sold raw cotton to Japan worth $224,524,000, while buying from Japan cotton textiles valued at only $53,793,000, for a favorable balance of $170,731,000.

Significantly, too, Japan's sales of cotton textiles to this country decreased in 1957 by some $10 million from 1956 and by some $11 million from 1955, while her raw-cotton purchases increased in 1957 by some $58 million from 1956 and by some $100 million from 1955. Trade balances in cotton exchanges alone in our favor in 1956 were $102,614,000 and $61,230,000 in 1955.

These statistics reveal that while Japan does export cotton textiles to this country amounting to only about 2 percent of our domestic production, she purchases about a fourth of all the raw cotton sold by the United States abroad.

It would appear to be simple arithmetic to realize that if Japanese textile imports into the United States were substantially reduced, Japan would not be able to purchase as much raw cotton as she presently does, let alone the multitude of industrial and farm products and raw materials that she does.

International trade is a two-way street; we cannot expect to sell unless we are willing to buy. In the case of Japan, she consistently buys almost twice as much as she sells to us.

Of all nations on earth, Japan, probably more than any other country, must trade to survive. With limited land and even more limited natural resources, she must trade in order to live. Her energetic manpower constitutes her only real natural resource.

The United States, on the other hand, while lacking unlimited labor resources, is rich in land, capital, and management.

Thus, the United States and Japan have developed mutually beneficial trade relations under the reciprocal trade agreements program, trade relations which should be encouraged and expanded for the common good.

CONSUMER BENEFITS TOO

Too often ignored in foreign-trade evaluations are the rights of the consumers-unorganized, inarticulate, unrepresented, yet constituting 170 million Americans in our land.

Japanese textiles, in the main, by catering to different economic classes of our citizenry, have enabled many Americans who would otherwise have to do without, to enjoy the luxury of natural fibers. In this way, new markets have been developed; for to many it is not a choice between Japanese textiles and United States products; it is Japanese imports or nothing at all.

Some customers prefer Japanese textiles because of their special qualities for the purposes they have in mind; more find that, dollarfor-dollar, Japanese textile imports are a better buy than competitive goods. They are not cheap in the sense of being shoddy or a waste of money; they are, it is true in most cases, less expensive than domestic items which many of our consumers cannot afford.

On a more general theme, it seems to us that in the past Congress has given too much consideration to the welfare of the manufacturer, while neglecting the consumer.

Protection for industry may be well enough, but it serves to impose a special tax on the consumer to subsidize the manufacturer. More

over, it violates the fundamental right of the American consumer to buy whatever he wants at the price he is willing to pay.

The report of the Joint Committee on the Economic Report, submitted to Congress on January 5, 1956, which summarizes its recommendations and findings on foreign economic policy, has the following on this subject:

It is hard to see why consumers should not have the right to choose such goods as desired, without regard to their origin or their foreign cost.

Until we presume to replace freedom with a controlled system where people are no longer their own masters, this must be so. No group of producers should be allowed to have a vested interest in the right to dictate what our people shall consume. The excuse that such a vested interest is essential to maintaining employment is fallacious, and was not allowed to block the introduction in the past of the automobile to the detriment of coachmakers, the electric streetcar to the detriment of horse breeders, or mechanical refrigeration to the detriment of ice deliverers. Some industries can adapt to the will of the consumer who in a democracy is king. Others have not adapted, and have become extinct. ✶ ✶✶

Our ability to command exotic products is one measure of our progress and freedom from previous limitations in the pursuit of happiness. Let our home producers use their admitted skills in advertising to compete freely with their foreign rivals.

For a Government official to make a moral judgment on how we ought to spend our money is an invasion of liberty and privacy which is acceptable only where obvious public harm follows, as in the uncontrolled use of narcotics. Interference with free consumer choice must rest upon very compelling grounds, and, if these relate to the short-run problems of displacement in certain industries or localities, a solution other than restriction of consumer freedom should be chosen.

If the greatest good for the greatest number is to be our yardstick, then the rights of the consumer should be paramount and all textiles-American-made and Japanese imports should vie on the open market for his trade.

