TABLE 1.-AVERAGE POST-KENNEDY ROUND MFN TARIFF LEVELS ON INDUSTRIAL PRODUCTS TABLE 2-PERCENTAGE DISTRIBUTION OF TOTAL MFN INDUSTRIAL IMPORTS BY RANGES OF TARIFF Source: GATT tariff study. The averages are calculated by weighing each country's 1972 duty rates by corresponding 1967 imports (1970 imports for Canada). The results are not strictly comparable since the averages for the United States and Canada are based on f.o.b. values, averages for the European Community and Japan are based on c.i.f. values. Note: The Office of the Special Representative for Trade Negotiations subsequently submitted the following information: Senator Curtis and Ambassador Eberle referred in the above colloquy to Tables 1 and 2. These tables show the 1972 tariff rates, weighted on the basis of 1967 imports, except for Canada, the figures for which are based on 1970 imports. As Table 1-A of the Committee Summary and Analysis of the Trade Reform Act shows, comparative tariff levels for the major trading nations do not differ significantly between the 1967 and 1970 import weghts. Senator CURTIS. How recent is it? Mr. EBERLE. 1972. Senator CURTIS. It was published in 1972. When did their studies take place? Mr. EBERLE. These are based on the weighting of each country's 1972 duty rates by 1970 trade. Senator CURTIS. 1970 trade? Mr. EBERLE. Right. Senator CURTIS. So it will soon be 4 years obsolete now. Mr. EBERLE. The tariff rates have not changed since that time. The trade may have shifted somewhat. But we took the weighting on 1972 tariffs but the actual trade on a 1970 base. Senator CURTIS. I do not want to be argumentative, I just want to understand it. Mr. EBERLE. Of course. Senator CURTIS. In arriving at the average tariff in Japan it does include the vast amount of raw materials that they want so desperately and charge no tariff on, is that right? Mr. EBERLE. The answer is yes, that is right. Senator CURTIS. And that is true of the other countries? Mr. EBERLE. The raw material rates are all low. That the rates on raw materials, of all raw materials, are relatively low. But there are some dutiable items in a country like Japan on raw materials where it brings their average up to almost as high as their rates on all industrial products of 11 percent. Senator CURTIS. Mr. Ambassador, the staff has given me a table here which appears on page 80 Mr. EBERLE. 80*. *Committee on Finance committee print entitled "Summary and Analysis of H.R. 10710." Senator CURTIS [continuing].-of this summary analysis, dated February 26, 1974, and on agricultural products the United States has an average tariff of 15.1 percent; Canada, 9.6 percent; Japan, 40.6 percent; the European Community, 16 percent; and the United Kingdom, 10.8 percent. Mr. EBERLE. I see. That is the column which has the simple arithmetic average for these tariffs. What you look for is the weighted average which brings those down substantially. Senator CURTIS. Yes, but what it does it put the United States as the lowest. Ours is 4.8. Mr. EBERLE. I think that is correct on agricultural imports. Senator CURTIS. Canada is 5.7, Japan is 27.4, European Community, 8.8-8.4, the United Kingdom 5. Mr. EBERLE. That is absolutely right. We do have the lowest tariffs on agricultural imports of any country, and I would point out that the footnote in your staff's excellent preparation notes that the European Community tariff of 13.9 does not include the variable levy. Senator CURTIS. For the European Community? Mr. EBERLE. That is right. Those come on top, and range from 20 to a 100 percent. Senator CURTIS. In other words, our tariffs are lower on agricultural products and agricultural products are one of the very redeeming parts of our foreign trade, is that not right? Mr. EBERLE. That is right, and that is the reason why we think it is so essential to have this negotiation with these people who have higher tariffs. Senator CURTIS. Now that same table separates the dutiable products which I assume leaves out bananas and coffee and things of that sort, and the average rate in the United States is 8.5, Canada 9.9, Japan 39.7. European Economic Community 13.9. But that does not include the variable rates, is that right? Mr. EBERLE. That is correct. Senator CURTIS. And the United Kingdom 9.9. There again, we are the lowest, are we not? Mr. EBERLE. That is correct. I would point out, the United Kingdom now would fall within the European Community. Senator CURTIS. That is correct. Would it take a long explanation so that our record would be complete, of what you mean by a variable duty? Mr. EBERLE. Variable levy. Senator CURTIS. By illustration or otherwise, in reference to the United Kingdom or Economic Community. Mr. EBERLE. Let