The undermining of exploration incentive has not only hurt the mine operator and the worker, but has harmed and threatens further harm to the consumer of products made from the minerals and metals involved, through reduction of the quantity of domestic supply. Present prices of copper and mercury illustrate the willingness of the foreign producers, or of governments controlling the marketing of foreign production, to exploit metal prices in times of shortage. The flooding of our market in times of surplus, as has recently been experienced by lead, zinc, fluorspar, etc., only serves to reduce the quantity of domestic production and to increase the opportunity for exploitation of our market when surplus situations disappear.

The basic objectives of the trade agreements program have changed materially, particularly since GATT became operative. Through GATT the Trade Agreements Act has been used as a means of achieving international political objectives. Domestically, it has been used politically as a means of securing cheap raw materials for domestic manufacturers. Both of these objectives were discussed before the Senate Finance Committee in hearings on H. R. 1, the former at considerable length between Senator Kerr, Senator Millikin, and Secretary Dulles, (pp. 1250 to 1260 of pt. 2 of the hearings on H. R. 1, before the Senate Finance Committee). Senator Flanders emphasized the second objective in his statement on page 1257 of the same document when he said:

"It is assumed that the advantages to the country as a whole," of the reciprocal trade agreements in general, "will come from an increased export business made possible by that purchase of cheaper goods from abroad."

"So it seems to me the theory assumes that some American industries will be hurt."

The conversation between Senator Flanders and Senator Millikin, immediately following Senator Flanders' statement, is most enlightening on the matter of the objectives of the trade agreements program, as presently operating under GATT, in contrast to the specific provisions for reasonable protection of domestic interests, stipulated in the agreements act. That conversation is as follows:

Senator MILLIKIN. Most respectfully, I offer the observation that there is no such exception in the law. The law contains a provision that there shall be no injury or threat of serious injury to a domestic industry.

Senator FLANDERS. Then it seems to me logically, irrefutably, that the law as at present written, and as we expect to extend it, does not lend itself to accepted economic theory as to the advantages of a freer foreign trade. Senator MILLIKIN. Whether it does that or not, I am just talking about the law.

Senator FLANDERS. I am just saying that the law does not agree with the principles for which it is now being supported in certain important quarters. [Italics added.]

To illustrate the effect upon the domestic mining industry of the "principles" for which the Trade Agreements Act is now being supported in certain quarters: The "principles" of buying cheap raw materials from foreign areas to improve the export potential of "certain' manufacturers-one need only review a few basic statistics of the lead-zinc industry. First the extent of duty reductions.

The fixed rate of the duties has been reduced to 50 percent of the original rate for lead and to 40 percent for zinc. Inflation, however, has reduced the effective duty rate to but 17.1 percent for lead and 13.5 percent for zinc of the original ad valorem equivalent rate (relationship of fixed duty rate to metal price). To my knowledge there has been no comparable reduction in duty protection for any other major internationally competitive industry.

Duties on most other imports, reduced under the trade agreements program, are on an ad valorem base and have been reduced by a maximum of 50 percent. Fifty percent of the original ad valorem equivalent duty on lead and zinc would be 19.25 percent and 19.2 percent of the respective lead and zinc prices. Those percentages of present price (16 cents lead and 13.5 cents zinc), would mean duties of 3.08 cents and 2.59 cents per pound.

Manufactured items of silver, for instance, are protected by a 30-35 percent The labor and the industry investments in that business have been well

tariff.
taken care of.

By comparison the worker and the investor in lead-zinc mining, which also produces silver, have suffered gross discrimination. The only possible explanation for such discrimination is that lead and zinc have been very useful in the international political trading related to trade agreement negotiations, and that the excessive imports following drastic duty cuts have been attractive to United States manufacturers, regardless of the effect upon the domestic mining industry. Both reasons are contrary to the intent of the Trade Agreements Act, but have been made possible through the international control of that act through the functions of GATT.

REDUCED DOMESTIC PRODUCTION

A few basic statistics covering the years 1948 to 1955, will suffice to illustrate the damage done.

Total domestic mine production of lead and zinc and 1955 production of lead and of zinc as percentage of production of previous years

We again respectfully present the request that your committee find H. R. 5550 to be contrary to the laws and to the constitutional provisions relating to the foreign commerce of the United States.

Very truly yours,

MILES P. ROMNEY, Manager.

STATEMENT OF OTTO HERRES, VICE PRESIDENT, COMBINED METALS REDUCTION Co., CHAIRMAN, NATIONAL LEAD AND ZINC COMMITTEE; RE H. R. 5550, AuTHORIZING UNITED STATES MEMBERSHIP IN THE ORGANIZATION FOR TRADE COOPERATION

Hon. JERE COOPER,

SALT LAKE CITY 10, UTAH, March 5, 1956.

Chairman, Committee on Ways and Means,

House Office Building, Washington 25, D. C.

