by the Committee for Reciprocity Information, covering the same lists of commodities. While the Committee for Reciprocity Information accepts views of interested persons concerning any aspect of the proposed negotiations, the Tariff Commission requires that data presented to it relate to the commodities listed for negotiation and be relevant to its determination of "peril points." Since information furnished in each investigation was required to be under oath, great care is required in its preparation and presentation.

This procedure fails in several fundamental respects to afford the domestic producer adequate opportunity to know what is being considered and to present his views thereon.

THE PUBLISHED NOTICES ARE INADEQUATE

The practice of the executive agencies concerned with tariff negotiations in including so-called “basket” clauses in their published lists of articles considered for negotiations leaves a great deal to be desired. This is particularly true in the case of the organic chemical industry. This practice is contrary to the President's assurance to Congress, during the consideration of the 1955 extension to the Trade Agreements Act, that any duty reductions under the authority thereof, would be, inter alia, "selective," since "across-the-board revisions of tariff rates would poorly serve our Nation's interest." Tariff reductions on such broad classifications as "basket" clauses are in no sense "selective." The committee's original list of September 21, 1955, included nine basket classifications and its supplemental list of December 9, 1955, included two such classifications.

As is well known to this committee, it has been found imperative to frame basket clauses in the chemical schedule of the Tariff Act in the broadest possible terms. This is because of the large number of compounds especially organic compounds, which fall within a single category or class of products. Some of the individual products included in a single category or class may be in commercial production, some may still be in the experimental or development stage, and still others, while known, may exist only in technical literature. All, however, may be intimately related to each other in respect to their constituent materials, methods of production and possible end uses. Some 7,000 organic chemicals are now made commercially, but more than half a million of such chemicals have been developed in the laboratory or described in technical literature. Obviously, it is impractical to list all of them individually. Any such listing today would be obsolete tomorrow. Effective tariff protection for most of such products is possible only by use of broad classifications.

The same considerations which necessitate the use of basket clauses to protect these products give rise to problems in connection with tariff negotiations. In many instances a duty concession covering a single tariff classification could involve a hundred or more individual products and have almost incalculable ramifications. For example, 4 of the 9 basket clauses included in the list of September 21, 1955, covered over 520 known articles in commercial production. One clause which was listed for possible concessions in Japanese negotiations covered over 1,200 commercially produced compounds. The domestic producer of such products is hard put to successfully oppose any duty concessions on them. In fact, the domestic producer of organic chemicals may be, and frequently is, unaware of the extent to which his individual operations might be affected by negotiations carried on on the basis of basket classifications. If his products are not named specifically, he may find that they are susceptible of classification under two or more different provisions of the tariff schedule, and he may have difficulty in ascertaining which one. It may turn out that the foreign-made products on which the American negotiators eventually concede reductions affect his own products in a way that he could not reasonably anticipate when going over the preliminary lists put out by the committee prior to the negotiations. Such a producer, concerned with protecting his products against what he may consider improvident duty reductions, faces a very heavy burden in a very short time.

THE TIME ALLOWED FOR PRESENTATION OF VIEWS IS INADEQUATE

The notices of September 21, 1955, and December 9, 1955, each allowed less than 30 calendar days (about 20 working days) for the filing of a statement in opposition to duty reductions on the articles listed, and for developing and presenting to the Tariff Commission data on which it could establish "peril points." Both had to be done simultaneously, if both approaches appeared desirable. The rules of both the Committee for Reciprocity Information and the Tariff Commission require that such a statement be under oath. To have any chance

of serious consideration a statement probably would have to cover many intangible factors and, in the case of the Tariff Commission, should embrace all pertiment economic data relating to the commodity affected. Considerable time, specialized knowledge, and skill are required in the preparation of such statements. Members of the association with better than average legal, accounting, and statistical assistance, have reported that they found it impossible to develop and organize adequate data for the purpose covering all products with which they were seriously concerned within the short time allowed

THE FINDINGS AND CONCLUSIONS OF THE COMMITTEE FOR RECIPROCITY INFORMATION AND THE TARIFF COMMISSION ARE SECRET

Neither the Committee nor the Commission makes any announcement of its decisions or conclusions regarding any item listed for possible concessions. No further information for domestic interests is forthcoming during the course of the negotiations themselves. The negotiations have always been held abroad and in complete secrecy, and the first notice to the domestic producer of the outcome of the negotiations is the publication of a release by the State Department announcing that certain concessions have been agreed to. Not until then does the domestic producer have even an intimation as to what, if anything, his protest has accomplished.

