All prepared statements will be much more helpful and useful to the members and staff if they contain subject headings on the subjects and points covered along with a summary of comments and recommendations at the beginning of the statement.

summer

SUMMARY OF NEW TRADE LEGISLATION AS SENT BY THE PRESIDENT TO THE CONGRESSEA

ON JANUARY 25, 1962

TITLE I-TITLE, EFFECTIVE DATE, AND PURPOSES

1. Title: "Trade Expansion Act of 1962."

2. Effective date: July 1, 1962.

3. Statement of purposes: The statement outlines the essential general welfare, foreign policy, and security purposes of U.S. trade policy and the objective of promoting these purposes through international trade agreements affording mutual benefits. It refers explicitly as among its purposes to the strengthening of economic and political relations with the European Economic Community and with other foreign countries, the assisting of less developed countries, and the countering of Communist economic penetration. The statement also refers to the provision of trade adjustment assistance as a purpose of the new act.

TITLE II-TRADE AGREEMENTS

1. Tariff reduction authority: The bill provides the President with the following types of authority to reduce U.S. tariffs in trade agreements entered into not later than June 30, 1967:

(a) General authority: In relation to countries generally the President is authorized to reduce existing duties by 50 percent.

(b) EEC authority: In negotiations with the EEC, the President is authorized to exceed the 50-percent limitation and to reduce tariffs to 0 on products within categories of which the United States and the EEC together account for 80 percent or more of world exports as measured in a representative period Intra-EEC trade and intra-Communist bloc trade are excluded from the measurement of world exports. Tariff reductions or eliminations under this authority may be made on agricultural products which do not meet the 80-percent "dominant supplier" rule, provided the President finds that such action will tend to assure the maintenance or expansion of U.S. exports of such products.

(c) Special authority for tropical agricultural and forest commodities: The President is authorized to reduce or eliminate tariffs on any tropical agricultural or forest commodity or primary products thereof if the EEC agrees to take similar action on a nondiscriminatory basis and if the commodity or product is not produced in significant quantities in the United States.

(d) Low-duty authority: The President is authorized to eliminate tariffs on products which are dutiable at a rate of 5 percent or less. 2. Prerequisites to negotiations:

(a) Tariff Commission advice prior to negotiations: The President must furnish the Tariff Commission with a list of the products or product categories on which negotiations are proposed. Within 6 months of receipt of the list, the Tariff Commission is required to advise the President as to the economic effect of reductions or eliminations of duties. The Tariff Commission may hold hearings in the course of its investigations. The President may not enter into a trade agreement until he has received the advice of the Tariff Commission or until the expiration of the 6-month period, whichever is the earlier.

(b) Reserve list: The President is required to reserve from trade agreement negotiations any product subject to an escape clause or national security action taken under this or prior trade agreement acts. He may also reserve such additional products as he deems appropriate.

(c) Notice: The President is required to give public notice of intention to enter into trade agreements and provide opportunity for presentation of public views, including views on the reservation of any article from the negotiations.

(d) Transmission to Congress: The President must transmit to the Congress any trade agreement entered into under this act, stating in the light of

1

the advice received from the Tariff Commission and other relevant considerations his reasons for entering into the agreement.

3. National security provision:

(a) Suspension of benefits to Communist countries: The bill continues the existing provision that the President shall deny the benefits of trade agreement concessions to the U.S.S.R. and to countries which are dominated or controlled by international communism.

(b) Safeguarding national security: The bill repeats practically verbatim the present provision of the trade agreements legislation relating to national security. Under this provision the President is required to restrict imports when he determines that an article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security.

4. General provisions:

(a) Most-favored-nation principle: All tariff reductions made under this act will be generalized on a most-favored-nation basis except for the discriminatory action specifically authorized with respect to the Communist bloc. This MFN principle applies not only to the general negotiating authority but also to the special authority for negotiations with the EEC, the tropical products authority, and the low-duty authority.

(b) Suspension of benefits: As in present legislation, the President is authorized to suspend trade agreement benefits to any country which discriminates against U.S. commerce or engages in other actions which in the opinion of the President tend to defeat the purposes of this act.

(c) Staging requirements: Tarriff reductions made under this trade agreements authority are in general to take effect in not less than five equal annual installments. They may take effect in unequal intervals and amounts provided the sum of reductions at any one time does not exceed what would occur under five equal installments. No staging is required for reductions of not more than 25 percent of the existing rate or actions taken under the tropical products or low-duty authority.

(d) Status of existing escape clause and national security actions: Past actions taken to grant relief under the escape clause and national security provisions of prior legislation will continue in effect except that escape clause actions taken more than 3 years before the effective date of the new act will terminate 1 year thereafter unless extended by the President.

TITLE III-ADJUSTMENT ASSISTANCE

1. Forms of adjustment assistance: The bill provides the following forms of adjustment assistance to meet difficulties due to increased imports of like or directly competitive articles as a result of tariff concessions:

(a) Assistance to firms: This includes (1) technical assistance, (2) various forms of financial assistance, and (3) tax relief in the form of special carryback of operating losses.

