers which would be most harmful for the future collection and processing of solid wastes domestically. We therefore urge that steps be taken to permit the widest possible latitude in exports of secondary materials from the United States in the interests of both the economy of the United States and of its future environmental programs. The harmful effects of restrictive export controls can be gaged in two specific metals: (1) Copper and copper-base scrap; and (2) nickel and stainless steel scrap. We should like to describe these two developments in somewhat greater detail. (1) In November 1965, export quotas were established by the De- partment of Commerce for copper and copper-base scrap. Under the terms of these quotas, export shipments for these commodities were drastically reduced one-third of what they were formerly (from 90,000 tons to 30,000 copper content tons.) While there has been a slight liberalization of these quota figures, the export industry has been operating under these restrictive quotas for about 5 years. It has become obvious that the long-term maintenance of the quotas has had deleterious effects on U.S. export firm relationships with for- eign consumers. It has given other countries a change to move into areas supplied by U.S. exporters and thken away their business. It has stratified a system of controls intended to be temporary and made it into a permanent method of operation. it has eliminated initiative among new firms who might ha~eA entered into the export business by freezing them out because of the restrictive quota system. It has caused a dislocation of the movement of raw material supplies on an international basis which in turn has contributed to the widening of the price gap in the two-tier price system. Perhaps most of all, it has not cured the disease it was supposed to cure. The export controls were established in 1965 in order to ease the shortage of copper and to reduce the inflationary trend which the Government felt was becoming a threat in the copper market. But any statistical study would show that export controls have accomplished neither: the supply-demand situation in copper today is hardly any different than it was in 1965; and the price of domestic primary copper has gone up substantially since 1965. It was the contention of the Foreign Trade Division when quotas were first introduced in 1965 that they would not stabilize the copper situation but would, on the other hand, cause further dislocation of supplies and tend to disrupt the international market situation. What has happened is that the supply of scrap hopper in the last 5 years has shown substantial growth; more and more scrap has been supplied to the domestic consumers; but portions of t.his scrap might normally be exported to foreign consumers has had to be kept in this country de- spite the fact that during the past 5 years many domestic consumers have not been in the market for it. Obviously, export controls can, theref ore, become a device for admin- istering price controls. By shutting out one possible market-the foreign market-the movement of material can only be directed to domestic consumers who can then "control" the prices they pay for the scrap. The original intent of the export quotas may therefore be sub- verted, in favor of one particular segment of the U.S. industrial corn- rnunity at the expense of another. PAGENO="0226" 3826 We might point out that the sum total of copper and copper-base scrap export in prequota. years was roughly about 5 percent of the total volume of scrap generated. We feel that the export of this small per- centage of material could not in any way injure the domestic industry in this country. There are today adequate supplies of copper available for all consumers. To have put into effect. a control mechanism that has lasted 5 years is of inestimable harm, however, to the entire U.S. export trade and the U.S. economy. (2) An even more dramatic example of Government export restric- tions can be found in the tota.l embargo of nickel and stainless steel scrap exports which was instituted by the Department of Commerce in July 1969. The embargo was the result of a major strike among Canadian nickel companies which brought the flow of nickel to a virtual halt. Exporters of nickel and stainless scrap showed understanding of the need for such an embargo when it was first announced. In meetings with officials of the Department of Commerce they indicated their co- operation in seeing to it that domestic consumers of nickel and stain- less steel scrap would receive all available supplies of material through- out the emergency. It might be pointed out that were it not for the tremendous flow of nickel and stainless steel scrap during the strike period, many U.S. consuming plants might have had to close down. As it was, not a single plant closed its doors. During this period we urged the Department of Commerce to pre- pare for the time when the emergency was ended, in order to permit immediate resumption of exports of nickel and stainless scrap to cus- tomers a.broad with whom our industry has had longstanding