Meaningful reciprocal trade helps to better assure this opportunity.

NATIONAL DEFENSE AND SECURITY

As developed by Secretary of Defense Neil McElroy before the House Ways and Means Committee last February:

The free world today is truly engaged in a new kind of war. "Cold" war does not exactly describe it because weapons are being used and heat is being generated. The weapons are economic, psychological, and political. We have little choice concerning whether we fight this war or not; we are in it.

It is of vital importance that we not only hold our own with these nonmilitary weapons but also make gains, for two reasons: First, if we use the economic, psychological, and political weapons effectively, the chances of ever having to use military weapons are diminished; secondly, if we do have to defend ourselves militarily, our position will be measurably stronger (for our allies will also be stronger because of trade with us).

Secretary of State John Foster Dulles, in testimony to the House committee, reminded us that Japan is the only industrial nation in the Far East and that

in the period of the early thirties, when world markets were closing and international trade declining, the leadership of Japan passed to those who believed that Japan, in order to earn a decent livelihood, would have to impose its rule over China and southeast Asia to insure adequate markets and sources of raw material. That led to war. Today the Soviet Union and Communist China eagerly covet the use of the industrial potential of Japan for their military and economic warfare purposes. The Japanese resist that unholy alliance. But

surely our trade policies ought to help make it possible for Japan to gain a livelihood within the free world. *** Unless we have enlightened trade policies, we shall risk losing all that we thought we had won at so grievous a price in World War II.

Today, our Nation is faced with the greatest threat in our history, including actual attack on our homeland. We need more than ever before allies who will stand with us against the common foe and guard our ramparts of freedom around the globe.

Reciprocal trade, especially with our allies like Japan, helps assure steadfast cooperation, for mutually beneficial commerce is Japan's lifeblood.

ASIAN COMMON MARKET AND FREE TRADE AREA

Much has been made during these hearings of the European Common Market and free trade area.

In preparing to meet this opportunity to expand our trade through an extension of the reciprocal trade program, we cannot afford to overlook the possibilities of other such common markets and free trade areas. We know, for instance, that Red China, supported by the Soviet Union, would like to organize such an association among the newly independent nations of southeast Asia. We are also aware that Japan might well look to developing an Asian common market and free trade area, this time not by force of arms which proved so disastrous, but by the peaceful development of undeveloped regions that could provide her with the raw materials she needs, while purchasing the manufactured items Japan would export.

This is a rapidly changing and challenging world we live in, and we will need to be ever watchful of our national interests. In these troubled times, we need to have permanent authority to negotiate tariff and trade agreements as situations warrant and demand.

SUMMMARY AND CONCLUSION

We, American importers of Japanese textiles, believe that it is in the national interest and the general welfare that the reciprocal trade agreements program be extended.

We view this matter not as a defense of our past trade policies but rather as an opportunity to demonstrate anew our willingness to accept the leadership of the free world, to not only strengthen our own security but that of the free nations, to not only expand our own economy but also the economies of our allies-all to the end that there may be peace and prosperity on earth.

That Japan has a particularly significant relationship with the United States in security and trade matters is of special moment to us. While we do not believe that Japanese textile imports into the United States do, in fact, injure domestic industry or segments thereof, we are not mindful that some imports from foreign lands, including Japan, might well result in actually injury domestic industry. In such cases, where an appropriate agency finds that a specific industry is being injured by imports, we are agreed that the Federal Government should provide necessary "adjustment" relief-not to assure an uneconomic industry or segment to continue to be subsidized, but to allow the workers involved, and the mills and the factories, and

possibly the communities as well, to prepare themselves for new opportunities to serve the Nation more in keeping with our dynamic society and ever-expanding economy.

If it is in the national interest that these imports be admitted into our markets, then any relief for resulting injury to a particular industry should be provided by the Nation. One industry or segment should not be called upon to shoulder a disproportionate share of the impact of imports. Neither should one industry or segment be allowed to prevent imports in the national interest. As much as possible, the benefits and the injuries, if any, of the reciprocal trade agreements program should be shared by all the people.

