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The reason I feel that I have something to say is that I have some background in committee trade hearings having served in the Special Office of Trade Negotiations and the Special Information Committee which held public hearings on the Kennedy Round and trade matters subsequent thereto.
At one of these hearings I had the privilege of listening to the testimony of Senator Fannin. The trade business then is not new to me. I guess the only thing I want to say about the bill is that there should be one, and if it is a minimum housekeeping bill, so be it. Perhaps that is disappointing, but I just don't think you ought to let, yourself be thrown off the track by getting too much on the platter which is not susceptible of being subdivided. If you do get into that condition, then there is obviously going to be no bill because there are too many controversial things in it. You ought to have a fall back position. This country has been without trade legislation since August of 1967. We changed our trade policy in 1934 and there never was one day's lapse between 1934 and 1967 without trade authority.
You know in the Congress what happens when there is a vacuum: The executive branch does tend to fill the vacuum. They have done it. It has been awkward. It hasn't been easy for them to negotiate where it was sometime questionable if you had the authority, and what authority, and were you usurping perhaps Executive privileges, so I think that this committee should decide to take the parts that they agree upon out of the House bill and go ahead and at least give our negotiators some form of legitimacy which I think they lack. I think if they don't have it, the Congress is sort of copping out to some extent.
As far as the marriage with business and government, I am glad that you thought of agriculture. I know you also thought of labor and I hope you think of the consumer.
Senator MONDALE. Yes, maybe we should add the consumers, too.
Mr. KRAUTHOFF. Marriages of business and government are not as popular as they might have been at the turn of the century. It is a much bigger household than those two, and there are people who might want to sit down with the businessmen and government when they are changing their grand ideas for the perfect future because there are other people who have thoughts about it, in no way denigrating the expertise of the businessmen. I was in business for 15 years myself and headed a national trade association. Everybody has expertise to put into the negotiations. I think they should all be used.
Senator TALMADGE. Thank you very much, both statements will appear in the record. I am most grateful to you for your statements.
I will turn the chair over to Senator Fannin. I must leave.
Senator FANNIN (presiding]. Thank you for your statements. They are helpful to us.
Certainly I agree consumers are important. One of the most serious problems facing this nation is what OPEC is going to do, the Organization of Petroleum Countries of the World. When the President decided that he was going to try to get consumer countries together, I happen to have been visiting the producing countries at that time and they were up in arms. They said let us not have a consumer country organization that could be the same as a cartel. Of course, they have a cartel, so they want it all their way.
We are facing a very complex world as you well realize. We need to protect the consumer and the only way that I can see that we can protect the consumer is to think about the producer. We are in this country up against some very serious problems. of competing in world trade, and if we don't protect the jobs in the country, we are not going to have consumers because, as you very well brought out, the consumer includes the masses of our populations, the producers— well, they are all consumers. But with most of the consumers, somewhere along the line, there has to be a producer involved with that consumer or they are not going to consume very long. That is a good way to put it. It is just a fact of life.
I agree we need legislative protection in our trade and other areas. Other areas have pointed out we need protection for domestic producers who are injured by unfair foreign trade practice. For example, one of them told us we are being injured by the dumping of the Polish golfcarts. Don't you think our golf industry needs protection against dumping of foreign golfcarts, for instance ?
Mr.KRAUTHOFF. Well, I certainly think they do if in fact dumping has been committed. I think the dumping law has to be followed very exactly. We also have to be careful to make sure that they are not just accused of dumping and they are not scared out of the market.
As a golfer, I know you would agree with me it is nice to have golfcarts. It is nice to have them at the lowest possible rental, and if we acted hastily against the Poles without giving them a fair shake according to our statutes, we might encourage Cushman and others to take advantage of our rather affluent industry.
Senator FANNIN. I happen to know a little bit about the industry. We have a highly competitive industry. We have had companies try to start up in my own State. They have not been able to compete.
Mr. KRAUTHOFF. Did Links ever go to Japan, you were worried?
Senator FANNIN. That was not Links. It was another company in competition, Bing, B-i-n-g.
Mr. KRAUTHOFF. Same design?
Senator FANNIN. Some of the people that now make Link clubs were with the Bing industry. When they left they had a similar design. That is a long story because there are lawsuits galore in this respect. What I am trying to bring out is that we have serious problems with, for instance, the Japanese, or we can go to other countries, but specifically it is brought to my attention by the electronic industry in my State. They say, the Japanese are making 100,000 TV sets and it is costing them $50 a set, but the second 100,000 will just cost them $40 a set. You know what happens. They say we are selling them cheaper in the United States because we are selling them from that second 100,000.