com- mitments. The strikes ended in November 1969. But it was not until 6 months later that the Department of Commerce took action to ease the embargo. In the meantime, the nickel shipments by the major Canadian nickel companies returned to normal and the market for scrap declined sharply. Prices fell below prestrike levels. After constant urging by our association, the Department of Commerce finally took initial steps to end the embargo and eliminated earlier announced plans to insti- tute quantitative export quotas on July 1, which our association had strongly opposed. - Quantitative controls would have brought about chaotic conditions within the industry and stratified a system of controls which had no reason for being imposed under existing market conditions. We bring these two cases to the attention of the House Ways and Means Committee as evidence of what can happen once the Govern- ment embarks on tactics of controlling the free flow of materials. The result is frustration, dislocation, inequality, and discrimination. The United States should be encouraging, rather than discouraging, the movement of secondary materials in international trade. One other point has to be made, and that is the consistent rise in transportation costs. Because of this, our export industry is facing severe world competition in moving our commodities. The shipping interests are piling on successive freight boosts on ocean transport of our materials. In some instances the transportation costs have become greater than the actual cost of the material. As a result, some types of secondary material have to remain in this coun- try, accumulating as solid waste, rather than finding outlets abroad PAGENO="0227" 3827 where they could be sold to consumers who could utilize them. Such mounting freight costs are doing permanent harm to American ex- ports. We urge Congress to reexamine the very basis of our trade policy in order to encourage foreign trade. Our association last month met in London with many other secondary trade organizations throughout Europe, at the meeting of the Bureau International do la Recupera- t~on, in an attempt to eliminate world trade barriers and to build international good will. The 1970's will see a greater world demand for raw materials, par- ticularly in the emerging nations. If the United States is to play a major role in the future as a supplier of such goods and commodities, it is vitally important that restrictions and impediments to the flow of secondary materials be eliminated and that the Government do every- thing in its power to encourage and enforce the free trade policies which have helped the United States become a major force in the world market. On behalf of the association we wish to thank you for letting us be here today. H Mr. B~JRLESON. Thank you for coming, Mr. Silver. That is a very interesting statement. Mr. Pettis, do you have questions? Mr. PETrIS. No, thank you. Mr. BTIRLESON. Again we thai~k you, Mr. Silver. (The following statements were received for the record:) STATEMENT OF THE ALUMINUM ASSOCIATION, SUBMITTED BY MONROE LEIGH, COUNSEL, INTERNATIONAL POLICY COMMITTEE This statement is filed on behalf of The Aluminum Association, whose mem- bership and purposes are set forth in Appendix A. The Association's comments are directed to general United States trade policy as it has evolved since 1962 and as it may be expected to develop during the decade of the 1970's. This pres- entation does not deal specifically with the detailed provisions of H.R. 14870 or any other particular trade bill except~ to note that the Association favors con- tinued expansion of world trade on a genuinely reciprocal basis. Instead, the focus of these comments is related to ~he methods of trade negotiation and the elimination of trade barriers as seen from the perspective of the aluminum in- dustry at this time. It is a common observation that the problems of trade policy are infinitely more complicated for the United States now than they were in 1934 when the re- ciprocal trade program was launched. Nevertheless, the basic objective of United States foreign trade policy remains valid: to press for continued encouragement of reciprocal world trade through the elimination of inequities and the reduction of trade barriers generally with the objective of expanding that trade on a world- wide basis. At this stage in our history, however, it is far more important to develop the techniques for achieving this condition than to reiterate that general objective. The principal recommendations offered by The Alumnium Association may be summarized briefly: 1. The fundamental purpose of American trade policy should be to foster and maintain world market conditions which permit genuine international competi- tion on the basis of business considerations. By this we mean competition based on business skills and on more efficient use of resources, rather than on subsidies and advantages resulting from national procedures and policies. Accordingly, the Association strongly recommends that a major effort be made to eliminate ineq- uities in tariff treatment and to reduce nontariff barriers and other restrictive techniques which prevent genuine international business competition. 