May we conclude our statement by saying that if GATT is triggered by OTC, our domestic markets will be increasingly shot through by unfairly competitive, low-cost goods that will tend to reduce our country's standard of living toward that of the less fortunate nations. GATT will not raise the standard of living of other countries as contended by the proponents of OTC, except to the detriment and at the expense of the United States economy.

Participation in OTC-GATT would remove from Congress the power and responsibility of regulating trade and commerce with foreign nations, and we resent the implication that Congress is incapable of looking after the commercial interests of the United States. We oppose this attempted violation of the constitutional power of the Congress and the placing of such power under the control of an organization dominated by foreign countries. Therefore, we respectfully urge you gentlemen of this committee not to report out H. R. 5550.

The CHAIRMAN. Does that complete your statement?

Mr. COURTNEY. It does.

The CHAIRMAN. We thank you for your appearance and the information given the committee.

Any questions?

If not, we thank you.

Mr. COURTNEY. Thank you, sir.

The CHAIRMAN. The next witness is Mr. Stanley H. Ruttenberg. Come forward please, sir. Please give your name, address, and the capacity in which you appear for the record.

STATEMENT OF STANLEY H RUTTENBERG, DIRECTOR OF RESEARCH, AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS

Mr. RUTTENBERG. Thank you, Mr. Chairman.

My name is Stanley H. Ruttenberg. I am Director of Research of the American Federation of Labor and the Congress of Industrial Organizations. I appear here today in behalf of that organization. The CHAIRMAN. Without objection your whole statement will be incorporated in the record.

(Mr. Ruttenberg's prepared statement follows:)

STATEMENT BY STANLEY H. RUTTENBERG, DIRECTOR OF RESEARCH AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS BEFORE THE HOUSE WAYS AND MEANS COMMITTEE ON H. R. 5550, A BILL TO AUTHORIZE U. S. MEMBERSHIP IN THE ORGANIZATION FOR TRADE COOPERATION, MARCH 13, 1956

I appreciate this opportunity to appear before your Committee today to express the views of the American Federation of Labor and Congress of Industrial Organizations on H. R. 5550. This bill, which has been introduced by the Chairman of this Committee, would authorize United States membership in the Organization for Trade Cooperation.

ENACTMENT OF H. R. 5550 SUPPORTED

The AFL-CIO wholeheartedly supports United States membership in OTC and urges speedy enactment of H. R. 5550.

It was in recognition of the need for a permanent international organization for the administration of the General Agreement on Tariffs and Trade that the AFLCIO Executive Council at its meeting held last month called for prompt author

ization of United States membership in OTC. This is what the executive council said:

"The next vital step is to tie these nations together in an administrative organization to coordinate their work between negotiating sessions, as well as to facilitate their periodic negotiations. To accomplish this objective, a charter for the establishment of an Organization for Trade Cooperation (OTC) has been drafted. President Eisenhower has submitted this to Congress for approval. We wholeheartedly endorse this proposal and urge that the Congress not delay its approval. The establishment of OTC will not affect trade policy, decisions or concessions in any way. It is purely an administrative body.'

I am attaching to my statement the full text of this AFL-CIO policy statement on international trade and respectfully request that it be incorporated in the record of the hearing.

AFL-CIO SUPPORT FOR RECIPROCAL TRADE PROGRAM REVIEWED

The statement by our executive council expresses the continued support of the now united labor movement for the Reciprocal Trade Program which the A. F. of L. and the CIO have consistently supported since its inception. The AFL-CIO stands committed to the principle that "the free world will be aided by the continued, but necessarily gradual, reduction of trade barriers and the expansion of international trade and commerce.'

We believe that this principle is the very heart of our Nation's trade policy initiated first by President Roosevelt and Secretary of State Cordell Hull and repeatedly supported. Most recently this principle was reiterated by President Eisenhower and supported by the Congress when the 3-year extension of the reciprocal trade program was approved last year.

H. R. 5550 is a simple bill with an extremely important objective. By authorizing United States affiliation with and support of the OTC, it would place the GATT, to which the United States has been a party since its inception 8 years ago, on a permanent and effective basis. And that is all it would do.

The United States and the other free nations of the world have derived great benefits from the GATT. The series of multilateral trade negotiations which have taken place under the GATT have significantly facilitated the broadening of world trade through reduction of tariff barriers and gradual removal of quotas and other restrictions impeding international commerce without doing serious injury to American production. There can be no doubt that the expansion of world trade to which the GATT has provided impetus has been an important contributing factor in making possible the economic prosperity which most of the free nations enjoy today.

OTC OBJECTIVES DISCUSSED

The sole purpose of the OTC is to place the GATT on a more secure and permanent footing. At present it is unique among international organizations in that it has no permanent secretariat and no permanent administrative machinery. All that establishing the OTC would do would be to correct these inadequacies in the present organization of GATT. OTC would be an administrative not a policy-making body. It would arrange for international meetings for tariff negotiations. It would assemble and publish important statistical and economic information relating to tariffs and trade. It would enable disputes arising under the GATT to be studied, heard and resolved expeditiously, before undue political tensions mount. Finally, and most important, it would provide a forum for discussion of important international trade issues of concern to member nations.