DEAR MR. COOPER: In considering H. R. 5550, the bill to approve United States membership in the Organization for Trade Cooperation, the committee is urged to reject participation in any organization which places the power to regulate trade and foreign commerce of the United States in the hands of an international agency.

RESPONSIBILITY OF CONGRESS

The American people look to the Congress to exercise its constitutional responsibility for their well-being in matters of trade and foreign commerce. We trust that the committee will oppose importuings of the State Department to delegate that obligation to an organization of foreign nations and that it will oppose the surrender of further congressional authority to another branch of the Government or to any international body.

We speak from experience in producing raw materials and from working with men who are dependent upon the productive resources of this country for their living. Our problems involve the welfare of the United States.

FOREIGN POLICIES

The aftermath of the Korean war brought disaster to the Nation's lead-zine mines. In consequence of State Department policies of foreign aid, excess imports of lead and zinc flooded the markets of the United States at prices below the average cost of American production.

A national committee was organized 3 years ago in an effort to cope with the emergency confronting the industry. The committee represents every lead-zine mining district in the country; lead-zine mining is a nationwide business.

American producers of lead and zinc have been on the defensive against policies that threatened to destroy their very existence for nearly 20 years. Workers in the mining industry believe in reciprocal trade, but they question the wisdom of Congress surrendering its authority over trade agreements to the State Department and OTC.

It is true that it is the responsibility of the State Department to look after our foreign interests, but who other than the Congress is there to see that our domestie industries receive similar consideration? What is ahead for American workers and American producers who in some instances admittedly are suffering serious injury because of State Department tariff concessions of 50 percent or more as well as from the effects of price inflation? Experience indicates that for them survival has become a matter of Executive discretion, in spite of peril-point and escape clauses provided by the Congress in trade acts for their protection.

WHAT RECOURSE

Approval of escape-clause relief for workers and producers found to be suffering serious injury from excessive imports is the exception rather than the rule. Constitutional authority over tariffs and trade rests with the Congress, but where today can domestic industry gain relief in a clear and undisputed case of injury? The State Department will look after foreign producers, but what recourse is available to American producers in good and proper cases? Certainly not in the law but only in the discretion of the executive branch, and there to be rejected through State Department influence. Is there another nation in the world today that does not afford protection to its domestic industries?

The trend throughout the world today seems to be toward centralized government. By approving OTC the Congress will add to the concentration of power in the executive branch of the Government. But that is not in accordance with the constitutional principles which gave this country of freemen the strength to become a great nation.

SAVING THE WORLD

Washington has been so engrossed in recent years with trying to save the world that problems here at home are forgotten. The State Department proposes to finance expanded production for all of the backward and undeveloped areas of the world where land and labor are cheap and take payment in metals, minerals, and other raw materials. When raw materials come into a country where they already are produced in substantial amounts and create an oversupply, the effect can be only lower earnings or unemployment for workers engaged in the industries affected. The price of a commodity is determined by the value of the excess of supply over demand.

Mineral policies of the State Department for the past 20 years have been responsible for metal shortages during 2 wars of this period and price instability that has been harmful to producer and consumer alike. No effective protection is available to the domestic mining industry against the dumping of metals on our markets from low-wage countries that have devalued their currencies. And no safeguard of consequence has been available to the consumer against shortages in times of heavy demand, nor against excessive prices on foreign metals during periods of shortage.

FINANCING COMPETITION

The American taxpayer has been called upon to finance competition which is putting industries essential to our national security out of business. His money has gone toward the purchase of metals at high world prices by other nations, later to be released and depress our markets. Mines are standing idle in the United States and workers are unemployed because of currency devaluation and the socialistic methods used by foreign governments in the purchase and sale of metals, and because of the overstimulation of foreign production by American aid

programs and high prices when United States mines were restricted by means of price controls.

When the extension of the Trade Agreements Act for another year was before your committee for consideration 3 years ago, we filed a statement calling attention to the emergency confronting the lead-zinc mines because of excessive imports and pointed out the need of constructive action for the preservation of the industry.

COMMUNITIES SUFFER

It was stated then and it is true today that unemployment and heavy economic losses are troubling many communities. Small independent companies unable to obtain financial support because of depressed prices and inflationary cost increases have been forced out of existence.

But we cannot believe that it is the policy of Congress to liquidate small business in this country.

Notwithstanding the liquidation of over 150,000 tons of the Nation's annual zinc production during the last few years in consequence of Washington's foreign aid and freer trade programs, the consumer has failed to benefit from cheaper metals. Because of the trend toward greater dependence on other countries for supplies, metal prices are rising. Price increases in lead and zinc now are required to attract more imports in order to replace the supplies wiped out in this country. A recent price-increase announcement stated that the rise in the London price of zinc had encouraged shipments of foreign ore to Europe and had discouraged imports of refined zinc, and in order to preserve zinc supplies for domestic customers, the zinc price was increased by a half cent to 131⁄2 cents a pound.

