If we do not have a prompt and effective mechanism of preventing imports of agricultural commodities from interfering with our various agricultural price support programs, we put ourselves in the position of trying to support the world price of agricultural products; or we multiply the cost of programs, designed to put the American farmer on a par with the income and earning power of other segments of the United States economy.

We have had on the statute books, section 22 of the Agricultural Adjustment Act, since 1935. It was clearly designed to provide for mandatory limitation on imports at any time imports threatened or tended to interfere with a price support program or any other farm program administered by the Secretary of Agriculture. However, in spite of repeated amendments to strengthen this statute and to restate the mandate of Congress that the trade agreements be made to conform thereto, the statute has been continuously honored by the State Department and the President only in its breach rather than its enforcement. The repeated assurances of both Republican and Democratic administrations that section 22 would be more effectively administered have come to naught. The time has now come, therefore, when the Congress must so amend the procedural provisions of section 22 and the Trade Agreements Act as to put section 22 entirely under the control of the Secretary of Agriculture-as is the control of our price support and other farm programs. Only in this fashion can we prevent circumvention of section 22 by the State Department and the gradual erosion of the farm policies and programs laid down by Congress.

When the Secretary of Agriculture administers a price support, marketing agreement or other farm program with respect to an agricultural commodity he should have parallel authority over both the domestic supply and the import supply. If he is in a position to deal effectively with only one source of supply it is obvious that his program cannot be effective. Domestic production plus imports constitutes the overall supply in the domestic market with which the Secretary must deal. It is self-evident that he cannot deal effectively with one without having parallel and simultaneous authority over the other.

Since we have section 22 on the statute books, why do we now need an amendment to the Trade Agreements Extension Act? The answer is, we must have such an amendment because in spite of the repeated congressional mandates, the State Department has continued to circumvent the congressional intent expressed in section 22 and has clearly indicated its intend of continuing to do so unless Congress makes it impossible. A little background will be helpful to your committee in considering this problem.

In both 1949 and 1950, the Senate passed amendments which I, along with other Senators, offered to section 22. These amendments would have transferred the administration and the fact-finding functions under section 22 from the Tariff Commission and the President to the Secretary of Agriculture. Also they provided that our domestic farm programs and section 22 should prevail notwithstanding any foreign trade agreement to the contrary.

To refresh your memory in this connection, I am enclosing a copy of a statement I made in support of our amendment before the Senate Agricultural Committee in 1950 and a copy of my statement on the Senate floor in support of this amendment which was then contained in section 3 of the Commodity Credit Corporation bill, H. R. 6567. This amendment in 1950 was approved unanimously by the Senate Agricultural Committee and adopted on the Senate floor without objection. A copy of the amendment appears in Senate Report No. 1375 of the 81st Congress, 2d session, and in H. R. 6567 as originally passed by the Senate.

However, both in 1949 and in 1950 our amendment to section 22 was either dropped or reversed in conference with the House, based upon assurances of the State Department and the administration, then in power, that section 22 would be more promptly and effectively administered.

In 1950, on the Senate floor, I moved to reject the conference report because I was skeptical of these assurances. My motion was lost by a tie vote, which was broken in favor of the State Department by the then Vice President. Following that, in 1951 I proposed a similar amendment at the time the Trade Agreements Act was up for extension and your committee very wisely recognized the problem and included in section 8 of the Trade Agreements Extension Act of 1951 an amendment to section 22 which was designed to accomplish my purpose of making the trade agreements program subservient to our agricultural programs and section 22. But you did not include an amendment improving and expediting the procedure as I had proposed. The amend

ment included by your committee, enacted into law by the Congress and signed by the President, provided as follows:

"(f) No trade agreement or other international agreement heretofore or hereafter entered into by the United States shall be applied in a manner inconsistent with the requirements of this section."

You will recall at that time you and I discussed the matter and we concluded, in view of the again repeated assurances of the State Department, as to more effective and more prompt administration of section 22 and assurances that the trade agreements program would be made to conform to section 22, that the amendment approved by your committee would be adequate.

In consequence, on the floor I did not insist on the balance of my amendment which would have transferred complete administration and control over section 22 to the Secretary of Agriculture. However, again, the State Department assurances were not honored.

