The CHAIRMAN. Are there any further questions?

If not, Mr. Doyle, again we thank you, sir, for your statement and your appearance before the committee.

Mr. DOYLE. You are very kind to give us the time.

Thank you.

The CHAIRMAN. Our next witness today is the Honorable Thomas M. Pelly, of Washington. Would you please step forward and identify yourself for the record.

STATEMENT OF HON. THOMAS M. PELLY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON

Mr. PELLY. Mr. Chairman, I appreciate this opportunity to state my views in connection with U.S. foreign trade policy.

I have long believed that the exchange of surplus goods between nations is common gain and I fully support the objectives of the administration's proposal, but I would oppose any provision which represented more abdication on the part of the legislative branch of its constitutional power and responsibility. Likewise, to interject Government planning and direction with subsidies to recompense domestic industry for injury on account of tariff reductions, in my opinion would be unwise. Nor should the retraining of employees be treated as separate from other vocational legislation already on the statute books.

Today, however, I would prefer to limit my testimony to the effect of tariffs on the Pacific Northwest lumber industry, since a representative of the National Lumber Manufacturers Association is appearing to express that industry's views. At a later date, I hope to have a further opportunity to comment on this legislation as it bears on our Pacific Northwest fishing industry when testimony covering problems of importation of foreign fish products is taken.

Mr. Chairman, limiting myself then to lumber and lumber products, I should like to say first that we have a sick lumber industry in my State of Washington and other Northwest States. The causes of this condition are many and frankly the matter of tariffs is only one.

Canadians through the British Empire preference have taken over a once substantial customer of Great Britain and, meanwhile, on account of lower costs now enjoy the bulk of the U.S. Atlantic market. The crippling effects of this low-cost foreign competition are due, as I said, to many factors. This constantly increasing competition has been so serious that quotas and/or higher tariffs have been studied although admittedly both are fraught with complications involving our whole trade relationship with Canada.

In the great forested areas of the Northwest, 60 percent of our working people are dependent upon the forest products industry for their livelihood. My own State of Washington is one of the major lumber-producing States of our Nation, specializing in softwood production.

Practically all of our softwood lumber imports are from Canada. In 1961, Canadian lumber imports were substantially in excess of the entire production of Washington State. Since practically of our softwood imports are from Canada, these imports are directly competitive with the lumber produced in my State.

It is for this reason that the people in my part of the country are extremely disturbed by the fact that during the past year approximately 4 billion board feet of Canadian lumber has found its way across the border into our markets. This is an increase of more than 70 percent in the past 10 years, and almost a 900 percent increase since

1935.

At this point, with the committee's permission, I would like to submit for inclusion in the record as part of my statement a statistical table showing U.S. softwood lumber production, exports, imports, and consumption for the period 1926-61.

TABLE 2.-U.S. softwood lumber production, exports, imports, consumption, 1926–61 [In million board feet]

Source: National Lumber Manufacturers Association and Bureau of the Census, U.S. Department of Commerce.

The tremendous increase in Canadian imports has naturally depressed the economy of the Northwest, where it is roughly estimated that some 300,000 people have been adversely affected. Almost all of the distressed labor areas in the Northwest are those which are dependent on a prosperous lumber economy.

During the past few years, approximately 100 lumber mills-both large and small-in the Douglas-fir region alone have ceased operations, attributing their closing down mainly to this large influx of Canadian lumber imports.

In this same region, over 600 million board feet of lumber production was lost during the past year by U.S. lumber mills. This amounts to a loss of 66,600,000 man-hours, or 8,325,000 workdays, which have

been denied the labor force in our Northwest lumber region. This is certainly a critical loss to the Northwest communities which are dependent on the forest products industries for their survival.

About 30,675 Washingtonians are employed in sawmilling, logging, and planning the activities directly affected by foreign-cost discrimination. This figure was about 15,000 higher a decade ago. Total woodworking employment in Washington is about 65,000 and the whole of the woodworking industry, of course, feels the impact of the favored treatment afforded Canadian competitors.

