this integration and the potentialities of that market to the Unied States. Our whole history proves that we do most of our business with people whose standards of living are high. The standards of living in Europe, if the integration goes forward, can, in my opinion, jump as much as 25 or 30 percent in the next 5 or years. 6 That is going to mean a tremendous opportunity for the export of United States goods into those countries and for our imports from them. Remember, you have got to match them one with the other. Senator FLANDERS. Speaking of the European Common Market, I have said for many years that Europe could do more for itself than we could possibly do for it in establishing that Common Market. Mr. HOFFMAN. That is right. Senator FLANDERS. You were making the case that they would also be doing something for us in establishing the Common Market. Mr. HOFFMAN. That is right. Senator FLANDERS. I note on page 5, near the foot of the page, you say: But it will not strengthen the free world if the European Community retires itself in regional autarky and neutralist self-sufficiency. There are two things involved in that statement. One is the question of immediate self-interest and the other is the long-range selfinterest of the free world. I have been somewhat disturbed in the representations that are made to us from year to year when this question comes up in this room, on the assumption that the strengthening of the free world is the great thing and that everything else in comparison is of minor importance. The economic strength of this country is of primary importance in the opinion, I believe, of all of us, because unless we ourselves are strong, we cannot be helpful. Mr. HOFFMAN. That is right. Senator FLANDERS. I have at times expressed that thought in the extravagant terms of suggesting that our slogan be, "Aid, not trade." Now, I am not putting that as a hundred-percent slogan, but it is one that I want to keep in my own mind. I want to make sure that we are capable of giving aid. Mr. HOFFMAN. That is right. Senator FLANDERS. That we have an abundance of production, an abundance of resources. There are times, particularly, with reference to supporting the possibilities of other nations in obtaining by their own efforts a higher range or standard of living in food, clothing, shelter, and education. That is much more liable to take intelligent aid than it is to furnish grants or loans for bigger steel production. Mr. HOFFMAN. Correct. Senator FLANDERS. And I want to be able to give that aid. I want this country to be strong enough so we can give that aid, give it freely and without distress. So, on that basis, I sometimes throw out that slogan, "Air, not trade." Mr. HOFFMAN. Of course, I quite agree that the most important of all goals is the strength of our own economy. If I felt for a moment that by trading with other nations and expanding that trade we would weaken our economy, I would say that was a strong argument against it. But I think the contrary is true. I think, by expanding trade we strengthen our economy and do not weaken it. And so I would say that that would be my answer there. I do think that we have an involvement in the world we can't avoid, but that is quite a separate subject. Senator FLANDERS. I don't remember clearly, but I think that at the Bilderberct Conference 3 or 4 years ago, which you and I both attended, I raised the question as to whether we were going to let the European nations organize their Common Market or whether we were going to horn in on it. I don't know whether you remember that. Mr. HOFFMAN. Yes. Senator FLANDERS. I got no satisfactory answer except I felt that I was being shushed down by the State Department. Does your point of view as expressed here on pages 4 and 5 indicate that, in a paternal sort of way, we are going to lead, and guide, and direct, these Europeans into larger policies of world strength and improvement and a little bit away from the immediate local advantages to be gotten from the Common Market area? I hate to see them too much cramped in obtaining these local advantages. Mr. HOFFMAN. I don't know that I quite understand the question. I do happen to know quite well most of the people who are directly involved in the Common Market. Senator FLANDERS. I know you do. Mr. HOFFMAN. The great architect for the Schuman plan, and the Common Market was Jean Monnet, of France, and I would say that Schuman, Adenauer, and other people are all involved. Fortunately from the standpoint of the free world, they are all individuals who believe in freer trade, in other words, who want to see an expansion of external trade between the Common Market and the rest of the world. I think the only possibility of a change of policy would result from an act on our part that would be regarded by their opponents as protectionist and give their opponents a chance to attack them on the grounds that we have gone in that direction, and therefore, there is no reason why the people in the Common Market shouldn't go protectionist. That is my concern. Senator FLANDERS. Now just for a moment would you say that if we decided to extend the reciprocal trade policy for only 1 year or 2 year, or 3 years, that we have, therefore, gone protectionist? Mr. HOFFMAN. I would say that any period short of 5 years would not accomplish what I hope can be accomplished, and that is give assurance of stability. No one can say positively Senator FLANDERS. Stability of movement? Mr. HOFFMAN. Stability of movement, but here is the pointSenator FLANDERS. Stability of movement, not stability of place. Mr. HOFFMAN. I want to relate the 4 years. Actually I think that it may take 5, but in this movement toward freer trade within the 6 countries my guess is that it is going to proceed quite rapidly. There will be a 30-percent reduction within that period. That is going to give a great advantage to the manufacturers within that area. I want to see that matched by corresponding reductions in external tariffs. I think you need the 5 years as an evidence that for that period we will have a continued direction to one policy, to overlap the 4 years in which this is going to take place. That is just my own opinion, Senator. It is not an opinion lightly given. In other words, I would think that a 3-year extension would be far less effective in accomplishing what I believe should be our goals than a 5-year extension. Senator FLANDERS. Now we will get back into the mainstream again. The plan proposes a 5 percent reduction per year. Now that is 5 percent on the present basis, not 5 percent of what remains. That is arithmetical, not geometrical. Mr. HOFFMAN. That is arithmetical, yes. Senator FLANDERS. Now getting back again to the main question, I think you know that I told Secretary Dulles, that without new light on the subject, I am prepared to speak and vote for a 3-year extension with the appointment of a commission which shall be more competent, more thorough-going, and reporting on questions which have been sidestepped or overlooked. I may say, as I said before here the other day, that I had on my desk in my office across the hall here, a pile of reports on reciprocal trade which measured 117% inches high, and none of them adequately discussed the questions which are in my mind. I