UNITED STATES HOP GROWERS ASSOCIATION, The SENATE FINANCE COMMITTEE, United States Senate, Washington, D. C. GENTLEMEN: May we call your attention to the marked article on page 7 of the accompanying copy of The Hopper, the hop growers' magazine? As you will observe, this article points out the fact that American hop growers are suffering seriously as a result of the tariff reduction authorized by the State Department under the reciprocal trade agreement with Czechoslovakia, and automatically applied to Germany. The 50 percent tariff reduction made effective over the unanimous protest of American hop growers stimulated heavy imports last year in the face of abundant domestic production and resulted in more than a 50 percent reduction in the spot market price for American hops, thereby causing heavy losses to many Pacific coast hop growers. We urgently request that you consider this result of the policy pursued by the State Department prior to the insertion of the moderately protective amendment passed by the Eightieth Congress in the light of the present proposal to remove these "ill advised changes." Bartering away the prosperity of American agriculture in an effort to gain the friendship of nations whose doctrines are diametrically opposed to our own does not make sense from any logical point of view. Stimulating the commerce of other nations by jeopardizing the existence of our own industries is on a par with the theory that the United States should share its resources to the point of exhaustion with the less fortunate nations of the world, including our potential enemies. This sort of nonsense may be politically expedient at the moment because it is widely viewed from an idealistic rather than a practical standpoint. Many of those who have suffered or expect to suffer as the result of its application are silent either because they feel that it is useless to protest under the circumstances or because they expect to be reimbursed by the Government for losses sustained as the result of unjustified tariff reductions authorized by the Congress. The Senate is our court of last resort. We have every right to expect from that body the most careful consideration of our request that any further amendment to the Reciprocal Trade Agreements Act should contain protective features that American industry and the thinking public will consider fair and adequate. Our experience has demonstrated that the operation of the Reciprocal Trade Agreements Act under the supervision of the State Department is grossly unfair. We request at least the retention of the Tariff Commission as an impartial third party. Respectfully submitted. E. L. MARKELL, Secretary. (The article from the magazine referred to above is as follows:) HOP GROWERS SUFFERING FROM TARIFF REDUCTIONS It is obvious, from the trend of policy in Washington since November 2, that the administration plans to continue to reduce American import tariffs with scant regard to the effect upon our domestic economy. This is indicated not only by President Truman's request for a 3-year extension of the Reciprocal Trade Agreements Act, after the removal of the protective measures written into it by the Eightieth Congress, but also by the apparent intention of the State Department to take advantage of the present political situation and public apathy to push through Congress the adoption of the International Trade Organization, which has been hanging fire since last year's discussions in Havana. If we could have any assurance that these measures will be handled with reasonable regard to the welfare of American industry, we could view developments with some degree of equanimity. Unfortunately, this is not the case. The theory back of both of these measures is to promote the interchange of commodities between the nations of the world, which is, of course, a highly describable, even if somewhat idealistic, objective. The practical application of this theory is, however, full of pitfalls. First of all, the agencies charged with the development of the reciprocal-trade agreement and the International Trade Organization acting upon the basis of instructions issued by the State Department, with the approval of the President, are apparently imbued with the thought that our import tariffs must be heavily reduced or eliminated, regardless of the effect of such action upon American industry. Nowhere has this been demonstrated more conclusively than in connection with the hop-import tariff. This situation is outlined briefly in a document recently forwarded by the United States Hop Growers Association to the Ways and Means Committee of the House of Representatives in Washington. This committee considered, during the week of January 24, a proposal on the part of President Truman, in line with his preelection promises, to extend the life of the Reciprocal Trade Agreements Act for 3 years after eliminating the protective features written into the act. The much maligned Eightieth Congress passed a bill, just before the expiration date of the Reciprocal Trade Agreements Act, extending its life for 1 year subject to certain new features designed to give some degree of protection to American producers. The principal provision was a requirement that the Federal Trade Commission determine the point beyond which the cutting of an import tariff would cause or threaten to cause serious injury to domestic producers. While the Federal Trade Commission has no power to prevent tariff cuts beyond the peril points, it is required to submit the results of its investigations to the President