benefit, but they have also stimulated and inspired new and better products in this country. It is a truism in business that success depends in large part on being able to predict the demands of the market. In modern dynamic economies there are so many economic factors at work that such prediction is extremely hard. When governments, including our own, add to the problems of the businessman by uncertainty in laws or regulations, the difficulties become very great. In recent years the foreign trade policy of the United States has been decidedly uncertain. The present bill is the fifth renewal of the Trade Agree ments Act just since 1951. Several of these renewals have involved important changes which significantly affect business operations. Furthermore, provisions have been written into the act which themselves make the conditions for doing business uncertain. The escape clause, in particular, is a real obstacle since it always poses the threat that imports will be restricted just at the moment when the effort of developing a market in the United States has become profitable.

It is hard enough for American businessmen to keep up with these changes with all the resources we have to obtain information on United States laws and regulations. The problems these continual changes create for foreign businessmen are even greater. Yet these foreign businessmen are our customers and our suppliers. Unless they can do business profitably with us, we will not be able to do business profitably with them.

The only conclusion which can be drawn from this is that the present bill to extend the Reciprocal Trade Agreements Act should be enacted without any other amendments to weaken it. The many safeguards which have been written into the act give domestic producers ample protection. If they are given any further protection it can only be at the expense of the much larger section of the American business community which is engaged in one form or another of international business. It is also important that the act should be extended for 5 years so that there will be more stability in this field.

JUNE 23, 1958.

Senator HARRY FLOOD BYRD,

Chairman, Finance Committee

Senate Office Building, Washington, D. C.

MY DEAR SENATOR BYRD: I wish to file this statement favoring the 5-year extension of the Reciprocal Trade Agreements Act without crippling amendments. Because of the Soviet economic offensive around the world, the 5-year tariff reduction program of the newly formed European Common Market, and our own economic recession I feel it more than ever important that the act be extended, that the President's final authority with the best interest of the total nation in mind be not impaired.

After careful study of two reports on the effect of foreign trade on New Jersey, I am convinced that the reciprocal trade agreements extension is essential to the wellbeing of our State. Both of our Senators have agreed with the findings of these reports.

The recent survey made by the League of Women Voters of New Jersey found that a large majority of our manufacturers have a direct interest in foreign trade. Our State is the Nation's sixth industrial producer.

According to a census of manufacturers made by the Department of Commerce, our 8 principal industries employ approximately 555,000 workers, accounting for about 70 percent of all manufacturing jobs in the State, and over 27 percent of all jobs in New Jersey. The study conservatively estimates that the export trades of these 8 industries provides full-time jobs for at least 33,400 workers.

In order that we may help to strengthen the economic status of our friends and allies I urge the Senate Finance Committee to report the Trade Agreements Act out without crippling amendments, and for a 5-year period. In fact, altho the present bill is acceptable to me, I have been disappointed that it is not stronger. Any further weakening of the bill would be disastrous to our own economy and to our already too impaired relations with other nations whose good will and cooperation we sorely need.

Sincerely,

MR. GEORGE B. MARTIN.

BROOKLYN HEIGHTS, N. Y., June 21, 1958.

Senator HARRY F. BYRD,

Chairman, Committee on Finance,

Senate Office Building, Washington, D. C.

DEAR SENATOR BYRD: I am writing in support of the passage, without amendment, of H. R. 12591, for reasons which are contained in the enclosed reprints of a recent article of mine. I request that the article be printed in the record as my personal statement and without reference to my law firm which has no connection with this matter whatsoever.

I would very much appreciate being sent a copy of the portion of the record which contains my statement, if that is possible.

Very truly yours,

PETER T. JONES.

[From the May 19, 1958, issue of Export Trade and Shipper, New York, N. Y.] THE BASIC MEANING OF WORLD TRADE TO THE AMERICAN PEOPLE By Peter T. Jones

The Trade Agreements Act, which underlies our entire reciprocal trade program, is today in serious danger. The present bill, H. R. 10368, with the provisions of which every reader of this magazine is familiar, would extend the program for 5 years from its expiration under the existing law, this June.