2. Tariffs, i.e., customs duties, on aluminum products should be harmonized at the lowest possible level. In this respect we point out as we have in earlier state- ments to this Committee, that one of the major unresolved problems in aluminum PAGENO="0228" 3828 trade is the substantial disparity between United States and European Economic Community traiffs on aluminum products. Both the Kennedy Round negotiations and subsequent price changes have resulted in even greater disparities than ex- acted at the time of the 1962 Trade Expansion Act. A major concern for the American aluminum industry is the elimination or narrowing of these disparities in aluminum tariffs. 3. In the Kennedy Round negotiations a tentative effort was made to negotiate tariff reductions on a "sector" basis. Aluminum was one of the sectors identified for this approach but unfortunately this approach was not pursued adequately. The Association continues to believe that in an industry as complex, as interna- tional, and as dynamic as aluminum a sectoral approach holds promise for sig- nificant steps toward expansion of aluminum trade. INTERNATIONAL CHARACTER OF THE ALUMINUM INDUSTRY The Association's recommendations as summarized above are based on the special characteristics common to the aluminum industry both in the United States and in Canada and overseas: 1. The major aluminum companies have substantial and growing foreign in- vestments which are seriously affected by such factors as availability of resources including bauxite resoures. costs of electric power, and access to mass markets. The existence of trade barriers, whether of a nontariff or of a tariff variety, is also an important consideration in investment decisions by reason of their effect on market access. 2. United States exports of aluminum have risen rapidly during the last ten or fifteen years, despite the restraints imposed by various trade barriers. Thus, the marketing and sales activities of the North American aluminum industry may be fairly described as already substantially international in character. 3. Aluminum technology has been internationalized to a highly significant degree. Thus, since no producer has a significant technological advantage, market development activities cannot fail to benefit all producers. It is shortsighted, therefore, to adopt restrictive practices which inhibit market development. EQUAL OPPORTUNITY TO COMPETE In the hearings on the Trade Expansion Act of 1962, spokesmen for the Aluminum Association emphasized the `importance of `securing equal access (i.e., equal opportunity to compete) to aluminum markets abroad. Indeed, the Associ- ation proposed at that time that `the statement `of purposes in the 1962 `legisl'aion should include a's a specific objective in trade n~go'tiation's the achievement of equal access for American products in foreign market's. Unfortunately, in our view, this recommendation was not adopted, pa'etly because it was believed that this `specific objective was embraced within the scope `of ~ther, more broadly stated objectives. The Kennedy Round negotiaitions did not go far enough in eliminating in- equities affeeting aluminum foreign trade. Most aluminum tariffs of the major industrial nations were lowered `and in some eases the gap between the generally lower United States tariff and `the higher foreign tariff was narrowed. However, there were important instances in which the gap or disparity was actually widened. This wa's especially true with respect to the European Common Market which, next to the United States, is `the largest market for `aluminum in the world. It is particularly significanlt that the most important United States negotiating objective with respect `to aluminum tariffs, i.e.. a reduction `of `the C'omm'on Mar- ket ingot tariff, was not achieved during the Kennedy Round negotiations. Ingot is `the `largest product group involved in `aluminum foreign trade, whether one looks at the import `side `or the export side. The EEC `aluminum ingot tariff stood at 9% ad valorem prior to `the Kennedy Round and remains at that level today with the fo'U'owing technical exception: In the Kennedy Round the EEC agreed to bind `an EEC quota of 130,000 tons per year at 5% `ad valorem whereas prior `to `the Kennedy Round negotiations there was a year-to-year 5% `tariff quota for the individual members `of the `Common Market. On the other `hand, the United States agreed during the Kennedy Round to reduce its ingot tariff by 20%. The net result wa's `that `the Kennedy Round worsened the United `States tariff position in aluminum ingot as compared to `the EEC. Thus, the EEC tariff prior to the Kennedy Round was 60% `higher than `the United States tariff. The EEC tariff is now more than 100% higher `than the United States tariff. In the light of the foregoing the Aluminum Association feels justified in reiter- PAGENO="0229" 3829 ating its basic recommendation regarding trade policy: The United States should seek to establish conditions for equal