Now, that did not mean that the wages went down, nor did it mean that the overall cost went down. The cost of hiring, the money, did not go down. The cost of the land did not go down. The wages did not go down. But the percentage of cost for onsite labor went from 33 to 18 percent. That is the record of the National Association of Homebuilders.

Now, this shows increased productivity. We do not stand in the way of increased productivity. Now, when you try to compare productivity of the American industry with other countries throughout the world, you have some real problems. One that comes to mind is Japan.

În order to become more knowledgeable in this field, we set up an institute in Japan about 10 years ago. And I say “we”—the labor movement set it up with the Japanese labor movement, and we set up an institute. We sent our research people over there, and we were trying to make comparative costs between the cost of production in Japan productivity, and we gave up after 3 years. We just gave up. We could not make the comparison because of an entirely different approach.

They have an entirely different employment policy. You know that in Japan if a man works for 5 years for a corporation and he reaches the age of 29, he belongs in that corporation for the rest of his life. He can never be laid off-not by any union rules or anything like that.

You know that they still have industrial homework in Japan. And when I say industrial homework, I do not mean homework like we had years ago, which was mainly in the garment industry, which was a national disgrace and which we have eliminated from our scene pretty much. But they have industrial homework where they actually take parts home from a factory and work on them at night. Now, how do you make a comparison between their costs and our costs?

But insofar as the overall picture of productivity, I lived in the days when American labor in a good many cases resented the introduction of a new material and new method. That is all behind us now, and I think our labor is the most productive labor in the world.

The CHAIRMAN. I have one more thing I want to ask you, and that. will complete my questions.

When we were looking at the Penn Central reorganization legisla tion, we included some provisions that labor was very much interested in. It seemed to me that if this Government was going to put its credit to work to bail out those railroads that we had a right to ask that they have a major employee stock ownership plan. If the railroads could be put on a paying basis and made to succeed, the workers would be the key to making that success and should be entitled to a major portion of the stock of those railroads. And we could have gotten it, I think, or at least could have gotten a lot more for workers if we had had the support of organized labor at that point.

I am not aware that the union movement has done anything in particular in these cases-especially if we have to go to bail a company out-to obtain for its members a piece of the action.

Mr. MEANY. We would leave that to the employees concerned. We have never taken a position that we want to own the companies where we work. We have never taken the position that we want special stock

option plans for employees. We have never taken the position that we want a portion of our income, for our work, in stock. However, we do not bar any of our groups from going into this sort of a plan. In fact, the Kaiser Co. out in California, they have some sort of a plan which gives the employees a personal interest in the success of that corpo

ration.

Now, we do not object to that at all, but our basic approach and I think you and I talked about this the other day-our basic approach is that we like to run our unions, and we like management to manage. We do not want to interfere with the management.

Now on the other hand, if some company comes along, whether it is Penn Central or some other corporation that is in trouble, comes along with a stock plan, that is up to the workers in that particular industry. And we do not really have a national policy on this. This is up to each industry.

The CHAIRMAN. Well, I do not think that employee stock ownership should be a method by which management achieves any undue influence over labor. You would not want it to be that way, and I do not think it should be.

Mr. MEANY. I do not think it should be, but what I am saying is, if there is to be employee stock ownership as part of a collective bargaining agreement, that is up to the particular workers, and the AFLCIO is not going to make policy on that.

The CHAIRMAN. Well, I am concerned that only 2 percent of the American people own 90 percent of all of the corporate stock. The last figures I saw, 90 percent of the people did not own any of it; and it would seem to me that the working people of this country would own just a lot more of the stock of these companies and the corporate growth of America-I am talking about the stock now-if

Mr. MEANY. I agree with you. I would like to see them own more.
The CHAIRMAN. I think they ought to own a lot more of it.
Mr. MEANY. We do not have a policy to promote it.

The CHAIRMAN. Why do you not, one of these days, develop a policy, because I think you would just get a lot more if you asked for it. And that has a lot of appeal to me.

Mr. MEANY. Now, if you happen to be unemployed, come over and see me. We might have a spot for you over there.

The CHAIRMAN. Well, I do not like to admit it, but that is always a possibility, Mr. Meany.

Thank you very much for your testimony here today. You made a very fine statement.

Mr. MEANY. Thank you very much.

The CHAIRMAN. This committee will stand in recess until 2 p.m. this afternoon.

[Appendixes to Mr. Meany's prepared statement follow. Hearing continues on p. 1223.]

APPENDIX

I -AFL-CIO Executive Council resolutions on International Trade and Investment, and The 1972 U.S. Soviet Trade Agreement.

II -Labor's Historic Role in Trade, and the American Workers' Mission Impossible; excerpts from the testimony of I. W. Abel, Chairman of the AFL-CIO Economic Policy Committee before the House Ways and Means Committee, May 17, 1973.

III -Excerpts from the Summary and Analysis of HR 10710-The Trade Reform Act of 1973 by the Senate Staff of the Committee on Finance.