In presenting this bill to Congress, the administration for the first time decided to put its "domestic foot" forward, rather than its "foreign foot." Secretary of Commerce Weeks, rather than Secretary Dulles, was chosen for the kickoff in an endeavor to impress Congress with the importance of foreign trade to that which is nearest and darest to the hearts of most legislators-the economic welfare of their own constituents.

In years past the Department of State has been put in command of the fight for our trade program, because it was thought that the most important reason for promoting foreign trade was its crucial role in strengthening our relations with other nations. As far as I can tell, the importance of foreign trade to our foreign relations is still thought by many members of the administration to be the No. 1 reason for fighting for the program, even in time of recession.

POCKETBOOK EFFECTS

But the State Department is not thought to have too many ardent supporters among the folks back home, and our friends in neighboring lands don't vote. Thus this year the administration decided for tactical reasons to emphasize that aspect of our foreign trade program which often seems to be of greater concern to Congress the immediate effect on some of their constituents.

The effect of foreign trade on the American pocketbook and on the general health of our domestic economy is highly important at any time, and especially in time of recession. And a healthy domestic economy is, of course, part and parcel of a strong foreign policy. But everyone is already focusing on the domestic aspect of the question which in fact is of lesser ultimate importance than the foreign aspect, although perhaps easier to comprehend. I should like, therefore, to put first things first by concentrating primarily on an analysis of the role of foreign trade in meeting the greatest challenge of our times-the challenge abroad.

We must never lose sight of the fact that the Soviet Union today is busily waging a cold war against us and, by the very presence of its vast military machine, is also permanently threatening a hot war. Defeat for us in either would be disastrous, although at times, from reading our papers, one would hardly think so. All to frequently, we seem to be focusing with dangerous singlemindedness on our miiltary posture and the threat of hot war. Tonight, however, I am going to stress the cold war, not because we can afford for 1 minute to turn our backs to the danger of hot war, but because it is clear Moscow's military challenge will never go unheeded in America. The reason was well put recently by Douglas Dillon, our capable Under-Secretary of State for Economic Affairs, who said:

"History is repeatedly disclosing that when the Americans are faced with a serious problem which is unmistakably clear to them, they somehow discover the unity, the resources, and the determination to solve it. I do not doubt, therefore, that our missile-satellite program will succeed."

It is because I share this confidence of Mr. Dillon's that I wish to turn to the problems of the Kremlin's cold war, which I think it fair to say, are not unmistakably clear to many of us and which therefore represent a greater danger. Only when we understand the essential nature of this cold war offensive are we able to grasp the full significance of a more liberal trade program in defeating it.

REVOLUTION OF RISING EXPECTATIONS

We are all familiar with the scientific revolution now thrusting us rapidly into the space age, and with the Kremlin's use of this to threaten hot war. But there is another revolution taking place simultaneously which the Kremlin is using to wage cold war. This is the revolution of rising expectations which is spreading like wildfire across the underdeveloped areas.

The driving spirit of this revolution was captured by the historian Arnold Toynbee, when he said:

"Our age will be well remembered not for its horrifying crimes or its astonishing inventions but because it is the first generation since the dawn of history in which mankind dared to believe it practical to make the benefits of civilization available to the whole human race."

Thus the Arab fellaheen in his sun-parched village, the rubber worker in sweltering Malaya, the plantation worker in Africa (and in the United States), the peasant in Guatemala, and families huddled in city slums everywhere-all these human beings for the first time are confidently demanding a better life. This is the key revolution which the Kremlin is exploiting in its cold war drive for world conquest.

By promising to fulfill these new hopes and demands of millions of people everywhere, by offering, as we shall see, very favorable terms of trade and by sending steel mills, technicians, and propaganda to these awakening countries, the Kremlin strives to capture their imaginations, their economies, and finally their governments. And its strivings are not impeded by the fact that many of these unhappy people are today poorer, in comparison to their own standard of living 5 years ago, or in comparison to the size of the gap that existed between their standard of living and our own 5 years ago.

But why so much attention to the underdeveloped areas? Joseph Stalin gave us the beginning of an answer back in 1923, when he said:

"The backs of the British ultimately will be broken, not on the Thames, but on the Yangtze, the Ganges, and the Nile."