In view of the record up to this point, in 1953 I, along with other cosponsors, proposed amendments which would have expedited the procedure of section 22 and would have made the findings of the Tariff Commission final and binding upon the President. At that time, the need for further strengthening and procedural improvement in section 22 was most ably stated by Secretary of Agriculture Benson as follows (taken from the Secretary's statement before the House Ways and Means Committee during its consideration of H. R. 429, the Trade Agreements Extension Act of 1953, pp. 726-728 of the printed record of such hearings):

"I recently recommended to the Senate and the House Agricultural Committees that the Reciprocal Trade Agreements Act be extended.

"At the same time I indicated that import controls should be provided for those United States agricultural products which were under price support, and recommended that section 22 of the Agricultural Adjustment Act of 1933 be strengthened so as to make this possible. Let me review for you the conditions that made these recommendations advisable.

"We in Agriculture have in operation, as a consequence of congressional action, various price-support programs. Many of the commodities included in these price-support and marketing-order programs are subject to substantial import competition. In many cases the price-support level is substantially above the world market price, even after allowance for the customs duties assessed against imports. When that happens, imports are attracted to this country from all over the world, including areas whose products would normally be exported in whole or in part to other countries where they may be badly needed. But the price-support level in this country acts like a powerful magnet to draw these commodities out of their normal flow in international trade. When we seek to limit the effect of this influence, we are simply seeking to diminish or avoid the distortion of trade by the stimulus of an artificial influence, such as a price-support program.

"I am sure the Congress would not enact a statute making mandatory the support of the world price of agricultural commodities at 90 percent of American parity. Yet that is what the present mandatory supports mean if we do not have a readily available and effective method of controlling imports of those commodities or products whose prices are maintained here above world levels by price-support or marketing-order programs. Our price-support activities, already costly, would become much more expensive.

"In recognition of the fact that a stimulation of imports can impose an intolerable burden on a price-support program, the Congress enacted section 22 of the Agricultural Adjustment Act. This section provides for the imposition of import quotas or import fees whenever imports of any agricultural commodity or product thereof render or tend to render ineffective or materially interfere with any price-support or marketing order (or certain other) pogram. This is permanent legislation.

"Although section 22 was originally enacted in 1935, it was very little used. It calls for investigation by the Tariff Commission after recommendation by the Secretary of Agriculture. Only 5 such investigations have been instituted in the past 17 years. Experience has shown that these investigations are usually long drawn out and this procedure, has proved to be wholly ineffective to meet the problem.

"Because of the failure of the executive branch to use section 22 in such a manner as to achieve the objectives of its enactment, Congress enacted section

104 of the Defense Production Act. This section applies only to certain fats and oils, butter, cheese, and other dairy products, peanuts and rice and rice products. "It requires that imports of such commodities shall be limited to such quantities as the Secretary of Agriculture finds will not (1) impair or reduce domestic production below current levels or such higher levels as deemed desirable; (2) interfere with orderly domestic storing and marketing; or (3) result in an unnecessary burden or expenditure under a price-support program.

"The control of imports under section 104 is prompt and effective. But it has been subjected to severe criticism on the ground that the procedure is arbitrary in character, and it has been the source of much friction in international relations. It requires the imposition of more drastic import restrictions than would be required simply to protect our price-support programs.

"We feel strongly that Congress intended section 22 to be used, and used effectively whenever necessary to protect price-support and other programs. The statutory history clearly so indicates. Section 22 can be made an effective instrument by improved administrative procedures and by supplementing it with authority, in an emergency, to impose the quotas or import fees within the limits specified by the section, on an interim basis pending decision by the Tariff Commission and action by the President. So strengthened, section 22 would assure the protection of the Department's price-support and other programs against interference or nullification by the distortions in international trade which such programs are likely to create.

"Furthermore, under this procedure the import restrictions which are necessary to protect our price-support programs would be subject to deliberations in which all parties could be heard rather than being imposed arbitrarily as is now the case. This would be in harmony with the policies embodied in the reciprocal trade agreements.

"The Tariff Commission, at the request of the President, began hearings on Monday of this week in an effort to expedite action on agricultural commodities now under price support.

"With the strengthening of section 22 there will be no need for an extension of section 104. The strengthening of section 22 can be accomplished by expedited administrative action and by a separate legislative action. I point this out merely to clarify the fact that extension of the trade agreements for a year, pursuant to the President's request, need not impair our price-support operations nor our protection of them.

