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market. I think we must accept this and treat as a fact that our exports will be increasingly restricted to those items which, for one reason or another, we can supply more cheaply or by virtue of exclusiveness. And this might be a limited trade indeed.
This, in my opinion, betrays the fallacy of the contention that we, by opening our markets without restriction to the free world, can balk Communist trade aggression.
Our markets are valuable to another country only if the exchange is valuable. And in the barter of international commerce, our trading position is weaker than it has ever been.
The elimination of all United States tariffs would only delay briefly the inevitable reckoning that United States exports are no longer a bargain. What country, may I ask, could be expected to pay a long price for goods out of friendship or for any other reason?
Gentlemen, in my opinion, these are the facts of this situation as opposed to the theories of certain economists and visionaries that have become so widely accepted.
In the face of these facts, I feel it would be worse than idle to continue to expect that trade agreements and inconsequential tariff reductions by the United States can preserve a commerce that no normal set of circumstances will sustain.
For this reason, should we not view as potentially dangerous the encouraging of foreign manufacturers to rely on the United States market that will not return to them the value of production on which continuing trade depends?
What I point out as a probability is an appalling thing to contemplate, as I hear the State Department describe our relations with other countries as being so sensitive that the United States must show no disposition toward the imposition of quotas or higher tariffs.
And I think none of us is unmindful of the reaction of our South American friends toward us as a result of the recent drop in commodity prices and demand for their products which came about through the play of forces over which we, and they, have no control.
My question is this: Is unrestricted trade with other countries a dependable instrument of foreign policy under today's circumstances ?
This is not just our problem. It is mutual with every nation in our trading sphere. In my opinion, it is one to be dealt with in open frankness and in full view of the natural laws that control demand and supply.
I mean no offense when I advance this proposal as a commonsense appraisal of our foreign trade program. I feel the path we have been following has created needless and avoidable dislocations here and abroad. I cannot justify its further pursuit when it will, in my opinion, lead to greater hardship and adjustment here and within countries whose alliance with us is so important.
Gentlemen, if the unrestricted encouragement of trade between the United States and other nations ever was justified, I feel it has outlived its usefulness. In our general interest, I am convinced that a carefully regulated trade is now required.
I make no pretense of being an economist. My views represent the accumulation of impressions gained over the years as the problems of foreign trade have been forced upon my attention.
In all probability, the extent of my services to you will be the raising of the questions which I have posed in this testimony.
I think they are fair questions and I think they must be fairly answered before we commit ourselves for another 5 years, 3 years, or 2 years to a foreign trade program that, in my opinion, could very well defeat the uplifting political and economic objectives we wish to promote.
I am aware of the emotion that has attached to debate on this matter, and am fearful of it. Too much is at stake to allow anything but a statesmanlike consideration of facts and probabilities to determine the course we should set for ourselves in world trade.
Thank you very much, gentlemen.
Mr. TORBERT. May I add that as though to confirm some of the ideas that have been submitted here, I would like to read the first paragraph of a bulletin received yesterday morning in Syracuse, N. Y., from Associated Industries of New York State.
This is sent to manufacturers throughout the State and it reads:
The officers of Associated Industries are seriously concerned over the everrising tide of imports of manufactured articles.
Many of our members have reported that they have already suffered serious injury.
From another news item coming from the Chamber of Commerce of the United States and dated June 20, I read:
Furthermore, private investment abroad totals about $35 billion, and $23 percent of our imports come from foreign branches of American companies
That would indicate that the transfers of our jobs to foreign countries is making very substantial headway.
I would ask for the privilege of filing a short additional supplement to my statement which would review in greater detail the damage done to our industry, all of which has been submitted in hearings before the Ways and Means Committee and other bodies, and the Tariff Commission.
Senator KERR. I would be glad for you to do that.
(The information requested was subsequently supplied in an addendum at the end of Mr. Torbert's testimony.)
Senator KERR. I see on the first page of your statement here, "domestic production in 1957 had been reduced to 50 percent of the 1957 production."
Is that the present relationship of your production? Mr. TORBERT. We have two branches, the earthenware branch and the fine china branch.
Senator KERR. Yes.
Mr. TORBERT. In the fine china branch of our industry, I have stated
Senator KERR. Is that in this paper?
Mr. TORBERT. That is in here, yes, sir; I have stated that of all the china
Senator Bexxett. It is in the same paragraph, Senator; it is marked "lightweight china."
Mr. TORBERT. Lightweight china. I have stated that all of the china bought in the United States last year over 90 percent of it was imported.
Senator KERR. What is the relationship of the total value of the production of china and earthenware!
Senator BERT. This is just recent; in 1953, 80 md in 1967, 64 perde it is a
Mr. TORBERT. The production in earthenware
Senator KERR. What I am trying to get, Mr. Torbert, is the reduction figure that would be accurate as to the entire industry you speak for.
Mr. TORBERT. The report as to the china branch is the result of the figures compiled through our association and are in plants from which we get regular reports.
We find that they do not check exactly with the census reports, because the census reports include some plants which do not report to our association.
My point is this: The figures from which we do quote are constant from year to year or we receive regularly so that we are able to get the drift, and speaking of the trend, I have the production of this group of fine china tableware potteries to which I have referred for the years beginning with 1950.
Taking 1950 as 100 percent, and note the yearly drop: 100 percent in 1950; 1951,96 percent.
Senator KERR. Is this just chinaware or both?
To go on, in 1952, 92 percent; in 1953, 80 percent; in 1954, 75 percent; 1955, 72 percent; 1956, 71 percent. And in 1957, 64 percent.
This was a drop in our domestic production every year and it is a total of 36 percent from 1950 to 1957.
