In all these vast activities, there is no vestige of law whatsoever guiding the State Department in its conduct; there are no standards. to which it must adhere; there is no provision for a review of its actions; it is accountable to no one.

We strongly urge that the committee withhold its approval of H. R. 5550.

We also respectfully suggest that this committee consider writing permanent foreign-trade legislation that will be equally fair to American exporters, American home-production industries and American importers, and so lay a basis for obtaining from foreign countries the same measures of fair competitive trade that we are willing to accord them here in our own markets.

We appreciate very much the opportunity of being heard before this committee.

Mr. MILLS. Are there questions?

Mr. Curtis of Missouri will inquire.

Mr. CURTIS. I have certainly appreciated your fine statement. You may have heard the previous question which I have been directing to other witnesses on the line of your experience, if any, in trying to process your ideas and views through the Committee on Trade Agreements or the Committee on Reciprocity Information.

Have you had any complaints on processing your ideas through the Executive committees to the Board of negotiation? If you have any experience along that line, I would appreciate a statement being prepared for the record.

Mr. WOOTTON. Our experience has been rather limited, sir, but I will give you a brief statement of what it has been.

Mr. CURTIS. Thank you.

(The statement referred to follows:)

Ref.: H. R. 5550.

Hon. THOMAS B. CURTIS,

House Office Building, Washington, D. C.

WINE INSTITUTE,

San Francisco 3, March 16, 1956.

DEAR Mr. CURTIS: This letter is submitted for the record in accordance with your request during my testimony of March 5.

Our experience with regard to trade agreement procedure has been rather limited. With one exception, all our objections to past tariff reductions before the Committee for Reciprocity Information were overruled prior to 1955. The single exception was in the case of one item to which we objected because the agreement was to be made with Italy which was not the principal supplier; the final result was that the negotiators worded the reduction so that the item was given a special description which made it apply only to shipments from Italy.

In all other cases, we were unsuccessful, although in justice I must state that (until the definition of "industry" was amended in 1955) the negotiators may have concluded that there was no legal injury because we showed no injury across the board to the whole industry but only injury or threat of injury to a particular segment or segments of the industry. It should be emphasized, however, that once the matter was submitted to the Committee for Reciprocity Information, there was no way of telling how much attention was given to our evidence, what the reasons were for rejection, nor (if our evidence had, for some reason or another, not been properly presented) was there any opportunity to present additional evidence that might have led to a different conclusion.

In the Fall of 1955, we presented evidence both to the Tariff Commission and to the Committee for Reciprocity Information showing that injury had already actually occurred to the premium table wine segment of our industry, by reason of an increasing quantity of very low priced foreign table wines. This presentation was based on the amendments made by Congress in 1955.

Negotiations are now going on at Geneva. If the further reductions to which we objected are not made, it may be for the reason that our evidence was adequate, or it may be for the reason that the interested foreign countries thought they already had sufficient reductions through past agreements and chose to bargain on items other than wine. On the other hand, if further reductions are made, then it would have to be assumed that someone along the line thought our evidence was inadequate, but there will be no way of finding out unless some administrative official is willing to discuss the matter on an informal basis.

Sincerely yours,

EDWARD W. WOOTTON.

Mr. MILLS. I noticed that on page 4 of your statement you referred to the Swiss watches. You do not refer to that as an action taken under the escape clause in connection with GATT, do you?

Mr. WOOTTON. It was in the bilateral trade agreement with Switzerland so that, technically, it was not under GATT, but it is my understanding that the escape clause under that agreement was the same as that in GATT.

Mr. MILLS. I wanted the record to indicate that Switzerland is not a member of GATT.

Mr. WOOTTON. That is correct, but the provisions of the trade agreement were substantially the same.

Mr. MILLS. Is not what you are describing there what always happens when you have situations of world trade and one country takes action to decrease the amount of imports from a country?

The other country is bound to take retaliatory action. You have described the perfect case, have you not?

Mr. WOOTTON. I do not see why the agreements have to be set up in such a manner so that, if a legitimate right is exercised and everybody agrees that it is a legitimate right, if that is exercised by one country, I cannot see why they should be penalized for doing that.

