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Cargill and the big wheat shippers and see what they want to do with it, and when the deal is all said and done, I think the farmer gets the short end of it, you know.

I do not go with these breast-beating Members of Congress who say that they are worried about the farmer when they are really worried about Continental Grain and Cargill and the great big shippers. So anything that helps the farmer-and when you talk about the farmer, you are not talking about Dwayne Andreas. You are not talking about Continental Grain. I am talking about the farmer, and I am with you on the farmer. But somewhere in between.

Senator Packwood. You have no objection to the farmer getting $5 a bushel for wheat ?

Mr. MEANY. No, I have no objection if that is what he needs. Let him get it.

But I certainly am going to try to find some way to get the workers, to get their wages up to the point where they can buy the bread that you produce with that $5 wheat, and I surely want him to get it and not the Russians to get it.

Senator PACKWOOD. Let me ask you about something in your statement where you are questioning the loyalty of multinational corporations. Where do you think corporate loyalty belongs for a foreign company that operates in the United States?

Mr. MEANY. A company that is based in the United States, its loyalty belongs here.

Where does the foreign company's loyalty belong that operates ? Back home, that is where you will find it.

Senator PACKWOOD. When the Volvo plant opens in Virginia. That plant should be subjected to Swedish sovereignty and Swedish regulation and not, to that of the United States?

Mr. MEANY. You think it will not be? You do not know the Swedes if you do not think it will be.

Senator PackWOOD. I do not think the U.S. Government is going to tolerate it.

Mr. MEANY. But the point is, let them pay their obligations to their own government, and as far as them operating here, we will try to do our bit for the workers and let our government—but the idea that they will not be loyal to their own government is ridiculous. Of course they will.

Senator Packwood. But you are not suggesting, are you-
Wr. MEANY. But what do you do with a U.S. corporation
Senator PACKWOOD. You are not suggesting-

Mr. MEANY [continuing). That takes orders from the Arabs and will not supply our fleet in the Mediterranean? What do you think of that?

Senator PackWOOD. What do you think if we have a Volvo plant down here and we get into a war and they are making tanks instead of whatever they might be making?

Who should they be subject to, Sweden or the United States as to where they ship those tanks?

Mr. MEANY. Not if we get into a war. If we get into a war we would certainly have emergency powers.

Senator PackWOOD. How about the automobiles they make there?

Should they be able to ship them any place they want and not be subject to our rules?

Mr. Meany. We have had an open market, and you will find out that the automobile workers, like all other trade unions in this country, have been free traders, but I think you had better talk to Leonard Woodcock now. He might have some different ideas. I defer to his thinking on that.

Senator Packwood. Let me ask you something about this foreign tax credit to make sure I understand how it operates.

You have a company that makes $2 million before taxes in this country. They pay a 48-percent tax rate.

So they pay $960,000 in taxes?
Mr. MEANY. Right.

Senator PACKWOOD. Now, let us say the same company they operate here and in Germany and assume the tax is at a 48-percent rate in Germany. So I understand they pay $480,000 on a million dollars profit in Germany.

Is that correct?
Mr. MEANY. I do not know what they pay in Germany.

Senator PACKWOOD. Well, assuming it is a 48-percent tax rate, that is what they pay there. And they pay a 48-percent tax rate on the million dollars they make here.

Now, it is your position that they should not be able to credit any of what they have paid on the taxes in Germany against the total tax liability; that they should pay a total tax on the entire $2 million in this country?

Mr. MEANY. As a credit?
Senator PACKWOOD. Yes.

In other words, what you are saying is if they choose to operate in Germany, they have the same total profit as when they operate here, but if they split it between the United States and Germany they should actually have to pay more taxes, more total taxes than if they operated here alone.

Mr. MEANY. Our position is that they should operate just the same as any other domestic company,

Senator PACKWOOD. Any domestic what?
Mr. MEANY. Any domestic company so far as taxes.

Senator Packwood. So they should not have to pay any more taxes than they would pay if they were a domestic company.