OTC MEMBERSHIP WOULD NOT EXTEND UNITED STATES COMMITMENTS

I know, however, that questions have been raised about such things as the impairment of our sovereignty, about the obligations on the United States, etc. These allegations do not seem to us to have any substance. The sovereignty of the United States is supreme. It cannot be superseded by an international organization. The Congress of the United States, in line with the Constitution, enacts legislation that establishes United States Government policy. The membership of the United States in an international administrative organization such as OTC in no way subordinates the integrity and sovereignty of the United States The OTC will provide administrative machinery for the GATT and a forum for discussion of tariff issues. It will not in the slightest degree extend United States commitments beyond those which have already been authorized by the

Congress. OTC will not raise or lower tariffs. That can be done only in actual tariff negotiations. As far as United States representatives to such negotiations are concerned, the extent of their authority to reduce tariffs is determined by legislation which Congress has enacted or will enact in the future. OTC does not intend to and cannot in any way alter those limitations. Indeed, realistically viewed, United States participation in OTC should be regarded as neither an extension of our commitments for tariff reductions nor a greater step toward liberalizing trade.

TRADE RESTRICTIONS

Let me dwell for a moment on the important service OTC will perform as a forum for discussion of important international trade issues. We too often forget that the trade restrictions which other nations have imposed on goods coming from our shores have been far more significant than any similar limitations we have established against the commerce of other nations. This is understandable because in the aftermath of World War II, faced with immediate problems of reconstruction of their economies, the nations ravaged by war were forced to impose quotas on imports and to adopt other drastic measures to bolster their domestic economies. It is a good sign that the nations which have been forced to resort to these extraordinary measures have been gradually removing their balance of payments restrictions so that more than half of Western Europe's imports from the United States have now been freed of quotas. Even on those items for which quotas still remain, licensing has been substantially liberalized. Nevertheless, it is still true that the restrictions still in effect against our goods shipped abroad are substantially greater than those which we have placed against the goods of other nations coming into this country. Therefore, while it is true that other nations in OTC will have an opportunity to air their complaints against us, just as they can in any other international body, we will derive a far more than compensating advantage in the opportunity to secure a review of the restrictive measures of other nations against us.

LABOR STANDARDS-AN IMPORTANT ASPECT OF TRADE POLICY

Moreover, from the point of view of the particular interests of American workers in trade and tariff policy, we are hopeful that the OTC will provide a focal point for discussion of the relationship of labor standards to tariff policy. The AFLCIO firmly believes that the failure to establish and maintain at least minimum labor standards in an exporting country should be considered a valid ca se for withdrawal of United States tariff concessions. Such a policy will not only protect American workers against injury that might result from tariff concessions, but will help to raise living standards of low-wage workers in exporting countries and thus equitably promote and extend multilateral trade.

We hope that where countries exporting to the United States are not making efforts to establish minimum labor standards in their exporting industries, that the United States through OTC will protest against such unfair competition and use the administrative machinery of OTC to seek to obtain commitments from such countries that they will establish and maintain minimum labor standards. This is only one of the many important functions which the OTC can perform which will redound to the benefit of the United States.

CONCLUSION

The AFL-CIO urges enactment of H. R. 5550 because we believe that establishment of OTC will contribute toward a more effective GATT. This will make it possi le for our nation, but only if it wishes to do so, to cooperate with the other free nations in continued mutual efforts to carry out the intent of Congress to promote a gradual reduction of the barriers to world trade. We favor United States membership in OTC because without such a permanent agency, such efforts at best would be cumbersome and unwieldy and therefore less effective. The AFL-CIO regards American membership in the OTC as the logical and indeed necessary extension of our continued support for the reciprocal trade agree ments program. Through helping to strengthen cooperative arrangements in the area of international trade, our Nation can help to enhance and make more effective the cooperation of the nations of the free world in all their joint endeavors at this critical moment in world history. If the United States takes the leadership in every effort to expand the commerce between the free nations of the world, it will redound to our own economic advantage as it will to the economic advantage of our friends and allies.

On behalf of the AFL-CIO, therefore, I respectfully urge that this Committee report favorably and that the Congress pass H. R. 5550 as introduced by the very able and distinguished Chairman of this Committee, Mr. Cooper.

STATEMENT BY THE EXECUTIVE COUNCIL AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS, MIAMI, FLA., FEBRUARY 7, 1956

INTERNATIONAL TRADE

Expansion of international commerce and the lessening of barriers to international trade must be key objectives in this country's total foreign policy. Economic development-in many instances, the economic survival of many countries throughout the world is dependent upon the ability to buy American goods and products. Many American industries are dependent to a substantial extent upon the exports of their products.

On the other hand, many basic commodities needed to continue production in key American industries are available only in overseas countries. Certain foodstuffs used daily by American families must be imported.

There is a great interdependence among nations of the world. Many rations actually depend upon trade as their vital bloodstream. It is in the interest of the free world to keep this vital bloodstream flowing.

