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the information necessary to permit them to take into consideration matters of broad foreign and domestic policy, matters which are not now within their province.
The proponents of this Simpson proposal will urge on you, as they did upon the Committee on Ways and Means of the House, and on the House, other changes in H. R. 12591. The effect of these would be to extend the trade agreements program in name only. They would grant only a theoretical negotiating power to the President. The ironclad handcuffs which they would place on the President would make it unlikely that any new agreement would be entered into under the statute.
The modifications in the escape clause provisions of existing law, proposed by the Simpson “substitute,” would serve to not only make new agreements unlikely, but would undermine the foundations of all of the existing trade agreements with the resulting collapse of the foreign relations of the United States with most of our best friends in the free world.
I need not extensively elaborate on this truism. The Congress and both great political parties have recognized for many years that the political relations of a nation are in large part dependent upon and are inextricably interwoven with its trade relations. Only recently Soviet recognition of this fact brought about an important change in the external policies of the Soviet Union. Khrushchev made it very clear that the Soviet Union is not only going to compete with us on the economic and trade fronts, but is going to do its level best to beat us at a game which we should now know a lot more about.
In the face of this threat we cannot arm ourselves with a Simpsontype one-shot popgun. We have no other course but to arm ourselves to the teeth for the economic and trade war which has been declared, the same as we have done for the military war which we fear may someday be declared.
As far as many of my clients are concerned, the outstanding characteristic in H. R. 12591 is the fact that it contains no provisions imposing import quotas on specific commodities despite diligent efforts by special interests to attach such restrictions to the bill. We are unalterably opposed to such barriers to international trade as a matter of principle.
Furthermore, this committee knows that once the door is opened but a bit to this type of legislative restriction, the flood can never be stopped. Since this committee specifically requested that comments be made on H. R. 12591 and not on individual commodities, I will not discuss quotas further, except to voice our strong opposition to all such amendments should they come up in your committee's consideration of H.R. 12591.
In my opinion, the most valuable feature of H. R. 12591 is the provision extending the act for 5 years. You have already been told by the Secretary of State of the problems confronting the United States through the formation of the European Common Market, wherein our trade negotiators will be required to negotiate not with a half dozen or so individual countries, but with representatives of one entity made up of practically all of Western Europe.
The resulting negotiations will be extensive and require a long period of time to complete. Thus, the formation of the European Common Market is reason enough for the 5-year extension of the act. How
ever, there are other compelling reasons which I would like to mention briefly.
The first is the probable creation, within the foreseeable future, of an entity very similar to the European Common Market. I refer to the Nordic Economic Cooperation Movement, commonly referred to as the Nordic Union.
For the past several years, representatives of Denmark, Finland, Norway, and Sweden have been working closely together to form an economic union of their countries. Most of the details have been worked out and it is quite possible that the projected economic union will become a reality in the not too distant future.
I have read the report issued by the Nordic Economic Cooperation Committee in July 1957, and should the union become a fact, it is interesting to note the procedures which will be undertaken by these four countries in future trade negotiations.
In the introduction of the report it is stated that the report was discussed at the Nordic Council's meeting in August of 1954. The Nordic Council made several proposals, and in paragraph 2 recommendsthat, on the basis of the data submitted by the Joint Nordic Committee for Economic Cooperation, the governments clarify the possibilities of applying uniform tariff rates (or restrictions) vis-a-vis non-Nordic countries and initiate endeavors to abolish intra-Nordic customs duties and trade restrictions to the extent and at the rate considered to be compatible with the special conditions of each country;
On page 110 of the report, under the heading “Cooperation in Commercial Policy in a Nordic Market," appears the following:
The principal rule (in tariff negotiations] should be, however, that tariff negotiations with other countries are to be conducted jointly.
On page 112 of the report it is stated: even if such far-reaching cooperation will not be possible for the present, the establishment of a Nordic market would immediately imply a more extensive cooperation in Nordic trade with outside countries in general and in trade agree ments in particular.