me submit to you a one-page insert. It will take time to explain how it works because it varies from day to day. It is an arbitrary point as against the world market price and I would rather submit it to you in writing. Senator CURTIS. Could you give us the tariff equivalent of the variable levy? Mr. EBERLE. What happens is that it depends on the world market price, and it differs by various products, and can run from zero up to 100-150 percent of the world price. Senator CURTIS. And oftentimes it runs 40 to 120 percent. Senator CURTIS. And that is true of agricultural products. Mr. EBERLE. Not all of them. Soybeans are not under the variable levy and we have a favorable position both in the EC and Japan on that. POSSIBLE SACRIFICING OF CERTAIN INDUSTRIES? Senator CURTIS. I know this proposal gives unemployment compensation which would seem to indicate that it was anticipated that we would sacrifice certain industries or parts of industries or products. What criteria will you follow in determining whether or not an industry will knowingly be damaged to the extent that their workers and possibly the industry, too, will seek these benefits? Mr. EBERLE. Well, let me start by saying that we need this kind of provision whether we have negotiating authority or not because that happens on a daily basis. Senator CURTIS. Yes. Mr. EBERLE. What we want to look at here is whether you have an industry that may have a rather sudden impact from imports and you must determine whether that is having an abrupt market impact and, if it is, we have provided that there can be relief provided, not through adjustment assistance, but through temporary tariff safeguards at the border. Senator CURTIS. Increased protective tariffs or other things? Mr. EBERLE. Tariffs, quotas, orderly marketing agreements, whatever it may be because it may be for some reason the industry, either fairly or unfairly, is being taken advantage of or can become competitive if they get help of these kinds, so we look at that first. On the other hand, there may be a segment of that industry that simply is not going to be competitive and I think probably the best example of this lay in the radio electronic field where suddenly some items just simply could not be made competitively here and some production moved abroad, but now is coming back again. Our technology was brought up to date and there was a transition period here. But it is that kind of approach that we will be taking and are taking today. We do not plan to "sacrifice" industry. Senator CURTIS. Will products made by one or two manufacturers get the same consideration if it is a widespread industry? Mr. EBERLE. No; we are looking for an overall impact on an industry because, as I tried to explain, because it may not be the import problem that causes it if it is only one or two manufacturers within an industry. Senator CURTIS. I mean, if the whole industry only constituted a few, one or two, manufacturers. Mr. EBERLE. Absolutely, they would get the same treatment. Senator CURTIS. For instance, I am not asking for solutions at this time but just throwing it out. Mr. EBERLE. Surely. Senator CURTIS. In Lincoln, Nebr., we make the Cushman scooters and golf carts, and the Polish similar product undersells them by about $200 a unit and, of course, they are a low-cost vehicle to start with. Yet, there are not many factories in the country that make that sort of a product, and so its effect on the overall economy of the country and the overall employment may be small but in a particular spot it is very serious. Mr. EBERLE. If the industry consists of one plant they will get the same treatment as if it got 200 plants and if that is a problem we would be happy to consider that one. VARIABLE LEVIES Senator CURTIS. Yes. This one can be answered for the record. On the variable levy, I think I understand it, but would you spell out two or three concrete examples and date them? Mr. EBERLE. All right. Senator CURTIS. As to when they existed, where the variable levy was reasonably low and still was there and one where it went high and a little explanation of the time and the circumstance and the world price which brought it about, about three illustrations. Mr. EBERLE. I would be happy to do it. Senator CURTIS. Thank you very much, Mr. Chairman. [The information referred to follows:] The basic problem facing U.S. agricultural exports to the European Community is the EC's use of trade devices to support its internal farm pricing system. The most important and most troublesome of these devices is the variable levy. This is an import charge to keep prices of imported products at least as high as domestic EC prices, eliminating price competition from