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concept really serve America's best interests as a nation. We should not continue to accept rigidly and blindly the philosophy of this program as high policy dogma.
2. If it passes that test, in situations such as now prevail in the case of many import vulnerable industries, where adequate protection cannot be afforded through upward adjustments under the tradeagreements program, fair and reasonable import quotas should be established.
3. The General Agreement on Tariffs and Trade (GATT) should be eliminated from tariffmaking, and the proposal to have the United States join the Organization for Trade Cooperation (OTC) should be defeated.
We feel that in this connection and in connection with the trade agreements program generally, effective control should be restored to Congress.
4. We see no merit in the idea of Government subsidies for domestic industries injured by the trade-agreements program.
5. And finally, if it should be felt necessary to extend the trade agreements program we would earnestly suggest and urge that the extension be limited to 1 or 2 years.
Thank you, sir.
All right, Mr. Moss.
AMERICAN KNIT GLOVE ASSOCIATION, INC.
Mr. Moss. Thank you, Senator Kerr.
My name is Harry A. Moss, Jr., and I am executive secretary of the American Knit Glove Association, Inc., of New York.
Honorable Chairman and members of the committee, I appear befor you today as the representative of labor and management in the knit, leather, and fabric glove industries and, in a larger sense, & spokesman for an area of many communities in Otsego, Schenectady, Fulton, Hamilton, and Montgomery Counties, New York State.
The glove industry permeates that area historically. Beyond that connection, though, the entire area has a social and economic relationship in the sensitivity of its payrolls to loss of employment through import competition from foreign carpets, rugs, and electrical products, as well as gloves.
Hence our deep interest in the bill before this committee.
First, may I preface our recommendations by noting the objectives involved. We are not opposed to foreign trade, nor do we minimize its importance to our economy. In fact, we purchase a large percentage of our raw materials abroad for manufacture here, although our higher wages and other costs preclude us from exporting.
The issue is not whether we should have foreign trade but rather the rules and equities under which that trade should be conducted, in the healthy economic interest of American labor and management, as well as the well-being of foreign political considerations.
We are not against H. R. 12591 in toto. We heartily agree with many of its features. We have worked hard, with many other in
-dustries, for the past 6 months to have them incorporated in the present bill. I refer to the provisions which improve the peril point, escape clause, and national security safeguards of current law.
We are encouraged by the fact that, for the first time, this bill establishes the principle that Congress shall be concerned with the final determination of any tariff rate or quota modification recommended in an escape-clause action.
Such changes, coming as they do after long deliberation by the Ways and Means Committee, prove the fundamental need for improvement in our trade-agreements program. However, this bill needs improvement in two cardinal respects to make it truly effective.
H. R. 12591 provides for an unprecedented 5-year extension of Executive authority to enter into trade agreements, and the language permits tariff rate reductions negotiated during that 5-year period to be put into effect in 5 annual steps extending beyond that period.
Hence a law enacted by this Congress would carry through the terms of 2 future Presidents and 5 new Congresses-in reality, 10 years of extended authority. .
We respectfully challenge the wisdom of recklessly binding this -country so far into the future.
The European Economic Community, a new development relied upon by the administration to favor a 5-year extension, is already beset with unpredictable developments. The risk to the American economy cannot be excused as a calculated risk.
In this regard, we point to the recent alarming developments in the so-called dollar gap.
Ever since the end of World War II, United States producers have found themselves hampered badly in international commerce by the hedgerows of restrictions that have grown up abroad to exclude American goods.
Despite the noble language of the General Agreement on Tariffs and Trade which specifically prohibits any trade restrictions “other than duties, taxes, or other charges, whether made effective through quotas, imports, or export licenses or other measures," arbitrary re strictions affecting American products have multiplied alarmingly. For example, 1 recent study found that 28 of the 37 participants in GATT require that imports be licensed.
The reason other nations can defy the rules of this agreement is that countries experiencing balance-of-payments difficulties are not required to live up to their part of the bargain.