I think that the Swiss withdrew from their tobacco threats but asked for negotiation on some 6 or 9 items.

Mr. MILLS. I am not commending anyone for what they did. I am calling attention to a perfect case of a country being subjected to the retaliatory action taken by another country. That will invariably happen; will it not?

Mr. WOOTTON. That is right.

Mr. MILLS. I am very much intrigued by the last paragraph of your statement. I think that you have put your finger on something of great magnitude, and I hope that the committee will consider it to a great extent.

You want us to write a foreign trade policy.

Mr. WOOTTON. I should very much like to see that, sir.

Mr. MILLS. Would you, for my benefit and in just a very few minutes, name some cornerstones upon which we ought to base such policy legislatively?

Mr. WOOTTON. I think you will find something on that if you will look in the appendix, sir.

Mr. MILLS. I have not had time to read that.

Mr. WOOTTON. On the first page of the appendix, you will find the statement of general principle which does seem to me could be applied here.

Mr. MILLS. Will you just give me the benefit of your own knowledge of this because I have not had time to read it. Tell me some of the cornerstones that you would advise us to use in writing permanent foreign-trade legislation.

Mr. WOOTTON. Well, legislation which provided that imports could come in without restriction, provided they did not get in in such quantities that they would seriously hurt American industry.

Mr. MILLS. Would you write quotas into it?

Mr. WOOTTON. It can be handled either by tariff or quota, or a combination, or what is called tariff quota.

Mr. MILLS. How would you carry out such a program?

Mr. WOOTTON. I think the bill that Mr. Scudder introduced last session, which would have authorized under principles like this, the Tariff Commission to make the necessary up and down adjustments on the applications of all interested parties, would be good.

Mr. MILLS. Would the other country be consulted or would we tell them, "We are minding our business and you mind yours?". Mr. WOOTTON. On these proceedings?

Mr. MILLS. Yes.

Mr. WOOTTON. I think the American importers and their foreign principals should be allowed to come in and make their case.

Mr. MILLS. Regardless of what retaliatory measures the other country might take against us for what we do?

Mr. WOOTTON. If you write legislation like that, sir, I think the next step after that would be to ask the State Department to have the other countries agree that they would accord us or our goods similar treatment over there.

If that was not possible, you could always make the application of that law to foreign goods coming in here contingent on their having adopted similar treatment for us.

Mr. MILLS. Would you let us be a member of some organization like OTC, to see that they were carrying out their end of the bargain? Mr. WOOTTON. I don't think that is necessary at all.

Mr. MILLS. You would trust them, in other words?

Mr. WOOTTON. I don't see how you can enforce an international agreement except on the other fellow's word.

Mr. MILLS. That is fine.

Do you feel thoroughly convinced that all the foreign countries have fully lived up to all their commitments under the reciprocal trade agreements program?

Mr. WOOTTON. There are so many loopholes in the present setup, sir, that almost anybody has an excuse, as I understand it, an out. Mr. MILLS. We have also, have we not?

Mr. WOOTTON. We don't seem to be in position to do that.

Mr. MILLS. If it applies to one, it would apply to the other, would it not?

Mr. WOOTTON. What I mean to say is that the complaints I have heard about are on the other side.

Mr. MILLS. You mean that they have squirmed out of their agreements?

Mr. WOOTTON. Yes, but that is due to the nature of the way the agreement is worded, as I understand it. I don't say there is anything illegal about it.

Mr. MILLS. If they have done that so promiscuously, then I do not know whether they are entitled to be trusted as you say you want to trust them.

Mr. WOOTTON. I would say I don't think they have agreed to something specifically.

75018-56-17

Mr. MILLS. At any rate, you would not have any provision made in connection with legislation establishing a foreign trade policy to bring about compliance with whatever agreements we might enter into in connection with that or whatever actions we might take in connection with it?

Mr. WOOTTON. I cannot say that it would be necessary, if they had positively agreed to a specific statement of principle and how to handle it.

Mr. MILLS. The difference between what you are suggesting and what we have is that they have not positively agreed in the past in these agreements?

Mr. WOOTTON. I would say so, yes.