Thus, the United States is undoubtedly going to be confronted shortly with more than one area entity with which it must deal in future negotiations on trade agreements. As it is entirely possible that the Nordic Union will come into being sometime within the next year or two, we should be in a position to deal with the extensive new problems which the formation of this union will create. The 5-year extension of the act should therefore be preserved intact.
Another compelling reason for the retention of the 5-year extension of the act is that such an extension will provide a degree of longneeded stability to the operations of United States importers, to the vast number of consumers who depend upon imports, and to United States manufacturers and producers who process imported materials or utilize imported materials in their own manufacture.
It has been difficult heretofore for such manufacturers and producers to make long-range plans to initiate sound manufacturing or sales programs or to stabilize their labor force. The uncertainty of our Government's position toward international trade has made such matters risky business for any concern which depends upon imports.
With our position firmly established on a 5-year basis, the American manufacturer employing imported products will be more reasonably
assured of a steady supply of materials and can devote himself to problems other than the constantly harassing one of our Government's position in foreign trade.
Mr. Chairman, in considering important legislation such as you have before you, there is no place, in my opinion, for special or selfish interest. This is a time for statesmanship at its finest. As statesmen, it is your job to see to it that the interests of the Nation as a whole prevail.
For these reasons, I urge you to reject the efforts which will be made to emasculate the bill with crippling or clearly unconstitutional amendments following the pattern of the Simpson proposals. I urge you to report out H. R. 12591 with the 5-year extension provided therein and without any amendments imposing import quotas on individual commodities.
I thank you, Mr. Chairman, for the opportunity to appear before you.
Senator CARLSON. Mr. Sharp, we appreciate very much your statement.
I was interested in your comments that many of your clients are both exporters and importers. I can well remember in previous hearings at least, quite a division between these groups. And I have heard of people being ambidextrous, and I am not so sure but what you are doing very well.
Mr. SHARP. There are quite a number of firms who are now in what we call international trade as such rather than only on one side of it. And it is of interest that in the experience I have had in working with them in the last few years we have had specific instances whereas action taken in the United States (for instance by reason of the Dumping Act) which has the tendency to restrict the flow of imports has had an immediate effect upon the amount of exports which the same firm which was affected by the stoppage of the flow of imports could sell to the country from which the imports come. And they were usually engaged-many of these concerns are usually engaged in a two-way flow between specific countries.
Senator CARLSON. Again we thank you, Mr. Sharp.
Senator Carlson. The next witness is Mr. William Barnhard, of the American Importers of Brass and Copper Mill Products, Inc.
STATEMENT OF WILLIAM J. BARNHARD, OF CHAPMAN, WOLF
SOHN & FRIEDMAN, COUNSEL, AMERICAN IMPORTERS OF BRASS & COPPER MILL PRODUCTS, INC. Mr. BARNHARD. Mr. Chairman and members of the committee, I am Mr. William J. Barnhard, Washington attorney with the firm of Chapman, Wolfsohn & Friedman.
Senator CARLson. If you want to file the statement and make an extemporaneous statement you may do so.
Mr. BARNHARD. Since it is such a short statement I should like to read it and I have asked permission for my clients to file a supplemental written memorandum before the close of the hearings.
Senator CARLSON. They will be placed in the record.
My professional activities are confined exclusively to problems of international trade, including my present activities as counsel for, among others, the American Importers of Brass & Copper Mills Products, Inc., and as secretary to the National Antidumping Committee, Inc., and I therefore welcome this opportunity to appear briefly in support of H. R. 12591.
Because of the necessary shortness of time allotted to witnesses at this hearing and because of the primary concern of this committee with the general problems of reciprocal trade extension, I shall confine my remarks to the general field of trade legislation, and request the privilege of filing for the record a written memorandum dealing with the specific problem of copper and brass product imports as they relate to the pending legislation.
The 1958 extension of the Reciprocal Trade Act could have been and should have been-a major stroke in the direction of national prosperity and international security.
It could have provided increased production and increased employment in America's manufacturing industries.
It could have provided higher wages and lower costs in America's processing industries.
