within the context of overall reciprocity we think they and we will be more virtuous as a result.

Senator RIBICOFF. I think the reason there is skepticism in this committee is that over the years-I do not confine it just to this administration-we have found through individual experience that when it came to trade negotiations we were always outpointed, and that our own interests were abdicated. This is one of the problems that I think we are going to have in this trade bill.

GENERALIZED PREFERENCES

Now, Mr. Flanigan, in your excellent international economic report you list as appendix C of the text of the Tokyo Declaration, a declaration signed by the U.S. Government. In it there is stated:

The developed countries do not expect reciprocity for commitments made by them in the negotiations to reduce or remove tariff and other barriers to the trade of developing countries.

Was there any consultation with the Congress before we locked ourselves into giving these countries trade benefits, and would we not want some concessions from these countries?

Mr. FLANIGAN. Senator, that declaration was by us and the other hundred nations in Tokyo. That sets a goal for the overall negotiations in the GATT, and we did discuss with you and other members of this committee and the Ways and Means Committee a year ago what our purposes were here, they included the proposals for generalized preferences. The purpose of this discussion now is to ask you for authority to negotiate just those kinds of preferences, on a generalized basis for developing countries.

Secretary SHULTZ. Ambassador Eberle would like to add a word on

that.

Mr. EBERLE. Two points here: First of all, a generalized preference scheme is really what we are focusing on here because you will notice it refers to the tariffs and we do expect them to have equal obligations under the rules of trade but only allow them to increase their foreign exchange, and those provisions are subject to congressional review. So I think there is the kind of cooperation that we, in forming the general approach, and then bring it back and try to work it out.

LIST OF IMPORTS FROM LESS DEVELOPED COUNTRIES

Senator RIBICOFF. Mr. Flanigan, would you provide the committee wtih a list of what products and in what quantities and volume such less developed countries as Brazil, Mexico, Singapore, Taiwan, and Korea, sent to the United States last year?

I think among other things you will find a lot of refrigerator and automobile parts from Brazil, for example.

Mr. FLANIGAN. I am surprised to hear there were a lot of automobiles from Brazil but I will, Senator, provide that list.

Senator RIBICOFF. My time is up.

[The information referred to follows:]

Source: Prepared by the International Trade Analysis Staff, International Economie Policy and Research, Mar. 12, 1974.

U.S. imports of major commodities from Mexico, 1973
Commodity

Millions

U.S. IMPORTS OF REFRIGERATION AND AUTOMOTIVE EQUIPMENT FROM SELECTED COUNTRIES, VALUED UNDER $1,000,000 EACH IN 1973

1 Values over $1,000,000 included in attached country tabulations of major commodity imports. 2 None.

The CHAIRMAN. Senator Fannin.

Senator FANNIN. Thank you, Mr. Chairman. I certainly commend you for having these hearings. Mr. Secretary, and Mr. Flanigan and Mr Ambassador, I certainly agree we do need the right type of a trade reform bill, Mr. Secretary, if you start with the premise that you are right, and I certainly commend you for feeling that you are, we can easily reach unanimity if we start with that premise, but I think we are all prone to look at these matters and look at legislation from the standpoint of our own experiences and personal observations.

JAPAN AND GATT

I have people coming into my office and they are talking about shortages. Newsprint is in short supply; we are short of waste paper; the Japanese are outbidding us, they say, and cotton the same; the Japanese are outbidding us. Minerals and lumber are the same. Of course, we know in the Middle East the companies were saying, the Arab countries were saying, "If you do not bid our products, our crude, the Japanese will," and they are paying a good price for it. Can we be specific how will this affect our trading with Japan?

Secretary SHULTZ. Well, this passage of this bill is essential to the conduct of the GATT negotiations that have been referred to here. Japan is a party to those negotiations, and in the process of working through them reasonably well have mutual concessions of one kind or another and they will help in our relationships there.

Now, I should emphasize that trade arrangements are not the whole story, by any means. The operation of the monetary system plays an important part as well in what turns out to be our balance of trade and payments with any given country and with the world as a whole.

Senator FANNIN. Mr. Secretary, a couple of years ago I happened to have the privilege of being with some of the Members of Congress when we were talking with the Japanese in Tokyo. We had them all around the table-the businessmen and officials and all—and we asked if they were willing to cooperate in correcting some of the inequity in GATT and they were insulted. They said, "We like it as it is." And I think they are emphatic in that condition and they will not change. If you have different feelings, I would like to hear it.

Secretary SHULTZ. They were the host in the opening meeting taking place in Tokyo and they seemed to be pleased with being in that posture

and they signed that declaration. I think they have come to recognize that the extraordinary surpluses that they were running up were causing great difficulty elsewhere and would eventually cause them great difficulty because people could not and would not sustain them. Furthermore, I would like to believe that it is gradually dawning on people everywhere, here, in Japan and everywhere, that exports in and of themselves are not desirable. They are only desirable to give us the means to pay for the imports that we feel we want to have. There is nothing to be said for just exporting just for the sake of exporting and when that sinks in, and I know that the world has over the centuries gone through fluctuating opinions about this, the Japanese themselves may think that things could be better.

Senator FANNIN. Well, they do not seem to have reached that conclusion with the tremendous exports now that we are taking from their country, and how they are certainly limiting imports to their country where it is labor oriented. But I would like to go on with this because

Secretary SHULTZ. There have been some changes. There is a lot to go.

Senator FANNIN. I realize some.

Secretary SHULTZ. Ambassador Eberle spent half of his life the last few years over there negotiating and has made some headway. Senator FANNIN. I talked to him a great deal about that.

Now, with regard to your comments on countervailing duties because this applies to Japan

Secretary SHULTZ. Could I make an additional observation? Mr. Flanigan has pointed out to me that our exports to Japan in 1972 were $5 billion. In 1973, they were $8.4 billion. Imports from Japan were $9.1 billion in 1972, $9.7 billion in 1973. So our trade deficit, this is just the trade account with Japan, declined from a $4.1 billion deficit to a $1.3 billion deficit. Quite a lot of change.

COUNTERVAILING DUTY LAW

Senator FANNIN. I realize most of the raw materials and non-labororiented products and the labor-oriented products come this way; the non-labor-oriented products go the other way.

But just to get to this question, in regard to your comments on the countervailing duty law, it is my undertsanding that your department interprets this statute in such a manner that relief for domestic producers is practically nonexistent. Now, if we specifically say in the new law that you do not have to enforce the law for 4 more years, how do we protect a domestic producer from an unfair trade practice for the next 5 or 6 years?

Secretary SHULTZ. I do not read the law that way. In fact, we consider it our duty to enforce the law as we see it in any case. The provision in the House permits the Secretary to forego countervailing if that action would in and of itself materially disrupt the multinational negotiations that we hope will go on.

Now, there may be instances where such a disruption might be threatened, but that is not necessarily all the cases by any means.

Senator FANNIN. I have great confidence in you, Mr. Secretary, but given the mandatory nature of this provision, why should the Secre