flour, bran, and a little wheat germ, but they will not bring in any wheat. It does not do much good as long as they try to bring in all the rest of these things. Mr. Secretary, I am sorry we kept you so long. We hoped to get you out of the trenches by 12 o'clock. The chairman has asked that I insert in the record of the hearings following the oral presentations by the Secretary of State and the Secretary of Commerce, the following statements of views of other departments and governmental agencies: Acting Secretary of Labor, James T. O'Connell; General Counsel of the Department of Defense, Robert Dechert; the Director of the Office of Defense Mobilization, Gordon Gray; Secretary of Agriculture, Ezra Taft Benson; Hatfield Chilson, Under Secretary of the Interior; William B. Macomber, Jr., Assistant Secretary of State; and United States Tariff Commission. (The reports referred to follow:) (See also report of the Treasury Department, p. 415.) EXECUTIVE OFFICE OF THE PRESIDENT, Hon. HARRY F. BYRD, Chairman, Committee on Finance, OFFICE OF DEFENSE MOBILIZATION, United States Senate, Washington, D. C. DEAR SENATOR BYRD: This is in reply to your letter of June 13, requesting a report from this agency concerning H. R. 12591, a bill to extend the authority of the President to enter into trade agreements under section 350 of the Tariff Act of 1930, as amended, and for other purposes. There can be no doubt that a high level of foreign trade is an important element of our national security. Mutually beneficial trade with nations of the free world strengthens our own productive machine and increases the economic potential of our friends and allies. The reduction of unjustifiable trade barriers through gradual and selective tariff reductions is necessary to an increased flow of this essential trade. Extension of the Reciprocal Trade Agreements Act and the amendments proposed by H. R. 12591 appear to be well designed to accomplish that objective and we are in favor of its enactment. Special mention should be made of the revision of the national security amendment proposed by section 8 of the bill. The proposed changes are generally designed to clarify procedures and criteria for dealing with threats to the national security arising from imports and to require reporting of actions taken when such threats are alleged. We believe that these amendments are in keeping with the purpose of the statute and are glad to support them. The Bureau of the Budget advises that it has no objection to the submission of this report and that enactment of H. R. 12591 is in accord with the program of the President. Sincerely yours, GORDON GRAY, Director. STATEMENT OF GORDON GRAY, DIRECTOR OF THE OFFICE OF DEFENSE MOBILIZATION ON H. R. 12591 I welcome this opportunity to comment on the special responsibilities of the Office of Defense Mobilization under the Trade Agreements Act. They appear in the so-called "national security" amendment which was added to the act by the Trade Agreements Extension Act of 1955 and which now appears in section 8 of H. R. 12591 in the revised form approved by the House of Representatives. Congress delegated authority to the Director of the Office of Defense Mobilization for the initiation of procedures to deal with threats to the impairment of the national security arising from imports, and the purpose of this statement is to outline the manner in which the Office of Defense Mobilization has undertaken the discharge of that responsibility and to comment briefly on proposed revisions in that responsibility now before your committee. Of course, we also have a continuing interest in foreign trade policies and practices generally, in the sense that they affect our total national security position and have a bearing upon the development and maintenance of our mobiliza tion base. As examples, our stockpiling responsibilities take us into the area of foreign trade; and the President has assigned us the task of determining for what critical materials foreign funds obtained from the sale of agricultural surpluses may be expended. In these and other ways, the Office of Defense Mobilization becomes involved in issues concerning imports because of the relationship of those issues to the national security or the maintenance of the mobilization base. However, the special assignment to the Director of the Office of Defense Mobilization under the Trade Agreements Extension Act of 1955 has provided for the first time a means and forum through which any threat to national security caused by imports might be reviewed and considered. It is important to emphasize, however, that there has sometimes been a tendency to interpret the national security amendment as a substitute for the "escape clause." Our administration of the amendment has sought to cut across this interpretation and to make clear that, in fact, it provides a basis for action only in cases where imports threaten the national security by impairing or inhibiting the creation of essential productive capacity, required skills, or other factors essential in times of emergency. Whereas the essential function of the Tariff Commission under the "escape clause" is the determination of injury to industry from imports, we are concerned with discovering any threatened impairment of the national security, whether or not injury to a domestic industry is involved. In support of actions initiated under the national