opportunity to compete in all major alum- inum markets. There is no justification for differentials in tariff rates and other trade restrictions among the major industrial countries. We believe, therefore, that tariff levels in particular should be reduced to the lowest possible levels. How- ever, we call attention to the fact that the equal opportunity principle also im- plies that if other major aluminum trading countries or trading blocs such as the European Common Market refuse to reduce aluminum tariffs, then the United States should be prepared to adjust its tariff upward to achieve equality. It should be noted that the trade agreements program since its inception in 1934 has pro- vided authority for the President to negotiate upward adjustments in `tariffs as well as downward adjustments. This authority should be used when necessary to promote equality. In this connection the Association believes that the Presi- dent's proposal in Section 203 of the pending bill (H.R. 14870) to amend Section 252 of the Trade Expansion Act of 1962 is highly desirable and indeed long over- due. As presently written Section 252 permits the President to impose additional duties or other import restrictions on the products of any foreign country which maintains unjustifiable restrictions "against United States agricultural prod- ucts.' The President has proposed that the word "agricultural" be deleted so that the President will have the power to take forceful action against unjustifiable foreign restrictions against any United States products. The Association strongly supports this change. THE SECTORAL APPROACH During the Kennedy Round negotiations Eric Wyndham-White, the Director General of GATT, came to the conclusion that special progress in dealing with foreign trade problems could be made in certain sectors of industrial production. Specifically he pointed out that the sectoral approach should be productive of negotiating progress in industries "characterized by modern equipment, high technology and large scale production, and by the international character of their operations and markets This approach was considered in a tentative way for aluminum among .other industries during the Kennedy Round negotiations but was not pursued. The Association continues to believe that sectoral negotia- tions offer promise. IMPORT QUOTAS The major nontariff barrier affecting aluminum trade is the import quota. In 1968 when testimony was presented to this Committee on behalf of the Associa- tion, this problem was discussed at length. We quote below from that testimony since it is still entirely relevant: "Another nontariff barrier issue-one that has been receiving increasing attention at home-is that of import quotas. The interest of The Aluminum Association in this subject derives from the fact that aluminum foreign trade takes place in the same economic and political climate as does other United States foreign trade. Thus, major developments in other industries also affect aluminum foreign trade conditions. For example, the United States-EEC Kennedy Round controversies over agriculture undoubtedly added to the United States negotiators' difficulties in dealing with the EEC on aluminum. Similarly, the current efforts of some domestic industries to obtain import quotas are bound to influence the policies and practices of those nations which feel that such quotas would restrict their sales in the quota-protected markets." "Many of the quota-sensitive countries also export aluminum products to the United States and, to some degree, are markets for United States aluminum ex- ports. Quota action for other United States industries could thus have a two- way effect on United States aluminum foreign trade: (a) heavier imports of aluminum or aluminum-containing products into the United States than the domestic market could absorb in healthy fashion, and (b) more difficulty in maintaining or expanding United States exports of aluminum or aluminum- containing products." "Should import quotas be established by the United States for other major domestic industries, fairness would require safeguards for the United States aluminum industry from the possible repercussions of such quota action. Alumi- num tariffs are low here, and there are virtually no tariff barriers to keep im- ports out. Without appropriate safeguards, foreign nations seeking dollar ex- change, but kept out of other product markets in the United States by quotas, might concentrate disproportionately on selling in the readily accessible alumi- nuni markets here. This type of import, stimulated by frustration elsewhere rather than by regular business competition, would not make for healthy foreign trade in aluminum." PAGENO="0230" Acme Aluminum Foundry Oompany. AE Division, Hoover Ball and Bearing Company. Alcan Aluminum Corporation. Alloys and Chemicals Corporation. Aluminum Limited, Incorporated. Aluminum Casting & Engineering Com- pany. Aluminum Company of America. Aluminum Mills, inc. Amax Aluminum Company. American Aluminum Casting Co. Anaconda Aluminum Company. Anaconda Wire and Cable Company. Arc Products