As long as the Pacific Northwest forest-products industry operates under handicaps, unemployment can be expected to remain acute in many western Washington communities.

The American lumber industry cannot meet Canadian competition for, besides the many advantages granted Canadian lumber producers by their Government, the Canadians have lower wage rates, lower shipping rates, and advantageous rail-shipping privileges which give them a favored competitive position over American producers.

Personally, as I said earlier, I greatly fear compensatory legislation to assist industrial plants adversely affected by imports to transfer productive facilities into other types of business activity. This method could cause a wave of overproduction in areas not presently harmed by foreign competition. It could lead to Government planning and control. It could lead to political maneuvering. Rather, I would urge substituting international agreements as the chief instrument to prevent disruption of an industry before rather than after the damage is done.

I would support a form of "disaster insurance" so that after the Tariff Commission finds injury to domestic industry and employment, the President could elect, and so report to the Congress, to enter into an international agreement with the country concerned with respect to exports to the United States for the purpose of eliminating the disruption caused by such imports. The Tariff Commission could make recommendations as to any limit and quantity and type of goods to be imported to stabilize the domestic market. The President could be authorized to seek an agreement unless the Congress opposes it by concurrent resolution.

If a satisfactory international agreement, for any reason, cannot be reached, then I would favor requiring the Tariff Commission to recommend duty and quota adjustments which would be mandatory on the President.

This latter provision would give the President a strong position on which to negotiate a voluntary international agreement.

In conclusion, let me say I was heartened to learn that the domestic lumber industry has taken an affirmative step to amicably resolve its import problems with Canada. A press release which came to my attention last Friday indicates that the industry has proposed a novel approach to the Canadian import problem. Under the industry's proposal, present U.S. and Canadian softwood lumber tariff's would be repealed, permitting duty-free entry of shipments to each country until total imports equaled 10 percent of the annual domestic consumption. A duty of 10 percent would then be imposed on the value of each import shipment in excess of 10 percent of total domestic consumption. I firmly believe that this proposal is worthy of the consideration of Congress and the President.

This problem is so urgent in the Northwest that relief from unfair Canadian competition must be immediately provided, if the economy of our domestic lumber regions is to be preserved.

The CHAIRMAN. The chairman understands it is all right with Mr. Lovejoy for Dr. Ochsner to be called as our next witness.

STATEMENT OF DR. ALTON OCHSNER, PRESIDENT, INTERNATIONAL HOUSE, NEW ORLEANS, LA.

The CHAIRMAN. Dr. Ochsner, your reputation has gone far, far beyond your native city of New Orleans, La. We understand that in addition to being the head of the Ochsner Clinic, you are also president of International House and you are appearing in that capacity today?

Dr. OCHSNER. I am, sir.

The CHAIRMAN. Dr. Ochsner, Mr. Boggs wanted to be here, but he had to go to the House floor, as you probably know. He asked me to express his regrets for having to leave for the floor.

Dr. OCHSNER. Thank you, sir.

Mr. Chairman, I appreciate this opportunity to testify before the committee on behalf of the organization I head, the International House. For almost two decades now, the 2,300 members of International House, resident in New Orleans, the United States and other countries abroad, have devoted themselves to the promotion of world trade, peace, and understanding among the free peoples of the earth. Although the United States is the political and economic leader of the free world, this leadership is not a vested right. We recognize that trade policies must be fluid and responsive to new conditions as they arise. We therefore welcome this administration's determination to meet the challenge of the Common Market in Europe as well as of the budding common market movement in other areas of the world and to adjust our foreign trade policies so as to generate an ever-increasing flow of trade between our country and other nations.

While International House is in general agreement with the administration's proposals as embodied in H.R. 9900 we would stress the importance of the reciprocal feature of this legislation to the end that negotiations carried out under this legislation would work to remove restrictive tariffs, quotas, and other barriers which still hamper the flow of American goods into many markets of the world. International House approves particularly the wisdom of the administration in making no changes in our trade policies as regards those industries which are essential to our national security and defense, and strongly recommends that safeguards should be included to assure the continued existence of essential industries, services, and skilled labor supply in time of national emergencies.