To me that is absolutely wrong and unfair. We are digressing some, but what I am trying to bring out, is that if we are going to be able to continue our competitive position in world trade, we must protect the domestic industry to the point where they are not having unfair competition. I am not in favor of saying that the Poles can't ship a golfcart in here because they will sell under the price of an American golfcart, but if they are building these golfcarts and they are doing as I was illustrating
Mr. KRAUTHOFF. Incremental prices for export.
Senator FANNIN [continuing]. They are selling at a lower price in the United States than they are in their own country, we have laws under the statutes which should apply.
I appreciate very much your testimony, gentlemen. We are not in disagreement. We have to go beyond what you have placed in the statement to fully realize the complexities of the situation. We appreciate your being here.
The hearings will stand in adjournment subject to call.
[The prepared statements of Mrs. Brown and Mr. Krauthoff follow:]
STATEMENT ON BEHALF OF THE CONSUMER EDUCATION COUNCIL ON WELD TRADE
BY DOREEN L. BROWN, CHAIRMAN, CECWT I am presenting this statement on behalf of a number of national organizations, members of the Consumer Education Council on World Trade, who are linked by a common interest in United States trade policy and the welfare of the consumer. The list of organizations joining in this statement is attached. I serve as Chairwoman of this Council on a volunteer basis, as do all of our officers and board members.
The Consumer Education Council on World Trade was established almost two years ago, through the efforts of twenty two national public-interest and consumer-oriented organizations, who felt that the American consumer was neither adequately informed nor adequately represented on trade issues. There had never been sufficient debate on the implications for the consumer inherent in United States trade policy, and individual organizations who attempted to speak on behalf of the citizenry, were being overshadowed by the very vocal vested interest groups.
The Consumer Education Council on World Trade serves as a clearinghouse for the purpose of channeling information to and coordinating activities on trade matters of its participating members, with the objective of achieving more effective action on behalf of the American consumer. Its ultimate goal is an informed and concerned citizenry who will be able to assume its proper role in the formulation of U.S. trade policy.
Our member organizations are in unanimous agreement that every consumer in the United States has a major stake in international trade; that this is an issue that directly affects their economic well-being, as well as their freedom of choice in the market place; that protectionism is against their interest and that it herefore behooves the American consumers to become vigorous advocates of a freer trade policy.
We are anxious that the public become aware of the adverse effects on their welfare of tariffs, quotas and voluntary export restraint agreements, with the danger of retaliatory action, all of which would inevitably reduce the quantity of foreign imports available and thereby raise the price on all goods, as well as limiting significantly the range of consumer choice by making some goods totally unavailable. We are particularly concerned because the low income consumers generally suffer most, since they are most sensitive to any increase in prices, and since low-priced goods from abroad are normally the primary target of U.S. import restrictions. These concerns have increased considerably, both in intensity and in validity, since the inception of this Council, as we all realize that the brunt of the consequences of an inflationary period in our economic history is borne by those least able to compensate.
Although we favor strongly the prompt passage of dependable and effective trade legislation and recognize the importance of such legislation to meaningful GATT negotiations, we are deeply troubled that the pending legislation does not address itself sufficiently to the specific interests of the consumers. Considering that the American consumer is the one most likely to be affected adversely by
trade barriers, and from the potential trade wars which such barriers are prone to generate, this seems to be assigning the consumer a very low priority.
During the last year we have been watching with mounting concern, quotas come and go in response to domestic needs. Protective measures are imposed one day, then as inflation becomes intolerable, lifted the next. The uncertainties of such a policy, while it may offer temporary relief, are not very reassuring and make it increasingly difficult to convince the consumer constituency that its best interests are foremost in the mind of the trade policy formulators or are even being taken into proper consideration.
We presented a statement to the House Ways and Means Committee urging additional consideration for the consumer and we were gratified to see as part of the bill passed by the House of Representatives, the inclusion of consumer representatives on the Advisory Committee for Trade Negotiations which will work with the Special Representative for Trade Negotiations. We do not feel, however, that this is sufficient to protect the consumer and would urge that this Committee seriously consider the following recommendation :
That whenever there is a matter of adjudications, negotiations, determinations or interpretations, or the creation of advisory bodies to the President, the Tariff Commission, the White House Council on Economic Policy, the GATT negotiating authorities or any other entity concerned with the formulation and implementation of U.S. trade policy, there should be included on these bodies representatives of consumer interests. Such representatives would be responsible for voicing and protecting consumer interests only, as distinguished from the other self interests of any particular segment of the population.
I feel certain that the members of the Senate Finance Committee are aware that this is not an original or radical idea. The concept, in fact, has already been approved by Congress in the past. Some years ago a piece of legislation was being considered by Congress related to Tariff Commission matters and containing a provision to include a consumer representative on the Tariff Commission. The entire bill, including the proposal for a consumer representative, passed both houses of Congress. The legislation, unfortunately, was vetoed by President Hoover. To the best of our knowledge, such a proposal has not been reconsidered by Congress. We think it is time that it was, and expanded to include other trade entities as well, so that consumer interest can become a prime factor in the consideration of trade policy, particularly if such a policy is designed, as it is claimed to be, for the benefit of both our national and international interests.
