bat this evil successfully, a better international order must be built and the United States must be in the forefront of that effort.

Fortunately for us, the free world is not disunited. It works together and provides dispersed power to retaliate against armed aggression. Military unity is imperative and must be continually strengthened. But this requires high morale throughout the free world and a willing spirit of close cooperation. Such an atmosphere is not created and maintained through military cooperation alone.

Economic security is indispensable to all our allies and friends. It is essential that their relationship to the United States contribute not only to their military security but also to their economic well-being. The strategy of Communist imperialism involves the subversion of country after country until the United States is isolated and subject to economic strangulation. You have heard repeatedly Mr. Khrushchev's threat of war in the peaceful field of trade and his boast that the Soviets will win this war because of the superiority of their system. I have said before-and I say again-it would be reckless to treat this threat as negligible.

The Soviet Union is rapidly developing its weapons for waging economic warfare against the United States and has achieved an industrial level which enables it to export manufactured goods in increasing quantity and variety, and to take in exchange large amounts of natural products, whether agricultural or mineral, for their own use or to dump on free world markets.

Through pursuing this course, they hope to gain dominance-first economically, then politically, in many countries which need an assured foreign market.

Our Government has, by treaty or resolution declared, in effect, that the peace and security of the United States would be endangered if any of nearly 50 countries were to be conquered by Communist imperialism. But, declaring this is not enough. We have to convince both friend and foe that we will do what is needed to prevent the Communist conquest. So we have the policies and actions represented by our mutual security program and by the Trade Agreements Act.

Some seem to believe that national policies which aim to assure a congenial and friendly world environment are un-American or unpatriotic. The fact is that, from our beginning, United States doctrine has proclaimed that our own peace and security are bound up inextricably with conditions of freedom elsewhere. Today, that doctrine, the doctrine of interdependence, is the cornerstone of freeworld policy.

How has trade figured in these developments? During the depression of the early thirties, many countries tried to restore their economies by tariffs, quotas, and currency manipulations. We did those things, and did them without regard to the effect upon others who were largely dependent on international trade.

But the domestic relief we expected did not come. And by 1934 the decline in world trade brought to power, in several countries, leaders so nationalistic and aggressive as to constitute a major cause of World War II.

They sought to expand their national domains at the expense of weaker neighbors on the ground that they could not assure their people a living standard by normal methods of peaceful trade. The

price we all paid in World War II will, I hope, help us to avoid such shortsighted action in the future.

So far as the free world is concerned, the trend since that war has, fortunately, been in the other direction. In this movement to liberalize trade, the United States has been an indispensable leader. Our Trade Agreements Act, first enacted in 1934, and since extended 10 times, has reflected our desire and purpose to promote the mutually advantageous expansion of world trade.

Some elements of United States industry try to improve their competitive position by implying that any competition from abroad, merely because it is foreign, should for that reason be barred. This viewpoint, I repeat, cannot be accepted as United States policy without endangering our whole Nation. This is not to say there are no cases where foreign competition should be restrained. There is a wide range of such cases, and protection is, in fact, accorded.

It is true, however, that any general disposition to exclude foreign goods simply because they are competitive would gravely disrupt economic, political, and spiritual relationships which are required for our own welfare and for the defense of our peace and freedom.

You may ask: What is the proper relationship between the progress. of the trade program and the interests of domestic producers? Let me say this: Almost every national policy hurts some and benefits others. The form of our taxation, the nature of our defense purchases, the location of government operations-all of these and many other national policies inevitably tip the scales of competition. Often, and certainly in the field of trade, the few who may be hurt, or fear that they may be, are more vocal than the many who may gain. That is their right. But the Congress has a duty, that is, to serve the overriding national interest.

Important as the trade-agreements program has been since its inception in 1934 and since World War II, I anticipate a progressively more vital role for the program in the future.

The program is one of our most effective tools for combating the emerging Soviet strategy of political-economic penetration into uncommitted countries through the offer of trade and economic aid. Since 1954, economic assistance extended by the Communist bloc to countries outside the bloc has amounted to $1 billion.