Manufacturing Division. Archer Products, Inc. P1w Arcola Wire Company. The Castings Corporation. Clendenin Bros., Inc. Cliff Manufacturing Company. Club Products Company. Coilyer Insulated Wire Company. Copperweld Steel Company. Detroit Gasket & Manufacturing Com- pany. Eastern Casting Corporation. Ekco Products Inc. Fischer Castling Company, Inc. Foote Mineral Company. General Cable Corporation. Harvey Aluminum (Incorporated). The Harvey Metal Corporation. Heillg Brothers Company. Howmet Corporation. Intalcb Aluminum Corporation. Kaiser Aluminum & Chemical `Corp. Mansfield Brass & Aluminum Corpo- ration. Mideast Aluminum Industries Corp. Midwest Aluminum Corporation. Minalex Corporation. National-Standard Company. National Steel Corporation. New Jersey Aluminum Company. New York Wire Company. Nichols-Home~hield, Inc. Noranda Aluminum, Inc. Oberdorfer Foundries, Inc. The Okonite Company. Olin Corporation. Permold, Inc. Phifer Wire Products, Inc. Revere Copper and Brass Incorporated. Reynolds Metals Company. Ross Pattern & Foundry, Inc. Russell Aluminum Corporation. Saramar Aluminum `Company. Schick Products, inc. Scovill Manufacturing Company. S-G Metals `Industries, Inc. Simplex Wire & Cable `Company. Southwire Company. Straua'han Foil Company, Inc. Texas Aluminum Company, Inc. Triangle Conduit & Cable Co., Inc. United Aluminum Corporation. U.S. Reduction Co. V.A.W. of America, Inc. Warner Mfg. Corp. Wellm'an Dynamics Corporation. Wells Aluminum Corporation. Wolverine Tube Division, Universal Oil Products Company. Wyman-Gordon Company. 3830 "Because of the pressure of governmental policies, we can no longer take for granted that the international market place can make adjustments rapidly enough or sufficient to assure healthy competition or the most efficient utilization of natural and human resources. Nevertheless, trade policy should favor, as much as possible, reliance on business competition, rather than on governmental regulation." "When national interest or the basic health of an essential industry does re- quire the intervention of governmental regulation, it should be a's temporary and flewible as possible. Accordingly, limitations on imports should not take the form of fixed `ceilings' over extended periods." "It may prove necessary, in specific instances, to place temporary and reason- able limits on market participation by imports when disparate national policies undermine the conditions of international business competition. However, com peting domestic and foreign suppliers should have the incentive and opportunity to increase their shipments to a market, and even to increase their share of that market. The emphasis should be on flexibility and on providing the opportunity to stimulate, and participate in, market growth." We are grateful for the opportunity to present the views of The Aluminum Association. APPENDIX "A".-NATTJRE OF THE ALUMINUM ASSOCIATION The Aluminum Association is a non-profit, unincorporated organization com- posed of companies within the Un'ited States engaged in the production and fab- rication of aluminum. The Aluminum Association was tu~ganized in 1935 to promote the general welfare of the aluminum industry, its members, and all others `affected by it, and to increase the usefulness of the industry to the general public. As of the present time, the Association is comprised of 69 members ac- counting for nearly 100 percent of the primary aluminum production in the United States `and manufacturing roughly 80 percent `of the country's semi-fab- ricated aluminum products. The following companies are members: PAGENO="0231" 3831 REYNOLDS METALS COMPANY, Washington, D.C. June 26, 1970. Hon. WILBUR D. MILLS, Chairman, Ways and; Means Committee, House of Representatives, Washington, D;C. DEAR CHAIRMAN MILLS: In the area of trade policy, the position of the United States primary aluminum industry, including that of Reynolds Metals Company, has been and continues to be in support of free access by all producers to all markets of the world. The domestic industry believes that there is no justification for a differential in tariff rates and other trade restrictions applicable to aluminum among the major industrial countries. What is needed is the establishment of conditions for equal opportunity for all nations to compete in all major aluminum markets throughout the world. Implicit in this position is the elimination of tariff and non-tariff barriers in all countries trading in aluminum. In the case of primary aluminum, which is by far the largest product group in aluminum foreign trade, the United States tariff already is less than one-half that of the current tariffs of other major aluminum trading countries, including Japan and the European Common Market. The first step in reaching the objective of equal access must be the equaliza- tion of the differentials in such tariffs~ and non-tariff barriers. In other words, the gap between the rate of duty which exists between the United States on the one hand, and the combination of tariffs and non-tariff barriers of other major aluminum trading countries and blocs on the other, must