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to other foreign nations similarly engaged in fishing. This treaty established a duty of 178 cents per pound on fillets of cod, hake, haddock, cusk, pollock, and rosefish on an annual import quota of 15,000,000 pounds or 15 percent of the average United States consumption of these species in the three preceding years, whichever was greater. A duty of 21/2 cents per pound was established for imports above this quota but no limit was placed upon the amount of fish that was permitted to enter this country.
In the drafting of this trade agreement with Canada, it was felt that the establishment of a fixed quota at the lower rate of 175 cents per pound and the higher rate of 212 cents per pound for imports over this quota would have the effect of limiting imports at a reasonable level in relation to our domestic production, and thereby afford sufficient protection to the fishing industry of this country.
The trade agreement of 1939 has been wholly ineffective in providing the domestic fishing industry with the protection the agreement was designed to afford. Unless reasonable quotas and restrictions are placed upon imports of fresh and frozen fillets into the United States, our fishing industry is faced with eventual extinction.
In 1939, the first year of the existence of the second trade agreement, the entire production of fresh and frozen groundfish fillets in the United States amounted to 99,500,000 pounds. Imports of the same species of fillets from Canada, Newfoundland, and Iceland during the same period amounted to 9,500,000 pounds or 91/2 percent of our total domestic production.
Imports have continued to increase year by year since 1939, until the year 1948 when the imports of fresh and frozen groundfish fillets of cod, hake, haddock, cusk, pollock, and rosefish reached a peak of 53,566,452 pounds.
Senator MilLIKIN. Will you pause a moment so that I can relate those figures?
In other words, those imports increased from 9,500,000 pounds to 53 million pounds. Is that right?
Mr. DELTORCHIO. That is right.
In 1948 the commercial fisheries of the United States produced 154,500,000 pounds of fillets of the same species. Thus in 1948 the imports represented more than 33 percent of the total domestic fillet production of this country. Expressed in another way, imports during the intervening 10 years have increased more than 500 percent while domestic production has increased approximately 55 percent.
This alarming increase of imports of fresh and frozen fillets from Canada, Newfoundland, and Iceland presents a very serious threat to the fishing industry of Gloucester and of New England. These imports are principally of cod, hake, haddock, cusk, pollock, and rosefish. The catching and processing of these species constitutes almost the entire production of the Gloucester fishing industry and the major portion of that of the New England fisheries. Gloucester industry is endangered by this trend, as is the industry of every other New England port, and unless some action is taken to limit imports to a reasonable amount of our domestic consumption, a fishing port such as Gloucester will be faced with eventual ruin. It is obvious that the second trade agreement has failed to provide the protection intended for the reason that it imposes no limit on the amount of fish which is allowed to enter this country. The higher duty of 212 cents above the quota is entirely inadequate to provide this protection.
Senator MILLIKIN. Will you hold up just a second, please?
Senator MILLIKIN. Now, this trade agreement that had the quota in it; was that the first agreement or the second agreement ?
Senator BREWSTER. That was the second agreement. You see, above the quota they go back to the old rate of 212 cents, and he makes the point that there is no quota at that limit.
Senator MILLIKIN. In other words, the quota has not been effective. Mr. DELTORCHIO. It has not been effective. The rate of 178 cents per pound applies to a quota, which is 15 percent of the total consumption of groundfish fillets in the United States the last preceding 3 years. After that quota is reached, the 212 cents per pound duty applies, but there is no limit on how many pounds can enter the United States at the 21/2-cent rate. So it has no effect whatever.
Senator MILLIKIN. In other words, it is not a complete quota.
By the way, today, of course, with the difference in consumption, the quota for 1949 will again be increased. As announced by our Customs Bureau the 1949 quota at the 17/-cent duty will be 26,881,369 pounds.
One has only to examine the fishing industry in the United States and to compare it with conditions existing in Canada and the other countries to the north to learn why it is impossible for the local fishing industry to compete on an equal basis without adequate Government protection.
Canada, Newfoundland, and Iceland pay substantially less money to the fishermen for their fish than does the domestic industry. For example, as has been brought out here today, fillets are the fleshy portion of each side of the whole fish. In the case of redfish, the yield is 25 to 30 percent. In other words, it takes about four pounds of redfish to produce one pound of fillets. A difference of 1 cent a pound in the purchase price of the whole fish would mean a difference of 4 cents on the initial cost of each pound of fillets before any processing costs.