By "the backs of the British," of course, he meant the entire Western World. By the Yangtze, Ganges, and Nile he meant that by capturing the markets and raw materials of China, India, Egypt, and the other underdeveloped countries, the Communists could break the economic back of Europe, which depends so heavily on the oil, rubber, metals, and markets of these turbulent areas. And with the fall or neutralization of Europe, the United States would stand little chance of avoiding Communist domination.

THE GRAND STRATEGY

This is the grand strategy-to capture the underdeveloped areas through trade and aid, to bring Europe to her knees by cutting her off from the vital raw materials and markets of these areas, and finally to strangle America by denying us the economic and military strength of Europe. And if anyone doubts the importance of Europe to our national welfare, let him ponder our willing expenditure of countless lives and dollars in two world wars, and more dollars in the Marshall plan to keep Europe free and friendly.

But what of this strategy: Is it anything we have to worry about? Has it accomplished anything? Let's first look at the three rivers on which, according to Stalin, the backs of the British would be broken. The Yangtze is in Chinese Communist hands, and Nasser's Nile can hardly be said to be securely at the disposal of the free world, although it is by no means under Communist control. Of the three, only India's Ganges can be said to be a true symbol of hope for the independent democratic growth of the underdeveloped areas, and even there, as in Egypt and elsewhere, we are liable to lose out if more trade is not forthcoming from our side, on a sustained basis.

Another Communist achievement which highlights the importance of a more liberal American trade program was emphasized by Stalin in 1952, just 5 months before he died. "The disintegration of a single world market," he declared, "must be considered the most important economic consequence of the Second World

War." China and the countries of Eastern Europe have broken away from the capitalist system, forming with the Soviet Union a united and powerful camp opposing the camp of capitalism. He predicted that this shrinkage of markets in the non-Communist world would produce mounting competition and bitterness in the field of foreign trade which, in turn, would facilitate the Kremlin's strategy of division and conquest.

TRADE POLICY'S ROLE

Here's where our trade policy comes in. This geographical shrinkage in the breadth of the free world's markets can more than be compensated for by an expansion in depth. If the nations of the free world steadily lower their trade barriers, the loss of markets to the Communist bloc will be but a drop in the bucket compared to the gain in new markets that will be achieved.

HIGH TARIFF'S CONSEQUENCES

But let's see what happens when we keep our trade barriers up. Let's go back to 1954 and look, for example, at wheat and cotton trade between Egypt and the United States. At that time the Egyptian people were buying some 20 percent of their annual wheat needs from our American farmers, who, reasonably enough, insisted on being paid in dollars. But our high tariff and quota barriers against Egyptian cotton made it increasingly difficult for Egyptians to earn enough dollars to pay for the wheat, machinery, and other goods they needed to buy from us.

So what did they do? They simply stopped buying the 300,000 tons of wheat they had been purchasing from us, at a time when our Government already owned and stored a wheat surplus worth almost $2 million.

A still more serious result of these trade barriers against Egyptian cotton was the signing by Egypt of a trade treaty with the Soviet bloc which permitted her to barter Egyptian cotton for Communist wheat without any payment of scarce foreign exchange. This obviously strengthened Egypt's dependency on the Communist bloc and in addition afforded the Kremlin an excellent opportunity for propaganda against the West. Listen to the following typical example of that propaganda which Moscow is constantly beaming to the underdeveloped nations, propaganda which we facilitate whenever we maintain high tariff barriers. This is an excerpt of a broadcast in Arabic by a Soviet economist entitled: "Arabs Suffer Under United States Trade Control."

"The United States and Britain, as well as Western Germany, are monopolizing the greater part of the exports and imports of Arab countries. Trade with these countries is always subjected to an adverse balance.

"The American and other capitalist monopolists talk a great deal about socalled freedom of trade, but have increased obstacles for importing Arab products. American exports to Egypt, Syria, and Lebanon exceed imports from these countries to America. The chief export, cotton, faces great difficulty because Egypt cannot find markets. At the end of the last cotton season, the quantities of unsold cotton amounted to 900 million pounds. It is known that America is Egypt's most serious competitor in the disposal of cotton."

What has happened to Egypt since 1954 is too well known to bear repeating here, save for the fact that in the last few years the Soviets have provided nearly all the wheat Egypt needed to import, leaving us to our surpluses. Clearly Egypt's drift away from the West was not caused solely by our trade barriers against her cotton. But no one would deny this was a contributing factor.

