(The Secretary of Commerce subsequently forwarded to the committee the following statement:) Changes in tariff levels of selected countries with which the United States has trade 1 Ratio of customs receipts to value of imports. Customs receipts do not include revenue taxes levied at substantially similar rates on equivalent domestic production. 3 1966. 3 1938-39. 4 1954. • 1965. Now following the war many foreign countries imposed quantitative restrictions on dollar goods for balance-of-payments reasons. Such quota restrictions had considerable effect on trade patterns. We agreed that quotas could be used as long as balance of payments problems made them necessary. We realized, of course, that these financial problems deferred some of the benefits we obtain from trade-agreement concessions, but considered this inevitable as long as countries could not in any case pay dollars for more imports. There was full agreement by all parties, however, that quota restrictions should be relaxed and removed as rapidly as circumstances permit, and this basic commitment is written into the GATT. Most people are not aware of the extent to which these quantitative restrictions have been eased in recent years, particularly in Western Europe. Today, for example, Belgium, the Netherlands, and Germany— three of our principal trading partners-- impose virtually no restrictions on imports of dollar goods. Sweden has freed 70 percent of its private dollar imports from quota restrictions; Italy, 72 percent; Denmark, 55 percent; Norway, 85 percent; in fact, practically all of the countries of Western Europe have taken some steps to remove quotas on dollar imports. This development undoubtedly has played a part in the extremely favorable development of our European trade in recent years-our exports to this area having increased from $2.9 billions in 1953 to $6 billion in 1957. As I have already pointed out, the proposal for a 5-year renewal of the President's authority to enter into trade agreements is intimately related to the recent creation of the European Economic Communitythe so-called European common market. Here six European countries, with a combined population almost equal to ours and a combined national product about one-third of our own, and consuming about $3 billion worth last year of our exported products. They are in the process of forming a new economic grouping. During the next 12 to 15 years, the European Economic Community will gradually eliminate all duties on its internal trade, and will gradually adopt a common customs tariff to the outside world, including the United States. With this economic unification should come faster economic growth, and consequently enlarged opportunities in the European market for our traders and investors. The extent to which we can benefit from these enlarged opportunities will, however, depend upon the tariff rates ultimately adopted by the European Economic Community. The Community stands ready to adjust individual rates in return for reciprocal concessions by its trading partners. To my mind, it is extremely desirable for the President to have authority in this field which will enable us to maintain and expand our export markets in this vitally important area. It is not in the interests of this country that we allow our trade to remain static while the rest of the world negotiates for greater opportunity. Why do we need authority for 5 years to negotiate successfully with the common market? Because it will take the European Economic Community the next 18 months or more to work out its proposed tariff rates. When these rates are known, we in this country will have to work out our list of possible United States concessions painstakingly and carefully, to insure that we screen out any which might threaten serious injury to any United States industry. This will bring us well into 1961. Then will come the negotiations themselves, complex and involving many countries, and certain to take over a year. If there were no difficulties or delays at any of these stages, it might be possible to conclude negotiations by mid-1962. We should not, however, take the chance that there will be no delays. We need a full 5 years to insure that everything we do is done after we have studied all the facts and considered their implications. We must always bear in mind that it takes at least two to negotiate. Given our importance in world trade, our presence at negotiations of this sort is crucial to their success. Unless our presence is guaranteed by a full 5-year extension, other countries will not themselves undertake serious preparations. We have been examining the bill's economic implications, but I would now like to turn to the relation of this legislation to the economic offensive which the Soviet Union has launched against the free world. The evidence mounts week by week that the Soviet Union, using combined programs of trade and aid, is attempting to increase its influence in the free world and lessen our own. Secretary Dulles has undoubtedly described to you the threat posed by these Soviet moves, and has told you how seriously we should regard them. Let me say that the Soviet program, if successful, could seriously endanger our entire way of life. In its trade drive, Russia is paying particular attention to areas of political ferment and economic distress; in particular, it is cultivating the less developed countries of the world. Hardly a month goes by without new Soviet offers to one or another key country with problems, and the pace of Soviet offers seem, if anything, to be accelerating. We should make a great mistake to underestimate the capacity of the Soviet bloc to state, to set forth on such an