THE BOARD OF CHRISTIAN EDUCATION OF THE PRESBYTERIAN CHURCH IN THE UNITED STATES OF AMERICA DIVISION OF SOCIAL EDUCATION AND ACTION Statement for the Senate Finance Committee, February 21, 1949, regarding the reciprocal trade agreements bill (H. R. 1211): The following official action was taken by the general assembly, Presbyterian Church, United States of America, June 1, 1948. This official action was taken by nearly 800 commissioners representing 8,455 churches with over 24 million members. "International trade: We recognize that a peaceful and durable world order can be established only upon a sound economic foundation, one that offers the peoples of the world the opportunity to meet at least the minimum necessities of life. Assistance to foreign countries through the European recovery program and other financial measures is of basic importance, but this will ultimately be in vain unless accompanied by an opportunity for other nations to sell goods to America equal in value to those they buy from us and to the money lent them by the United States. Consequently, we look with alarm upon the attempts of certain pressure groups to modify the reciprocal trade agreements so as to nullify future steps toward freeing international trade. The determination of powerful and interested economic groups within the United States to gain special tariff consideration is one of the greatest domestic threats to the stabilization of world economy. The denial of trade with any country will imperil mutual understanding and good human relations, and will not promote peace, world order, and Christian fellowship." Statement submitted by: PRESBYTERIAN DIVISION OF SOCIAL EDUCATION AND ACTION, By FERN M. COLBORN. Hon. WALTER F. GEORGE, Chairman, Finance Committee, NATIONAL PEACE CONFERENCE, United States Senate, Washington 25, D. C. DEAR MR. CHAIRMAN: I am directed, by unanimous vote of the conferees of the National Peace Conference, voting as individuals in our meeting held on January 17, 1949, in New York City, to convey to your committee our hearty approval of the proposed legislation to extend and strengthen the reciprocal trade agreements program. The National Peace Conference has actively supported the reciprocal trade agreements program since its inception. The work of our members has done much to inform public opinion of the value of the program, both for the welfare of the United States and for the peace of the world. As the nations struggle to repair the damage of war and to restore productivity, the reciprocal trade agreements program becomes increasingly necessary. Without some such policy of encouraging trade between nations, there would be serious danger of stagnation resulting from barriers to imports, preventing the purchase of necessary commodities, blocking exports, causing unemployment, distress and instability. Even though such stagnation began in a single nation, it might and probably would prove contagious and tend to spread. We have learned by sad experience that economic ill-health is no respector of national frontiers. The reciprocal trade agreements program is an important means of protecting the economic health of the world, of reducing the social strains favorable to communism and war, and promoting the economic well-being generally. The reciprocal trade agreements program is therefore of value to the security and prosperity of the United States as well as to the peace and welfare of the world. We favor the extension of the reciprocal trade agreements program and we favor freeing it from the limitations imposed on the program last year. Sincerely, RICHARD R. WOOD, President. BRIEF IN OPPOSITION TO H. R. 1211 (By C. A. Cannon, chairman, legislative committee, American Cotton To the Committee on Finance, United States Senate: FEBRUARY 22, 1949. This statement is filed on behalf of the American Cotton Manufacturers' Association. The association represents the largest portion of this country's textile industry with its headquarters in Charlotte, N. C. The majority of the mills represented are located in the Southeastern States. The textile industry is among the Nation's largest from the standpoint of employment, furnishing work to well over a half million Americans. The textile industry views with great alarm the effect that H. R. 1211 would have on the industry if it should be enacted into law without the proper amendments to safeguard the security of the Nation, the industry, the economy, and the American worker. The textile industry is one of our Nation's first lines of defense. Soldiers cannot maintain themselves in either hot or cold climates and cannot use their weapons efficiently without proper clothing. Neither can the civilian population produce efficiently the war materials and equipment to sustain a large army unless they are properly clothed. In addition to clothing soldiers and civilians there are a great number of requirements for cotton textiles in the production, manufacturing, assembling, and transporting of everything used by the military, whether it be airplanes, guns, tanks, or other equipment generally thought of as being of top priority. In 1925 there were 37,900,000 spindles in place in this country and in 1939 there were 24,900,000, a decrease of 13,000,000 spindles in 14 years. To replace these spindles the cost would be not less than 14 to 12 billion dollars. Since the textile industry is so vital to our