IV -Some recent trade trends.

V

-AFL-CIO analysis of the Administration's Trade Reform Act of 1973.

VI -The Administration's "adjustment assistance" proposals.

VII

Retaliation and the right of America to self interest.

VIII-Answering the argument that U.S. consumer would be hurt if imports and exports were regulated.

IX

X

-Answering the argument that multinational firms' operations abroad spur job growth here.

-Answering the argument that if the U.S. acts in its own behalf imports and exports will be reduced and trade diminished.

XI -Answering the claim that providing the President with options will answer the U.S. trade problem.

XII -U.S. productivity remains high, labor costs low.

XIII-Analysis of Item 806.30 and 807 of the U.S. Tariff Code.

XIV-Transfer of technology.

XV Statistics

U.S. Merchandise Trade.

U.S. Trade in Manufactured Goods.

Annual Percent Change in U.S. Exports and Imports, 1960-1972.

Percentage Change in U.S. Exports and Imports 1972-1973.

Comparison of Imports and Exports for first 10 Months of 1972 with 1973, Commodity groups.

Private Capital Outflows from U.S.

Change in Industrial Production by Selected Industries September 1969-
September 1973.

Change in Non-Farm Employment, 1969-1973.

U.S. Employment in Manufacturing, September 1969-September 1973.
Employment Change by Industry from June 1969 to June 1973.

APPENDIX I

STATEMENT BY THE AFL-CIO EXECUTIVE COUNCIL ON INTERNATIONAL TRADE AND

INVESTMENT

The international economic structure has been seriously shaken. Normal trade patterns are being shattered. National currencies are in disarray. Nations with once-comfortable trade balances are desperately seeking larger export markets to earn the price of oil for industrial survival.

Much of the blame can be laid to the staggering price increases levied by the oil-producing nations, which have further fueled a global inflation carrying with it the possibility of worldwide recession and unemployment of crushing proportions.

These events have made the Administration's so-called Trade Reform Act of 1973 totally obsolete. Its provisions bear no relation to the events of the day. Indeed, the bill passed by the House late last year and now pending before the Senate Finance Committee is worse than no bill at all. A total reexamination of U.S. trade and investment needs is in order, utilizing the realities of the Seventies-particularly 1974-and abandoning the dead and unworkable dogmas of the past.

The energy crisis comes on the American economy at a time when it already is in deep distress, much of it traceable to the nation's misguided and misapplied foreign trade and investment policies. The American worker, consumer and businessman are all suffering from a deepening erosion of the U.S. industrial base. A tide of imports has wiped out more than a million jobs as products and whole industries have been engulfed. The export of technology and capital at reckless rates have funneled American production and productivity abroad, costing the U.S. economy not only badly-needed new jobs and job opportunities but the benefits of more efficient production means. Multinational corporations, manipulating U.S. tax laws, have transferred jobs and production overseas at the expense of the American economy, costing the nation badly-needed tax revenues.

The Administration's trade bill fails to address itself to these problems. In addition to granting the President unprecedented and sweeping new powers which he could use to permanently alter the structure of foreign trade and the structure of the U.S. economy, the bill contains these serious deficiencies:

It provides no specific machinery to regulate the suffocating flow of imports or to curb the export of materials in short supply at home.

It does not deal with the export of U.S. technology and capital to other parts of the world where corporations-mainly American-based multinationals can maximize profits and minimize costs at the expense of U.S. jobs and production.

It does nothing to close the lucrative tax loopholes for multinationals which make it more profitable for them to locate and produce abroad.

It does nothing to repeal Items 806.30 and 807 of the Tariff Code, which encourage U.S. firms to locate abroad and take advantage of low-wage foreign production and a special low tariff rate on goods exported to the U.S.

It fails to assure action against unfair trade practices of other nations. It does not assure adequate U.S. responses against new and old barriers to U.S. products raised by other nations, particularly at a time when nations of the world are re-examining these barriers with an eye to greater self protection.

It encourages the entry of goods from low-wage nations of the world at special or zero tariffs.

It ensures the further heavy erosion or stunted growth of badly-hit U.S. industries such as steel, apparel, chemical and allied products, rubber, shoes, stone, clay and glass, autos, aircraft and electronics.

It ignores the fact that America's industrial base and productive strength have been weakened by current foreign trade and investment policies, and makes no provision for restoring the nation's critically needed industrial health.

For these reasons Congress should reject the bill now before it and write a new trade bill which will contain legislative provisions that are comprehensive, flexible and realistic.

The new legislation should:

1. Regulate U.S. imports and exports as a means of establishing an orderly flow of international trade. Specific flexible legislative machinery is needed to control imports. This flexible mechanism should also be applied as a restraint on the excessive exports of farm goods, crucial raw materials and other products in short supply domestically. Exports, imports and U.S. production should be linked in relation to needs for supplies, production and job opportunities in the U.S.