One member of the association advises that it unsuccessfully filed protests under the prescribed procedure in connection with the GATT negotiations at Geneva in 1947, at Annecy in 1949, and at Torquay in 1951, covering, in the aggregate, 9 specific products and 4 basket classifications of products. The reductions effected on the following items protested equaled in virtually every case the maximum permitted under the law:

1 Duty on caffeine reduced to 90 cents a pound prior to 1947 by a trade agreement with the Netherlands. NOTE.-The ad valorem duties in paragraphs 27 and 28 calculated on the American selling price.

Another member reports that between December 1946 and March 1955 it presented briefs to the Committee for Reciprocity Information and to the Tariff Commission opposing reductions on 31 specific products and 10 groups of products listed for possible concessions. Of these 41 tariff items, it states, maximum tariff concessions were made on 5 items, less than maximum concessions on 10 items, and no concessions on 26 items. Whether its opposition (either before the Committee for Reciprocity Information or the Tariff Commission) had any effect, or whether foreign countries were not interested in concessions in the case of the items on which less than maximum concessions were made, it has no way of ascertaining. In summary, many members of the association have serious misgivings concerning the adequacy of present procedures in protecting domestic interests. Reference is made to the fact that they have been repeatedly faced with the necessity of making elaborate studies within an elapsed period of a month concerning the

economics of producing and selling large numbers of listed products, both individually and in broad groups whereas the Tariff Commission is allowed nine months to complete a similar study of a single product in connection with "escape clause" proceedings.

Reference is also frequently made to the long period of uncertainty which exists between the publication of the list of products being considered for possible concessions and the announcement of the concessions actually made. During this interval, of course, a domestic producer who may already be having difficulty in meeting foreign competition is left completely in the dark as to how he may fare as a result of the negotiations, and is handicapped in planning for the future. The Manufacturing Chemists' Association, Inc., is grateful for the opportunity to present these comments on the efficacy of the present procedures and is hopeful that they may prove to be of some value to you in your consideration of H. R. 5550.

Respectfully,

RICHARD F. HANSEN, Chairman, International Trade and Tariff Committee.

(The following letter was received for the record:)

DRUG, CHEMICAL AND ALLIED TRADES SECTION,
NEW YORK BOARD OF TRADE, INC.,

New York 7, N. Y., March 15, 1956.

Hon. JERE COOPER,

Chairman, Committee on Ways and Means,

House of Representatives, Washington 25, D. C.

Mr. CHAIRMAN: The Drug, Chemical and Allied Trades (DCAT) section of the New York Board of Trade, with more than 800 members, represents a crosssection of the country's drug and chemical manufacturing industry and others. closely related to it.

As chairman of this section, I am charged with the responsibility of presenting to you and the members of your committee, the written testimony of the section on the subject of H. R. 5550, a bill to authorize United States membership in the proposed Organization for Trade Cooperation (OTC).

I request the permission of your committee to enter the text of this letter in the printed record of the hearings,

This section is in favor of the administration's general foreign economic policy to expand world trade and strengthen the economies of friendly countries, while maintaining the economic strength of our country. We are in favor of economic cooperation with friendly countries but we are concerned over the means proposed to reach that goal as presented in the OTC-GATT combination.

For the following reasons, this section is not in favor of H. R. 5550:

(1) Approval of membership in OTC would carry with it approval of the General Agreement on Tariffs and Trade (GATT) which is in provisional effect and has not as yet been approved or disapproved by the Congress.

(2) By the transfer of powers from the GATT to OTC, the latter becomes more than strictly an administrative entity. OTC would be a governing body with responsibilities of administration and with authority to enforce decisions.

(3) The scopes of GATT in international trade matters and of OTC in the area of international economics, with the latter's unlimited power of selfamendment, are entirely too broad. These institutions would eventually invade the domestic economies of participating countries. It is impossible to measure the danger to the existence of our United States private enterprise system.

(4) By its very nature, the OTC-GATT combination is supra-national not only because it is not responsible to any government nor to any peoples but also because of OTC's responsibilities of arbitration, of decision, of authorizing and recommending punitive economic retaliatory measures or even expulsion.

(5) GATT is an unauthorized long-range commitment to reduce continually, through periodic negotiations, the level of tariffs and to conform the foreign trade laws of the United States to the terms of GATT as of October 30, 1947. This impinges on the exclusive right of the Congress under the Constitution to make laws.

(6) The United States with only one vote in each of GATT and OTC against 34 votes, may well be exposed to being overruled in matters of national interest to the people of our country.

(7) The OTC-GATT combination is coercive, if for no other reason than the combined weight of the members acting either as a court of justice or as a policymaking body.

For the above reasons, this Section urges your Committee to reject H. R. 5550 and to initiate a careful examination of GATT and a detailed study of the com'bined GATT and OTC.

Respectfully submitted.

