The trade deficit with Japan was reduced, but not just because of the dollar and yen revaluation. The President's International Economic Report states: "Japan is by far the largest buyer of U.S. farm goods and raw commodities used by industry and these two categories accounted for nearly all the rise in our erports to them."

Trade with the European Economic Community shifted into surplus from the deficit in 1972. But again, farm products showed the sharpest increase-75% and accounted for about one-third of the increased sales.

For the developing countries, U.S. agricultural shipments rose by 97%, accounting for a huge share of the improvement in these countries.

The U.S. is in greater deficit with Canada. However, as a result of the two governments newly agreed-on statistics, Canada's surplus in trade was reduced to $2.7 billion.

The new trade problems of the United States result from ever more complicated changes in the operations of the U.S. economy and the failure to link the operations of this economy together. America's farmers and consumers and industries share the need for supplies to produce within this country so that we can trade with other countries. Farmers who sell wheat need fertilizer and equipment in short supply; consumers who buy products need reasonable prices and industry needs raw materials, crude materials and new machinery to produce as well as workforce whose skills are kept active through employment and not deteriorated by unemployment. Until there is a new analysis of what America has and needs, negotiations with other nations will continue to confuse the patterns of trade at home and abroad, contributing to inflation and weakening the United States. The need for a flexible mechanism to curb exports of materials in short supply, to regulate imports and to assure the production base of this huge nation with jobs for its citizens at decent wages is the only possible solution.

APPENDIX V

ANALYSIS OF H.R. 10710

H.R. 10710, the Trade Reform Act of 1973, is worse than no bill at all. The new problems of international trade are ignored in the bill. What is missing in the proposals is more important than what is included. These ideas are missing: A positive new set of U.S. rules is needed for promoting the United States interest at home so that this country can work out effective agreement with other countries to benefit this country as well as others. The Congress is not asked in this bill to make it a matter of United States policy to assure the growth of all kinds of industry in keeping with the skills and resources and needs of the United States and its citizens at home. Instead, the Congress is asked to declare that trade barriers are wrong for the U.S., but that developing countries and developed countries should have assured access to thhe U.S. market. Thus the bill puts the cart before the horse. A strong America cannot continue to exist in a misdirected world. A mechanism is needed for regulating imports into the U.S. and exports of raw materials and other products in short supply so that the U.S. can have a strong, varied economy.

Investment, tax technology and other policies are crucial to the economie health of thhe United States in relation to every nation of the world. The bill does not contain effective provisions to remove tax breaks on overseas investment, to regulate the wholesale exodus of America's newest technology and production units, and to combat the rising prices in the United States caused by trade and investment problems.

Consumer protection and information are denied in this bill and consumer interests are ignored.

Employment of American workers at every skill level-the professional, the skilled, the unskilled and the job-seekers—with job opportunities available for a growing labor force should be promoted.

The Trade Reform Act (H.R. 10710) is therefore merely a patchwork of power for the President, a maze of technical escapes for negotiators and technicians. What is needed is a comprehensive modernization of U.S. laws and policies to promote America's economy at home so that America can deal effectively in negotiations with nations abroad.

The following are some of the features of the bill: The authority is designed not only to regulate foreign trade and to achieve international political objectives but also to use foreign trade and international objectives to regulate the domestic economy. But it does not answer the problem now facing the United States in a changing world. The bill has no clear direction even for trade policy. Its provisions can make America's deteriorating trade position even worse. The Presidential power in H.R. 10710 can affect almost every part of the American system-the Congress, the business community and the citizens of this nation.

THE BILL'S CONFLICTING AUTHORITY

The authority to change U.S. trade barriers up or down for different reasons and for different time periods is granted in the bill. Thus an American producer would be constantly in need of a team of specialists to make decisions on U.S. production.

The President would have five-year negotiating authority to make agreements to raise or lower tariffs or leave them intact for many international purposes. The bill provides for advice from public or government departments, from the Tariff Commission and from industry and public advisors. But the advice need not be heeded by the President's negotiators. (Title I)

The President could raise tariffs to grant "import relief" from competition temporarily, to meet "unfair competition," to retaliate for unjustifiable barriers abroad, for balance of payments reasons, for domestic inflation, to stop import disruption, to carry out international agreements, and for other purposes. In various provisions, the authority lasts for one year for 150 days, some has an indeterminate length, and some may be established for negotiating purposes. (Titles I, II, III, IV and V) He could remove tariffs for as many reasons.

The President could set quotas for some of the above reasons, sometimes temporarily, sometimes for an indeterminate period. Orderly marketing agreements with other nations may be reached to regulate imports. But even such quotas-on past, present and future agreements-may be removed.

The President could remove or reduce tariffs and quotas for balance of payments surplus reasons, for domestic inflationary reasons and for carrying out "compensation" under international agreements (i.e. if a product has its duty raised in order to relieve injury to the U.S., the President may reduce tariffs on another U.S. import to "compensate" our trading partners). He may also renegotiate tariffs on individual products and put them in effect, after negotiations are completed (Title I).

The President could reduce tariffs to zero on most semi-manufactured and manufactured products imported from developing countries. Only 27 countries are exempt from this treatment.