"I wish to emphasize that the limitation of imports for commodities under price support is made necessary by our price-support laws."

Similar statements were made by Secretary Benson earlier in 1953, before both the House and Senate Committees on agriculture.

When the Trade Agreements Extension Act of 1953 was on the Senate floor for debate, I believe the Senate would have adopted my proposed amendments to section 22 had not the Secretary of Agriculture and other members of the current administration assured us that the new administration would more effectively administer section 22 to prevent trade agreement and import interference with our domestic farm programs. In view of these new assurances, the Senate, in lieu of my proposed amendments adopted an amendment proposed by Senator Cordon which was finally enacted into law and signed by the President, providing as follows:

"In any case where the Secretary of Agriculture determines and reports to the President with regard to any article or articles that a condition exists requiring emergency treatment, the President may take immediate action under this section without awaiting the recommendations of the Tariff Commission, such action to continue in effect pending the report and recommendations of the Tariff Commission and action thereon by the President."

While I feel confident that Secretary of Agriculture Benson, in 1953, fully intended to provide a more prompt and effective administration of section 22 in accordance with his assurances and the clearly expressed Congressional intent; the above amendment enacted by Congress and signed by the President has never been used although there have been many occasions when it appro priately should have been used. The good intentions of the Secretary of Agriculture have simply again been overruled by the State Department and the foreign trade advisers in the White House.

The ineffectiveness of section 22 and the cumbersome procedures under which it now operates-under the influence of the State Department-has been pointed

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out to you by the Dairy Industry and probably others in your current hearings on legislation to extend the Trade Agreements Act.

A rather detailed review of the legislative history of section 22, since its inception in 1935, is contained in a statement prepared by Mr. Karl D. Loos for presentation to the Boggs Subcommittee on Foreign Trade Policy. This statement is entitled "Agricultural and Foreign Trade-Section 22 and Congress Versus GATT and State Department." This statement reviews the repeated times that Congress has amended section 22 to strengthen its procedural and substantive provisions-also the manner in which the State Department and the President still continue to ignore section 22 and to make it subservient to the trade-agreements program and the contrary provisions of the executive agree ment, known as the General Agreement on Tariffs and Trade (GATT).

I feel that this statement clearly demonstrates the need for further amendment of the procedural provisions of section 22 and the Trade Agreements Act as a condition precedent to any extension. I enclose a copy of this statement for the consideration of your committee.

The State Department and the President have continued to take the position that the executive agreement known as the GATT is superior to and controlling over the mandate of Congress as expressed in section 22. They even go so far as to contend that the existing restrictions on agricultural imports, such as dairy products, are possible only by virtue of a gracious "waiver" which the State Department has obtained from the foreign contracting parties to GATT. Also the State Department and the President have assured the other foreign countries who are members of GATT that the limitations on imports imposed under section 22 will be removed in the near future--and that domestic agricultural price support and other farm programs will be gradually amended to conform with the requirements of international trade and the provisions of GATT.

This presents a situation which I believe the Congress must correct. We cannot allow the State Department to ignore the congressional mandate which was contained in your committee amendment of 1951.

The intent of the State Department on this waiver was very clearly revealed in a speech made before the Graduate Institute of International Studies at Geneva, Switzerland, in December 1956, by Mr. Eric Wyndham White who was Executive Secretary of the General Agreement on Tariffs and Trade, and a delegate thereto from the United Kingdom. In this speech, published by GATT at Geneva, Switzerland, in March 1957, Mr. White attempts to justify the reluctant granting of the limited section 22 waiver, to the United States, in the following words:

"At the same time, the policy of agricultural import restrictions cuts across this general direction of United States policy and weakens its position in international discussions on these matters. The United States is, therefore, extremely sensitive to the political pressures which bear upon its policy in relation to agricultural imports. In order to take account of these difficulties and in order to put the United States in a position to go to Congress and seek the ratification of the Agreement on the Organization for Trade Cooperation, the contracting parties found it necessary to give the United States a waiver leaving the United States free, so far as GATT is concerned, to take measures affecting agricultural imports which are necessary to give effect to the domestic price support program. *** It was recognized that the United States could be expected to act with moderation in the use of the waiver *** the United States administration has consistently striven to limit the area in which restrictions are applied. Moreover, the contracting parties were impressed by the expressed determination of the United States administration to attempt over a long period to adapt its agricultural policy to deal with a situation which is not only an external problem but an increasingly acute internal problem as well."