Senator BREWSTER. You said the difference was 3 and 9 cents. So that multiplying that by 4, you would have 12 and 36 cents, a difference of approximately 24 cents.
Mr. DELTORCHIO. I don't believe, Senator, the other witnesses referred so much to rosefish or redfish, when they were talking. It was mostly cod, I believe. And I am not going into that, because I think Mr. Fulham of Boston will go into the cod angle. Because we are heavier producers of the rosefish, and I think he will take in the cod. I am just showing you the difference here.
Senator BREWSTER. All right. Mr. DELTORCHIO. In the case of other groundfish species, the yield is approximately 40 percent. In other words 21/2 pounds of whole fish produces one pound of fillets. A difference of 1 cent a pound in the purchase price of whole fish means a difference of 242 cents per pound of fillets of these species before any processing costs. Now, as to cod, and so on; Mr. Fulham will go into that more thoroughly.
At the present time, Gloucester is paying an average of 414 cents per pound for redfish while processors in Newfoundland buy the same species ex vessel for 112 cents per pound. Lower wages paid workers who process the fish in these countries to the north further increase this differential.
In addition to this, the governments of these competing countries have subsidized the building of vesssels, processing plants and freezers, and even subsidized transportation—subsidies which in many instances our own Government has financed, thereby enabling them to build up and strengthen their facilities in order to compete on a more favorable basis with our domestic industry.
The situation already is acute. The alarming increase in the proportion of the foreign imports to domestic production is an indication and a warning that unless definite measures are taken now to prevent this ever-increasing trend, the fresh and frozen fish industry of Gloucester and New England will suffer the same fate that befell the salt fish and smoked fish industry, which has for all practical purposes been eliminated as a domestic industry for the same reasons that now threaten the fillet industry—the lack of adequate tariff protection.
Senator MILLIKIN. Do you have any documentation of this last statement; to wit, that the lack of tariff protection put the salt fish and smoked fish industry out of business?
Mr. DELTORCHIO. Well, I haven't anything with me, but certainly history has shown how it happens. If Canada goes into all of that, with their cheaper costs, they produce a lot of salt fish, and GortonPew, one of the companies in town, does very little of it. Our local boats practically catch none. They couldn't compete with the Canadian boats.
Senator BREWSTER. In other words, you say the figures will show that where formerly there was a large salt and smoked fish industry in this country, it has now practically disappeared, and meanwhile the industry has developed to the north of us, in Canada and Newfoundland and taken over our markets?
Mr. DELTORCHIO. That is right. I believe that Gloucester, if I remember my history, was one of the greatest salt fishing ports in the world at one time. And today the production of salt fish is nil.
Senator BREWSTER. We used to send vast quantities of that to the Caribbean, did we not?
Mr. DELTORCHIO. That is right.
Mr. DELTORCHIO. That is right. That has more or less now swung over into the fishcakes, you see, and things like that, but the salt fish is practically out.
Senator MILLIKIN. We no longer produce salt codfish? Mr. DELTORCHIO. Practically none; a very small quantity. What does come in is some green cod, what we call green cod, salt cod that is shipped in here from Canada, and they process that and make fishcakes, and so forth.
The fishing industry of Gloucester and New England has faced critical periods in the past, due in part to unrestricted imports of fillets
into this country. In 1937 when inventories of frozen fish in stora ge, mostly groundfish fillets, were excessively heavy, the entire New England fish industry was seriously affected. Many of the fishing boats were forced to tie up. To relieve the situation the United States Government that year appropriated $1,000,000 to enable the Federal Surplus Commodities Corporation to remove the surplus so that the industry could operate on a normal basis. Ten million pounds of frozen fish fillets were purchased and distributed by the Government in order to revive the industry. It is significant to note that during 1937 the United States imported 10,226,000 pounds of frozen fillets from Canada, practically the identical amount which the Government determined was necessary for the Federal Surplus Commodities Corporation to purchase in order to relieve the New England fishing industry, and restore it to a competitive position.
