to expand wid trade Tropical country and ик only a tiny fraction of our total imports from them. In the interest of efficient division of labor, the greatest attention should be paid to bargaining down Common Market tariffs against our agricultural products. Conversely, as we move toward freer trade, we must make certain that U.S. manufacturers are not discriminated against when it comes to purchasing their agricultural raw materials, such as cotton and wool. 10. The principle of most-favored-nation treatment should be preserved in future trade negotiations. This principle, by which all concessions in our tariff are generalized to all nations, has contributed importantly to the orderly expansion of world trade over the past 25 years. We should reaffirm this principle in any future negotiations with the Common Market to make sure that the imports of all free nations have nondiscriminatory access to both Atlantic markets. 11. Free access should be granted, unilaterally, to the tropical exports of the less developed countries which do not compete with any production here or in Western Europe. It is in our interests to have as large a free market as possible for these products. Typically, they are the staple exports of countries which are trying to bring about both an industrial revolution and reformation in their social and political life in the face of grave poverty and the threat of Communist imperialism. At this stage in their development the earnings from their exports of tropical foods and raw materials provide the bulk of the finance available to them for diversifying and strengthening their economies. If it is in our interests to provide development assistance to these countries, it is certainly in our interests to provide free access, without compensating trade concessions, to as broad a market among the industrialized countries as possible. Safeguards and trade policy 12. The present safeguards in trade legislation are clearly not working well. Both opponents and proponents of liberal trade policy agree that the present peril point and escape clause provisions do not provide prompt and effective help to those firms and workers who face genuine hardship trying to adjust to increased import competition which has resulted from tariff reductions. These provisions do act to deny exporters many opportunities to expand their markets abroad by limiting the authority of our tariff negotiators. Thus, what was originally designed as a safeguard for some domestic producers has turned out to be very largely an obstacle in the way of other domestic producers. 13. The major failing of existing safeguards in trade legislation is that they offer no alternative to the crude weapon of tariff protection. In particular, there is no means of helping firms and workers to adjust to the new competitive position of the United States in the world economy. Either blanket protection is afforded at the expense of consumers and producers who would otherwise get the benefits of freer trade, or we run the risk of making a few individuals and businesses victims of a national policy. 14. The idea of incorporating into trade legislation provisions to permit the President to offer, as an alternative to tariff protection, assistance to individual firms and workers who face hardship as a result of accelerated import competition deserves a try. Such assistance might take the form of loans, tax credits, and technical assist ance for firms and readjustment, relocation and retraining allowances for workers-many of which can be made available through the area redevelopment program. The aim of trade adjustment assistance should be to help firms modernize to become competitive, or to help. firms and workers move into more competitive lines of work. Investment of public funds to this end would only be justified if the economy as a whole benefited through a more efficient use of labor and resources. It should be left to the discretion of the President whether to employ tariff relief or trade adjustment assistance or some combination of both. Senator Pell adds: I am in full agreement with the objectives of paragraph 14 to the effect that there must be a meaningful trade adjustment program. However, I do not believe that this paragraph sufficiently brings out the necessity for depth, vigor, and imagination in developing a really significant trade adjustment program. Cant me 15. The Tariff Commission should continue to advise the President Tor Com about the potential impact of any tariff reductions on domestic adve producers. In the case of import-sensitive industries, the Commission should conduct a continuing review, not limited to times when a specific complaint is before it. To carry out its mission more effectively, the Commission should have clearer and more logical legislative criteria of what constitutes injury or threat of injury. The governing criteria should be the prospect of substantial and prolonged unemployment or of substantial and prolonged idling of machinery and equipment. Rail Piat 16. Efforts to determine "peril points" in advance of negotiations o should be abandoned. Experience has proven conclusively that there is no objective way of making such determinations. Attempts to do so almost invariably result in freezing individual tariffs at their present level and tying the hands of our tariff negotiators without any good cause. In this past year's negotiations in Geneva, nearly 40 percent of the items on which others sought concessions in our tariffs were reserved as a result of "peril point" findings. This amounted to a very serious erosion of the President's authority to negotiate for better access for our exports without any compensating benefits. Any future negotiations with the Common Market along the lines recommended in this report would be impossible under the present peril point procedures. Strensnin 17. The national security provisions of the expiring legislation NS should be strengthened by giving the President greater authority to counter the disruptive tactics of Communist state traders. The Con present provisions relate solely to our own productive plant, but this is too parochial a definition of national security in the thermonuclear age. B. OUR ECONOMIC POLICIES 18. Trade policy in the year 1962 should be considered in close connection with the many objectives of our foreign policy. In particular, the opportunity to negotiate a historic trade agreement with the Common Market involves much more than just an opportunity to expand the flow of trade between us and thereby strengthen гр EEC equals Ficer for Japan our respective economies. Such an opportunity can signal our desire to form a partnership with the nations of the Common Market over the whole range of policies vital to our collective security. 19. The superstructure of such a partnership already exists in the North Atlantic Treaty Organization and the Organization for Economic Cooperation and Development. But both of these organizations still function as though the Atlantic Community were still made up of one very large economic and unit a number of smaller ones. This is no longer true. With the rise of the Common Market the Atlantic alliance is becoming a partnership of equals in the economic as well as the political sense. 