(b) Assistance to workers: This includes (1) readjustment allowances in the form of compensation for partial or complete unemployment, (2) retraining of workers for other types of employment, and (3) relocation allowances to assist families in moving to an area where employment may be available.

(c) Assistance to industries: In extraordinary cases where the foregoing types of assistance may be inadequate to mitigate the difficulties involved, the President is authorized to apply increased duties or other import restrictions. Under this authority, the President may increase the duty for any article to a rate not more than 50 percent above that existing on July 1, 1934, or may impose a duty not to exceed 50 percent ad valorem on a free list item. Such extraordinary relief will expire at the end of 4 years, unless the President determines that the national interest requires its extension for a longer period. This form of relief may be provided in addition to or as a substitute for other forms of adjustment assistance. 2. Eligibility for adjustment assistance:

(a) Procedures: Petitions for determination of eligibility to apply for adjustment assistance for firms and workers will be filed with the President. Before making a determination as to eligibility, the President must secure advice from the Tariff Commission on the extent to which imports of like or directly competitive articles have increased as a result of a tariff change made in a trade agreement. As regards extraordinary relief for industries,

applications are to be filed with the Tariff Commission, which will advise the President whether the adverse conditions set forth below exist. The President will make the ultimate determination as to the granting of extraordinary relief.

(b) Standards: A firm will be eligible to apply for adjustment assistance if increased imports resulting from a trade agreement concession are determined to be causing or threatening to cause any one of the following three conditions: (1) Significant idling of the productive facilities of the firm, (2) prolonged and persistent inability of the firm to operate at a profit, or (3) unemployment or underemployment of a significant number of the workers of the firm. Only the third standard as to unemployment or underemployment as a result of increased imports due to a tariff concession is applicable to determination of the eligibility of workers of a firm or an appropriate subdivision thereof to apply for adjustment assistance. All three standards must be met to determine eligibility of an industry to obtain extraordinary relief.

3. Administration: Adjustment assistance will be administered through existing agencies and programs of the executive branch. Matters relating to assistance to firms will be referred to the Departments of Commerce and other interested agencies, including the Small Business Administration. Matters relating to assistance to workers will be referred to the Department of Labor and other interested agencies. An interagency Adjustment Assistance Advisory Board chaired by the Secretary of Commerce will be established to advise the President and the administering agencies on the development of programs for adjustment assistance to firms and workers.

[H.R. 9900, 87th Cong., 2d sess.]

A BILL To promote the general welfare, foreign policy, and security of the United States through international trade agreements and through adjustment assistance to domestic industry, agriculture, and labor, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

TITLE I-TITLE, EFFECTIVE DATE, AND

PURPOSES

SEC. 101. SHORT TITLE AND EFFECTIVE DATE.

Text of

This Act may be cited as the "Trade Expansion Act of 1962", and shall take effect on July 1, 1962.

SEC. 102. STATEMENT OF PURPOSES.

It is the purpose of this Act, by lowering trade barriers through trade agreements affording mutual benefits, to stimulate the economic growth of the United States, maintain and enlarge foreign markets for the products of United States industry and agriculture, and make available to the people of the United States a greater variety of goods at lower prices; to strengthen economic and political relations with the European Economic Community and foreign countries through the development of an open and nondiscriminatory trading system in the free world; to assist in the sound economic progress of countries in the earlier stages of economic development; and to counter economic penetration by international communism. In addition, it is the purpose of this Act to provide appropriate assistance to enterprises, workers, and farmers of the United States in adjusting to new conditions which may result from increased trade with the European Economic Community and foreign countries.

TITLE II-TRADE AGREEMENTS

CHAPTER 1-GENERAL AUTHORITY

SEC. 201. AUTHORITY FOR ALL TRADE AGREEMENTS.

(a) In order to further the purposes of this Act, the President may, until the close of June 30, 1967, enter into trade agreements with foreign countries or instrumentalities thereof; and he may proclaim, in accordance with the provi

sions of this title, such continuance, reduction, or elimination of any existing duty or other import restriction, or such continuance of existing duty-free o excise treatment, as he determines to be required or appropriate to carry ou such trade agreements.

(b) In carrying out any trade agreement under this title, the President shal not proclaim a rate of duty on any article lower than 50 percent of the rate of duty existing on July 1, 1962, except as otherwise provided in this title.

SEC. 202. AUTHORITY FOR LOW-RATE ARTICLES.

In carrying out any trade agreement under this title, the President may proclaim duty-free treatment for any article which is subject to a rate of duty existing on July 1, 1962, of not more than 5 percent ad valorem or to a rate of duty existing on that date the ad valorem equivalent of which is not more than 5 percent.

CHAPTER 2-SPECIAL AUTHORITY FOR EUROPEAN

ECONOMIC COMMUNITY

SEC. 211. BASIC AUTHORITY.