Nation's security, we should at all times have in operation enough spindles to furnish the normal domestic and export supply by operating two shifts of 40 hours each, with the third shift being available for use in any national emergency. The textile industry is one of the most vulnerable of all American industries under the present Trade Agreements Act and would be placed in a critical condition should H. R. 1211 be enacted into law without being amended to provide the proper safeguards. Foreign countries do not have the incentive to build up heavy industries to produce so-called luxury goods, such as refrigerators, washing machines, electric motors, automobiles, etc., because their countries do not have the standard of living to support this type of industry. On the other hand, each country has had an incentive to manufacture their own clothing and therefore they have an established textile industry that will be expanded, perhaps with American money, to consume the American market. We have already seen evidence of this by the desire on the part of Germany and Japan to send their textile goods to this country. We all know that the present Trade Agreements Act has not had a disastrous effect on the American textile industry because of war and abnormal economic conditions. However, that situation is ended and through extensive subsidization from our own Government, foreign textile industries have been rehabilitated and revived and are again entering into the textile markets of the world. This fact is clearly revealed in the decrease of American cotton textile exports in 1948 as compared to 1947. It is further revealed in the fact that the number of people employed in the American textile industry has steadily decreased since January 1948. We all know that communism thrives in any situation where unemployment, bad economic conditions, and idleness are widespread. We do not see how we can afford to endanger the security and economy of this Nation by enacting legislation that would certainly result in the loss of American markets for some American industries, and, therefore, produce drastically curtailed production in some industries and the complete close down of others. Further reduction of American spindles will seriously endanger our national security and have a disastrous effect on the civilian economy and war potential in time of national emergency. The unrestricted importation of foreign textile goods will result in unemployment of millions of American workers. The American farmer will be without a market for his cotton if the textile industry continues to lose its export and home markets. As an absolute minimum for the continued survival of the American textile industry, H. R. 1211 should be amended to provide: (1) For the continuation of the "peril point" report of the Tariff Commission established by the Trade Agreements Extension Act of 1948. (In this connection the Tariff Commission should be established as a fact finding body with definitely established "peril points" below which the President could not go without going to Congress to explain his position.) (2) For the insertion of an escape clause in all trade agreements which do not now contain such a clause. In conclusion, I wish to express to the committee my appreciation for the opportunity of filing a statement. I hope the information which I have attempted to bring to your attention will be of real value in assisting you in formulating an equitable decision in this problem that is so vital to the welfare of our country. STATEMENT OF WALTER J. MASON, NATIONAL LEGISLATIVE REPRESENTATIVE, AMERICAN FEDERATION OF LABOR, ON THE EXTENSION OF THE RECIPROCAL-TRADE AGREEMENT PROGRAM BEFORE THE SENATE FINANCE COMMITTEE, TUESDAY, FEBRUARY 22, 1949 The American Federation of Labor has long been deeply conscious of the need for a foreign policy, democratically conceived and executed, which in a very forceful and dynamic way would strengthen the ties among the world's democracies and combat any growth of totalitarian government throughout the world. By the activities of our European representatives, our specially constituted free trade-union committee, through our assistance to the European free trade-union movement and the developing unions in Germany, our participation in the International Labor Organization, and our work in helping to establish a new democratic organization of workers in the Americas, we have tried to carry out our concept of a democratic foreign policy by carrying to other people of the world our convictions about democracy and giving them every possible assistance in their fight against totalitarian principles. As part of its foreign-policy program, the American Federation of Labor supports the extension of the reciprocal-trade agreements program; but we have some suggestions to offer. At its recent convention in Cincinnati, the federation unanimously adopted a report of its resolutions committee which reads as follows: "We recommend that the American Federation of Labor support the principle of this act. The reciprocal-trade agreements program offers a method looking toward the further freeing of international trade from restictive barriers. "However, in some instances the duty reductions already made have reached the point where further reductions would endanger the employment in particular industries exposed to competition from abroad. "In supporting the