Mr. MEANY. No, no, no.
Senator PACKWOOD. Oh, they should pay more.
Mr. MEANY. They should pay more.
Senator PACKWOOD. Why?

Mr. MEANY. Why should they not pay taxes on the profit they make overseas?

Senator PACKWOOD. Well, they do pay taxes on the profit they make overseas.

Mr. MEANY. To us.
Senator PACKWOOD. Well, you want them to pay
Mr. MEANY. I want them to pay it to us.
Senator PACKWOOD. And to the foreign country.

Mr. MEANY. I do not care whether they pay the foreign country or not. Let them pay it to us.

Senator Packwood. In other words, they should pay the full amount to us and then pay the foreign country, if they choose to operate overseas, that is the way they should be taxed ?

Mr. MEANY. Then they would most likely come home where they belong, and then we would have the jobs here.

Senator PackWOOD. All right. I have no other questions, Mr. Chairman. The CHAIRMAN. Senator Byrd ? Senator BYRD. Thank you, Mr. Chairman.. Mr. Meany, I was most interested in your forthright appraisal of détente and your view of the Russian leadership. I do not express it in as colorful language as you but I am in thorough agreement with what you said in that regard. I happen to feel that President Nixon provided a service in going to Peking and to Moscow and I like to see the dialog between the leaders of our great nations of the world. But when it comes to agreements the way I analyze these agreements that were made in 1972—and there were three of them with Russia_the United States came out second best in every one of those agreements, the wheat deal subsidized by the taxpayers to the tune of $300 million, the SALT agreements, and the Russian debt.

Mr. MEANY. Debt?

Senator BYRD. The debt that Russia owes the United States $2,600,000,000, and here is the way we settle it: $48 million unconditional, $722 million conditioned on Russia getting the most favored nation treatment and long-term credits from the American taxpayers.

Now, if that is a good deal

Mr. MEANY. You know, Senator, I do not want to interrupt, but one of the agreements they signed when they had this scenario here at the White House, you know, when Brezhnev arrived and he got out of the helicopter, and 1 hour later they were signing and then they had one at 4 o'clock, all with the proper press coverage and so on and so forth, one of the deals they signed was on farm exports and agricultural products, and part of the deal was that we were to get from the Soviets information as to their need for these products, in other words, their production. They refused completely to give us that information. So they have already welched on that deal, and that deal is not a year old.

But, of course, this is par for the course. They welch on their deals and have over the years. They do not keep agreements, and some of these American corporations are going to wake up some one of these days and find out that they are dealing with a dictatorial monolithic government.

Senator Byrd. We are dealing with a dictatorship. The Russian people, I am convinced, are just as peace loving as are the American people, but they have no way to express themselves.

Mr. MEANY. No question about it.

Senator BYRD. The decisions are made by a few people in the Kremlin, which is an entirely different situation than in the United States. And consider the contrast in the standard of living.

I sat next to Comrade Shushkov, the trade commissioner, when he was over here recently, and I asked him how many automobiles the Russians have per capita. He told me they have 1 automobile for

every 200 citizens. Over here we have one for every two citizens. That is the standard of living we want to maintain in this country. That is what puts me in a quandary about this trade bill.

I am basically a free trader, I guess, through the years.
Mr. MEANY. We have been.

Senator BYRD. But we do not want to get ourselves in a position where we will have to lower our standard of living to meet the standard of some other countries.

And that is why I want to ask you your view as to how we can pass a trade bill, in what form we should pass a trade bill without undue trade restrictions, but at the same time, give some reasonable protection to the standard of living of the working people of our country?

Mr. MEANY. Well, we think that we have supported a bill here and Senator Hartke introduced it but we are willing to concede that since that bill was introduced, there has been a major change in the whole world situation. We certainly have the same objective as you just stated, Senator, and whether it is a quota system or some other system, I think this Congress can find and must find—a way so that we can trade with the rest of the world on some other basis than the complete one-way system we have now. I just cannot understand American industrialists. I can understand their short-term attitude toward quick profits, but I cannot understand their long-term philosophy. If they are going to lose their consumer market here—and I repeat again. and I will repeat this just as often as I can—that the consumer market is the great mass of the American people. It is the American workers. You go through a little town in Germany outside of Bonn, you see a few television aerials. You will find out that here and there, there is a washing machine or a dishwasher or a refrigerator in these homes. But when you go out to one of our industrial cities, and in the residences there, there will not be a single home there that has not got all of these things.