Now as to the earthenware branch
Senator KERR. Well, your figures are that that is off 50 percent, that is your statement ?
Mr. TORBERT. Yes.
Senator BENNETT. Now we are confused here a little because I think Mr. Torbert has just been discussing the drop in domestic production.
There was some foreign importation at the beginning.
Senator KERR. I would just like one simple figure if he would give it to me. Mr. TORBERT. Which is that?
Senator KERR. What percent of the combined sales of earthenware and china in this country are produced abroad?
Mr. TORBERT. The figures are not combined in any records we have, and I might add that the earthenware industry has always been represented in these hearings by Mr. Wells, of the earthenware industry, but since only one witness was desired for each
Senator KERR. Would you do this for me: Would you just get me the total volume of the two and add it together and say "of this total volume, 50 percent, 60 percent, 80 percent is foreign produced,” and just put that in the record ?
Mr. TORBERT. We will put that in our supplemental statement; yes, sir.
Senator KERR. Fine.
Senator BENNETT. If I might ask for one more, could you do that for the year 1947 and 1957, because you have used both years in your statement.
Mr. TORBERT. Yes, sir.
(The information requested was subsequently supplied in an addendum at the end of Mr. Torbert's testimony.)
Senator BENNETT. So we could see what change in the total has occurred in 10 years. Mr. TORBERT. All right. Senator KERR. Thank you very much, Mr. Torbert. I appreciate your statement. Mr. TORBERT. Yes, sir. Thank you. Senator KERR. Any questions?
Senator BENNETT. I would just like to make the comment, Mr. Chairman, that I had the privilege of reading this statement last night, and I think it is one of the most important that has been made thus far in these hearings, because it gathers together in a very statesmanlike manner a lot of problems that have been presented to us piecemeal, and should give us a basis for serious study of the future, and maybe a more fundamental change that we may need to consider rather than to continue to patch up the policy that was set in motion 25 years ago.
I am very happy with this statement, and it has set my mind running down a lot of alleys. Mr. TORBERT. I appreciate your comment, sir.
Senator KERR. Well, mine, like the Senator from Utah, is presently running-I am not going to say down a lot of alleys, but along some very definite lines. I would say the statement that I have just heard, the part of it I heard, accelerated rather than set it.
Senator BENNETT. I think that is probably accurate in my case but it certainly has accelerated it.
Senator KERR. Thank you, Mr. Torbert. (The material referred to follows:)
[Addendum to brief of E. L. Torbert presented to Senate Committee on Finance, July 1,
PRICE AND VOLUME TRENDS RELATING TO COMPETITION IN THE UNITED STATES
MARKET FOR HOUSEHOLD TABLEWARE (CERAMIC) BETWEEN FOREIGN AND DO MESTIC PRODUCERS
In response to the committee's request for data indicating, for recent years, changes in the size of our market and the extent to which it has been supplied by domestic and foreign producers in the same period, we submit the accompany. ing table of information.
In complying with this request, as best we can, we face the familiar problem of being unable to measure the United States household tableware market, as it also includes and may have included plastic and glass wares. Within our knowledge, no statistics have ever been collected that include all food-serving utensils for home use.
In the absence of comprehensive data, we are obliged to interpret available information in the light of long experience in producing and marketing our product.
With respect to the 8-year period embraced by the submitted statistics :
The United States household tableware market probably increased in keeping with population growth and the rise in real income in this country. Much of the added demand was apparently satisfied with plastics and glassware-domes tically produced and imported.
Some increase in the sales of ceramic tableware for household use is to be noted. The quantity of ceramics in use, however, is thought to be greater than the sales increase indicates, as a more widespread use of dishwashers and improved detergents is prolonging the life of this ware.
The data on ceramics submitted herewith are deficient in two respects (1) The statistics on lower quality earthenware and lightweight china produced
in this country are not available to us for the years compared and (2) Government import statistics (which do not include heavy quantities of high- and medium-quality ceramics entering the United States duty free) are not continuously analyzed for quality and composition.
However, we are discussing the position of manufacturers of quality ceramic ware in this country, and the decline in production volume here is clearly read. Excluded are plastics and glass-whatever market inroads these two materials may have made.
Within the ceramic field, it is obvious that American manufacturers have not been able to hold their own market against foreign producers.
After making due allowance for quality and composition of imports, the average prices shown for the several countries listed betray the insuperable disadvantage that the equally efficient American manufacturers suffer by reason of their higher wage levels and, therefore, higher labor costs.
The efficiency gap has closed between these competing countries, but the wage levels (22 cents in Japan, 43 cents in Italy, 55 cents in West Germany, 61 cents in the United Kingdom, and $2.08 in the United States) remain-as they have for decades—vastly disparate.
In this 8-year period, foreign ware has been produced at stable and even declining prices. Domestic producers, however, with lower volume and heavier promotion expense induced by these imports plus greatly increased wage costs, have been caught in a price-quality-cost predicament that further aggravates their competitive disadvantage.
Japanese imports in particular-regardless of quality and composition-are priced so low that products of like quality from other sources simply cannot compete. As a result, the Japanese exported 6,147,000 dozen of earthenware and 6,826,000 dozen of chinaware to this country in 1956.
Though it must be obvious that imports of this nature and volume represent displacement and also forestall the development of domestic manufacturing competition, our escape-clause and section 336 applications for relief have been denied, and United States tariffs and other protections have been reduced repeatedly over this period of years.
We consider this to be evidence, per se, that the Trade Agreements Act, as administered, is not being used to protect a long-established industry in the manner intended at the time this legislation has been passed and subsequently amended.