trade-agreements program, we recognize the need of safeguarding American labor in some industries, especially where wages are a relatively heavy factor in the cost of production, against competition that threatens to undermine our labor standards." The reasoning behind this resolution is very simple. It is intimately connected with the efforts this country has been making through the Marshall plan and other measures to achieve a peaceful and prosperous world. The problems of attaining a peaceful and prosperous world are, of course, immense, but we feel a good start has been made. The most crucial area is Europe, and through the European recovery program, we have done much to help restore the war-torn economies of the European democracies. However, the devastating physical destruction caused by the war and the many political, economic, and financial obstacles to normal living which the past 10 years have inexorably brought will make it extremely difficult to restore any real stability to Europe by 1952. One of the more perplexing obstacles to stability in Europe, as well as the rest of the world, involves the problem of achieving balanced trade relations. If Europe is to be self-supporting, it must find ways not only of producing more but of selling more to other countries in return for the products which it must import. The advantages of reducing trade barriers and expanding world trade are too numerous and well-known to be enumerated here in any detail. As workers in the United States we benefit by an expanding world trade in two particular respects: (1) Over 2,000,000 workers in this country are dependent upon exports for their jobs; the most recent analysis of the Bureau of Labor Statistics indicates that the employment of nearly 2,400,000 workers in the first half of 1947 was dependent upon exports. (2) As consumers we are able to purchase foreignmade goods, which otherwise would not be available for consumption in this country. If the principle of reducing trade barriers is valid at all, it is valid with reference to the trade barriers of the United States. If stability can be achieved, it can be achieved only if this country is willing to purchase more products from other nations than heretofore. We must become more importminded. Only in this way can the rest of the world obtain the dollars which are necessary to enable them to make their purchases from us. The chief instrument by which this Nation can contribute toward a progressive reduction in world-trade barriers is the reciprocal-trade agreements program. Under this program, this country has already reduced its duties by some 50 percent on the average; and we have very few quotas on imports and no embargo at all. Because of our stake, as workers in a free society, in developing a peaceful and prosperous world, we firmly support a 3-year extension of this program. While we unequivocally support extension of the Reciprocal Trade Agreements Act, we wish to make it clear that this does not imply endorsement of each and every tariff or import duty which has been or will be negotiated under this program. In fact, we feel that the level of import duties on some commodities may be at a point beyond which further reduction might endanger production and employment opportunities of the domestic industries producing competing products. We have a number of national unions that operate in industries that are faced with competition from imports. The resolution quoted above takes into account the validity of their concern. We support their position. Imports that come from countries where prevailing wages are low do offer a threat to our labor standards and we urge that care be taken to assure ourselves that such imports do not undermine these standards. This is a question of the prices at which such imports can be sold in this country in competition with our own output. We do not fear fair competition. The rate of duty should be sufficient to provide against prices that will force industry to depress wages and seek to impose unsatisfactory working conditions; but they should not be higher. The American Federation of Labor takes the greatest pride in the productivity efficiency of the American worker. We realize that through the application of new production techniques, improved machinery, and the efforts of the organized labor movement in this country, the American worker, with his machine tools, is far more productive and efficient than his counterpart anywhere in the world. This greater productivity is directly responsible for the fact that the American standard of living is higher than anywhere in the world. This high productivity means, in many instances, that the products made by American labor have a lower unit cost in this country than similar articles made abroad, and that many products of American labor can be exported and sold in competition with similar products made in other countries. Nevertheless, what is true for American industry as a whole may not be true for each specific product made in this country There are some instances in which foreign competitors utilizing substandard conditions of employment can and do compete directly with American products and could, in the absence of reasonable protection by import duties, drive these producers to lower levels and deprive American workers of employment I do not mean to imply that we should refrain from reducing our import duties