SYDNEY N. STOKES, Chairman.

The CHAIRMAN. The next witness is Mr. C. P. McFadden. Come forward, please.

STATEMENT OF CORNELIUS P. MCFADDEN, CHAIRMAN, FOOTWEAR DIVISION, RUBBER MANUFACTURERS ASSOCIATION, INC.

Mr. MCFADDEN. My name is Cornelius P. McFadden. I am chairman of the footwear division of the Rubber Manufacturers Association for whom I speak.

We oppose H. R. 5550 because we are convinced that it is a dangerous bill that would expose American industry and American workingmen and ultimately the American public to serious danger. The OTC is the head of the camel and the camel is the General Agreement on Tariffs and Trade. Just what GATT is and what it can and might do are somewhat obscure. We see two things clearly. One, GATT's primary aim is to the elimination of tariffs and other protections which it is the duty of Congress to provide for domestic industry and the workingmen and women whose livelihood depends on that industry. To accept GATT, Congress must surrender authority in the economic affairs of our Nation.

On those two points we stand in opposition to the passage of the bill you are now considering.

We feel that many American industries, rubber footwear among them, need tariffs to enable them to compete even in the American market with the products of low-wage countries. How can competition be fair if one manufacturer has a wage scale from 3 to 20 times that of his competitor? Our industry has seen the handwriting on the wall. We have lost our export markets which were a substantial part of our program. Unless our Government is prepared to recognize the facts of economic life, we face the fate that has befallen the rubber footwear industry in Canada, loss of the domestic market.

Attached to this statement are 2 clippings, 1 from the Footwear News which carries the headline "Canada Rubber Group Sees Imports Forcing Industry Out of Business."

The other clipping is from the Akron Beacon Journal and it states that one of the large rubber manufacturing companies is suspending its manufacture of rubber footwear in Canada because of the competition from imported footwear "chiefly made in Hong Kong at coolie wage levels."

These are ominous signposts along the road of unrealistic trade negotiations.

When Congress adopted the reciprocal trade program authority over matters of international trade was handed over by Congress to the administrative branch. From then on decisions on vital questions of tariffs and trade were made by persons unknown to the public. Furthermore, these faceless persons are insulated by a bureaucratic maze from the people who are affected by their decisions.

GATT would transfer this authority over tariffs and trade to an even more remote plateau, an international organization which proposes to take over all the economic problems of the world. Congress has never been asked to approve GATT. OTC is an offspring of GATT, and if Congress recognizes and embraces OTC, this action will be taken as recognition and approval of GATT.

Here is a most unique situation in which the child is trying to give birth to the parent.

GATT and OTC have won numerous supporters, but we are fearful that many of these supporters have not read beyond the section which sets forth the announced purpose of these instruments. Many who speak favorably for GATT and OTC have been exposed to a wellplanned propaganda campaign aimed to sell these goods strictly on the label of their good intentions.

We, though opposing GATT and OTC, enthusiastically agree with the aims set forth in the announced purpose of these programs. We make no pretense of fully understanding what GATT is, but we have enough knowledge to realize that it does not offer a safe and sure road to attainment of its high purposes.

Although Congress has not put its stamp of approval on GATT, trade agreement negotiations for the past several years have been carried on by the United States under GATT procedures. So there is history to support our contention that it is unrealistic, impractical, and sometimes unfair to operate under the GATT system.

For example, in November 1954, the State Department published a list of items on which it was contemplating negotiating trade agreements with Japan. One of these is 1537 (b). This section embraces thousands and thousands of rubber products. Does such an announcement give proper and adequate notice to interested persons as to what the negotiations are all about?

How can the Committee for Reciprocity Information make an adequate investigation so that the American negotiators will go to the conferences with full information needed to protect American interests? Under 1537 (b) in Geneva in 1955, there were some cuts made. One, rubber and gutta-percha manufacturers, and another, soft rubber manufacturers, were cut from 25 percent to 12% percent.

Months after these negotiations were completed various American rubber manufacturers suddenly discovered they were losing sales on many items to imported goods. They had not been aware that the Government had contemplated cutting duties on these items.

For instance, latex foam rubber products invaded the American market from Great Britain and western Europe under the reduced duty. But the negotiations had been carried on with Japan. Japan was not a factor in the latex foam rubber field before or during the Geneva conferences. Japan is not a factor today. Great Britain, Germany, Belgium, and France had been important in this field. But not Japan.

Under the Reciprocal Trade Agreements Act negotiations for tariff adjustments are supposed to be carried on with the country which is the principal importer into the United States.

Another example has to do with the industry which manufactures rubber catheters and surgical tubing. Before the war they were losing the American market to imports from Europe. When the war broke out in Europe the Government asked American manufacturers