offensive or the appeal which Soviet offers may hold for other countries. The Soviet threat in the trade field is a real and a serious one. It would be doubly serious if, while the Soviets preach and practice expanded trade, we were to retreat from our position of trade leadership and were to weaken ourselves by self-imposed restrictions on trade. Stop trade, and the nations dependent on international exchanges will surely move away from us and toward the Communist world. As I have often stated, we do not have to sacrifice our domestic industries in order to counter the Soviet threat. What is essential is that we make it unmistakably clear to our friends that we intend to continue to trade with them, in the full sense of the word—that we intend to buy from them as well as sell to them. It is essential that they know we intend gradually and reciprocally to work for higher levels of world trade, and that we do not intend to retreat from our progress to date in this direction. It is this confidence of our friends in the continuity and direction of our trading policies that is crucial. If they feel they cannot depend on our good intentions, they will look elsewhere for the markets and sources of supply they so vitally need. I know of no better way to generate or retain this confidence than the passage of the legislation under consideration. To sum up, the reciprocal trade agreements program is one of our strongest weapons with which to counteract the Soviet trade offensive. It does not in itself provide the complete answer to Soviet economic penetration, but it is absolutely indispensable in the sense that, without it, nothing else we do is likely to be very effective. If we do not demonstrate to the world that we support the continuing reduction of obstacles to free world trade, if our failure to take action weakens our friends to the point where they fall into economic dependence on the Soviet bloc, we will have lost a crucial battle in the epochal struggle of our times. To sum up, let me review briefly the points I have tried to make in support of this legislation. 1. The program is a job-making and job-insuring program-today more than 41⁄2 million American workers depend upon world trade for their livelihood. 2. Our foreign trade is vital to the future of our economy. Today we are the world's greatest trading nation. 3. The program contains adequate safeguards against injury to American industry, workers, and agriculture. 4. The program is particularly important in view of common market developments in Europe and elsewhere; and 5. Failure to satisfactorily reenact the program would severely handicap us in successfully countering the Soviet economic offensive. Debate between protectionist and free trader is nothing new in this country. The process goes back to the earliest days of the Republic. Neither is the debate new to me. As a manufacturer I have been concerned with these matters and concerned on the protectionist side of the argument. For a number of years I was president of the Home Market Club, which some years ago for lack of support fell into innocuous desuetude its remnants drifting into the American Tariff League. When I came to Washington in 1953 I was eager to see how our trade might develop under this program. It has developed substantially, as I think has been evidenced by the charts I have brought with me today and developed under the rules of the Reciprocal Trade Agreements Act. A Secretary of Commerce, if he is to do an honest job, must do what he can to provide protection both for the company and the worker who makes products for export and the company and the worker who compete with the foreign producer. In the light of this fact I have come to the inescapable conclusion that unless we walk a middle road in these trade matters our posture in the world will suffer and so will our trade. This bill attempts to walk this middle road and to give life and expression to my conviction that if either the free trader or the protectionist wins the argument they both will lose. Thank you, Mr. Chairman, that concludes my statement. I would like to ask some questions. You and the Secretary of State have used a figure of four and a half million American jobs. How do you get that figure? Secretary WEEKS. The figure is arrived at, Mr. Chairman, by estimates and studies made by the Bureau of the Census and the Department of Labor. I believe it was in 1947, was it not, that the last accurate rundown was made? The projections since that date have been carried on on a sequential manner and this is the estimate of the number of people who are engaged in manufacturing goods for export, who are engaged in handling imports, the service trades and those who are also engaged in the first stage of manufacture of the imported raw materials. Senator KERR. Well, then, what percentage of them would you estimate are employed by those engaged in or whose activities are connected with imports? Secretary WEEKS. Do we have that breakdown? We have these figures. United States employment attributable to foreign trade in 1956, exports: nonagricultural workers, 2,516,000; agricultural workers, 602,000. On the import side: in transportation and distribution, 524,000; in the processing of imported materials, 858,000. Senator KERR. That total is how much? Secretary WEEKS. Four million five hundred thousand. Senator KERR. I would like you to put in the record the authentication of those figures. Secretary WEEKS. Yes, sir; we will do that. (The Secretary of Commerce subsequently forwarded to the committee for insertion in the record the following further statement on a point raised by Senator Kerr:) (The charts referred to are as follows:) |