security section up to this time, we have undertaken to provide flexible procedures which could be adapted to the specific requirements of each situation presented to us. For instance, the Office of Defense Mobilization has made it a practice to hold public hearings if it has appeared that such hearings would provide an effective means of acquiring useful facts and viewpoints. In such cases, the primary purpose of hearings has been to obtain information and to advance investigation of the relevant facts, rather than to be adversary in nature. Information obtained from such public hearings is then studied and analyzed in the light of other facts at hand. In all cases, whether or not hearings are held, other agencies of the Government familiar with the subject matter and possessing information, expert advice, or specialized experience are consulted to obtain their views and knowledge. Sometimes the necessary investigations are undertaken through the establishment of interagency task groups specifically brought together for that purpose and, in other cases, the bulk of the pertinent information becomes available through the formal statements of the various agencies consulted. The net result of these various processes has assured the Director of the Office of Defense Mobilization that all the information and advice available is in turn made available to him in reaching a final judgment. As has been pointed out in the course of the discussion of this subject, the issues are seldom crystal clear in many of these situations. Also, some industries have found it very difficult to provide or assemble data to support a petition. Under these circumstances, after making every effort to check with other agencies and within the industry, we have kept some cases open rather than to deny them because sufficient data were not quickly or readily obtainable. This has meant that a few petitions have remained in an inactive status for quite awhile, or have seemed to take a considerable time for processing. Finally, another noteworthy aspect of the national security amendment has been that, by its nature, it sometimes yields solutions which cannot be entirely final. The dynamics of trade and commerce in the setting of rapidly changing domestic and international developments impose a requirement that we be willing to reopen cases if petitioners indicate the availability of new information or if circumstances change. I think I need not elaborate the fact that the national security amendment may pose some very difficult problems and judgments. As I have indicated, the questions involved are only occasionally so clear cut as not to be arguable. This is particularly true because the level of imports with respect to a given commodity or industry is often only one of a number of factors which may be affecting the domestic producers and their capacity to meet mobilization requirements. Likewise, the substantial changes in mobilization base and actual mobilization requirements brought about by ever-advancing scientific and technological developments may well produce a different judgment from that which might necessarily have been reached in World War II, for instance. In any event, I can assure the committee that we take our responsibility under this act altogether seriously. If we are called upon to administer the revised section before your committee, we intend to continue to rely heavily upon the advice of other governmental agencies and to give all petitions the most searching examination. In that connection, the revision of the national security amendment which has been approved by the House of Representatives has our support. In general, the proposed changes are designed to clarify administrative procedures and criteria and to require reporting of actions taken when threats to the national security arising from imports are alleged. We believe that they are in keeping with the purpose of the statute and that the revised provisions would provide an effective means of giving national security cases the attention they require. I would now like to describe briefly our operating experience under this amendment, and summarize the cases which have been before us. They have involved the following items: In June 1957, after a finding by the Director of the Office of Defense Mobilization that there was reason to believe that imports of crude oil were threatening to impair the national security, the President established a Special Committee To Investigate Crude Oil Imports under the chairmanship of the Secretary of Commerce. The Committee's investigation of the effect of the trend of imports on national security led it to recommend, in July 1957, that a plan of voluntary limitations on imports be adopted by importing companies. The President accepted the Committee's recommendations. The plan applied to all parts of the country except district V (Washington, Oregon, California, Arizona, and Nevada). When this exception was made, it appeared that imports into the west coast district would no more than make up the difference between demand and domestic crude oil production. Later in the year, however, the Committee found that imports into district V were increasing sharply and would also be at excessive rates unless action were taken to curtail them. Accordingly, the Committee recommended that a plan of voluntary restrictions also be adopted by importers in that area, and this