The apologists for the trade-agreements program have always pointed to the so-called dollar gap to explain why other nations refuse to allow our goods to enter their markets.
"After all,” they say, "how can we expect these people to buy our products when they have no dollars to spend ?"
We do not intend to discuss the validity of this particular argument. We would simply like to invite the committee's attention to the fact that the United States Department of Commerce, just a week ago today, reported that the dollar gap no longer exists.
The Department issued a report showing that, during the first quarter of 1958, there was a net outflow of $550 million from the United States to foreign nations. This means simply that America
paid out half a billion dollars more than it received; and it also means that the dollar gap is closed.
Senator KERR. Didn't that actually create another dollar gap just in reverse ?
Mr. Moss. It did so, yes, sir.
One might expect that these dollars would have been used to buy American products and that this new-found prosperity would be reflected in the level of our exports. But this is not, unfortunately, the case.
The same Commerce Department report indicates that our exports, in the same period, declined almost $1 billion from the preceding quarter.
Not only did we, as a nation, see $550 million leave our country, perhaps permanently, but we also lost a billion dollars worth of business in just 3 months, which indicates a contributing factor to this recession.
In all fairness, it must be pointed out that these two statistical facts are slices from the same pie-that, if other nations had purchased an additional billion dollars worth of American goods, the dollar gap would not have closed; there would still be a foreign deficit of $450 million.
And yet, to our mind, there is a very disturbing conclusion to be drawn. Other nations would rather have our dollars than our products. If this trend continues, we are facing a national economic catastrophe unprecedented in modern times.
Nor are our fears allayed by the fact, also reported by the Department of Commerce, that the nations benefiting from our outflow of $550 million converted most of this sum into gold.
In the last 4 months, there has been a veritable flood of gold leaving this country-gold worth $1.2 billion. And the magazine, U. S. News & World Report of June 27, 1958, reports that, while our gold reserves stand at 21.4 billion, if we had to pay the claims of foreign instrumentalities (amounting now to 11.6 billion) we would be left with $1.7 billion less in gold than we need to support our currency system.
I am sure the members of this committee are giving this matter their deepest consideration.
Speaking of exploitation of labor, which is always involved in the trade agreements program and import competition, the new Russian offensive boldly proclaimed as an economic war, poses a threat to American labor of a magnitude never before imagined
In the Communist economy, costs are not more than fictional figures. True costs and prices are subject to the whims of political expediency. The present trade agreements program is a pushover in the path of Russian international ambitions.
Consequently, we plead that this bill will be amended to limit the extension to 2 years instead of 5, so that the United States may be free to review and revise our program in the light of accelerated changes in world conditions.
As to further tariff cutting authority, we must plead against additional cuts.
Rates have been cut by over 75 percent under this program, thousands of them only recently, in the past 4 years. We point to the inconsistency of continuing down the road to free trade, on the one
hand, while we strive to improve American wages and living conditions, on the other hand.
If any concession is to be made to those who demand further tariff cuts, we submit that a carryover of presently unused authority should
uts, equate during the ne President to approxhat the pre
Congresect, or modifand, the
As to the power of the President to approve or nullify Tariff Commission escape-clause decisions, we plead that the present bill be rewritten.
Simply stated, as we understand, the present bill would authorize the President to reject or modify a Tariff Commission recommendation unless Congress, by a two-thirds vote of both Houses directs otherwise. The likelihood of any industry ever obtaining support of two-thirds of both Houses is in the realm of sheer fantasy.
Therefore, to be practical, we urge the approach whereby the President would initiate congressional action if he wishes to reject or modify a Tariff Commission recommendation. As Chief Executive, he has at hand facilities, such as all executive departments, defense agencies, and foreign diplomatic offices, to marshal promptly all pertinent facts to convince Congress of an overriding national interest.
We propose that H. R. 12591 be amended to provide the Tariff Commission escape-clause recommendations become effective, unless the President within 60 days obtains congressional approval for rejection or modification.