In fact, in the past, members of the Egyptian delegation to the United Nations have told me on several occasions that our protectionist policy against Egyptian cotton is the one policy they would most like us to change. In view of the many differences between our two Governments, this is quite a revealing statement. We would do well to bear in mind when considering the consequences of our high trade barriers for our relations with other Arab nations which together control some two-thirds of the world's known oil reserves.

SOVIET TRADE WEAPON

There's another reason why high trade barriers are increasingly inimical to our national welfare. Joseph Stalin pointed it out in 1952 when he also predicted that the friction in the free world over shrinking markets would be hastened along by the "high rate of industrial development" in the Communist countries. "One may say with certainty," he declared, "that with such a rate of industrial development, things will soon reach a stage where these (Com

munist) countries will not only have no need to import goods from capitalist countries, but will themselves experience the need to dispose of surplus goods of their own production."

That was in 1952. Today Soviet production is expanding at an annual rate of about 11 percent, while recently our own production has been dropping by the same 11 percent rate annually. Moreover, in recent weeks the latest evidence of Stalin's prediction at work has been flashed across the country by our news services. For many years Great Britain purchased 80 percent of its aluminum from Canada. Recently a new competitor, none other than the Soviet Union, has pushed its own sales of aluminum to Great Britain from a paltry 197 tons in 1956 to a current rate of 23,000 tons, almost one-sixth of the Canadian sales. How do they do it? They simply offer it to the British at $510 a ton instead of at the Canadian price of $552. Thus part of the free world's market has been chopped off and dragged into the Soviet orbit-by means of trade, and the same sort of thing is occurring to a lesser degree with regard to ferroalloys, tin and oil which are also being offered in the free world's markets in growing quantities. Trade is clearly a major weapon in the Kremlin's grand strategy for world conquest.

WHAT'S ONE ANSWER?

What's one answer to this Soviet trade offensive? We must widen and deepen our own channels of trade at every opportunity so that it can never be said that free societies are unable to offer greater opportunities for material, as well as spiritual growth to mankind everywhere.

Having examined the cold war challenge the Kremlin has thrust upon us and the importance of more foreign trade and fewer trade barriers in meeting this challenge, let us now turn briefly to the threat of hot war.

HOT WAR THREATS

To maintain the military balance of power, we must have missile bases in Europe. Recently, however, the doctrine of neutralism on the continent has been gaining more adherents and the movement has not been slowed down by the thought that remaining in alliance with the United States carries with it the obligation to install missile bases on European soil, making our allies, as well as ourselves, primary targets in case of an all-out nuclear attack. There is a growing notion, however wishful and foolish it may be, that a neutral Europe without missile bases would somehow be spared while the United States and Russia shot it out overhead.

Think of the opportunity we would present to these forces of neutralism to win new supporters if, having asked our allies to risk their very lives by building missile bases, we then turned around and announced, "We've just decided not to renew our reciprocal trade program. We're going to keep our dollars; you'll have to go it alone and peddle your products elsewhere." Can you imagine the response? Headlines would scream: "Ike's Trade Bill Killed, No Bases Here."

Unless the administration's trade bill gets through Congress without crippling amendments, our hopes for missile bases in Europe will be as badly damaged as our chances of competing with the Kremlin for the markets of Europe, the markets and raw materials of the lesser developed areas and, most important of all, for the loyalty, respect, and friendship of freemen everywhere.

What do we mean, "without crippling amendments"? We mean that we must have the full 5-year extension of the act, carrying with it the authority to enter into new trade negotiations to reduce tariffs by a total of 25 percent.

Why is this important? Perhaps the key reason concerns the new European Common Market and the disastrous effect its creation is likely to have on our sizable exports to Europe if the administration's request is turned down.

EUROMARKET CHALLENGE

Last year we sold $2.8 billion, or more than 17 percent of our total exports to the six Common Market countries of Germany, France, Italy, Belgium, Holland, and Luxembourg. That's a sizable business.

In the next 4 to 5 years, however, the tariff barriers of the 6 nations in the Common Market against each other will be lowered by about 30 percent, giving goods produced within the Common Market a substantial improvement in price vis-a-vis the present price of comparable American goods.