Senator CURTIS [continuing]. of this summary analysis, dated February 26, 1974, and on agricultural products the United States has an average tariff of 15.1 percent; Canada, 9.6 percent; Japan, 40.6 percent; the European Community, 16 percent; and the United Kingdom, 10.8 percent.

Mr. EBERLE. I see. That is the column which has the simple arithmetic average for these tariffs. What you look for is the weighted average which brings those down substantially.

Senator CURTIs. Yes, but what it does it put the United States as the lowest. Ours is 4.8.

Mr. EBERLE. I think that is correct on agricultural imports.

Senator CURTIS. Canada is 5.7, Japan is 27.4, European Community, 8.8-8.4, the United Kingdom 5.

Mr. EBERLE. That is absolutely right. We do have the lowest tariffs on agricultural imports of any country, and I would point out that the footnote in your staff's excellent preparation notes that the European Community tariff of 13.9 does not include the variable levy.

Senator CURTIS. For the European Community?

Mr. EBERLE. That is right. Those come on top, and range from 20 to a 100 percent.

Senator CURTIS. In other words, our tariffs are lower on agricultural products and agricultural products are one of the very redeeming parts of our foreign trade, is that not right?

Mr. EBERLE. That is right, and that is the reason why we think it is so essential to have this negotiation with these people who have higher tariffs.

Senator CURTIS. Now that same table separates the dutiable products which I assume leaves out bananas and coffee and things of that sort, and the average rate in the United States is 8.5, Canada 9.9, Japan 39.7. European Economic Community 13.9. But that does not include the variable rates, is that right?

Mr. EBERLE. That is correct.

Senator CURTIS. And the United Kingdom 9.9. There again, we are the lowest, are we not?

Mr. EBERLE. That is correct. I would point out, the United Kingdom now would fall within the European Community.

Senator CURTIS. That is correct.

Would it take a long explanation so that our record would be complete, of what you mean by a variable duty?

Mr. EBERLE. Variable levy.

Senator CURTIS. By illustration or otherwise, in reference to the United Kingdom or Economic Community.

Mr. EBERLE. Let me submit to you a one-page insert. It will take time to explain how it works because it varies from day to day. It is an arbitrary point as against the world market price and I would rather submit it to you in writing.

Senator CURTIS. Could you give us the tariff equivalent of the variable levy?

Mr. EBERLE. What happens is that it depends on the world market price, and it differs by various products, and can run from zero up to 100-150 percent of the world price.

Senator CURTIS. And oftentimes it runs 40 to 120 percent.
Mr. EBERLE. Oh, yes, absolutely.

Senator CURTIS. And that is true of agricultural products.
Mr. EBERLE. It is probably zero today, I can check.

Senator CURTIS. That is true of agricultural products.

Mr. EBERLE. Not all of them. Soybeans are not under the variable levy and we have a favorable position both in the EC and Japan on that.

POSSIBLE SACRIFICING OF CERTAIN INDUSTRIES?

Senator CURTIS. I know this proposal gives unemployment compensation which would seem to indicate that it was anticipated that we would sacrifice certain industries or parts of industries or products. What criteria will you follow in determining whether or not an industry will knowingly be damaged to the extent that their workers and possibly the industry, too, will seek these benefits?

Mr. EBERLE. Well, let me start by saying that we need this kind of provision whether we have negotiating authority or not because that happens on a daily basis.

Senator CURTIS. Yes.

Mr. EBERLE. What we want to look at here is whether you have an industry that may have a rather sudden impact from imports and you must determine whether that is having an abrupt market impact and, if it is, we have provided that there can be relief provided, not through adjustment assistance, but through temporary tariff safeguards at the border.

Senator CURTIS. Increased protective tariffs or other things?

Mr. EBERLE. Tariffs, quotas, orderly marketing agreements, whatever it may be because it may be for some reason the industry, either fairly or unfairly, is being taken advantage of or can become competitive if they get help of these kinds, so we look at that first.