every time a businessman claims the lowered duty will force him out of business. What I do say is that the facts surrounding each proposed reduction must be carefully examined for its possible effects on domestic production and employment, that the total effect of the reduction, on exports as well as imports, must be studied, and that ample opportunity to present their views must be afforded those who might be affected by the reduction. In other words, it would be wise to examine with care the character of competition that would be encouraged by further duty reductions. The Tariff Commission seems to us to be the appropriate agency to carry out the necessary factual investigations of comparative labor costs in various countries and related data needed to aid and guide the State Department in its negotiations. This is good procedure and would not injure the sound administration of the tradeagreements program. We urge that the authority of the Tariff Commission be accorded full recognition in the adjustment of tariff rates and believe that this will not hinder the progress of the trade agreements program. This process of determining possible reductions in import duties is naturally a very complicated one. Because it so directly affects the workers in the industries concerned, it is of primary concern to organized labor, and one on which labor must be consulted. Because this question is so important, the recent A. F. of L. convention, in endorsing the reciprocal-trade agreements program with the words I have already quoted, added the following comment: 44 * * * We urge that in the process of reaching reciprocal-trade agreements affecting the labor standards of our workers that labor be accorded an appropriate and adequate opportunity of presentation and effectual representation." To a certain extent labor is represented now in the process of determining import duties since, along with other interested parties it is given the opportunity of presenting its point of view before the Committee for Reciprocity Information. However, this representation needs to be strengthened. As it stands now, presentation before this committee must be confined to general comments because no indication is given of the contemplated tariff reductions. In order to make this system more effective, either labor representatives should be part of the team negotiating the agreement or labor should have an opportunity of presenting its views before the proposed reductions are finally adopted. In any event, if the principle of labor representation has any meaning, it should mean that labor's views should be sought with respect to specific import duties and not simply the general level of import duties. BRIEF AGAINST THE REENACTMENT OF THE TRADE AGREEMENTS ACT Prepared by Arthur Besse, president, National Association of Wool Manufacturers, for the Senate Finance Committee, February 22, 1949 The Trade Agreements Act should not be further extended. Much has been said about the act, a considerable amount with the object of concealing its real purpose. It is becoming increasingly apparent that the act is being used to bring the United States to what amounts to a free-trade basis and to freeze that basis by making both the free and dutiable lists the subject of international agreements. Anyone has a perfect right to espouse the principle of free trade, but the advocacy of such a program should be honestly conducted. The aims of such a program should not be obscured by a listing of impracticable objectives, unjustified emphasis on terms such as "reciprocal," or reiterated assurances that no domestic producers will be hurt, when the program, if successful, necessitates a curtailment of the domestic producers' home market. An examination of the record will, I think, show the act in broader perspective and give an insight into its underlying purpose. The original amendment of 1934 The first Trade Agreements Act in 1934 was largely the work of Cordell Hull, then Secretary of State. Mr. Hull has always been consistent in advocating the reduction of tariffs and, so far as I know, has never suggested that the reduction should stop at any particular point. In his "Memoirs," in speaking of his desire to reduce the 1930 tariff rates, Mr. Hull says (p. 358) "It would have been folly to go to Congress and ask that the Hawley-Smoot Act be repealed or its rates reduced by Congress." So the trade agreements program was devised to bypass Congress. According to Mr. Hull (p. 354), the Executive Committee on Commercial Policy drafted a bill delegating tariff powers to the President since the committee was "agreed that only this type of executive agreement could succeed." However, the act was never publicly described by its proponents as a device by which Congress would delegate to the Executive the power to do that which Congress itself would not do if it were consulted. The original act was urged as a measure which would overcome the effects of the depression of the early thirties. Mr. Hull himself said that the act was "not an extraordinary plan to deal with ordinary or normal conditions, nor an ordinary plan to deal with extraordinary conditions" but was "an emergency measure to deal with a dangerous and threatening emergency condition." The drafters of the bill went considerably further and stated that the purpose of the bill was to expand the foreign markets of the world and thus (1) to |