It could have provided new markets and increased sales for America's coal, textiles, farm products and many other articles.
It could have provided hope to the underdeveloped nations of the world, strength to our free world allies, and a substantial part of our answer to the increasingly menacing Soviet economic offensive.
But the bill before this committee does none of these things. It will not encourage more American overseas business, either in buying or in selling. It does not give our negotiators enough bargaining strength to protect the interests of American workers, farmers, and industrialists in the common market and other developing regional markets. And it does not give us the power to combat the Communist trade drives.
Then why should we, who desire an expanding level of world trade, support this measure? For three reasons only: First, because it is the lesser of two evils, being much less destructive to American business and American policy than the substitute measures; second, because this bill, however weak and circumscribed, has become a symbol of American economic policy whose defeat would produce drastic and dangerous international repercussions; and third, because it provides at least a modicum of bargaining power to protect American interests.
For these reasons, we appear here in support of H. R. 12591. But, unlike many of my colleagues, I do not believe that the best we can hope for from this committee is approval of the House-passed measure. I hope and expect that this committee and the Senate itself may provide the Nation with a stronger trade bill that will promote more American business, provide more and better job opportunities, create new and bigger markets for the produets of our farms, mines, and factories.
My remarks will be devoted primarily to the economic needs of our own people, rather than the needs of our friends abroad or the issue of international solidarity. The economic health of our allies and our alliances is an intensely practical and selfish consideration which cannot be ignored, but others better qualified than I have
discussed or will discuss these aspects of the trade program. I suggest that perhaps there has been too much emphasis put on the foreign aspects of our trade program, the help it provides abroad, the alliances that it helps cement, and the world leadership it provides us.
These are vital, of course, but at least equally vital is the immediate selfish economic aspects of trade right here at home. Trade is not charity, it is not foreign aid, it is not in any sense a giveaway. Trade is business, it is buying and selling, which means it is jobs and profits and markets and sales. It seems to me that the Nation will obviously benefit from a trade bill that encourages such business more than does the measure now pending before this committee.
Expansion of American business is impeded by section 3 (a) (1) of this bill, which permits tariff rates to be increased by as much as 700 percent, to levels half again as high as the Smoot-Hawley rates of 1930. No American industrial consumer or distributor could feel safe in establishing a source of supply subject to such punitive taxes.
Expansion of American business is impeded by section 4 (b) of the bill, which authorizes long and expensive escape-clause investigations even where the competing domestic industry does not request them. If the domestic industry, which is directly affected and is in possession of the facts, does not complain, there seems to be no warrant for this additional roadblock.
Expansion of American business is impeded by section 5 (a) of the bill, which permits escape-clause investigations to be instituted by "any organization or group of employees,” even where the competing industry does not complain of import competition. Here again, if the domestic industry does not complain, there seems little warrant for launching such an investigation.
Expansion of American business is impeded by section 5 (c) of the bill, which authorizes the imposition of prohibitive duties up to 50 percent on articles Congress has said shall be duty free. The obvious purpose of such an authorization is not to encourage more business, but to create new roadblocks in established channels of commerce.
Nor is expansion of American business helped by section 6 of the bill, which gives the Congress a veto over the Executive determination on tariff rates. This provides a new element of uncertainty to the flow of commerce to and from American factories.
While the pending bill, minus these listed sections, will not encourage any major expansion of United States overseas business, it would at least not discourage whatever business expansion may be possible.
On the other hand, a more restrictive bill would not help the American economy, but would seriously injure it.
Import restrictions on copper and copper products, for example, would not help our mining industry. The current temporary problems in copper are worldwide and their solution does not lie in national import restrictions. The plight of the American miner is further compounded by the sharp decline in United States industrial production, particularly in American exporting industries, and a further decline by the loss of export markets would hurt, not help, both the manufacturers and the miners who supply them.
Another effect of import restrictions is typified in a recent report from Buenos Aires, dealing with increasing Argentine purchases of coal. Argentine industrialists had been buying some Polish coal at $28 a ton and some German coal at $22.50. Currently they are buy