The above statement clearly reveals that the State Department obtained the GATT waiver only to pacify the Congress and only for a temporary period.

Unless we very clearly amend the law I believe the State Department and the President will forego the temporary waiver which has been "so graciously granted on a limited basis by GATT" (as expressed by Mr. White) and withdraw the balance of the agricultural import restrictions which now exist under section 22.

I submit to you that in fairness to the foreign countries involved, we must amend the Trade Agreements Act to make it abundantly clear to everyone that our domestic farm programs and section 22 must prevail over foreign trade agreements.

I urge your committee to thoroughly study this problem and include in your trade agreements extension bill some amendment which will adequately protect the superiority of section 22 over foreign trade agreements and will give to the Secretary of Agriculture authority he needs to consider total supply in our domestic market places.

I respectfully request that this letter and its enclosures be made a part of your hearing record.

Best personal regards,

WARREN G. MAGNUSON,
United States Senator.

AGRICULTURE AND FOREIGN TRADE-SECTION 22 AND CONGRESS VERSUS GATT AND STATE DEPARTMENT

Statement of Karl D. Loss before the Subcommittee of the Ways and Means Committee on Customs, Tariffs and Reciprocal Trade Agreements

OCTOBER 15, 1956

My name is Karl D. Loos, of Washington, D. C. I appreciate the August 29 invitation of the subcommittee to testify at its recent public hearings on the broad subject of "Agriculture and Foreign Trade" and regret that my previous arrangements would not permit my appearing personally at the hearings. I am submitting this statement for the record in lieu of a personal appearance.

Since many outstanding witnesses have appeared and commented at length on the broader aspects of the various subjects, related to agriculture and foreign trade, listed in the letter of August 29, I believe this statement will be of most service to the committee if it is limited to a discussion of section 22 of the Agricultural Adjustment Act of 1933, as amended, and related subjects. Section 22 is one of several import relief provisions of existing agricultural legislation and foreign trade legislation. These import relief provisions are designed to provide relief to domestic agricultural programs and to American farm producers (and other domestic industries) facing serious competition and threatened injury from excessive imports. Examples of such import relief provisions are(1) Section 22 of the Agricultural Adjustment Act of 1933, as amended, (2) The peril point (secs. 3 and 4 of the Trade Agreements Extension Act of 1951, as amended)

(3) The escape clause (secs. 6 and 7 of the Trade Agreements Extension Act of 1951, as amended),

(4) The Anti-Dumping Act of 1921,

(5) The countervailing duty statute (sec. 303 of the Tariff Act of 1930), (6) The unfair trade practices in import trade provision (sec. 337) of the Tariff Act of 1930, and

(7) Section 336 (The flexible-cost of production-tariff provision) of the tariff provision) of the Tariff Act of 1930.

The lack of proper and effective administration and enforcement of these import relief provisions in existing law covers a wide field upon which the Ways and Means Committee and the Senate Finance Committee have heard considerable and growing complaints from domestic industries in various foreign trade hearings in recent years. In the interest of conserving record space, I will not attempt to comment on all of them in this statement. However, I hope that the subcommittee's staff may have time to give consideration to the following statements which have been made by me or by my partner, John Breckinridge, at previous public hearings held by the Ways and Means Committee and the Senate Finance Committee in connection with previous consideration of trade agreement or other foreign trade legislation:

Finance Committee hearings, H. R. 1612, Trade Agreements Extension Act of 1951, pages 885-912, 885-914.

Ways and Means Committe hearings, H. R. 4294, Trade Agreements Extension Act of 1953, pages 824-841.

Ways and Means Committee, H. R. 1, Trade Agreements Extension Act of 1955, pages 1964-1978, and 2302-2307.

Finance Committee hearings, H. R. 1, Trade Agreements Extension Act of 1955, pages 1489-1513 and 1514-1527.

Ways and Means Committee hearings, 1956 on H. R. 5550, Organization for Trade Corporation, pages 198-216.

These previous statements before your Committee and the Senate Finance Committee all relate to the procedures and executive administration (or