There are several other aspects of the proposed legislation which are potentially dangerous to the welfare of the consumer. We refer in particular to a) the power given to the President to increase, under certain conditions, tariff rates by 50%. b) the easing of standards by which the Tariff Commission determines injury to a domestic industry and the devices which the legislation authorizes the President to use to ease domestic injury. c) the authorization to impose temporary surcharges or import quotas to correct persistent balance of payment deficits. d) the provisions for relief to industries from unfair trade practices.
All of the above, if implemented, would directly affect the quantity and/or prices of imported commodities, the burden of which ultimately would be borne by the American consumer. We do not intend to make specific recommendations to remedy these aspects of the bill, but are commenting on them as a demonstrable example of the lack of consideration being given to the welfare of the consumer.
United States trade legislation, including the pending bill, historically imposes an obligation on the President to protect the interests of American industry and American workers. We do not quarrel in the least with these requirements, but it is necessary that the President should be required to give equal consideration to the interests of the consumer. Their needs should be given particular attention, not merged with other special needs. We would therefore like to see spelled out in the legislation, that whenever the President is mandated to examine the effects on various economic sectors of certain protective or remedial actions before taking such actions, he be obligated to consider the short and long term effects of such actions on the American consumers. In this way, consumer welfare will be given equal priority with that of industry, labor and agriculture.
In his message to Congress on trade the President stated :
"A wide variety of barriers to trade still distort the world's economie relations, harming our own interests and those of other countries. . . These barriers to trade, in other countries and in ours, presently cost the United States several million dollars a year in the form of higher consumer prices and the inefficient use of our resources. Even an economy as strong as ours can ill afford such losses."
We hope that these words are meant to demonstrate a commitment on the part of the United States to develop and implement a new and progressive system of international trade from which all Americans may benefit and which will strengthen our ties with other nations. Such a system to be viable must be consistent with the principles of fairness and concern for all which we so often and readily articulate.
As members of the Consumer Education Council on World Trade, we recognize that all American citizens are American consumers, and that they represent the largest interest group in our country. Their welfare, therefore, is in the interest of the entire nation, both economically and socially. It should not be denied nor overlooked, but should, on the contrary, be given major consideration in the formulation of a "more open and equitable world trading system."
STATEMENT ON BEHALF OF THE CONSUMER EDUCATION COUNCIL ON WORLD TRADE
BY DR. LOUIS KRAUTHOFF, CHAIRMAN, ADVISORY COMMITTEE Mrs. Brown has just told you generally about our Council and the board consumer interests which it represents today. I am appearing before you, as Chairman of the Advisory Committee of the Council, to speak on a subject of which I think I have particular expertise-trade hearings themselves. As the President of two national trade associations in the 1950's, I gained some insights into the preparation of testimony. Then, as Chairman of the Trade Information Committee of the Office of the Special Representative for Trade Negotiations, from 1964 through 1972, my inter-governmental committee held public hearings on international trade matters as directed by the Trade Expansion Act of 1962.
During this time I followed the trade hearings of the Congress with especial interest. Those of the Ways and Means Committee building up to this bill were especially lengthy : five thousand eight hundred and twenty seven pages in 1968; four thousand six hundred and fifty one in 1970; and five thousand three hundred and seventeen (including the summary) pages of testimony were generated last year over a period of twenty four days.
In 1968, Ways and means spent eighteen days on trade hearings but never reported out a bill. In 1970 the House spent twenty three days in public hearings on trade. The Senate spent two in October, and the bill died on the Senate floor two months later. The nation has been without trade bill authority now since August 1967. Until then there had never been a lapse of even a week since 1934, when we changed our trade policy. These issues are complex and the policy decisions are difficult, but the country and its over two hundred million consumers want action. They are not unaware that in this area especially there is apt to be Executive Branch usurpation when the Legislative Branch leaves an unaccustomed vacuum.
In the testimony last year before the Ways and Means Committee, witnesses representing sixty five commodities of direct consumer interest-from aluminum to zinc-were heard. Also appearing at those hearings were witnesses for two hundred and twelve non-governmental organizations. Our Consumer Education Council on World Trade was one of those groups and Mr. Brown has outlined our basic grade goals. I just want to stress that in all this economic mix, the American consumer has an enormous stake. They want to go on having the wide variety of choice that largely unrestricted imports are so essential in providing. They also want ample import entry to insure them as much shelter as possible from inflation, our number one national problem.
It is not often that the consumers in this country get concerned about international trade, but when they do get the wind up they develop ways of being heard. An early case in point was the special import tax on tea that led to the Boston Tea Party.