who presumably would have to take the Commission's findings into consideration before placing a reciprocaltrade agreement into effect. The President in a recent communication urged that Congress remove this means of enabling him or anybody else to recheck the justification for proposed tariff changes. Just how serious the effect of tariff changes may be was demonstrated during the past season when domestic hop prices reacted sharply to heavier than anticipated imports. The United States Hop Growers Association stresses the effect of the tariff reduction in the following statement: WAYS AND MEANS COMMITTEE, House of Representatives, Washington, D. C.: JANUARY 20, 1949. In connection with the consideration of the President's request to extend the Reciprocal Trade Agreements Act for a 3-year period and for the removal of the protective features written into the 1-year extension by the Eightieth Congress, we wish to call attention to the experience of the American hop growers resulting from tariff reductions imposed upon the industry in 1948 through the reciprocal trade agreements with Czechoslovakia. The United States Hop Growers Association is a cooperative, nonprofit service organization, representing the hop producers of America. On the 18th of December 1946 we filed with the Committee for Reciprocity Information, which was then considering tariff reductions with certain European countries, a brief in opposition to the proposal to reduce the import tariff on hops by a maximum of 50 percent. We are enclosing a copy of this brief because it is important in connection with your present considerations. The two following paragraphs from pages 7 and 8 of that brief summarize the position taken by the hop producers at that time: "Owing to the fact that the cost of producing hops in the United States is several times higher than it was 8 years ago and in view of the high exchange value of American dollars in the markets of the world, it is probable that the present 24-cent tariff on hops provides far less protection than the 18-cent tariff in 1938. This was demonstrated during 1945-46, when 3,770,671 pounds of European hops were shipped into the United States in spite of the 24-cent tariff in the face of abundant supplies in this country, and regardless of the general shortage of hops in many of the other beer-consuming countries of the world. A lower tariff and more abundant European supplies under existing conditions could easily cause a catastrophe as far as American hop growers are concerned, especially if the lower tariff were applied to the cheaper grades of European hops, which would tend to encourage the dumping of low-quality European hops into the American market. "In view of the circumstances as outlined, the hop producers of the United States are strenuously opposed to any reduction, at this time, in the import duty on hops. If some concession seems to be an essential feature of international trade policy, regardless of its effect upon the domestic industries involved, we strongly recommend that any such action with reference to hops be deferred until the American hop industry has had ample opportunity to adjust itself to the after effects of the war." We feel that this was a fair and reasonable position for us to take. Unlike various other domestic agricultural industries that need European outlets, the American hop industry, because of its heavy expansion during the war period when it shouldered the burden of meeting the Western Hemisphere's hop requirements, now greatly needs protection against European hops, during at least the critical readjustment period. We tried to make this clear in our brief and in our testimony before the Committee for Reciprocity Information. However, the negotiators at Geneva decided to reduce the tariff on hops imported from Czechoslovakia by the maximum permissible amount of 50 percent of the prevailing 24-cent tariff. Judging from all indications, our reasonable request was completely ignored, presumably in order to make concessions to our foreign competitors. Before this reciprocal trade agreement could be made effective, Russia had reduced Czechoslovakia to the status of a Communist satellite, but, in spite of our renewed protest, this fact had no effect upon the decision of the State Department to offer the same radical tariff concessions to communistic Czechoslovakia that had been negotiated with its democratic predecessor. Placing a po tential enemy in a position to take commercial advantage of the United States may make sense to idealistic "do-gooders" in the Department of State, but it cer tainly does not appeal to the farmers who now face bankruptcy largely as the result of such policies. The effect of this heavy reduction in the hop-import tariff was strikingly apparent last year. The American crop in 1948 was approximately 50,000,000 pounds. While this was only a moderate crop, it was more than enough to take care of our domestic requirements. In anticipation of a supply closely in balance with demand, the prevailing price to growers for the small volume remaining unsold advanced from around 60 cents a pound in June 1948 to about 75 cents in August. This situation prevailed until the harvest was well under way. Then rumors began to circulate regarding heavy importations of European hops. Hops are used almost exclusively for the manufacture of beer. They have practically no other outlet. Under such conditions a slight surplus above market requirements is immediately reflected in drastically lower prices. Even the rumor of large importations