ORGANIZATION FOR TRADE COOPERATION

TUESDAY, MARCH 6, 1956

HOUSE OF REPRESENTATIVES,

COMMITTEE ON WAYS AND MEANS,

Washington, D. C.

The committee met at 10 a. m., pursuant to recess, in the committee room, New House Office Building, Hon. Wilbur D. Mills presiding. Mr. MILLS. The committee will come to order.

The first witness this morning is the Honorable Thomas J. Lane, Member of Congress from Massachusetts. Mr. Lane, of course we know you well, but please follow the usual custom and give your name address, and the purpose of your appearance, for the benefit of the record.

STATEMENT OF HON. THOMAS J. LANE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MASSACHUSETTS

Mr. LANE. Mr. Chairman and members of the committee my name is Thomas J. Lane, and I represent the seventh district of Massachusetts. I asked for time to appear before you in order to make known to you my great concern over H. R. 5550 which provides for United States membership in the organization for trade cooperation, usually referred to as the OTC.

I don't have to acquaint you with the connection between the OTC and the general agreement on tariffs and trade, as H. R. 5550 is written, its approval by Congress would carry with it the approval of the purposes and objectives of GATT, since OTC is proposed specifically to administer GATT and to work toward the fulfillment of its purposes and objectives.

Whether I am for or against GATT is beside the point. What is of the greatest significance is that Congress is being asked to approve this very complicated 8-year-old agreement by a back-door approach. The actual agreement, i. e., GATT, has never been submitted to Congress and is not now before us. Yet we are asked to take a step that would represent an acceptance of the agreement, whether we like the agreement or not, whether or not we believe that the State Department went beyond its authority in signing GATT in 1947 or whether we think that Congress should surrender its power in this field or not.

Speaking as one member of Congress I can assure you that I have no intention of resigning my authority, or my responsibility to my constituents, to the State Department and much less to an organization that would sit in Geneva and in which the voice of the United States would be reduced to one vote.

Not only would I be letting down the people who elected me and who look to me to speak for them in the Congress and who expect Congress in turn to speak for the United States in questions of foreign trade and tariff policies, but I would be giving my assent to the virtual disfranchisement of my constituents in this field of national activity, should I support the OTC.

In this bill the State Department has contrived a well-hidden snare, preconceived as a means of taking out of the hands of Congress the power lodged there by the Constitution, without Congress discovering the stratagem until it was too late. By that time the word of the United States would be so pledged and cross-pledged in international agreements that in all good honor we could not withdraw. Our freedom of action in Congress would then be a mockery and that would be made all the worse because we would be so pledged and cross-pledged in international agreements that in all good honor we could not withdraw.

Our freedom of action in Congress would then be a mockery and that would be made all the worse because we would have no one to blame but ourselves. Our constituents would soon realize that their representatives in Congress had lost their power and that a vote in congressional elections was a vote wasted, so far as influence on our foreign trade policy is concerned.

I am sorry that my feeling toward the State Department is marked by such a high degree of distrust. The distrust has, however, been of their own making. Why do they not come forward with a bill proposing that the executive and not the legislative branch should regulate our foreign commerce? That is their desire and their objective in this bill. I would respect them for it even though I would not agree with them. As it is I neither agree with them nor can I respect them for their tactics.

The reasons advanced for seeking the OTC, short of the real purpose that I have outlined, do not add up to good sense. For 7 or 8 years GATT has functioned without OTC, and has transacted much business. It has sponsored four international tariff-cutting conferences and has disposed of a considerable agenda at each of its annual sessions.

So, why is OTC necessary? If OTC is to be no more than the State Department claims for it, its existence would add little or nothing to what GATT already provides. It would be nothing more than an international sewing circle, offering tax-free jobs to an ever-growing list of international bureaucrats.

The logic of this reinforces my conviction that the State Department is after something far more meaningful than its repeated disclaimers suggest. The OTC proposal is nothing less than further prosecution of the Department's tireless quest for control of all of our foreign trade policy, including both its determination and its execution. It seeks the OTC as the stamp of approval of Congress itself for State Department management of our foreign commerce through GATT.

In my opinion we cannot consent to such a renunciation of responsibility; in fact, we should roundly condemn any scheme that seeks such an end by indirection. I deplore the State Department's attempt. I denounce it as an unworthy assault by one branch of the Government upon another and resent the method of it as a reflection upon the intelligence of Congress.

I strongly urge this committee to give the State Department the answer it deserves by defeating H. R. 5550 outright.

Mr. MILLS. We thank you for the information given to the committee, Mr. Lane.

Mr. LANE. Thank you, Mr. Chairman.

Mr. MILLS. Our next witness is the Honorable William L. Springer, Member of Congress from Illinois.

