Senator CARLSON. Now, I assume it would take a great increase in tariff to protect your industries.

Do you have any ideas of how much of a tariff that would be?

Mr. BELL. Of course there is one real value in the new bill, in that it has a provision by which tariffs can be increased, after escapeclause proceedings, as much as 50 percent, over the tariffs in existence in 1934.

The fundamental difficulty in this provision is that its application is subject to the approval of the executive branch of the Government, and it is very questionable, based on experience, that the administration would put such a high tariff into effect even if it faced a unanimous decision on the part of the Tariff Commission.

Another thing I want to say is that in 1936, the Tariff Commission had made an investigation on bleached goods and related fabrics covering about a year under section 336 of the Tariff Act of 1930, which was geared to comparative costs of production. They did not find the cost of production in Japan but they did take and use the prices, the import value of the goods as the Japanese base, and they recommended an increase which amounted to an average of 43 percent over the 1930 rates, which President Roosevelt and Secretary Hull put into effect immediately.

But that did not have any great effect in limiting the volume of the goods that were coming in at that time. Instead of the value being invoiced at 4 cents a yard, it was just made 312 cents a yard, so the tariff increase was largely ineffectual.

I don't know whether there can be-in most of these goods, I don't believe there are tariffs that we could reasonably expect to have imposed which would effectively balance the actual difference in costs.

Senator CARLSON. I am glad you mentioned this provision which was in the bill which I hoped would be helpful which would permit the President or executive branch of the Government to raise tariffs up to 50 percent.

Mr. BELL. I am glad it is put in there and I think the reason it was put in was that the executive departments of the Government found in their discussions with the Japanese that under the existing law, there was not specific authority to raise tariffs high enough to compensate for the discrepancies.

Senator CARLSON. Well, I can assure you, Mr. Bell, I think every member of this committee feels keenly the situation we are confronted with and we have legislation before us.

I believe you stated you had some question as to the effect, even of adequate tariffs on this, on the imports of textiles. Did you make that statement just now?

I thought you said you had some concern.

Mr. BELL. Yes, adequate tariffs would be all right.

But whether we could ever get adequate tariffs

Senator CARLSON. Of course that is the point.

Mr. BELL. You have got to realize also that when you arrange a tariff structure that would be fair and equal with the Oriental competition, it would be so high that the European competition would find it most difficult to get by.

Senator CARLSON. Then your second suggestion was quota limitations and that is the point I want to discuss with you briefly, be

cause there are other industries in this Nation that would like very much to have quota limitations.

Mr. BELL. Yes, sir.

Senator CARLSON. And once we start, I don't see that we can select one group and not give it to others and that gets to be a problem. I want to mention it becauses I come from a section that produces

oil.

Mr. BELL. Yes, sir.

Senator CARLSON. And the imports of textiles, based on this commercial statement which I have before me, says that all imports of textiles still rank only between 2 and 3 percent of domestic production.

I would like to remind you that the oil industry, which is also having some problems, it is estimated that in the third quarter of this year, the increase of oil imports, residual oil, crude oil imports, finished and unfinished products will be 70 percent higher than it was in 1957 and it is a hundred percent higher than it was in 1954, so when we begin to talk about quotas, get into this picture, there are other fields too, that will have some-have a very good case for quotas and it is one of the problems confronting this committee, one we are seriously considering.

Mr. BELL. I know it is. I can give you a specific example of one of the immediate problems. In the Japanese program one limitation that the Japanese imposed upon themselves was something like a million, I think it was a million fifty thousand dozen shirts.

They kept within the quota, according to official Japanese statistics by shipping in 1957 only 955,000 dozen shirts. But in the meantime we have shirts coming in from HongKong amounting to around 450,000 dozen from Hong Kong as against about maybe twenty-eight or thirty thousand dozen the previous year. Hong Kong was the largest market for Japanese piece goods in 1957, taking over 150 million square yards of cotton textiles.

Senator CARLSON. Mr. Bell, I assure you as one member of this committee I am sympathetic with your problem and I thank you for your testimony.