first be eliminated. Until this has occurred the United States Government should not consider a further reduction in the United States aluminum tariff. Once tariff parity has been achieved, then the United States and the other aluminum trading countries and blocs could move together pursuant to a mutually agreeable timetable to the ultimate elimination of the remaining tariffs and non-tariffbarriers. It is respectfu1ly requested that this letter be included in the Record of the current hearings before the Ways and Means Committee. Sincerely, MAXWELL CASKIE, Vice President. STATEMENT OF ERIC A. TRIGG, PRESIDENT, ALCAN ALUMINUM CORPORATION The United States aluminum industry is deeply engaged in the foreign trade of the United States, as well as the trade of other countries. The industry, of which Alcan Aluminum Corporation is a part, is therefore concerned with certain legis- lative proposals before the Committee. In this statement Alcan presents a brief outline of certain aspects of trade in the aluminum industry and makes two sug- gestions respecting provisions of bills before the Committee, which affect the aluminum industry. Alcan Aluminum Corporation is one of the larger aluminum fabricators; its main office is in Cleveland, Ohio. It is the United States operating unit of Alcan Aluminum Limited of Montreal, Canada. It has 12 fabricating plants in seven states, employs 5,000 employees and operates 17 metal service centers. It is the largest user of aluminum ingot produced by the Aluminum Company of Canada, Ltd. It is also the largest U.S. exporter of semi-fabricated products. Until recently total U.S. imports of, primary aluminum and aluminum products historically exceeded exports. As the re.sult of the strong demand in other coun- tries, total U.S. aluminum exports for the first quarter of 1970 exceeded imports by a substantial margin. On the other hand, bauxite is largely imported and im- ports of alumina are increasing. The multinational character of the aluminum industry is probably well known to the Committee. Alcan has operated on an international basis for over forty years and today each of the other major aluminum companies operating in the U.S. also conducts its business on a world basis. The amount of primary aluminum capacity outside the United States with which U.S. primary producers have affiliations totals more than 900,000 tons, which output is greater than the aluminum capacity of any single country of the free world other than the United States and Canada, and equal to 24% of U.S. domestic aluminum capacity. PAGENO="0232" 3832 We know of no case of a primary aluminum plant in any country of the free world which has ceased operating in the last twenty years. Most of them have been expanded or modernized and 44 new primary aluminum plants have been completed in the free world since 1950, a capital investment of some $5.5 billion. The U.S. industry and the users of aluminum have benefited as a result of this multinational development. The number of primary aluminum producers here will have grown from three in 1947 to fourteen by the end of 1971. Independent fabricators in the United States have seen their share of the mill product market rise from less than 5% in 1952 to 32% in 1969. Many of these fabricators rely on imported aluminum and as a group get about a quarter of their primary aluminum from foreign sources. The principal products of the aluminum industry moving in world commerce are bauxite, the ore of aluminum-approximately 25 million tons a year; alu- mina, the intermediate producit-6 million tons; primary aluminum-2 million tons. Bauxite and alumina rank fourth among the leading dry bulk cargoes in world commerce. Foreign commerce in these basic products of the aluminum in- dustry are a high percentage of total world production of these porducts, perhaps higher than for any other basic industry, except petroleum. Trade in primary aluminum between nations of the free w-orld has quadrupled since 1955. However, only a relatively small percentage of the fabricated aluminum prod- nets-sheet, foil, extrusions-move in w-orld commerce. Most of these products are used in the country of area of manufacture because of freight costs and appli- cations specialized to the particular user. Once all the tariff reductions agreed to in the Kennedy Round are in effect, there w-ill be no duty on bauxite in any of the major consuming areas. Tariff duties in alumina and aluminum will be as follows: United States (per ton) EEC (percent) Japan Un (percent) ited Kingdom (percent) Alumina Aluminum $2.40 20.00 8.8 (1) 0 9 8 0 1130,000 mt. at 5 percent, remainder at 9 percent. Note: On an ad valorem basis the U.S. duties were in 1969 equivalent to 3.86 percent in the case of alumina and 4.3 percent in aluminum. These tariff duties serve no useful function. They add to the cost of production and are therefore inflationary. The duties are vestiges of the local and national condition of the industry before it became multinational. It is well known that the world aluminum industry requires very large capital investment; its prices and its profits