ORGANIZATION FOR TRADE COOPERATION

WEDNESDAY, MARCH 7, 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 James C. Davis, Member of Congress from Georgia. We are pleased to have you this morning before the committee and you are recognized to proceed in your own way without any interruption.

STATEMENT OF HON. JAMES C. DAVIS, REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA

Mr. DAVIS. Thank you very much, Mr. Chairman. I appreciate the opportunity of coming here today before this honorable committee to express my opposition to the proposed Organization for Trade Cooperation in the bill H. R. 5550, which is now before your committee.

This bill seeks congressional approval of United States membership in OTC. If this approval is granted, tacit consent is thereby given to the General Agreement on Tariffs and Trade. I cannot agree with this unusual legislative procedure. The Organization for Trade Cooperation and the General Agreement on Tariffs and Trade are not independent of each other but are part and parcel of the same international program. Consequently, if Congress is expected to give approval to OTC, which in effect would be approval of OTC and GATT, then both of these must be brought before Congress for review and approval. GATT has never been submitted to the Congress, nor is it contemplated that it ever shall be.

The Department of State, in clear and unmistakable assumption of congressional authority, has attempted to bind the foreign commerce of this country to the provisions of alien philosophy.

Article XI of the revised General Agreement on Tariffs and Trade provides that:

No quotas shall be instituted or maintained by any contracting party on the importation of any product of any other contracting party.

The State Department has arrogated to itself the authority to regulate foreign commerce which clearly lies within the province of the Congress. It has agreed to eliminate certain quotas on agricultural products as soon as circumstances permit and not to impose any new quotas in the future.

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In other words, the State Department has shackled our import policy to international control and has asserted itself to speak for this Congress and Congresses yet to meet.

The General Agreement on Tariff and Trade is primarily concerned with foreign trade but is not entirely held to that field. GÅTT claims partial jurisdiction in the domestic policy of member nations when that policy impinges on foreign trade.

The rules of GAÅTT provide that aid to farmers that results in a surplus for export must be regulated in such a manner that the farmers will not acquire more than an equitable share of the export market. The proposed OTC would decide, in the event of a dispute, whether or not such a share was equitable.

The organization would consist of an Assembly representing all the members of GATT, with one vote each. Communist Czechoslovakia, under this arrangement, has exactly the same vote as the United States. In 1947 Congress rejected the International Trade Organization and was assured that its provisions would not be put into effect without congressional approval.

GATT includes substantially the same provisions as the ITO. Congress has never been permitted to act on GATT. Yet, now it is asked to grant indirect approval to it without hearings. In other words, the State Department is asking that Congress approve GATT without first looking into its provisions.

So far, no nation has accepted GATT under any condition other than porvisional, including the United States.

The very provisional nature of GATT has given our country considerable flexibility in its trade program. If we consider circumstances warrant a return to bilateral trade agreements or if we believe that a better way than GATT can be evolved for furthering international trade, there is nothing to prevent us from dropping out of GATT without an international furore. This would not be true if we were to approve the OTC.

Approval of OTC would be but another example of the growing tendency to create new supranatural bureacratic organizations for centralization of world power.

Today we are one of the low-tariff nations of the world. Since the beginning of the reciprocal trade agreements program in 1934, we have lowered our tariffs by 75 percent. Legislation has recently been passed providing for lowering them further and if the power to regulate foreign commerce is transferred from Congress to some international agency, further reductions are not only possible, but imminent.

It has not been emphasized enough that exports from farm products are largely financed by the American taxpayer. During the fiscal year 1954-55, $1.7 billion worth of the $3.2 billion exported were covered by some kind of Government aid; either grant, loan or other aid to foreign countries or direct subsidies to our own exporters. This is directly contrary to the principles of GATT. GATT advocates the avoidance of such aids for "primary products" which includes most farm products. Approval must be obtained before such subsidies can be given. These subsidies to our exporters were undertaken to benefit our domestic economy and this provision of GATT would invalidate this domestic program.

Approval of GATT through OTC would twice remove the power of Congress to regulate foreign commerce; we will delegate our power over foreign commerce to the State Department, which, in turn, will hand it over to OTC. In my opinion, there is already too much delegation of congressional power. It is time that Congress withdrew the delegated power that has been abused in this fashion.

Mr. MILLS. Does that complete your statement, Mr. Davis?