On behalf of the Executive Committee of International House, I submit for the record the following resolution approved by them: RESOLUTION ADOPTED BY THE EXECUTIVE COMMITTEE OF INTERNATIONAL HOUSE, TUESDAY, MARCH 20, 1962

Whereas International House was founded in 1943 by New Orleans business leaders who envisioned a 20th century concept in two-way world peace and world trade, and who dedicated this organization to the furtherance of world peace, trade, and understanding through private community planning and actions; and

Whereas new challenges and opportunities exist in the world today, making essential a great expansion of the President's authority to negotiate trade agreements with all the free nations of the world, and especially with the countries comprising the European Common Market; and

Whereas the decisions made by Congress in regard to trading and cooperating with the European Common Market will be vital in determining whether our Nation moves on to new heights of economic power in association with other free nations, or whether we deliberately forfeit our role as leader of the Western World; and

Whereas the reciprocal trade agreements program inaugurated in 1934 has been successful in promoting international trade throughout the world and resulted in progress and prosperity in our own and all friendly foreign nations; and

Whereas working within the framework of the reciprocal trade agreements program the United States has in fact widely expanded worldwide exchange of goods and increased its own markets abroad by reciprocally lowering tariffs and trade barriers and liberalizing trade regulations as well as world trade as a necessary factor for world peace; and

Whereas it is recognized that nations and peoples buying from the United States must also sell to the United States and this necessarily makes for mutually beneficial two-way international trade; and

Whereas the total U.S. volume of exports and imports surpassed $35 billion annually in 1961 and is a keystone to our own peace, prosperity, and welfare of our citizens; and

Whereas the reciprocal trade agreements program has been renewed 11 times since its original passage in 1934, but these renewals have been for short periods and gradually the law has been emasculated and weakened by restrictive provisions in recent years; and

Whereas to assure continuance of this beneficial and productive program it is necessary to rally all citizens to join in an effort to preserve and expand this law which is up for renewal this year in Congress; and

Whereas New Orleans, a great port and trading center, recognizing the paramount importance to all nations in the world of a continuance of the reciprocal trade program, expresses serious concern with any moves to turn the clock back to a tariff program that would restrict trade and undermine our economic and political situation in world trade; and

Whereas the aims, policies, and goals of International House are in concurrence with the four major phases of the administration bill H.R. 9900, which are: (a) Extension of trade negotiating authority for a period of 5 years, until June 30, 1967;

(b) Authority to eliminate gradually tariffs on certain items in which the United States and the European Economic Community supply 80 percent or more of the world's trade;

(c) Authority to reduce in gradual stages by as much as 50 percent present duties on certain other items by categories of products;

(d) Appropriate and tested forms of Federal financial aid for companies and workers injured by import competition and extraordinary relief of industries injured by reason of some reduction or elimination of duties; and Whereas we are in agreement with the administration's new Trade Expansion Act of 1962 with the single exception that aid to displaced employees should be administered by the States and should not exceed the benefits provided by State unemployment compensation laws; Now, therefore, be it

Resolved, That the International House of New Orleans hereby records its support of all major aspects of President Kennedy's "Trade Expansion Act of 1962" with only one reservation to the effect that we believe that aid to displaced employees (as stipulated in title III of H.R. 9900) should be administered by the States and should not exceed the benefits provided by State unemployment compensation laws; and we hereby request Congress to pass H.R. 9900 with the above single restriction; and we hereby endorse a nationwide program to inform the people of the United States and particularly those in the Mississippi Valley of the vital importance of this measure; and be it

Resolved, That commercial, civic, economic, and cultural groups everywhere be invited to join in this crusade to save and expand the reciprocal trade agreements program and thus preserve the keystone to our foreign trade policy which has had the support of both great political parties over two and a half decades and which has made a material contribution to world peace and prosperity.