20. The very rapid rate of growth among Common Market members should enable these nations to come much closer in the years immediately ahead to matching our contribution to free world defense and economic development. As more liberal trade policies allow each Atlantic market to help strengthen the other, so our military and foreign aid policies should strengthen each other. A more equal sharing of the burdens of military and economic aid should be a prime objective of the U.S. missions at both NATO and OECD. 21. The expanding Atlantic markets together will be able to absorb much more easily than would each by itself the growing trade in Yeef a manufactures from free nations outside of the Atlantic Community. "Семмен Chi Japan, particularly, must have growing trade outlets in the free world to sustain her very rapid rate of economic progress if she is not to turn to Communist China for trade. Western Europe today imposes many more restrictions on Japanese trade than does the United States. In any future trade partnership we should see that Japan has equal and growing access to the markets on both sides of the Atlantic, and thereby that the problems of adjustments are spread more evenly. 22. An important byproduct of a trade partnership between the United States and the Common Market should be closer alinement of policies regarding trade with the Communist bloc. The United States cannot hope to counter the disruptive effects of Communist trade by going it alone. What is needed is a common approach on the part of all the major industrial powers in the free world, particularly in the matter of trade in strategic materials. Such an approach will be much easier if expanding trade opportunities within the free world are assured. 23. Expanded free world trade requires better institutional arrangements than now exist for preventing deficits in international payments from causing international monetary crises. The Subcommittee on International Exchange and Payments of the Joint Economic Committee in its August 23, 1961, report, recommended that an agreement be entered into by the leading industrial nations of the free world to provide standby credits to ease payment difficulties during the period in which more permanent adjustments are being made. Such an agreement was worked out in principle at the meeting of the International Monetary Fund 'in Vienna, Austria, in September 1961, and has since been negotiated under the aegis of the IMF among 10 leading industrial nations, including the United States, Canada, and Japan as well as 7 European countries. Although the draft agreement provides credits in smaller amounts than would be desirable, and is subject to more cumbersome procedures for making them available than would be desired, it is nevertheless a forward step. Prompt ratification of the agreement by the Congress will help to protect the dollar and other leading currencies. trade 24. The OECD should be strengthened to become the forum in which these and other economic policies affecting the Atlantic Community as a whole are reconciled. Through OECD's Development Advisory Committee, member nations are already beginning to coordinate their programs of aid to the less developed countries. We need to press our partners further in the direction of matching our effort. OECD also has set for itself the target of a 50-percent increase in the combined national product of its membership by 1970. Progress toward this target should be reviewed in OECD each year. A reign econ, por. 25. All our foreign economic policy objectives in 1962 come back to to the need to start with trade. It was the prospective benefits of a free trade area that caused the nations of Western Europe to break through centuries of inhibition to form the Common Market. It is the prospective benefits of a wide area of virtually free trade between the Common Market and North America which can bring about the partnership of equals which the United States has been working for steadily since the Marshall plan. The resources of such a partnership are more than equal to the task of defending the free world against Communist imperialism and of assuring the economic advance of those countries of the world which are trying to break with a past of poverty into a future of opportunity. The task in 1962 is to knit those resources together so that each side of the Atlantic reinforces the economic strength of the other. Nothing knits free people together quite like a large and expanding volume of trade. NOTE.-Senator Fulbright, because of the extraordinary press of other congressional duties, was unable to participate in the hearings or committee meetings on this report. For that reason, the findings and conclusions herein set forth are neither approved nor disapproved by him. 81843 O(pt. 1) - 62 - 12 Alumor! complete export agree for FT ? + Form for FT is Chamber for FT SUPPLEMENTARY STATEMENT OF SENATOR SPARKMAN During the course of the subcommittee hearings I was tremendously impressed with the almost complete agreement, if not complete agreement, with which expert witnesses and statesmen expressed the view that the United States must pursue with renewed vigor its policy of gaining reciprocal reductions in tariffs and bringing about the elimination of other barriers to trade among the nations of the free world. There was almost complete agreement, if not complete agreement, that it is of the utmost national urgency that Congress give the President new and broad authority to accomplish these purposes, before the present reciprocal trade authority expires on June 30, 1962. I have been equally impressed that the major business, labor, and farm organizations likewise expressed the view that the United States must vigorously pursue a policy of freer trade and that the President must be given adequate authority to achieve this policy. U.S. CHAMBER OF COMMERCE Speaking for the U.S. Chamber of Commerce, Mr. A. B. Sparboe, vice president of the Pillsbury Co., said, in part: The chamber believes that a sound and expanding international commerce is essential to the continued expansion of the economy of the United States and to the achievement of greater prosperity and strength of all nations. Mutually beneficial trade raises standards of living by providing more goods at less real cost. The United States has a vital stake in promoting measures to achieve a relaxation of discriminatory and restrictive trade practices throughout the world. Such practices include exchange controls, quotas, preferential or discriminatory treatment, subsidies, and other devices. * U.S. trade policy should provide our Government with adequate bargaining authority to make effective agreements for the reduction of barriers to world trade. Such reductions on our part should be accompanied by comparable or appropriate elimination of restrictions on the part of other nations. The current problem concerns that of adquate authority to meet the new challenges in world markets. 4 Hearings, op. cit. p. 265. |