Mr. BELL. I just do not see how you can write the textile industry off the map of the United States. It is too much embedded into our whole American economy, with all the textile plants and all the sewing plants, located in over half of the States of the Union. This is probably an understatement, and I imagine it would be three-quarters, where the production and distribution of textiles and apparel is a very vital part of the American economy, and as far as price competition goes, we just cannot do it under the handicaps of Government discrimination against us.

Senator ANDERSON. Did I have these figures right that it was 30,000 dozen from Hong Kong the year previous and it jumped to 500,000? Mr. BELL. 450,000.

Senator ANDERSON. When you said a million dozen-you said a million dozen from Japan?

Doesn't that suggest to you the only way to get at this is quotas? Mr. BELL. Yes, quotas imposed by the United States, not by Japan, I don't see how we can go to each of these countries in turn that are

building up their textile industry, as they come up, Hong Kong, and then maybe Formosa, and the Philippines, we have

Senator KERR. Pakistan?

Mr. BELL. Pakistan. Pakistan used to be a very large importing country, and now they have an exportable surplus of textiles.

Senator ANDERSON. And it will grow instead of diminishing?

Mr. BELL. Unquestionably and of course we are not worried about Red China yet but they are building their textile industries, because they can get profits quickly from them and thus obtain capital funds for increasing their plant facilities for the making of steel and heavy goods industries.

Senator KERR. That is the only nation you have mentioned that is not borrowing money from us to build textile industries?

Mr. BELL. Not borrowing, I think we have given in our foreign aid

Senator KERR. What we do not give them we assure them is available by loan.

Mr. BELL. To pay in foreign currencies, yes.

Senator ANDERSON. Senator Bennett?

Senator BENNETT. No questions.

Senator ANDERSON. Thank you very much, Mr. Bell.

We appreciate your testimony.

(The following statistical data was submitted for the record by Mr. Bell :)

STATISTICS OF THE UNITED STATES DEPARTMENT OF COMMERCE AS PUBLISHED BY UNITED STATES TARIFF COMMISSION-UNITED STATES IMPORTS FOR CONSUMPTION Par. 919. Shirts of cotton woven goods—not knit

STATEMENT OF WILLIAM F. SULLIVAN, SECRETARY, NORTHERN TEXTILE ASSOCIATION, ACCOMPANIED BY HENRY TRUSLOW, PRESIDENT, NORTHERN TEXTILE ASSOCIATION

Mr. SULLIVAN. My name is William F. Sullivan.

I am secretary of the Northern Textile Association.

With me is Mr. Henry Truslow, who is president of that association and is also president of the Ponemah Mills in Taftville, Conn., a cotton textile concern.

The association, which was founded in 1954, is an organization which represents the textile mills located principally in New England. We oppose H. R. 12591, first, because it authorizes further reductions in tariffs, and second, because it provides no guaranties that injury to the industry or its various segments will be remedied.

The bill authorizes the President to do nothing about serious injury caused by imports. In fact, he is granted the specific power to "disapprove" the remedies which have been found necessary to prevent or remedy serious injury to a domestic industry.

His "disapproval" can only be set aside by a vote of two-thirds of both Houses within 60 days, an unrealistic procedure which offers no assurance to the industry.

The peril-point and escape-clause procedures in the bill, which give congressional direction to the Tariff Commission, are completely nullified by the subsequent authority to the President to ignore the findings and recommendations of the Commission.

This is further aggravated by the complete lack of any direction by the Congress to the President as to the criteria or rules he should apply in a situation involving serious injury to a domestic industry. Our fears about the operation of H. R. 12591 are founded upon experience and injury which we have received under prior trade agreements legislation. We have been wounded in the past by the GATT, and it is being reloaded with a 5-year supply of ammunition in this bill.

While the Trade Agreements Act has been in effect, American mills have not only lost an increasing share of the domestic market for their products but, in the case of cottons, two-thirds of the export market which that industry had in 1949 has been lost.