The recommendations we have made, we sincerely believe, are equitable, practical, and realistic in the best interests of our domestic economy and a fair improvement of United States foreign-trade legislation.
I would like to add, Mr. Chairman, that in answer to your question of one of the witnesses earlier today, the United States Department of Labor reports that in 1947 employment in our industry amounted to 5,000; there were 44 factories,
Senator KERR. Say that again.
Mr. Moss. And the same Department of Labor reports that as of 1954 there were 2,025 employees; that may not be a large industry, but the unemployment is very large considering the size of our industry and the size of our manufacturers.
Senator KERR. Well, to the people that are in it it is nearly as important as the development of more productive facilities are either to some foreign-owned company or some American-owned company in a foreign country seeking to dispose of their products in that market.
Mr. Moss. Yes; that is right.
Senator KERR. I dissent here on the part of your testimony and that of others that some of you boys are against any combine you are not in on.
Mr. Moss. Well, you mean why not,
Senator KERR. I mean that is the basic concept of the people in Oklahoma, that is the way they feel. Mr. Moss. I see.
Senator KERR. So we understand how you feel so far as I am concerned. Mr. Moss. I see. Thank you. Senator KERR. Thank you very much. Are there any questions? We will recess until 10 o'clock in the morning. Mr. Moss. Thank you very much, Mr. Chairman.
(By direction of the chairman, the following is made a part of the record :)
CITIZENS COMMITTEE FOR STABILIZATION, LEAD-ZINC INDUSTRY
Flat River, Mo., June 25, 1958. Hon. HARRY F. BYRD,
Senate Office Building, Washington, D.C. DEAR SENATOR BYRD: We believe you are familiar with the situation now confronting the soft-metals industry. We have corresponded about the problem and you have indicated a desire to see it corrected. The price of lead and zinc has fluctuated during the past year and is 27 percent below that of a year ago. This area, with the largest lead mines in the Nation has a large surplus of unsold lead and zinc. Serious unemployment has already occurred and a substantial cut in working time is imminent.
It appears much of our plight is due to unrestricted imports of lead and zinc from low-wage countries. While we recognize the importance of world trade both to our economy and the furtherance of world peace, we do not believe an important basic industry should be sacrificed on the altar of expediency.
In examining the various proposals to alleviate a problem that has been mounting for a number of years, we sincerely believe the following should be considered by the Congress :
(a) A sliding scale import tax would give protection to domestic producers without seriously affecting the volume of imports. Imports are necessary be cause we do not produce sufficient lead and zinc for our needs.
(b) An import quota system based on the wage scale of foreign producers would aid in regulating large-scale dumping from extremely low-wage areas. Higher quotas would be assigned high-wage areas. The attached wage schedule was used by the Schwab committee in congressional hearings last year. It seems unlikely a workman earning a few cents a day could purchase goods produced by an American workman.
The theory of the Trade Agreements Act is that other countries have dollars with which to purchase our goods. At present, there is little balance between the purchasing power of a miner in South America and a miner in North Amer ica. A recent Associated Press dispatch from Ottawa quotes the Canadian Prime Minister as critical of the "imbalance of trade with the United States." Canadian wages are only slightly lower than ours. Therefore, a Canadian miner has more dollars to purchase our goods than a South African native who earns 8 cents a day. Certainly there is no permanent cure-all but any legislation enacted should (1) Be long range to encourage exploration. (2) Permanent enough to permit the industry to plan 4 or 5 years ahead. (3) Give first consideration to our domestic industry. (4) Be self-sustaining with as little burden on the taxpayer as possible.
(5) Be enacted speedily. Other areas are more seriously affected than we and the gravity of the situation daily grows worse.
The subsidy plan now being considered would, in our opinion, afford some relief but has no more permanency than stockpiling. The makeshift policies of our various Federal agencies over the past several years has brought the industry to its present condition.
If the Congress adjourns without enacting some legislation to relieve our distress, the future of the entire nonferrous metals industry in the United States is in doubt. Sincerely,
T. J. WATKINS, Chairman. Best personal regards. T.J. W.