depressed the domestic hop market in the fall of 1948 and when these rumors became a reality, spot market prices dropped sharply from around 75 cents or more per pound to 35 cents-much less than the cost of production. We now witness the phenomenon of hops grown in the United States at the highest cost of production in the world, going begging at the world's lowest price level largely because of our excessive imports. This weakened market situation had, as its usual accompaniment, large-scale rejections of high-priced contract sales, because buyers always become supercritical in their interpretation of quality specifications under depressed market conditions. The demoralized price situation now confronting the hop industry is, in large measure, a direct result of tampering with the hop tariff. Domestic hop users who desire European hops have been able to purchase their requirements in spite of the 24-cent tariff, but cutting the tariff in half increased hop imports by at least a million and a half pounds. Theoretically, this is an insignificant amount, designed to help the poor hop growers in Czechoslovakia and Germany, but practically it turned out to be a sufficient quantity to overload the market and to bring many American hop growers close to the brink of disaster. If the President is to be authorized by the Congress to make arbitrary adjustments in import tariffs, we suggest that he also be authorized to reimburse domestic producers for damages suffered as the result of such actions. We are in favor of the protective measures written into the bill for the extension of the Reciprocal Trade Agreements Act by the Eightieth Congress, because they provide at least some measure of protection to American producers. The hop growers and the Nation as a whole cannot continue to exist as solvent entities if some curbs are not placed upon the tendency of the State Department to pass out concessions to our foreign competitors regardless of the effect of such action upon our own economy. We have confidence in the judgment and fairness of the Tariff Commission, based upon past experience. We regret to say that we cannot make the same assertion regarding the actions taken by the Department of State in their ruthless exploitation of American producers in connection with so-called reciprocal trade negotiations. We feel confident that we are expressing the as yet uncrystallized opinion of American citizenry, when we state that the people's mandate of November 2 was distinctly not a carte blanche authorization to sacrifice the American stand ard of living on the altar of free trade or to bankrupt the United States as a kindly gesture of good will to the less fortunate nations of the world. E. L. MARKELL, Secretary, United States Hop Growers Association. STATEMENT BY THE NATIONAL BOARD OF THE YOUNG WOMEN'S CHRISTIAN ASSOCIATION EXTENSION OF THE RECIPROCAL TRADE AGREEMENTS ACT The national board of the Young Women's Christian Association has supported the reciprocal trade agreements program since its inception in 1934. We have favored each extension of the program after careful study, and have sent informative material to YWCA's throughout the country. At the most recent national convention of the YWCA's of the United States in March 1946, it was voted that: "We will promote and support action by our Government to follow national trade policies which conform to the principles proposed as a basis for an International Trade Organization so that there will be the freest possible flow of trade among all nations." * * * We now wish to urge favorable action by the Ways and Means Committee and by the House of Representatives to extend the Trade Agreements Act until June 12, 1951, with a return to the procedures followed prior to June 1948. These are our principal reasons: 1. Since the United States is the dominant economic power in the world, our action will set standards for world economic cooperation and development. Mutual reduction of artificial trade barriers and discriminatory practices promotes the exchange of goods; expanding multilateral trade helps each country achieve high levels of production and consumption; good living standards are necessary for world political stability and peace. The reciprocal trade program, although never fully tested under normal conditions, has increased our trade with nations participating in it. If the United States fails to extend the Trade Agreements Act at this time, if it is restricted in is operation, or if it is extended for only a limited period, other nations will have cause to doubt the intentions of the United States. 2. Planning now for the return of normal conditions of trade is essential to the successful operation of the European Recovery Program. The nations participating in that program recognize the necessity of reducing barriers to trade. Europe needs multilateral trade for efficient production. Although at present the nations of western Europe have few goods to send us, this is an abnormal condition. If those nations know that they will be able to export to us to balance their imports when more normal conditions return, their production and recovery will be stimulated. Otherwise, continued loans by the United States may be needed to prevent a collapse of western Europe. 3. The successful operation of the International Trade Organization requires mutual and reciprocal efforts to reduce barriers to trade. Renewal of Trade Agreements Act will show our intentions to carry out the principles we have espoused. This action is also needed in order to extend to other countries the 23-nation agreement on tariff reductions reached at Geneva in 1947. 