plan became effective January 1, 1958. More recently, on May 28, 1958, I recommended to the President, in concurrence with the Special Committee, that the importation of petroleum products be placed under the cognizance of the Committee, in order to guard against any possible circumvention of the crude oil program. The President accepted the recommendation and, on the advice of the Special Committee, has directed the initiation of a program limiting the importation of unfinished gasoline and oils. The need for maintaining a balance between imports and domestic production of crude oil, in the interest of national security, arises from the probability that excessive imports would weaken and might destroy the incentive for exploration and development of new domestic sources of supply. This conclusion was first put forward by the President's Advisory Committee on Energy Supplies and Resources Policy in 1955 and was reiterated in 1957 by the Special Committee To Investigate Crude Oil Imports when it found that additions to domestic reserves had not been keeping pace with the increase in domestic consumption and that the sharp increase in imports then scheduled would bring about a further decline in domestic exploration and development activities. Taking all factors into consideration, including the importance of foreign oil resources to our national security and the importance of the United States market to the oil exporting countries of the free world, the committee found a need for achieving some reasonable balance between imports and domestic production at this time. Its recommendations for a pro gram of voluntary restrictions by importing companies were framed with a view toward flexibility. The voluntary plan is administered by the Department of the Interior and the need for continuing it will be reviewed periodically. The Special Committee remains in existence to keep the situation under continuing study. In the case of residual fuel oil, imports have caused complaints from the domestic coal industry and we initiated some months ago a reporting service to watch the trends of such imports. As recently as June 4, 1958, the Special Committee found that residual fuel oil imports into the United States do not threaten to impair the national security. Nevertheless, the Office of Oil and Gas of the Department of the Interior has undertaken the task of preparing a monthly table summarizing the results of importers' replies as to their actual and projected imports of residual fuel oil. These statistics are referred to the Presidential Advisory Committee on Energy Supplies and Resources Policy, which concurred in the desirability of initiating the reporting service and which meets monthly on the subject, to enable it to be continually made aware of the effects of residual oil imports as they relate to the national security and thus to be in a position to make appropriate recommendations. OTHER CASES Of the other cases under the national security amendment, each case has its own history and background and there follows a brief description of each. The petitions for photographic shutters and for stencil silk were withdrawn by action of the submitting industry groups. The petition for fluorspar was canceled at the request of the petitioners after the Office of Defense Mobilization had scheduled a public hearing. This action was taken to allow time for the industry to evaluate the effects of the Government purchase program authorized by Public Law 733, 84th Congress, which legislation was passed before the date scheduled for the fluorspar hearing. The Felt Association requested the postponement of action on its wool felt petition pending the results of its escape clause action before the United States Tariff Commission. We have acquiesced in this request. The Action on the petition for wooden boats has been delayed because of the petitioning association's difficulty in obtaining information from its members. association agreed to revise and supplement its petition at a later date, if it decided to pursue the matter. We have agreed to hold the case open for an additional period. In the case of the petitions for analytical balances and clinical fever thermometers, the respective petitioning association and guild agreed to restudy their petitions and supporting data with members of their industry. In May 1957, both petitioners notified the Office of Defense Mobilization of their continuing interest and intent to file supplementary data for their respective petitions. data have not yet been filed. Such A public hearing was held by the Office of Defense Mobilization on January 7-9, 1957, to hear arguments for and against the petitions of the clock, pin-lever watch, timer, and jeweled watch industries. The material obtained on these cases occasioned the active study and continuing cooperation of the Department of Labor, the Department of Defense, and the Business and Defense Services Administration (Commerce), among others. Because of the complexities of this case, it received the most intensive and exhaustive examination, and it was not until February 28, 1958, that I was able to announce my conclusion that imports of jeweled and pin-lever watches were not threatening to impair the national security. A public hearing was held on September 11-12, 1956, on the petition regarding imports of hard fiber cordage and twine. On March 7, 1957, the Director of