Since 1954, the exports of the Communist bloc to the free rations have grown 70 percent. In 1957, they amounted to some $3.1 billion. Furthermore, the number of bloc trade agreements with the free nations has more than tripled in the last 3 years, rising from 49 at the end of 1953 to 149 at the end of 1957. From what we know of the economic potential of the Communist bloc, there is reason to believe that this performance can be greatly augmented within the next few years. The state-controlled economy of the Soviets is well suited to swift changes in quantities and destination of exports. The shortage of virtually all consumer goods within the Soviet area means that additional quantities of a wide variety of imported materials can be absorbed with ease.

The danger of the Soviet economic offensive arises from the fact that, to the leaders of Communist imperialism, economic ties are merely another means of gaining ultimate political control. If, through trade and economic assistance, they can bring free nations within their economic orbit, they will have paved the way for political 27629-58-pt. 1-2

victory. Even though responsible leaders in the recipient countries also know this, desperation for markets in order to meet the aspirations of their people can tempt those governments to gamble their political independence rather than refuse Communist aid and trade.

To this challenge, our basic answer is our trade-agreements program, coupled with our own aid program. The free world, as a whole, certainly offers by far the largest market for the raw materials that provide most of the money income of the less developed countries. This offer can only be realized, however, so long as the dominant free-world trade trend is in the direction of opening markets and expanding trade to the maximum.

In Western Europe, we see unfolding a great new movement toward economic unity. This is the European Economic Community established by the Treaty of Rome, which entered into force on January 1, 1958. Through this treaty, six nations on the European continentBelgium, France, the German Federal Republic, Italy, Luxembourg, and the Netherlands-have agreed to eliminate all barriers to trade among themselves and to act toward others as a single economy.

They will form a single common market of 170 million customers with a total import trade which, last year, was larger than that of the United States.

This new market will, in time, have a single uniform tariff and a common trade policy which it will apply to imports from the United States and other countries of the free world.

This development has been encouraged by the United States, both the Congress and the executive branch, since the early days of the Marshall plan. It should now be our policy to cooperate with the new Economic Community of Europe to the end that both the United States and the European Economic Community will contribute to the economic strength and well-being of the free world as a whole.

The next 5 years will be the critical, formative years of the European Economic Community. This is a major reason why it is essential that the trade-agreements program be renewed this year for 5 years. During this period, long-lasting decisions will be made as the level of the European common external tariff and as to the other commercial policies which the Community will adopt.

The best opportunity we will have to negotiate with the Community the tariff reductions most advantageous to our export trade will be before the new tariff becomes firmly established. We would seek to negotiate tariffs lower than those to which the countries comprising the European Economic Community are presently committed.

The procedure and timetable which its members contemplate for the establishment of the Common Market illustrate the need for extending our program for not less than 5 years.

The first step in reducing internal tariffs, within the Common Market, will be taken next January 1, when internal duties are to be reduced by 10 percent from their present levels. Thereafter, there will be progressive reductions until internal tariffs are completely eliminated by the end of 1972. These reductions are important to us because, after the first of next year, goods produced within the Common Market will have a steadily increasing advantage within the Common Market area over American and other free-world goods. With respect to external tariffs, the plan is this: The European Economic Community has informed us that they expect to have their

proposed, or target, tariff (which they are now negotiating among themselves) available for examination by us and others about the end of 1959.

The objective of this examination will be to ascertain whether the target tariff accords with the obligations which the common-market countries have previously assumed under the General Agreement on Tariffs and Trade. In this context, we shall want to be satisfied that the target external tariff is not no the whole higher, nor more restrictive than the separate tariff schedules of the six countries now in effect. We shall also look at the individual items to be certain that the commitments which others have made to us are maintained.

After we have completed this examination, we will have to prepare the United States position for negotiations and choose the items on which we might be willing to consider tariff concessions. This will include peril-point investigations by the Tariff Commission.