From a textile point of view, the trade agreements program has been accompanied by a shrinking of our foreign and domestic markets which amounts to about 13 percent of our total production of cotton textiles for domestic use, this since 1949. This has taken place in the last 8 years, and will continue unless Federal policies are changed.

I said we had been hurt by this type of legislation, and there are certain assurances that have been given that there are plenty of safeguards in the present bill.

Three years ago last March, when we appeared before this committee, as did many others here today, on the matter of extending the present act, H. R. 1, the following assurance had been given by the President to the Honorable Joe Martin on February 17, 1955:

I wish to comment on the administration of this legislation if it is enacted into law *** This program must be, and will be, administered to the benefit of the Nation's economic strength and not to its detriment. No American industry will be placed in jeopardy by the administration of this measure ** Just 1 week before Representative Perkins Bass wrote to the President and stated the textile leaders

fear their industry may be in serious jeopardy if textile tariffs are further lowered

and added:

I am sure you are aware of this problem peculiar to textiles, and that should the Reciprocal Trade Act be extended by the Congress, as provided in H. R. 1, you will bear this in mind, and will take no action which will injure or jeopardize this important industry, or any other for that matter.

The President reassured Mr. Bass on February 17, 1955, as follows:

I appreciate that legislation of this character has always aroused concern among industries that are fearful it may be administered so as to affect them adversely. Such fears are in fact groundless, for it would ill serve our Nation's

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interests to undermine American industry or to lower our high living standards. Our own economic strength is a pillar of freedom throughout the world, and it would be irresponsible to take any action that would weaken it. For this reason no American industry is going to be placed in jeopardy by the administration of this measure. Nor will any American industry be placed in jeopardy in the trade negotiations which are to begin next week at Geneva under the existing trade agreements law.

On June 8, 1955, the House and Senate conference committee approved H. R. 1 in the form in which it was shortly thereafter adopted. On the following day, June 9, 1955, the Department of State issued a press release stating that a new trade agreement had been signed at Geneva on June 8 with Japan and other nations. The full text of the release regarding textiles is as follows:

Among the concessions granted by the United States were moderate reductions of rates on some carefully selected cotton textile items *

Senator KERR. That is all it said?

*

Mr. SULLIVAN. That is all it stated in relation to textiles.

Senator KERR. You know that song, "That is all she wrote." [Laughter.] "I will send his saddle home."

Mr. SULLIVAN. Subsequently, it developed that duties on about 90 percent of the cotton textile production of this country were cut.

The reductions averaged about 25 percent, and in some cases were as high as 50 percent. It is interesting to note that had the Department of State waited 3 days longer, at which time the then-current act expired, it would have had to act under H. R. 1 as enacted and reductions would have been limited to 5 percent or a total of 15 percent over a 3-year period.

Senator ANDERSON. You think those dates were significant?
Mr. SULLIVAN. Yes, sir.

Now assurances by the proponents of the present bill that it "contains fully adequate safeguards for domestic industries" are hardly persuasive.

The consequences of the Geneva reductions of 1955 for cotton textiles are well known. The rate of Japanese textile imports began to soar and became so alarming in 1956 that even the Japanese volunteered not to increase their imports further. In the meantime, however, many of our mills had been permanently closed. This voluntary limitation by Japan, which is due to expire in 1961, is the only thing which stands between 350,000 workers in the cotton textile industry and unemployment.

A 5-year extension of this act might well be construed by other countries as an invitation to take greater advantage of our low textile duties.

The cotton situation is bad and the wool situation is in many ways

worse.

Duties on wool textiles were drastically reduced in 1948, and imports subsequently rose. In the fall of 1956, the United States finally exercised its right to establish a tariff quota under the so-called Geneva reservation, but this arrangement fails to make any provision against the concentration of imports in certain categories of fabrics. Imports of woolen goods tend to concentrate in the higher-quality goods which are relatively light in weight and contain a relatively greater proportion of labor. For example, imports during the first