4. Our productive capacity is still being used to the full because of pent-up demands for goods in our own country and because of the operation of the European recovery program. Preparation for more normal conditions should be made now, in order to keep our future production and employment high. Largescale production for both domestic and foreign markets will keep our unit costs of production low, and thereby benefit the consumer. 5. The United States needs now and will continue to need essential materials not available in this country. These imports will help balance our exports but will not do the whole job. Also needed are goods produced better or more efficiently abroad, with concentration by American industries on their most efficient production. This would enable American consumers to purchase goods at fair prices. 6. The above reasons show why extension of the Trade Agreements Act will benefit the women and girls in the YWCA. We have a vital stake as consumers seeking high living standards, and as workers needing a high level of production and employment. We have a deep interest in promoting the peace of the world by every possible means. In this we are impelled to action by our duties as American citizens, by our deep religious convictions, and by our membership in the world-wide YWCA movement. BRIEF OF TOY MANUFACTURERS OF THE U. S. A., INC., RE HEARINGS ON H. R. 1211, EXTENSION OF TRADE AGREEMENTS ACT On behalf of the Toy Manufacturers of the U. S. A., Inc., this brief is filed in opposition to the enactment of H. R. 1211, now pending before your committee. This bill would extend the present Trade Agreements Act without including therein the provision in existing law giving the United States Tariff Commission jurisdiction to establish peril points to govern the negotiation of tariff rates. This industry became an important United States industry during and after the First World War and has developed to its present high standards of production and wage levels through initiative, research, capital investment, and protection against low-cost foreign competition. Our views of the Trade Agreements Act and the trade agreement policy have been made known to this committee from time to time by appearances and briefs, when bills for the extension of the act have been before Congress. This is a matter of record with your committee and we will not unduly extend this brief by its repetition. During the first years of the operation of this act, due to economic factors and international chaos, no bases existed upon which to compare foreign costs with domestic costs and thus determine whether a reduction in the rate of duty should be made, or to regulate the extent thereof. We had also the additional factor of widely fluctuating currencies. These and other factors were realized and considered by Congress, for in 1948 in the reenactment or extension of the Trade Agreements Act it included therein the provisions of the present act placing with the United States Tariff Commission the duty to establish, after investigation and hearings, a limit beyond which reduction could not be made without injury to American production or labor. Since the enactment of this bill, the United States Tariff Commission has promulgated regulations in accordance with law and by its orderly procedure has justified the confidence placed in it by Congress. The Tariff Commission has had but one opportunity to exercise the jurisdiction conferred upon it-the pending schedule of items upon which a new trade agreement is to be negotiated. In the preparation for these negotiations, it has been our experience, and through contact with other industries we learn, that the Tariff Commission has canvassed industry, agriculture, and labor in its attempt to compile facts which would assist our State Department in negotiating with foreign countries upon an intelligent basis so as not to disrupt any branch of our domestic economy. The provision for the participation by the Tariff Commission, we feel, was a wise one and one which should be welcomed by those Government agencies charged with the negotiations, as it has been welcomed and labor and industry in this country. It is our firm belief that in the enactment of the Trade Agreements Act, Congress did not intend to reduce the protection afforded by our tariff to the point where it would result in unemployment to labor or serious injury to agriculture or industry. Economic conditions of the world are still so unsettled as to afford no normal basis where it will be safe to establish permanently the protection needed in the case of the great majority of products and commodities which compete with our production. We feel, however, that the function performed by the United States Tariff Commission is essential to the maintenance of our labor, agriculture, and industry. From the debates on this bill in the House of Representatives and an examination of the final vote thereon, the conclusion is inescapable that the present trend is toward reduction of tariffs and the increase of imports without impartial investigation or the establishment of peril points. We respectfully urge that if it is the intent of Congress to continue the trade agreement policy, the provisions of the act of 1948 conferring jurisdiction on the United States Tariff Commission to determine peril points should be reinstated in H. R. 1211. Respectfully submitted. TOY MANUFACTURERS OF THE U. S. A., INC., By HORATIO D. CLARK. |