Mr. DAVIS. Yes, sir.

Mr. MILLS. We appreciate very much your coming before the committee this morning and the information which you have given the committee.

Are there any questions?

Mr. Mason of Illinois will inquire.

Mr. MASON. Judge, I have to say you are a man after my own heart. You have presented a logical, convincing argument against the passage of this bill, which would put us in OTC. I am mightly glad that we have some real Americans who are interested in America and American jobs and the American people first, and who are not willing to follow the State Department, who seems to be interested in all foreign people and foreign workmen first and our own workmen second. I am mighty glad to have listened to your testimony.

Mr. DAVIS. May I say, Mr. Chairman, that I hold the opinion of the distinguished gentleman from Illinois in very high esteem. It is certainly a great compliment to me that he has made those remarks about my feeble effort in this behalf.

Mr. MILLS. I think all of us will admit, Mr. Davis, that whatever position you take on anything you make a very logical argument in support of that position.

Mr. MASON. That is right.

Mr. MILLS. We thank you again for your appearance and the information given the committee.

Mr. DAVIS. Thank you very much, Mr. Chairman.

Mr. MILLS. Our next witness is the Honorable Cleveland M. Bailey, a Member of Congress from West Virginia.

Mr. Bailey, you are recognized to speak in your own manner without interruption.

STATEMENT OF HON. CLEVELAND M. BAILEY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WEST VIRGINIA

Mr. BAILEY. Mr. Chairman and members of the committee: For the purpose of the record I am Congressman Cleveland M. Bailey from the Third West Virginia district.

Mr. Chairman, I made a request of you for time to make a statement on H. R. 5550 because it is the most important trade legislation that has come before the Congress in many years, even more important than the extension of the trade agreements at the last session of the Congress. Let me tell you why,

On previous occasions I have discussed with this committee various phases of our trade policy. I was then trying to safeguard West Virginia's industry against excessive imports. Today I am pleading for a restoration of our constitutional guaranties. That means

that the power to regulate commerce, to make treaties, and to fix tariffs shall remain in the Congress of the United States.

If the present bill passes you may as well disband as a committee that considers tariff and trade legislation. There will be little or nothing left for you as a committee to do. The State Department will take charge, and you and all of the rest of the Congress will be sitting on the sidelines.

I am not speaking facetiously, Mr. Chairman, when I say this. Nor do I seek to reflect upon the chaiman of this committee, for whose sincerity and integrity I have the highest regard. He has introduced H. R. 5550, but I know that he will not regard anything that I intend to say as having any personal implications of any kind.

It happens that my district and my State have several industries that are affected directly and vitally by import competition. Therefore, we are sensitive to tariff and trade legislation. The district represented by the distinguished chairman of this committee has little or no industry which is vulnerable to import competition.

It is a little like the person who does not appreciate the cost of medical attention and hospitalization until it strikes home. That, too, has happened to me, and I can realize the difference in my feeling before and after.

Certain products produced in West Virginia, such as coal, pottery, glassware, textiles, toy marbles, spring clothespins, and chemicals have long faced import competition in greater or lesser degree. Some of the competition has been severe and crippling in these industries, has led to distressful unemployment conditions and to shrinking of industrial activity. The question of imports is to us not an academic one. It is as vivid as a toothache and as real as physical illness. It is not something far away, something that we merely read about or something that can be shrugged off. It is right at home and it is an inescapable part of the responsibilities of this Congress to deal with it.

The people who elected me have the right to look to me to help solve these problems. There is nothing they can do about the cheapness of imports which come from others parts of the world. This is a matter for the Congress. Congress is the logical branch of the Government to look after matters of this kind, and the framers of our Constitution thought so, too. That is why they placed the responsibility of regulating our foreign commerce squarely on the shoulders of the Congress. They did not give this power to the Executive for reasons that have made themselves very clear in recent years. Both the power and the responsibility of regulating foreign commerce belong to Congress, and not to the executive branch of the Government. Let us not forget this.

Members of the Congress are elected every 2 years. It is the branch of the Government that is closest to the people and most responsive to their needs and their problems. The regulation of foreign commerce is something that is important to many of the people back home. The character of that regulation affects them. It affects their income, their employment, and their future. Therefore, they want to keep this regulation in the hands of that part of the Government that is most responsive to the sentiment of the people, and that is the Congress. To repeat, that is where the constitution wisely placed this authority.