The "adjustment" alternative should provide adequate safeguards for the rights of the individual workers, of the industries and plants involved, and, also, of communities, too, because a minimum 5-year extension of the reciprocal trade agreements program-without authority for the President to increase tariff duties above those of our highest schedule in history and without emasculating amendmentsis clearly in the national and international interests of the United States and of the free world.

We urge, therefore, early Senate enactment of this legislation, to remind our allies that we are not abandoning them and our enemies that we are strengthening our sinews, militarily and economically, to better defend ourselves against all eventualities.

The CHAIRMAN. Thank you very much.

Mr. Nelson A. Stitt, United States-Japan Trade Council is the next witness. Please have a seat and proceed.

STATEMENT OF NELSON A. STITT, DIRECTOR, UNITED STATES. JAPAN TRADE COUNCIL

Mr. STITT. Mr. Chairman, my name is Nelson A. Stitt. I am director of the United States-Japan Trade Council with offices at 1000 Connecticut Avenue in Washington, D. C.

Our council has a membership of about 170 American and Japanese firms, all located in the United States, which conduct a large part of the trade in both directions between the United States and Japan.

The bill now before the Finance Committee is of great and abiding interest to the council, since that legislation will fix the direction of United States foreign trade policy for the next few years.

While all the world's trading nations are attentively watching these proceedings, those of us interested in the transpacific trade are even more keenly aware of their implications, both because the United States-Japan trade is still in the growth stage and because imports from Japan have come under increasingly heavy attack from persons more concerned with the product competition generated thereby than with the benefits to be derived from an expanded exchange of goods and services.

Japanese imports have been much in the news of late and it is therefore difficult for most persons to believe that imports from Japan represent less than 5 percent of the United States import total and less than 10 of 1 percent of the total sales of all United States manufacturing corporations. Yet these imports have formed the basis

for vociferous demands from all sides for further restrictions upon United States trade and further undermining of a United States trade policy already seriously weakened by protectionist inroads in the past 10 years.

Today we would like to direct the committee's attention to an aspect of United States trade with Japan which must be weighed against the cries of alarm emanating from industries whose difficulties, upon close examination, often have little to do with import competition.

This aspect is the stake of American industry, mining and agriculture in the Japanese market for United States exports. The United States-Japan Trade Council has just published a study, prepared by an independent firm of economic consultants, distributing 1957 United States exports to Japan by commodity by State and region of origin. Facts previously not well known or documented were brought to light, adding up to two outstanding conclusions: 1. Every State and region of the United States has profited from exports to Japan; and 2. Every major segment of the United States economy has a stake in maintaining and increasing exports to Japan.

American exports to Japan in 1957 totaled $1,226,600,000 which made Japan our best customer after Canada.

Over the past 5 years Japan has purchased more of our farm products than any other country, and was our foremost export customer for cotton, wheat, barley, and soybeans. Agricultural shipments in 1957 exceeded $455 million including $217,300,000 in raw cotton and linters, $114,300,000 in grains, $63 million in soybeans and other oilseeds, $19,700,000 in inedible animal oils, $15,700,000 in raw hides and skins, and $9,600,000 in dairy products.

Turning to industrial products, Japan in 1957 bought from the United States $240,400,000 worth of iron and steel products, $163,300,000 worth of machinery and vehicles, $61,700,000 worth of petroleum products, $54 million worth of bituminous coal, and $84,100,000 in chemical and related products.

The table attached to this statement distributes United States 1957 exports to Japan by State. Led by Texas, 7 States had exports of $50 million to $105 million; 10 States had $20 million to $49 million; 20 States had $10 million to $19 million; and the balance had less than $10 million.

These latter, upon examination, prove generally to be States with relatively small populations, where exports were undoubtedly significant on a per capita basis.

For your information, Mr. Chairman, the State of Virginia in 1957 exported over $12 million worth of Virginia products to Japan including chemicals, coal, wood, pulp, iron, and steel products and synthetic fibers.