think you have had a copy of my questions; haven't you? Senator FLANDERS. Which I addressed to Secretary Weeks. It seems to me that the whole approach to reciprocal trade treaties has been on an emotional basis, that we had a religious revival service downtown here a few weeks ago in support of it. Some who are the strongest proponents of it get indignant if I ask them questions. I think I want it extended not merely to 3 years, but more or less indefinitely, but I only think that. I certainly am not certain of it, not by any means certain. And for my own benefit, I want this Commission appointed to investigate questions such as those I raise. Now, perhaps it is too much to ask that the whole United States Government be overturned for my own personal benefit, but that is what I am asking, and I hope that we will decide on a 3-year extension and a more competent investigation of the subject than has yet been made. If you would like to address yourself to my intransigent position, I will be glad to listen to you, because the witness has his rights as well as the Senator. Mr. HOFFMAN. I can merely express my hope that you will change your mind and make it five. Senator FLANDERS. It can be done, the investigation can be done in 3, that is in time for new legislation at the end of 3 years. Mr. HOFFMAN. Perhaps I am overinfluenced by my knowledge of the European situation. I think as things have turned out that General de Gaulle, coming into power in France, may turn out to be a very, very good thing. He has been strongly nationalist. I think, however, he has indicated he will respect the present treaties. I think any evidence we can give that we want to continue in the direction we have gone would be extremely useful at this time. Senator FLANDERS. Mr. Chairman, I have no further questions. Mr. HOFFMAN. Thank you very much. The CHAIRMAN. Miss Marjorie Thompson is the next witness. STATEMENT OF MARJORIE THOMPSON, UNITED STATES SECTION, WOMEN'S INTERNATIONAL LEAGUE FOR PEACE AND FREEDOM Miss THOMPSON. Mr. Chairman, and members of the Senate Finance Committee, I am very grateful for this opportunity to come here. My name is Marjorie Thompson, 519 Old Buck Lane, Haverford, Pa., and I am speaking in behalf of the United States section of the Women's International League for Peace and Freedom. Our aim has been, since the league was founded in 1915 under the leadership of Jane Addams, to bring together women all over the world who believe in true justice and freedom, and are determined in their efforts to try, as far as in them lies, to abolish the political, social, psychological, and economic causes of war. It is because of our concern with the economic causes that we have wished to testify today. We believe that an enlightened economic foreign policy must be the base on which our political foreign policy rests. New factors in the world situation make an extended Reciprocal Trade Agreements Act more necessary for the United States than ever before. I shall want to speak later of what it means to those others who are struggling to preserve their freedom and enjoy democratic forms of government. The establishment of the European Common Market made up of six European nations, and the proposed organization of the much broader free-trade area, including Great Britain, mean, quite literally, that this country can no longer afford any kind of isolationist policy or any attempt to withdraw within its own boundaries. The Marshall plan did much toward the economic integration of the countries where it was in effect. The Schuman plan--the Coal and Steel Community-was another successful step in that direction. There is also the possibility of some sort of free-trade area being set up by the South American countries. We should welcome further integration and strengthen it in every way we can because it will raise living standards, help to remove tensions that lead to war between nations, and strengthen the free world. However, we also have to face the problems that the Common Market poses for this country. Trade is a two-way street. The goods we ship must be paid for by the goods we buy; therefore, exports roughly should equal imports, for an imbalance creates an unhealthy economy, not only for ourselves but for the whole world. In 1957 we exported $1912 billion worth of goods and imported $13 billion worth. The "dollar gap" of $612 billion was the largest it had been in 10 years. The countries that bought from us only could do so because they earned dollars by selling to us. Unless we have some means, such as the Trade Agreements Act, by which to negotiate bilateral tariffs, we are in danger of losing our foreign markets. I quote from a representative of labor: United States exporting industries will be faced with the problem of having to clear tariff barriers while their European competitors can export to other European countries in the Common Market without any tariff duties being imposed against them. Clearly the United States exporters will be operating under a severe competitive disadvantage (from statement of Andrew J. Biemiller and Stanley H. Ruttenberg, AFL-CIO, before House Ways and Means Committee, February 21, 1958). This disadvantage will affect both the manufacturers and labor, as well as our agrarian interests. Those who have things to sell will find fewer markets in which to sell them. As for labor itself, we have something like 42 million workers, according to the Department of Commerce, who depend on foreign trade for their employment, either directly or indirectly. Particularly during a recession and in a time of rising unemployment, we should, in view of this, try to strengthen our foreign trade rather than adopt a course that might weaken it. In my own State of Pennsylvania, according to the study recently made by the United States Department of Commerce, one quarter of all persons employed in the State draw their wages from eight industries engaged directly in foreign trade. In addition there are the agricultural workers who have a direct stake in the export of farm products which in 1956-57 amounted to $15 million. There are also the miners, who greatly benefited by exports, and some 2 million other workers who derive a portion of their income from foreign trade. The conclusion that the study reaches is that the net effect of imports on the State of Pennsylvania is overwhelmingly favorable. Without imports there can be no solid basis for selling abroad. Undoubtedly, in some cases of highly protective industries, tariff adjustments might cause a period of difficulty while we adapted our economy in the light of new imports, for we cannot step up our selling unless we step up our buying. The hardship would probably not be greater than that which normally accompanies technological changes. We feel that Congress should consider means for assisting affected industries and workers to adjust to new economic patterns. As one of the manufacturers said before the House Ways and Means Committee: if both United States exports and foreign investments are to be sustained and expanded, there must be more, not less, opportunity for foreign countries to sell whatever they have to offer to the United States markets (from statement of William Blackie, Caterpillar Tractor Co., February 21, 1958). |