On the other hand, there may be a segment of that industry that simply is not going to be competitive and I think probably the best example of this lay in the radio electronic field where suddenly some items just simply could not be made competitively here and some production moved abroad, but now is coming back again. Our technology was brought up to date and there was a transition period here. But it is that kind of approach that we will be taking and are taking today. We do not plan to "sacrifice" industry.

Senator CURTIS. Will products made by one or two manufacturers get the same consideration if it is a widespread industry?

Mr. EBERLE. No; we are looking for an overall impact on an industry because, as I tried to explain, because it may not be the import problem that causes it if it is only one or two manufacturers within an industry. Senator CURTIS. I mean, if the whole industry only constituted a few, one or two, manufacturers.

Mr. EBERLE. Absolutely, they would get the same treatment.

Senator CURTIS. For instance, I am not asking for solutions at this time but just throwing it out.

Mr. EBERLE. Surely.

Senator CURTIS. In Lincoln, Nebr., we make the Cushman scooters and golf carts, and the Polish similar product undersells them by about $200 a unit and, of course, they are a low-cost vehicle to start with. Yet, there are not many factories in the country that make that sort of a product, and so its effect on the overall economy of the country

and the overall employment may be small but in a particular spot it is very serious.

Mr. EBERLE. If the industry consists of one plant they will get the same treatment as if it got 200 plants and if that is a problem we would be happy to consider that one.

VARIABLE LEVIES

Senator CURTIS. Yes. This one can be answered for the record. On the variable levy, I think I understand it, but would you spell out two or three concrete examples and date them?

Mr. EBERLE. All right.

Senator CURTIS. As to when they existed, where the variable levy was reasonably low and still was there and one where it went high and a little explanation of the time and the circumstance and the world price which brought it about, about three illustrations.

Mr. EBERLE. I would be happy to do it.

Senator CURTIS. Thank you very much, Mr. Chairman. [The information referred to follows:]

The basic problem facing U.S. agricultural exports to the European Community is the EC's use of trade devices to support its internal farm pricing system. The most important and most troublesome of these devices is the variable levy. This is an import charge to keep prices of imported products at least as high as domestic EC prices, eliminating price competition from outside countries. The variable levy is applied on about one-quarter of U.S. agricultural exports to the enlarged EC. These include feed and bread grains, beef, veal, pork (excluding variety meats), lard, dairy products, poultry and eggs.

In the case of grains, threshold price which is the minimum import price into the community serves as the base for the calculation of variable levies on imports. Every working day the Commission, the executive arm of the EC, collects price quotations for each grain on international markets and adjusts those prices to what they would be if the grain had been of a standard EC quality and had been offered for delivery, c.i.f. Rotterdam. The lowest such adjusted price for each grain is then deducted from the corresponding threshold price. The difference is the variable levy, which is then collected on all imports of that grain regardless of the actual price of the particular shipment. In this way, the EC eliminates both price and quality competition from imports. Imports are effectively limited to those quantities and grades that cannot be supplied by domestic production. Community preference is absolute. "Seasonal" competition is also eliminated by raising threshold and intervention prices monthly during the year to cover storage costs for domestic grain.

In the case of long grain rice, the import levy-related to the difference in prices of EC grown varieties-is generally set by price quotations for cheaper medium grain varieties, and is higher than would apply if a true long grain standard were used.

1 Levies on lard imports, set quarterly, are derived from the price of feed grains.

2 Converted from units of account at UA 1 equals $1.08571 before Feb. 13, 1973 and UA 1 equals $1.20635 after Feb. 13, 1973.

3 Marketing year 1972-73.

Senator HARTKE. Mr. Ambassador, time is late but let me say to you that I think all members of this committee share a very high regard for your intelligence and your ability in the trade field.

I must hasten to add that I do not know of any one man that I disagree with so totally in this critical field of trade. Our decision should be to disagree agreeably. I disagree with your policies, but I do respect your professional ability.

Second, I would like to say for the record, that the staff work which has been done in this field has been effective, accurate, and objective. I want to compliment Mr. Best for the excellent job he is doing. Don't you agree, Mr. Ambassador?

Mr. EBERLE. I certainly do.