If the United States does not foster mutually advantageous trade relations with the other free nations, there is a real danger that the Soviet bloc will step into the breach. If the United States is interested in preserving a free world, in building strong and effective economies in these countries, in preventing the spread of communism and totalitarianism, in maintaining markets for many of our products, in preserving a steady flow of raw materials and foodstuffs into this country, then we must actively support and participate in the extension of multilateral trade among the free nations of the world.

Such a program was started in the middle '30's when the reciprocal trade agreements program was enacted. The American Federation of Labor and the Congress of Industrial Organizations have consistently supported the reciprocal trade agreements program from its inception. It has been extended periodically, with modifications, ever since. At first, the United States negotiated bilateral agreements which incorporated the most-favored-nation clause. The program of reciprocal trade, which includes the escape clause and the peril point procedure, was designed to promote exports and imports without causing serious injury to American industries. Beginning in 1947, multilateral trade agreements were negotiated. There are now some 30-odd countries that are parties in one way or another to these negotiations.

The next vital step is to tie these nations together in an administrative organization to coordinate their work between negotiating sessions, as well as to facilitate their periodic negotiations. To accomplish this objective, a charter for the establishment of an Organization for Trade Cooperation (CTC) has been drafted. President Tisenhower has submitted this to Congress for approval. We wholeheartedly endorse this proposal and urge that the Congress not delay its approval. The establishment of CTC will not affect trade policy, decisions or concessions in any way. It is purely an administrative body.

On the policy side, there are many cuestions. As long as the reciprocal trade agreements program is carried out without doing serious injury to American industry, it will have the wholehearted endorsement and support of the AFLCIO. Serious injury, in the main, can be avoided by the continuation of the present procedure for peril point findings which precede all multilateral negotiations. The peril point concept goes a long way toward implementing the basic tenet that trade concessions shall be granted without doing serious injury to American industries.

Every trade agreement, as the result of a legislative mandate, contains an escape clause that permits the affected industry to appeal to the United States Tariff Commission and the President for relief from serious injury or the threat of serious injury resulting from tariff concessions. This provision should be continued.

Many times the industries affected by increased imports are located in communities dependent upon one industry. Such communities are hit cuite hard and become distressed areas. I egislation should be enacted to assist these communities by aiding the workers, industrial enterprises and communities to adjust to the situation.

In addition, injury that might result from tariff concessions can be minimized by improving labor standards of workers abroad. During the multilateral trade negotiations, no tariff concession, for example, should be granted on products made under labor standards that are considered substandard in the exporting country. Failure to establish and maintain at least minimum labor standards in the exporting country should be considered valid cause for withdrawing. United States tariff concessions.

American labor will continue to work with the ILO and the ICFTU, so that national labor centers in countries throughout the free world will be better able to attain living standards that enable their countries to compete more equitably on the world market.

With the improvement of worldwide living standards, the development of an adjustment program in the United States, the continuation of an effective administration of the escape clause and the peril point procedures, and the approval of of the OTC by Congress, we in the AFL-CIO are confident that the free world will be aided by the continued, but necessarily gradual reduction of trade barriers and the expansion of international trade and commerce.

Mr. SIMPSON. We remember Mr. Ruttenberg from his earlier appearances before the committee. He always provides information. I was hoping he might be able to arrange his schedule so we could ask some questions. I just wonder whether the time might be extended more than 10 minutes.

The CHAIRMAN. He is recognized for 10 minutes. We will see how he gets along.

Mr. RUTTENBERG. I would be perfectly happy to come back at any time you like, Mr. Simpson.

I appreciate this opportunity to appear before your committee today to express the views of the AFL-CIO on H. R. 5550. This bill, which has been introduced by the chairman of this committee, would authorize United States membership in the Organization for Trade Cooperation.

The AFL-CIO wholeheartedly supports United States membership in OTC and urges speedy enactment of H. R. 5550.

It was in recognition of the need for a permanent international organization for the administration of the General Agreement on Tariffs and Trade that the AFL-CIO Executive Council at its meeting held last month called for prompt authorization of United States membership in OTC. This is what the executive council said:

"The next vital step is to tie these nations together in an administrative organization to coordinate their work between negotiating sessions, as well as to facilitate their periodic negotiations. To accomplish this objective, a charter for the establishment of an Organization for Trade Cooperation (OTC) has been drafted. President Eisenhower has submitted this to Congress for approval. We wholeheartedly endorse this proposal and urge that the Congress not delay its approval. The establishment of OTC will not affect trade policy, decisions or concessions in any way. It is purely an administrative body."

We believe that this principle is the very heart of our Nation's trade policy, initiated first by President Roosevelt and Secretary of State Cordell Hull and repeatedly supported. Most recently this principle was reiterated by President Eisenhower and supported by the Congress when the 3-year extension of the reciprocal trade program was approved last year.

H. R. 5550 is a simple bill with an extremely important objective. By authorizing United States affiliation with and support of the OTC, it would place the GATT, to which the United States has been a