Mr. MILLS. That is a new doctrine to me. I thought they insisted that they had agreed and we had to agree and we had to stay in compliance and we had insisted that they had to stay in compliance. Maybe you have opened up a new avenue of thought. Mr. Mason of Illinois will inquire.

Mr. MASON. I am intrigued with this idea that under GATT we can make agreements with a group of countries to lower tariffs, we will say, on both sides; have both sides keep that agreement; both sides lower their tariff but the one side under GATT can impose other restrictions legally and not violate their agreement, and they do impose other restrictions which, in essence, shuts out our exports to that country.

Therefore, what good does it do to enter into an agreement to lower tariff rates when they use these other methods, as they can under GATT, to shut out our exports?

That is the thing that, it seems to me, is the loophole you are talking about, that they can legally take advantage of and they do. Mr. WOOTTON. That is my impression, sir.

Mr. MILLS. But, Mr. Wootton, I discussed that with you and you say that, if we write a permanent foreign trade program legislatively, you do not want us to provide any way in the future in connection with such a program that will guarantee that these countries will not squirm out of what we write, as they have squirmed out of what our departments have negotiated.

That is what puzzles me about your program.

I would like to have a sort of policeman carrying a billy club around to see that they do what they are supposed to do.

Mr. WOOTTON. A policeman works both ways.

Mr. MILLS. Maybe I put my finger on it. If it is our policeman, it is all right.

Mr. WOOTTON. I believe in being fair and equal to both sides.
Mr. MILLS. I would have to agree that our police would be.

Mr. WOOTTON. My point was that on the sanctions that the policing is done by OTC and hurts our export industries. That, I don't think, is a fair way of handling it.

Mr. MILLS. I am not talking about OTC as a part of this program that you suggest we write.

I wondered whether we needed some organization where we could bawl them out or do whatever we wanted to if they were not doing the right thing.

You say that we do not need that because we can place confidence in them.

Mr. WOOTTON. I think so if the agreements are written specifically enough.

Mr. MILLS. You do not think they would do the right thing if we joined OTC?

Mr. WOOTTON. One of my objections to OTC is the sanction application to our export industries, sir, which I think is a very serious thing, and there ought to be some substitute for that system.

Mr. MILLS. In other words, if the Congress writes the agreement and all the articles, then we do not need to worry because they are going to live up to that?

Mr. WOOTTON. I didn't say that.

Mr. MILLS. When the executive department enters into the agreement, you say they have squirmed out of those and still we do not need anything to keep them from squirming out of these agreements. I am trying to follow you. I am having difficulty in doing so.

Mr. WOOTTON. I am sorry I have not made myself clear.

What I am trying to say, I think, is this: That, if you can decide in your own foreign trade legislation the exact basis on which imports can come in here, and then if the foreign countries agree to accord exactly the same terms of entry to our merchandise, and the merchandise of any other party to the agreement, I don't think when it is specifically written clearly as to what the obligations are that you have to have a policeman on the thing.

Mr. MILLS. How would we get them together with us in the first instance to know what they were going to write, if we wrote it? How are we going to do that?

Mr. WOOTTON. I think the first step would be an indication by the Congress as to what the admission of foreign goods into this country should be; in other words, to state what our willingness with respect to foreign goods is. That provides a basis for negotiation.

Mr. MILLS. Then would we let the executive find out if they could negotiate with other countries on that basis?

Mr. WOOTTON. That is one way, and I assume that that would be the normal way.

Mr. MILLS. I wondered if you were not leading us to a written program comparable to the reciprocal trade agreements.

Mr. WOOTTON. No, because the thing would operate automatically and without this type of bargaining and with the absence of the sanctions in there, which seems to me an important point.

I do not think you would have all the trouble you are having now, with one industry fighting against another industry.

Mr. MILLS. I am not going to argue that the Congress can do it better. The difficulty we have had over the years is whether we could do it. I thought you could tell us how.

Mr. WOOTTON. I think the appendix fully states the thing.

Mr. MILLS. Thank you very much for your appearance and the information you have given the committee.

(The following letter was later received from Mr. Wootton:)