BROAD DELEGATION OF AUTHORITY TO THE PRESIDENT

Senator HARTKE. Do you agree that the administration's trade bill is the broadest delegation of legislative authority to the executive which has ever been requested in the history of the United States?

Mr. EBERLE. No. I would have to say that it is the broadest delegation of joint participation with Congress that has been asked for. I do not think you can call it a sole delegation because it does have congressional review and participation in it.

Senator HARTKE. But of such a limited nature as to be practically ineffective.

The second thing which disturbs me is that the President is under rather severe attack. Impeachment proceedings are being considered in the House of Representatives, and here we are preparing to delegate extensive authority to that President whose ability to lead is being challenged.

Do you feel that that is a proper exercise of the separation of powers doctrine under such circumstances?

Mr. EBERLE. The answer is yes, I do, and let me explain why.

First of all, on tariffs, there was more authority, advance authority, granted on tariffs in the Kennedy round than this bill proposes at this time.

Senator HARTKE. But Mr. Kennedy was not under the pressure of such severe charges at that time. I was a cosponsor of that bill and I certainly am not a cosponsor of this measure.

Mr. EBERLE. The point is there was more authority granted in that than today. Two, on nontariff barriers, negotiated agreements on these must come back for congressional review and veto by either House of Congress, so I do not think it is the kind of delegation you suggest. Then, too, if we are successful-and I hope we will be in having Congress participate with us during these negotiations-it is the kind of discussion that gives you the opportunity for input and if you disagree, you have the chance to veto.

IMPORT PROTECTION

Senator HARTKE. I am one of the sponsors of the Burke-Hartke bill and I have been dealing with specific trade legislation since 1971 and I do have some disagreement with you on that. But the point still remains that the administration's trade bill does delegate unprecedented authority to the executive for imposing quotas or eliminating them,

for imposing tariffs or eliminating them, and for renegotiating GATT. You do not have to accept that conclusion. It is also the conclusion of the working population of America and the two most organized labor groups, the AFL-CIO and United Automobile Workers. This latter group is now asking for import protection from small imported automobiles.

Do you think that the union people are blind, therefore, to their own best interests?

Mr. EBERLE. Not at all. I would only suggest to you that our approach and several of these unions' approach are not that totally dissimilar Let me try to explain it to you this way, if I can. The placing of quotas on a calculated percentage of imports goes across the board on all products whether there is a problem or not. This bill, by applying the import relief section on a very much more liberal standard than in the past, will allow those industries to quickly come in and get the kind of relief they want when there is a problem.

We are facing that problem issue this way, and the difference is that our trade is only 6 percent of our GNP, and exports somewhere around 12 percent of our total manufactured productive capacity. In other countries, if they respond by an automatic quota it can react against all of our other exports whereas if we have this product-byproduct approach, we do not risk that kind of reaction against the United States. That is why we think we can solve the same problem when there is injury without having our other exports-12 percent of our productive capacity-attacked and precluded from the world markets. It is a two-way street.

Senator HARTKE. The only difference between you and organized labor is that you intend to follow the quota procedure too, but through a different mechanism?

Mr. EBERLE. Only when there is injury and a problem which cannot be solved through other means.

SETTLEMENT OF DEBTS

Senator HARTKE. I think there would be deep apprehension if people really understood what you propose to do in this legislation. Senator Byrd, in his questioning of you, did not take full credit for his own participation in the amendment which was adopted by the Senate. If you will recall, the Byrd amendment was attached to the debt ceiling bill. The Byrd amendment would have required congressional approval of any settlement on debts owed to the United States by foreign countries. The administration opposed the Byrd amendment and it was deleted in the House. Is that a fair statement? The administration opposed it?

Mr. EBERLE. That is my recollection.

Senator HARTKE. The House deleted it because of administration opposition.

Let me give you the facts of the case. The lend-lease debt was about $10.2 billion, if I recall correctly. The agreement which was executed provided for $48 million unlimited payment, with the rest conditioned upon the restriction that there must be most-favorednation treatment granted, is that right?

Mr. EBERLE. Correct.