the Office of Defense Mobilization rendered a negative decision on the cordage petition, finding that imports of hard fiber farm and industrial twines were not threatening to impair the national security within the meaning of the section. On July 1, 1957, the Cordage Institute, on behalf of its industry members, requested reconsideration of this decision. After a preliminary examination of the brief submitted with the request for reopening, the Cordage Institute and others interested were notified on August 20, 1957, that a further study had been ordered, including a review of the March 7, 1957, decision. With the help of other agencies, this comprehensive study and review were concluded earlier this year and on May 6, 1958, the March 1957 decision was upheld on the ground that the review indicated imports are not threatening to impair the national security. A petition on dental burs was filed during May 1957 and the processing of the case was concluded. However, on August 28, 1957, just prior to a decision, the American Dental Trade Association withdrew this petition. Within the last 2 weeks, this petition has been refiled and is now being studied. A petition on fine mesh wire cloth remains inactive, with the industry's concurrence, awaiting the handling of an escape clause petition the industry has also filed. The Tariff Commission has just concluded initial hearings in this matter and now has the case before it for decision. A petition on wool textiles was filed in 1956 and public hearings were held June 3-4 1957. After investigation, this petition was denied on January 6, 1958. Finally, on March 7, 1958, the General Electric Co. and others filed a petition indicating their belief that Government procurement of imported heavy electrical generating equipment constituted a threat to the national security. A comprehensive examination of this petition is now being conducted with the assistance of all the agencies involved. The cases which may now be said to be active or open are those involving finemesh-wire cloth, analytical balances, clinical fever thermometers, wooden boats, wool felt, dental burs, and heavy electrical-generating equipment. It may be noted from what I have said that the interest of the Office of Defense Mobilization in the pending legislation tends to be of a specialized character. In that narrow sense, as I have indicated, it seems to me that the national security amendment has provided a necessary opportunity to review and consider threatened impairment of the national security arising out of imports and that the proposed revision before your committee will appropriately support continuing review and consideration. Finally, although it goes beyond the direct responsibilities of the Director of the Office of Defense Mobilization, I should like to emphasize my support of the proposed legislation as a whole for the reasons advanced by the President. STATEMENT OF JAMES T. O'CONNELL, ACTING SECRETARY OF LABOR, ON EXTENSION OF THE TRADE AGREEMENTS ACT Mr. Chairman and members of the committee, I am pleased to submit this statement in support of the 5-year extension of the Trade Agreements Act, as embodied in H. R. 12591. I shall direct my comments to those aspects of this proposed program which directly concern the welfare of the American workers. Foreign trade generates employment. This is one indisputable fact that emerges from any consideration of the foreign commerce of this Nation. We in the Department of Labor have estimated that the jobs of about 41⁄2 million workers are attributable to the activity created by foreign trade. This is about 1 out of every 14 workers in the United States. These 41⁄2 million workers comprise 4 major groups. By far the largest of these 4 is the group composed of 21⁄2 million nonagricultural workers in our factories producing goods for export and in the clerical, manual, transportation, and communication activities associated with actual shipment and exporting. In addition, agricultural exports account for the employment of approximately 600,000 agricultural workers. Imports of foreign-produced goods also generate employment opportunities in the United States. These employment opportunities come about in the first instance because imported goods must be transported and distributed within the United States, either to distributors or to industrial enterprises which process the imported materials. Over 500,000 workers in the United States are engaged in jobs in this transportation and distribution process. Then, there are about 850,000 workers who are employed in the "first factory processing" of imported materials, which includes such activities as roasting and grinding coffee or making alumina from imported bauxite. These 4 groups I have described fall into 2 components which comprise the total of 4.5 million workers whose jobs are attributable to foreign trade. Approximately 3,100,000 American workers are involved in our exports from industries and agriculture, while the importation of goods from foreign countries provides jobs for a total of almost 1,400,000 workers. This figure of 4.5 million has been used extensively in discussions of our foreigntrade program. In this connection, I might point out that the figure is a product of studies made during the past 10 years. The first figures on employment attributable to export industries were published in 1947 on the basis of data from the |