(a) If the President determines that the United States and the European Economic Community together account for 80 percent or more of the aggregated world export value of all the articles within any category, he may, in carrying out any trade agreement with the European Economic Community under this title, issue proclamations as to articles within such category without regard to the limitation expressed in section 201(b) of this Act.

(b) For the purpose of a trade agreement with the European Economic Community under this section, the categories to which the authority granted in subsection (a) of this section applies shall be those determined by the President prior to entering into such trade agreement.

(c) For the purpose of making a determination as to any category under subsection (a) of this section:

(1) The "European Economic Community" means the European Economic Community as of the date of the request under subsection (d) of this section: (2) The determination of the "world export value" shall be made on the basis of a representative period falling between December 31, 1956, and the date of the request under subsection (d) of this section. Such determination shall exclude exports from any country of the European Economic Community to another such country, and shall exclude exports from any country dominated or controlled by international communism within the representative period to another country so dominated or controlled; and

(3) A "category" is any three-digit group of the Standard International Trade Classification in the edition current on the date of the request under subsection (d) of this section.

(d) In making a determination under subsection (a) of this section as to any category, the President shall request the advice of the Tariff Commission as to the articles falling within the category, the representative period for computation with respect to such category, and the world export value of such articles in the representative period.

SEC. 212. AGRICULTURAL COMMODITIES.

In addition to other authority provided in this title, the President may, in carrying out any trade agreement with the European Economic Community under this title, issue proclamations as to any agricultural commodity or product thereof without regard to the limitation expressed in section 201(b) of this Act, if he determines that such agreement will tend to assure the maintenance or expansion of United States exports of such commodity or product thereof. SEC. 213. TROPICAL AGRICULTURAL AND FORESTRY COMMODITIES.

(a) In addition to other authority provided in this title, the President may, in carrying out any trade agreement under this title, proclaim the reduction or elimination of any existing duty or other import restriction on any tropical agricultural or forestry commodity or primary product thereof without regard to the limitation expressed in section 201(b) of this Act, if he determines that

(1) the European Economic Community has made commitments to make comparable reductions or eliminations in duties or other import restrictions with respect to such commodity or product substantially without differential treatment; and

(2) such commodity or product is not produced in significant quantities in the United States.

(b) For the purpose of this section, a "tropical commodity" is a commodity with respect to which the President determines that the principal world output is in the area of the world between 20 degrees north and 20 degrees south latitude.

CHAPTER 3-PREREQUISITES TO NEGOTIATIONS

SEC. 221. TARIFF COMMISSION ADVICE ON NEGOTIATIONS.

(a) Before entering into negotiations for any trade agreement under this title, the President shall furnish the Tariff Commission with a list of articles or categories of articles proposed to be the subjects of such negotiations.

(b) Within six months of receipt of such list, the Tariff Commission shall advise the President of its judgment as to the economic effect of reductions or eliminations in duties or other import restrictions on United States firms and workers in industries producing like or directly competitive articles. In so advising the President, the Tariff Commission shall take into account the probability of the occurrence on a widespread basis in the industry of significant idling of productive facilities of firms, of prolonged and persistent inability of firms to operate at a profit, and of unemployment or underemployment of workers. (e) In the course of preparing such advice, the Tariff Commission may hold bearings, giving reasonable public notice thereof, to afford opportunity for interested persons to be present, to produce evidence, and to be heard.

(d) No trade agreement shall be entered into until the President shall have received advice from the Tariff Commission under this section or until the expiration of the six-month period, whichever shall occur earlier.

SEC. 222. RESERVATION OF ARTICLES.

The President shall reserve, from negotiations under this title for the reduction or elimination of any duty or import restriction, any article as to which there is in effect, at the time of such negotiations, any action taken under section 232 or 351 of this Act, under section 2(b) of the Act entitled "An Act to extend the authority of the President to enter into trade agreements under section 350 of the Tariff Act of 1930, as amended", approved July 1, 1954, as amended (19 U.S.C. 1352a), or under section 7 of the Trade Agreements Extension Act of 1951, as amended (19 U.S.C. 1364), and may so reserve any other article he determines to be appropriate, taking into consideration the advice of the Tariff Commission furnished under section 221 (b) of this Act.

SEC. 223. NOTICE.

Before entering into negotiations for any trade agreement under this title, the President shall afford an opportunity, after reasonable public notice, for any interested person to present his views, including views on the reservation of any article from the negotiations.

SEC. 224. TRANSMISSION TO CONGRESS.

After entering into any trade agreement under this title, the President shall transmit to the Congress a copy of such agreement, stating, in the light of the advice of the Tariff Commission furnished under section 221(b) of this Act and of other relevant considerations, his reasons for entering into the agreement.

CHAPTER 4-NATIONAL SECURITY

SEC. 231. PRODUCTS OF COMMUNIST COUNTRIES.

The President shall refrain from applying any reduction or elimination of any duty or other import restriction proclaimed in carrying out any trade agreement under this title or any predecessor Act, to products of any country or area dominated or controlled by international communism, whether imported directly or indirectly.