The President could reduce tariffs on imports from Communist countries to make them equal with tariffs for products from other countries ("most-favorednation" status), as long as there is the right of emigration from those countries. Some Communist countries could also receive "developing country" status. (Mostfavored-nation status means that imports from a country charged the lowest tariffs are given to imports from other countries under agreements). The President would have new authority to remove U.S. non-tariff barriers through international agreements during the 5-year period.

(a) The Congress mandates the President to seek the end or harmonization of non-tariff barriers, both U.S. and foreign. Ther is no definition in the bill. Ironically one non-tariff barrier, specifically provided for in other sections of the bill, is a quota on U.S. imports. Most nations have quotas or licensing practices for imports more effective than U.S. regulations.

(b) Authority is granted to the President to negotiate only removal of U.S. "non-tariff barriers." Many laws are non-tariff barriers. Some important effects would be on product standards, labeling, consumer protection laws and the marking of foreign origin law. For example, the law now requires the marking or identification "Made in Japan, Mexico, England" or other country somewhere on the imported product. Consumer information would be even less available than it is now, because even the minimal requirement now in law to state where a product is made could be removed. Products with American brand names could be made totally behind the Iron Curtain or in Brazil or Mexico or Japan or Korea, and the American consumer would lose even the right to know where it is made. The product would be sold as an American product at American prices.

(e) The Congress would have 90 days notice and 90 days to veto agreements which affect non-tariff barriers the negotiators might change in international agreements. The President decides whether the agreement needs to be submitted to Congress. In effect, U.S. laws on standards, taxes, consumer protection, health and safely, environmental standards and other domestic protections are in jeopardy. This authority appears to begin the date the bill becomes law. Each Presidential agreement could require action by the Congress to preserve some law that has already been enacted for the benefit of the citizens of the United States. If Congress does not act in 90 days, the agreement becomes law.

Much of the authority specified in the above paragraphs already exists in international agreements or in domestic law. The basic changes from prior laws are the provisions for Presidential discretion almost without limit, the right to negotiate changes and impose them almost at will, and the authority to act without sufficient Congressional or public consideration to impose decisions reached abroad in secret—some of it not clearly subject even to a Congressional veto. Thus the authority is broad and conflicting.

INJURY TO U.S. EMPLOYMENT AND PRODUCTION COULD INCREASE

Injury to U.S. industry and employment could be increased under the Trade Reform Act of 1973. The fact of past, present and future injury is lost in a maze of provisions emphasizing why the injury occurred, temporary and long-range foreign, political and economic issues, and temporary domestic economic conditions. U.S. and foreign-based multinational firms and transfers of technology in a changed trading world are ignored. Action to prevent injury or to repair past injury is neither required nor emphasized. Even "relief" from injury is temporary, subject to removal without a hearing, and not related to the need of the U.S. economy for a strong, productive, diversified base.

(1) "Relief" from injury caused by "competition" is discretionary and temporary under the new "escape clause" section of the bill. The Tariff Commission has wide discretion to determine whether imports have caused injury. The Tariff Commission is directed to inform other agencies if anti-dumping and countervailing duty laws would apply. If injury is found by the Tariff Commission the President has complete discretion whether to grant temporary "relief." The President may remove this "relief."

The steps for such "relief" are steeper than in present law.

(a) The tests of injury from imports have been changed. The causal relationship between imports and injury is slightly less strict, but test for the actual injury is stricter. Thus the increase in imports need not be caused by a tariff concession, nor must imports be the "major" cause of injury, but only a "substantial" cause. That means not less than any other cause. Rapid changes in the world scene, such as the energy crisis, make this provision almost prohibitive in finding injury. A new test requires that unemployment be "significant," and "significant" number of firms must suffer economic problems in some injury findings.

Several other factors for consideration have been added, which could be used to explain Tariff Commission findings for or against injury. But there is no definition of U.S. industry. There is no requirement to separate out the U.S. production from foreign production of a U.S. firm. Thus U.S. multinational firms can continue to go abroad behind foreign barriers and join foreign exporters to send goods into the U.S. (The Tariff Commission report showed market penetration of 27% in the American radio and TV industry after U.S. radios were virtually nonexistent.) The U.S. production and employment may no longer exist, but "U.S." industry will not necessarily be considered injured under the tests of the Trade Reform Act.

(b) If injury is found there is no mandate to act to give help to industry. The President must decide whether adjustment assistance should be made available. The President may raise tariffs, put on tariff quotas, establish quotas, or negotiate orderly marketing agreements in that order. The Congress can veto his actions if he establishes quotas or negotiates orderly marketing agreements. Items 806.30 and 807 may be suspended. If he does act, the law states that the "relief" should be phased out in five years. It may be removed. These provisions are unrealistic. For example, orderly marketing agreements have taken more than five years to negotiate. Without clear authority and mandate for the U.S. to act, other nations would not want to negotiate or agree to U.S. action.