THE CONSUMER PAYS

It would appear from this that the stage now has been reached where it is necessary to raise the price of lead and zinc in order to protect the American consumer. He must compete in foreign markets for his needs because he no longer has the assurance of near self-sufficiency in domestic productive capacity which so long was provided for him by United States mines. Imports have taken over the major portion of the market for zinc in this country, reversing the relationship that existed before the Korean war.

Emergency action taken by the President in 1954, to provide a stockpilepurchase program for lead and zinc conceals temporarily but does not eliminate the problems of the mines. Imports of foreign zinc ore and metal were greater in 1955 than in 1954, when the President asked the State Department to see that foreign producers were not to take advantage of the stockpile purchases by increasing their shipments to this country.

NO GAIN

The people of the United States can expect to gain nothing from the establishment of OTC. Passage of H. R. 5550 will do little if anything to expand our world trade. There is not much left for the State Department to concede in the matter of further tariff reductions; and the time may be coming when some of the concessions already made should be withdrawn for the welfare of our people. But if our trade is controlled by OTC and the General Agreement on Tariffs and Trade, this will be most difficult to accomplish. We would be a member with one vote in an organization made up of 34 other nations, including Asiatic neutrals and Communist Czechoslovakia.

According to the 1954 report of the Organization for European Economic Cooperation:

The combined effect of negotiated reductions and of the price rise has been such that the import duties collected in 1952 were only one-fourth of what they would have been under the 1930 tariff on the same amount of dutiable imports. *** Most of the duties apply to manufactured goods; ***. The greater part of these duties is below 15 percent (p. 112).

On the other hand, many of the provisions of GATT are so qualified by exceptions and discriminations that their effect would be adverse to the trade of the United States.

REJECT INTERNATIONAL CONTROL

The majority of our people have been enjoying the seeming prosperity that comes from deficit spending for many "brave causes" and from the inflationary consequences of war. But if they are sobered by the economic competition promised by the U. S. S. R., onetime recipient of our foreign aid, they may not

look with approval on international regulation and control of their affairs by such agencies and organizations as OTC and GATT.

It is the responsibility of the Congress to provide the favorable climate, proper balance, just dealing, and freedom that will permit prosperity to flourish in the United States. Let our industries produce new wealth and prosper and we shall have money to spend and invest in foreign countries to help others raise their standards of living.

We therefore respectfully recommend for your consideration that in the national interest the committee reject membership in OTC.

Sincerely yours,

OTTO HERRES.

MOUNT AIRY, N. C., March 7, 1956.

Hon. JERE COOPER,

Chairman, Ways and Means Committee,

Congress of the United States, Washington, D. C.

SIR: If agreeable to your committee, I would appreciate your entering the following statement in the record of the hearings on H. R. 5550, a bill to authorize membership of the United States in the Organization for Trade Cooperation.

My name is Frank L. Smith and I am engaged in the granite business at Mount Airy, N. C.

Since the granite industry as a whole and some of our people here are opposed to this bill, this statement only reflects my own personal opinions.

There is no doubt that foreign granites are competing with domestic granites on the American market at levels that the domestic producers cannot equal with their high labor costs. This is particularly true with the colored granites that are supplied as thin veneer with polished finish.

If the domestic granite industry can show (and I believe it can) that it is being seriously endangered by foreign granite, it can secure relief through the escape clause of present tariff agreements without taking a position opposing the general development of foreign trade, which is the purpose of this bill.

It is my opinion that the overall welfare and safety of our country requires stepped-up foreign trade. It seems to me we will have a more sound economy and will win more friends abroad by trading commodities with people in other countries than by giving them money as poor relatives to buy goods in this country.

If we do not trade with our friends, then they will trade with our enemies.

It is my understanding that the Organization for Trade Cooperation is an administrative agency which would operate under the United Nations to provide a meeting place for trading nations and to administer such agreements that are made under the General Agreement on Tariffs and Trade. I am heartedly in favor of such an organization.

Although I do not believe the principle is directly involved in this particular bill, I believe the Congress should be very careful in approving trade agreements that would deprive it of future authority to act on tariff matters as is its responsibility under the Constitution.

If such a delegation of authority to an international agency should ever become desirable, it is the writer's opinion that it should come about by a constitutional amendment and not by a trade agreement. Respectfully submitted.

FRANK L. SMITH.

CROWN ZELLERBACH CORP.,
San Francisco 19, March 13, 1956.

House of Representatives, Washington D. C.

DEAR Mr. IRWIN: I should like to go on record with the House Ways and Means Committee in support of H. R. 5550, the bill approving United States participation in the Organization for Trade Cooperation.

I have been concerned with foreign-trade matters for some time, both as a Government official and an industrialist. I was United States employer delegate and Vice Chairman of the Governing Body of the International Labor Organization from 1945 to 1948; chief of the Economic Cooperation Administration special mission to Italy from 1948 to 1950; and alternate United States delegate to the