This whole process will take at least 18 months from the date on which we receive the target tariff. This timetable makes clear that under the best of circumstances negotiations with the European Economic Community cannot begin until 3 years from now. The negotiations themselves would take at least a year, bringing us at least to mid-1962. It is only prudent to allow another year for slippages. Finally, other countries will not be willing to make the complex preparations for these negotiations unless they are sure that the United States Government has authority to see them through to completion. For all these reasons the full 5-year extension is a necessity.

Another point I wish to make is this. Our trade agreements program has been accepted in this country now for 24 years. I think it is clear that the program has been successful and has benefited this country greatly. I believe that most people in this country look upon the program as continuing and permanent. It would be, to my mind, unthinkable to discontinue it.

On each of the 10 times that the Trade Agreements Act has come before the United States Congress for renewal, there has been a period of uneasiness and concern among out friends throughout the free world. Because the United States is the ranking supplier or consumer of so many commodities, its trade policy is a matter of vital interest to the overall economy of many countries. The question of whether the United States is going to continue to buy a given country's products so as to enable that country to accumulate dollar exchange with which to buy needed supplies for the well-being of its own people is often nearly a life-and-death proposition.

For one reason or another people abroad have acquired the impression that trade restrictionist sentiment is growing in the United States. Whether this impression is correct or not-and the recent passage of this renewal bill in the House would certainly indicate the contrary-the belief injects an element of instability and danger into the future which is not conducive to cooperation or to our national security.

Why then should we insist upon the reargumentation of its merits every 3 years or oftener and lead our friends abroad to fear we may suddenly reverse our trade policy. The Trade Agreements Act has become a symbol around which other free world countries develop their trade policies and make their plans. Greater stability in our

program will certainly mean greater stability in their programs. Can there be any doubt that such stability would benefit us all?

This stabilizing of our basic policy would not of course mean freezing our procedures; if during the 5-year period experience shows the need for improvements in the legislation, this can of course be accomplished. Mr. Chairman, a few days ago (June 6, 1958) I made a statement to the Foreign Relations Committee dealing with the basic aspects of our foreign policy. In the course of that presentation I made a statement about world trade which I should like to repeat here today:

The world of today requires better economic health than was tolerable in past times.

International trade is more than ever important. Our own foreign trade is now approximately $32.4 billion a year and provides employment to 41⁄2 million of our farmers and workers. International trade is even more vital to the economic life of many other free-world countries. A principal instrumentality and the outstanding symbol of our attitude to international trade is our Trade Agreements Act. The principle of the act was first adopted in 1934, and 10 times the Congress acted to renew it. Any failure now to renew it would be a grave blow to the world's economy, including our own, and it could be fatal to security.

Mr. Chairman, that is a blunt statement. But to put it less bluntly would in my opinion fail to portray the immense importance to the United States of the legislation now before us.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you, Mr. Secretary.
The Chair recognizes Senator Kerr.

Senator KERR. Mr. Secretary, I am quite interested in your statement. I know you speak from a sense of deep conviction. There are differences between us with reference to this matter or certain phases of it, and I am sure you will recognize, as do I, that they do not spring from a divergent viewpoint with reference to the imperative necessity for doing the best for the welfare of our country, but only from a different viewpoint as to how best to reach that objective.

In your statement, referring, I believe, to the development, as you call it, of the common market of the 170-million citizens of Belgium, France, the German Federal Republic, Italy, Luxembourg, and the Netherlands, you call that the common market?

Secretary DULLES. Yes, sir, I did

Senator KERR. How did you call that?

Secretary DULLES. I called it by what is technically its correct
Senator KERR. You mean economic community?

Secretary DULLES. Yes. It is popularly known as the common market.

Senator KERR. You say they are going to try to reach an agreement as to what tariff will be charged on items imported to any part of that European Economic Community?

Secretary DULLES. Yes, sir.

Senator KERR (reading):

This whole process will take at least 18 months from the date which we receive the target tariff

and then you say:

This timetable makes clear that under the best of circumstances negotiations with the European Economic Community cannot begin until 3 years from now.