Mr. Springer, we know you well and favorably but, for purposes of the record, will you give your name, address and the purposes of your appearance?

STATEMENT OF HON. WILLIAM L. SPRINGER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

Mr. SPRINGER. Mr. Chairman, my name is William L. Springer. I represent the 22d district of Illinois in the House of Representatives. Mr. MILLS. You are recognized, Mr. Springer.

Mr. SPRINGER. This administration has consistently advocated the removal of governmentally imposed trade barriers. It seems to me that this position is consistent with the removal of price controls domestically, and is a reaffirmation of its belief in free enterprise. The primary purpose of the Organization for Trade Cooperation is the administration of GATT. GATT provides rules and principles by which member governments agree to conduct their mutual foreign trade relations, and provides a cooperative means for the reduction of tariffs and other governmentally imposed trade barriers.

It may be surprising to the members of this committee to know that the present GATT does stem from chapter IV, the chapter on commercial policy of the defunct Havana charter for an international trade organization. Many citizens opposed United States participation in the international trade organization when it was before the Congress because they objected to other provisions of ITO as represented by, 1, chapter III dealing with employment provisions; 2, chapter V, the chapter on restrictive business practices; 3, chapter VI, the chapter on intergovernmental commodity agreements; and, 4, the charter provisions dealing with foreign investment.

Many people oppose the United States participation in the Organization for Trade Cooperation because they favor high tariffs and do not wish to see the present trade agreement program continued. Their views are certainly respected. They will remind the Congress of all the other features of the International Trade Organization so as to produce the maximum resistance to congressional approval of United States membership in OTC.

In order to secure passage of H. R. 5550, it will be necessary to distinguish between those who actually favor governmental interference in the free flow of trade through tariffs and quotas, and those who believe in a free market economy and, accordingly, oppose those provisions of the former ITO charter which they believe interfered with its development.

It is important that a forthright position be taken repudiating all the other ITO concepts so that the forces believing in free markets can stand together in support of H. R. 5550.

Because of this background, the debates in Congress will likely review the history of the now defunct Havana charter providing for the establishment of the International Trade Organization.

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In connection with the approval of United States membership in the Organization for Trade Cooperation, the Havana charter was a direct product of proposals to the peoples of the world prepared by our own State Department in 1945. A meeting of the preparatory commission to draft the charter was convened by the United Nations in 1946 and the United States Finance Committee in 1947 conducted extensive hearings on the proposed International Trade Organization. Following the adoption of the Havana Charter in 1948 by 54 countries, President Truman asked the Congress to permit him to accept membership in behalf of the United States Government. A resolution was introduced to that effect in the 81st Congress, House Joint Resolution 236, which many of you will remember, so as to authorize the President, and the House Committee on Foreign Affairs conducted extensive hearings on it in April and May of 1950.

The material contained in this statement attempts to review the question of United States membership in the Organization for Trade Cooperation in the context of these Senate and House hearings. The now defunct International Trade Organization included provisions dealing with restrictive business practices and intergovernmental commodity arrangements. Chapter V of the charter dealing with restrictive business practices was subsequently incorporated into a provision by the Ad Hoc Committee on Business Practices established by the Economic and Social Council at the suggestion of the United States Government in 1951. The present administration rejected this approach in a forthright statement to the Economic and Social Council at the 19th session of that body held in New York during April 1955.

Chapter VI, dealing with the intergovernmental commodity arrangement, has also been the subject of heated controversy in the Congress since 1952, as many of you will remember. Many members believe the now defunct International Materials Conference was an attempt to supplement chapter VI of the Havana Charter. I believed that at the time and opposed IMC on that basis.

Senator Ferguson, Representative Sadlak, Representative Dondero, and four committees of Congress opposed participation in the International Materials Conference and secured the passage of amendments to the Defense Production Act of 1952 and to the State Department Appropriation for Fiscal 1953.

This action led to hearings in the 83d Congress pursuant to Senate Resolution 145, with which many of you are familiar, by the Senate Interior and Insular Affairs Committee, Subcommittee on Minerals, Materials, and Fuel Economics.

The Randall commission, it its report, rejected commodity agreements. This Administration subsequently implemented the Randall commission's position by rejecting United States adherence to the International Tin Agreement. While we have continued with the International Wheat Agreement and the International Sugar Agreement, we have rejected the international commodity agreements as a general solution to the commodity problems.

The United States Government recently opposed the formation of the United Nations Commission on International Commodity Trade and, after that Commission was established in spite of our opposition, we refrained from accepting a seat to which we were elected.

Part V of the hearings of Senator Malone's subcommittee is devoted entirely to a consideration of the resolution which was then before the