So, the television sets and the refrigerators, they are purchased by the machinists, the auto workers, and the people that make them.

We have a situation where an auto worker can buy an automobile or a machinist can buy a refrigerator. So, we are the only country in the world that has this standard. We have the highest standard of living for our workers, no question. And I just cannot see giving it away. I think we should trade with all of these countries, and I have no objection to trading with the Soviet Union, but let us get something, and if we cannot get something economic, let us get something political. We can go a long way if they would just say that they would live up to their commitment to the United Nations.

They made a commitment to the United Nations in writing. In fact, they had a ceremony, and old smiling Gromyko was there when he delivered the document that any person, any citizen has a right to move without restriction from any country, including his own, to any other country on Earth.

Now, this is something that they could help us with. They can help uis settle this Middle East thing. God Almighty, do not tell me that the Arabs are pushing the Russians around. You know, I do not think Saudi Arabia is calling the shots for the Kremlin. In fact, when you look at the military situation, suppose in Iran or Iraq that the Russians wanted to take that oil. Well, it might take them 24 hours to move

in, so they are the bosses there. They are the bosses in that area of the world.

This October war was started when they gave the signal, and it was so well coordinated that the minute the shooting started, they resupplied by planes. They knew their Arab friends. They knew their Arab friends well enough to know that the Israelis were going to knock out a lot of their equipment, so they had them resupplied. They were resupplying almost faster than they lost it. And what happened in those first few days? Where was détente in the first few days of that engagement over there?

Kissinger was begging for a meeting of the U.N. Security Council. They would not talk to him. They did not want to have anything to do with him because the Egyptians were doing quite well. The Israelis were getting it in the neck. But then when they turned around and they broke through and they cut across to the west bank of the Canal and split the Egyptian forces, boy, the Russians wanted a sudden meeting of the Security Council, and, boy, Henry obliged them right away, and he patted them on the back. There would have been no meeting of the Security Council if the Egyptian success had continued.

So this is détente, and détente is an absolute fraud. It is a fraud. The cold war-we talk about the cold war. The cold war was a Russian tactic. I showed you here why they dropped it. But the war is still on. But now the name of the war is détente, you see, that is the name of the war. It is détente and I do not think we can afford the luxury of selfdelusion. We cannot deceive ourselves. We have got to go by the record. We have got to know who we are dealing with, and the idea that a dictatorial form of government is going to deal with us on the basis of human values and human rights, they have no concept of human rights. And Senator, here is a map.

You have heard of Solzhenitsyn's book, "The Gulag Archipelago." Well, here is a map published by the American Federation of Labor showing the central Gulag controlled system, and when do you think this map was printed? Twenty-five years ago. Twenty-five years ago, we printed this map and we documented all of the slave labor camps there, and the slave labor is still there.

So we have got our great big industrialists and our great big bankers embracing these guys, sending American capital over, mixing American capital and slave labor. Good God, have we no principle at all?

You know, in the days of Hitler, we heard a lot about Hitler's atrocities, but there was no validation of the gas chambers until the troops moved in, in the late days of the war. We heard a lot of rumors. We did not know about Dachau and a lot of these camps, but we heard a lot of rumors. But Franklin Roosevelt opted for human freedom before we got in the war. He did not appease Hitler. He came to the British rescue. He helped the British with Lend-Lease, so we opted for human freedom even before we got in the war.

I would like to see this administration take a similar principle on the question of human freedom and human decency and deal with the Soviet Union and deal with them on the basis of give and take.

Our policy should be: we've got something, what have you got? What have you got to give? We sell, what have you got to sell ?

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