The repeal of items 806.30 and 807 was requested in 1967 by AFL-CIO because their use exported jobs, especially to the lowest wage countries, added to imports, and helped transfer huge parts of whole industries (consumer electronics production for example) out of the U.S. Under these provisions U.S. tariffs are not charged on U.S. parts of a product which have been exported for assembly or processing. This means preferential tariffs for imports with U.S. parts. These tariff items have lubricated the expansion of the multinational firm by adding a special advantage for foreign operations. The temporary repeal of these items is too little and too late for billions of dollars of lost U.S. production and hundreds of thousands of jobs. Between 1967 and 1972 imports under these items rose more than $2 billion while exports rose about $400 million. The first ten months of 1973 showed a 55% increase over the like period in the year before.

The operations of the world's largest firms (either U.S.-based or foreign-based) are not considered unfair competition for U.S. production and employment in the bill. Foreign state monpolies can "compete" with U.S. industry from abroad.

(2) Unfair Competition. The bill gives the President wider discretion to retaliate against unjustifiable foreign trade barriers than is now available in Section 252 of the Trade Expansion Act, but the provisions make action unlikely. U.S. firms with plants abroad do not want their foreign subsidiaries, partners, licensees to press for removal of foreign barriers to U.S. products. Nor do they want the U.S. to raise barriers to exports from abroad to the United States. Neither is necessarily beneficial to the corporate interest. While the President would clearly have some authority to act against foreign barriers by raising U.S. barriers, past performance shows that such provisions are seldom used. Since the U.S. has seldom retaliated and since the Administration wants the law to make the action discretionary, there is no reason to expect such a requirement to be implemented.

Current provisions on other unfair trade practices-dumping, relief against subsidized imports, unfair trade restrictions-are changed in the bill. But the

results could be even more unfair and confusing than current practice, which largely ignores the existing provisions in law. For example, the President's message on United States Foreign Policy for the 1970s (May 3, 1973) stated, without evidence. "Enforcement of anti-dumping and countervailing duty laws, which protect American workers and industry from injury due to unfair import competition, has improved markedly." There has been much investigation, but little action. The bill's provisions would probably have the same result. U.S. producers and workers do not have a guarantee of redress even against unfair competition under this bill.

Antidumping provisions of current law are amended in the new bill. Dumping is the sale of foreign product to the U.S. at price below the price in the exporting country and injury to domestic industry there from. The bill's amendments:

(1) Limit the time for processing dumping cases, provide for public hearings, and reduce some dumping assessments. The time for cases can be extended to nine months-long enough to destroy an industry. The right to hearings is automatic only for foreign exporters and U.S. importers. Under present law, worker groups have participated in antidumping cases. Under the new bill, even their right to hearings is not automatic. Thus neither U.S. workers nor U.S. producers will have an automatic right even to present their case at hearings.

(2) Reduce the antidumping duty (difference between the foreign exporters' price and the price at which the product is sold to the U.S. importer) in some cases. Thus the provisions appear to make tiny steps forward, but actually would be even more discriminatory against U.S. production. Antidumping action has not often prevailed against foreign and U.S.-based multinational firms, which do not want to admit that their foreign operations can add to the destruction of U.S. industries. The imposition of dumping duties is a minimal action for such serious erosions of U.S. production. Too lttle is often too late. Thus foreign producers (“U.S." or others) can continue to dump from every nation of the world without speedy action. With countries trying to export to the U.S. to make up for rising world oil prices, this provision jeopardizes the entire U.S. economy.

Countervailing duties, seldom enforced now, would be even more difficult to obtain under the new bill. The countervailing duty concept is designed to meet unfair competition from imports which have been subsidized abroad. A countervailing duty is an added charge on an imported product which equals the amount of a foreign subsidy. Under current law the Secretary of Treasury must put on a countervailing duty automatically whenever a finding of a "foreign bounty or grant" is made. This provision was enforced only 13 times between 1967 and 1973.

The bill would (1) set a one-year time limit for investigation and decisions and (2) would make duty-free imports subject to such a duty. But it removes the requirement for automatic action, requires a finding of injury to U.S. industry, and gives the Secretary of Treasury discretion whether or not to apply the duty. Thus the unfair subsidies of imports into the U.S. can continue without U.S. government action. The effect on other trade negotiations-not the effect on the U.S.-becomes the test for action. The policy of the U.S. government would become: foreign subsidies of exports to the U.S. are all right; we are only going to take action if an industry can prove injury and if the foreign governments would not be made unhappy in world negotiations. This encourages U.S. production abroad and further destruction of U.S. industry from foreign imports. A U.S.-based multinational opposes countervailing duties on imports from its foreign plants. American importers do not want countervailing duties. Foreign exporters do not want countervailing duties. Therefore, the mere right of action is unlikely to result in effective relief.

The only protection that is clear in H.R. 10710 is the protection of U.S. patents against infringement from imports.

NEW TYPES OF AUTHORITY

Title I of the bill grants the President new authorities to take action for balance of payments, domestic inflation and other reasons. The Congress has power in the Constitution to regulate interstate and foreign commerce and to pass laws concerning changes in tariffs, etc. But this section of the bill would make much of this power subject to Presidential discretion and international decisions.

One example is the authority to impose new tariffs or take them off without going to the Congress for 150 days. Another is the authority to change tariffs to