Again in 1946, fillet imports into this country amounted to 49,500,000 pounds, 39 percent of the total domestic production of groundfish fillets for that year. Gloucester dealers were compelled to carry tremendous inventories into 1947 and during the spring of that year lost more than one-half million dollars when they were forced to sell fillets which had cost them more than 20 cents per pound to process, for a sale price as low as 13 cents per pound. The same situation applied generally to other fishing ports engaged in the processing and filleting of fish.
A substantial part of the losses sustained by the New England fish industry during the spring of 1947 can be attributed to the high imports of the previous year. The Gloucester fish industry was saved from an even greater loss during 1947 because imports during that year dropped to 35,000,000, 14,000,000 pounds less than had been imported during the previous year. This afforded the necessary breathing spell which enabled the local industry to get back on its feet. This drop in fillet imports during 1947 to 35,000,000 pounds resulted from labor difficulties during that year in Canada.
The industry in Gloucester is faced with an even more acute situation at the present time. Imports of fresh and frozen groundfish fillets during the year 1948 amounted to 53,500,000 pounds. As a result, groundfish fillets in cold storage in the United States on January 1, 1949, amounted to nearly 33,000,000 pounds, as compared with 24,000,000 pounds in storage on January 1, 1948. The present trend of lower prices for foods and other commodities and necessities of life are clear warning of the danger of a repetition of the losses in the spring of 1947. The fishing industry in Gloucester and the majority of firms engaged in the processing of fillets is not in a position to withstand a repetition of those 1947 losses.
The fishing industry in Gloucester has been aware of the critical condition facing it for some time. It has realized that it cannot expect assistance from the Government if it does not endeavor to help itself. Accordingly, the member firms of the Gloucester Fisheries Association have contributed $25,000 toward a national fish advertising campaign presently being conducted by the National Fisheries Institute. In addition to this they have raised and allocated $50,000 for the conduct of a special campaign to advertise Gloucester fish and fish products throughout the country.
All together, the Gloucester industry has contributed $75,000 this year in an attempt to do all in its power to off-set the hardship being imposed upon it in the form of unrestricted imports. This represents striking evidence of the seriousness with which all firms engaged in the fishing and processing industry in Gloucester view the problem.
But advertising alone, while it may help to alleviate the present acute situation, is not the cure and in the long run cannot offset the danger to the industry in the form of the tremendous and ever increasing imports of fish fillets. Furthermore, advertising adds one more item of expense to our product, which does not apply to our foreign competitors. In other words, every nickel our industry spends for advertising also advertises the foreign product. To be effective, this problem must be met directly by the imposition of definite quotas limiting imports into this country.
The preservation of the domestic fishing industry on a sound basis is essential if the industry is to be able to meet the demands made upon it during time of war. During World War II, Army procurement officials continuously called upon the Gloucester industry to provide necessary food for the armed forces. The industry was requested to and gladly did relinquish a substantial part of its commercial requirements in order to take care of the needs of the armed services. There were many weeks when the entire production of the Gloucester industry was turned over to the Army.
If our Government during times of war is in urgent need of a fishing industry which can produce large amounts of food to meet any emergency, it is essential that such an industry be kept and maintained on a strong competitive basis during times of peace. If the commercial fisheries of this country are forced to continue to conduct their business in the case of the unfair competition they are facing today in the form of unrestricted imports, such competition can only result in the gradual extinction of the fishing industry in this country.
To whom can we look in the event of another emergency to help provide our food requirements? We cannot depend upon our neighboring countries to the north to furnish our armed services with their food requirements, in view of our experience in the last war when the production of most of these countries was needed for Great Britain and other European countries. We feel that the healthy condition of the domestic fishing industry is important to the security and welfare of our country.
From this, we believe it follows that the fishing industry in Gloucester and in all of the United States is seriously threatened by the alarming and increasing quantities of fillets being imported into this country. We believe that the only effective relief that can be provided is in the form of reasonable and adequate tariff controls, limiting the amount of fish that can be taken into this country in any given year. We do not object to fair competition on an equal basis—we welcome it; we expect to share our markets, to a reasonable extent, with our neighboring friends to the north; but we do not feel that we should be asked or expected to share to the extent that we put ourselves out of business.
We have just received figures on fillet imports for the month of January. These total 4,217,000 pounds--20 percent more than was imported into this country in January of 1928. If this increase con