Shortages of raw materials in the U.S. and new demands by countries which have those raw materials have led to new problems. Many raw material producers are requiring companies to use those raw materials within their borders. This interchange has led to a new threat to the American industrial system. As long as the U.S. has a policy of freedom of investment abroad and other countries have policies to seek their own rapid industrialization, the shortages of raw materials here will be used as an excuse to help industry to move abroad and further undermine production facilities within the U.S.

Interwoven into this problem is the recent change in the value of each nation's money. The value of the yen, the franc and other currencies have become lower. Many countries are competing to export as much as possible to improve their balance of trade and balance of payments. Imports from any part of the globe into the U.S. can shoot up very rapidly and the U.S. has no system to prepare for the rapid influx of any product from any part of the world.

2. Modernize trade provisions and other U.S. laws to regulate the operations of multinational corporations. Regulation of multinational firms, including banks, is necessary because these concerns are the major exporters and importers of U.S. farm products, crude materials and manufactured products. They use U.S. tax, trade and other laws in combination for their worldwide advantage. They export production facilities, money and jobs and juggle prices and credit to maximize their own worldwide company advantage. They license the newest technology for use abroad and combine in joint ventures with foreign companies and governments regardless of the impact on the U.S. need for jobs, production, or supplies.

3. Eliminate U.S. tax subsidies and other advantages for corporations investing abroad. Specifically, the tax laws should eliminate tax deferral of income earned abroad and foreign tax credits. These provisions allow U.S. corporations to pay no income on the profits of their foreign subsidiaries until these profits are brought home-if ever-and the foreign tax credit permits corporations to credit taxes paid foreign governments, dollar for dollar. against their U.S. tax liability. These provisions contribute to the export of jobs, the erosion of the

U.S. industrial base, the denial of needed raw materials and components for U.S. production and job needs, and encourage foreign governments to change their rules to the disadvantage of the U.S. The present provision in the tax laws allowing the establishment of Domestic International Sales and Corporations (DISCS) should also be repealed. This provision now gives the largest multinational firms and banks windfall tax breaks on their exports.

The annual cost to the U.S. Treasury of these tax loopholes amounts to at least $3 billion in needed revenue.

4. Repeal flagrant incentives and subsidies to encourage U.S. firms to move or expand abroad. These are Items 806.30 and 807 of the Tariff Code, which encourage the foreign production and foreign assembly of goods for sale in the U.S. These provisions are used to shift production to cheap labor markets for the profits of the multinational corporations. Imports under these provisions have risen from $1 billion in 1967 to $3.4 billion in 1972; in the first ten months of 1973, imports under these provisions were 55 percent higher than in the like period of 1972.

5. Re-examine and limit the operations of the Export-Import Bank which provides loans at interest rates much lower than those paid by American businesses, consumers and home buyers. These loans help U.S.-based multinationals expand foreign branches and assist foreign governments, including the Soviet Union and other Communist countries, in getting America's newest production facilities. Particular emphasis should be given to the impact on U.S. jobs, and potential cost to the U.S. taxpayer.

6. Clear provisions should be written into new legislation to regulate exports of capital and new technology. Other nations are demanding only the newest kind of U.S. technological facilities and U.S. firms are licensing or producing America's newest inventions abroad with the help of U.S. and foreign governments.

7. Multilateral trade agreements with other nations, such as the textile multifiber agreements, should be administered in keeping with the flexible machinery devised to regulate imports and exports. This flexible machinery would be a safeguard against a misunderstanding of America's intent and assure continued U.S. sovereignty over its trade and other domestic laws.

8. Since almost any federal, state or local law can be considered a non-tariff barrier to trade, any legislative provision to authorize negotiation on non-ta riff barriers should be limited and should require specific Congressional approval for the removal of any barrier, with full information about the products affected. U.S. tax laws, consumer protection laws and other social legislation, including occupational health and safety standards, should be barred from such negotiations.

9. New provisions are needed to speed and assure action against foreign dumping of products on the U.S. markets-the sale of these goods at a price artificially lower than in home countries-or other subsidized imports into the U.S. These provisions should emphasize U.S. producer and worker needs and rights to participate in proceedings.

10. Clear labelling on imports of products and components to mark the country of origin of the product and the components within it is needed. Advertisers also should be required to designate the country of origin of products they handle. All consumer protection legislation should be strictly enforced on imports.

11. Trade with Communist countries should not be viewed as ordinary commercial exchange. The U.S. should end the extension of low-interest loans and insurance of private loans by U.S. government agencies to Communist countries. Senate legislation must contain the restrictions on Soviet trade written into the House bill over the opposition of the Adminisration.

12. The need for improved U.S. statistics on imports, exports and production has become urgent. Neither the U.S. government nor interested U.S. producers and workers can obtain adequate statistics in sufficient detail on the impact of imports or exports of industrial commodities. A comprehensive system of reporting on investment abroad, licensing of production and other technology flows is needed. Firms which operate within the U.S. should be required to segment their U.S. and foreign production in reporting to government agencies.