outside countries. The variable levy is applied on about one-quarter of U.S. agricultural exports to the enlarged EC. These include feed and bread grains, beef, veal, pork (excluding variety meats), lard, dairy products, poultry and eggs. In the case of grains, threshold price which is the minimum import price into the community serves as the base for the calculation of variable levies on imports. Every working day the Commission, the executive arm of the EC, collects price quotations for each grain on international markets and adjusts those prices to what they would be if the grain had been of a standard EC quality and had been offered for delivery, c.i.f. Rotterdam. The lowest such adjusted price for each grain is then deducted from the corresponding threshold price. The difference is the variable levy, which is then collected on all imports of that grain regardless of the actual price of the particular shipment. In this way, the EC eliminates both price and quality competition from imports. Imports are effectively limited to those quantities and grades that cannot be supplied by domestic production. Community preference is absolute. "Seasonal" competition is also eliminated by raising threshold and intervention prices monthly during the year to cover storage costs for domestic grain. In the case of long grain rice, the import levy-related to the difference in prices of EC grown varieties-is generally set by price quotations for cheaper medium grain varieties, and is higher than would apply if a true long grain standard were used. 1 Levies on lard imports, set quarterly, are derived from the price of feed grains. 2 Converted from units of account at UA 1 equals $1.08571 before Feb. 13, 1973 and UA 1 equals $1.20635 after Feb. 13, 1973. * Marketing year 1972-73. Senator HARTKE. Mr. Ambassador, time is late but let me say to you that I think all members of this committee share a very high regard for your intelligence and your ability in the trade field. I must hasten to add that I do not know of any one man that I disagree with so totally in this critical field of trade. Our decision should be to disagree agreeably. I disagree with your policies, but I do respect your professional ability. Second, I would like to say for the record, that the staff work which has been done in this field has been effective, accurate, and objective. I want to compliment Mr. Best for the excellent job he is doing. Don't you agree, Mr. Ambassador? Mr. EBERLE. I certainly do. BROAD DELEGATION OF AUTHORITY TO THE PRESIDENT Senator HARTKE. Do you agree that the administration's trade bill is the broadest delegation of legislative authority to the executive which has ever been requested in the history of the United States? Mr. EBERLE. No. I would have to say that it is the broadest delegation of joint participation with Congress that has been asked for. I do not think you can call it a sole delegation because it does have congressional review and participation in it. Senator HARTKE. But of such a limited nature as to be practically ineffective. The second thing which disturbs me is that the President is under rather severe attack. Impeachment proceedings are being considered in the House of Representatives, and here we are preparing to delegate extensive authority to that President whose ability to lead is being challenged. Do you feel that that is a proper exercise of the separation of powers doctrine under such circumstances? Mr. EBERLE. The answer is yes, I do, and let me explain why. First of all, on tariffs, there was more authority, advance authority, granted on tariffs in the Kennedy round than this bill proposes at this time. Senator HARTKE. But Mr. Kennedy was not under the pressure of such severe charges at that time. I was a cosponsor of that bill and I certainly am not a cosponsor of this measure. Mr. EBERLE. The point is there was more authority granted in that than today. Two, on nontariff barriers, negotiated agreements on these must come back for congressional review and veto by either House of Congress, so I do not think it is the kind of delegation you suggest. Then, too, if we are successful-and I hope we will be in having Congress participate with us during these negotiations-it is the kind of discussion that gives you the opportunity for input and if you disagree, you have the chance to veto. IMPORT PROTECTION Senator HARTKE. I am one of the sponsors of the Burke-Hartke bill and I have been dealing with specific trade legislation since 1971 and I do have some disagreement with you on that. But the point still remains that the administration's trade bill does delegate unprecedented authority to the executive for imposing quotas or eliminating them, |