are relatively low. During 19G4-68 the aver- age profits after tax of the four largest aluminum producers, including Alcan, were 9.4% on shareholders' equity, compared with 12.4% for U.S. manufacturing industry as a whole. Tariff duties amounting to millions of dollars are, therefore, particularly burdensome on the earnings required for growth. The industry and the users of aluminum would benefit if the duties were removed. The United States is the world's largest importer of alumina, as well as a lead- ing exporter. Imports in 1969 amounted to 1,700,000 tons, most of which came from Australia and Surinam. The U.S. also exported almost a million tons. The U.S. duty on alumina when used to produce aluminum is suspended under P.L. 90-615 until July 1971. If the U.S. alumina duty is not removed or suspended, the duties on imports into this country will be a heavy burden on these companies importing. Alumina imports into tile Comm ois Market in 1969 were 300,000 tons, mostly from Surinam and Guinea. The plans for building large amounts of new alu- minum capacity in the Common Market by T5.S.-affihiated companies and others may result, unless compensated by equivalent alumina capacity, in increased imports of alumina. At 8.8% on an assumed dutiable value of $60 a ton, the duty will be $5.28 a ton and thus a burden to the development of aluminum consump- tion in the Common Market. It should be mentioned that the Common Market duty on alumina will be 5.5% by 1972 instead of 8.8% if Congress revokes the American Selling Price provision. Japan is neither a large importer nor exporter of alumina; it imports bauxite PAGENO="0233" 3833 which is free of duty in that country. The United Kingdom, when `it becomes a major aluminum producer next year, will be an importer of alumina. Only one of the three smelters being built there will be supplied by alumina produced with- in the country. The U.K. duty of 8% is not applied to imports from Common- wealth sources, nor from EFTA countries, but will apply to alumina from the United States. The U.K. is seeking admission into the Common Market and the duties on alumina and aluminum entering the U.K. may change. Norway relies entirely on imported alumina, but has no duty on the product nor on aluminum. Its imports of alumina too would be affected if it joins the C~mmon Market. The situation regarding tariff duties on primary aluminum in the major coun- tries is similar to alumina. Both the U.S. and the Common Market, as well as Japan, are major importers of aluminum and the duties on aluminum in these areas are unnecessary and financially burdensome. The United States is a major supplier of aluminum to Common Market countries while imports into the U.S.A. come mainly from Canada and Norway. The two principal bills before the Committee, HR-14870 and HR-16920, fail to provide the `President with sufficient authOrity to negotiate to remove these du- ties, either with respect to the U.S. or to major foreign countries. As indicated, U.S. duties on alumina nn'd aluminum are on an ad valorem equivalent to `less than 5% `but exceed the 2% level suggested in HR-14870. We believe that the legislation being considered `should include an affirmative program to roduce `some tariff duties, and we suggest `that the authority which was contained in the Trade Expansion Act of 1962, Section 202, authorizing the President to reduce `or `remove entirely rates `of duty amounting to less `than 5% ad val'orem or its equivalent, should be `included in the legislation under con~id- erat'ion. Such `low `rates `serve no purpose `on most products and in connection with `the aluminum industry, where `the volume `of foreign tnt'de is `so groat; such rate's `on alumina `and primary `aluminum represent `a wholly unnecessary `and onerous burden `on the industry with n'o benefit `that we can see `to any `domestic manufacturing or `labor interest. We also `suggest that authority, perhaps limited, `should be given to the Presi- `dent `to `reduce certain U.S. tariff duties without `necessary regard to compen's'a- tion or offset `to `any increase in other duties made as a result `of escape clause proceedings. We refer `t'o `those `situations where only part of the President's Tra'de Expansion Act t'uthori'ty to `reduce `the U.S. `duty was used in the Kennedy Round. This `occurred with respect `to primary `aluminum where `the rate was reduced `by `only 20%. W'e hope `that this brief `outline of `the ctrcumstances in `the aluminum industry will prove `helpful to `the Committee and tha't the Committee Will consider our suggestion's concerning the proposed `legislation. We `believe `that `the United State~s should continue `its leadership in moving `towards freer world trade in alumina and aluminum and `th'a~t in `such `effort's `the basic `materials of the `alu- minum industry-bauxite, `alumina and, primary aluminum-should be foremost in such considerations. Mr. BURLESON. The committee will adjourn until 10 o'clock tomor- row morning, June 12. (Whereupon, at 4:05 p.m. the committee was adjourned, to recon- vene at 10 a.m., Friday, June 12, 1970.) PAGENO="0234"