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"compensate" foreign nations for their claims of trade losses from higher U.S. barriers to trade without Congressional actions.

Such arbitrary powers are largely related to economic theory that has no relevance to modern problems. For example, the authority to remove tariffs (or to expand imports of products formerly under quota restraints) to reduce domestic inflation ignores the experience of recent years in American domestic production and markets. Prices for U.S. lumber, scrap steel, and hides have skyrocketed-not because if import restrictions, but because of additional exports. These raw material prices have made it impossible for some of American producers of furniture and steel products and shoes to stay in business. But the bill would grant the authority to increase imports of finished products made from these raw materials. Thus hides would continue to go out of the country and no barriers to imports of shoes would be applied. But hide prices are higher at home and revaluations makes imports more expensive. Shoe prices rose more rapidly than the overall cost of living during the 1960s, despite rising imports. Hide prices shot upward. U.S. shoe producers face not only competition from increases of shoe imports, but also higher costs for hides to make shoes at home.

The result is higher costs for producers and higher costs for consumers in the U.S.-more inflation. This effect is now felt in other industries as import prices and domestic prices rise. But this provision maintains the fiction that imports restrain price increases.

The authority to take temporary actions could therefore continue to disrupt and hurt U.S. production and worsen the condition of the U.S. economy. But the Con. gress and the public would have little knowledge of when or why such actions would be taken.

Title I also provides for an authorization of special funds to pay the expenses of the GATT and directs the President to renegotiate the GATT. Congress has never granted specal authorizations for GATT expenditures. The bill recognizes that GATT rules are outdated but also commits the U.S. to the current GATT rules (Title II). The President is directed to negotiate international fair labor standards with no criteria or protection for U.S. standards. (Title I)

TRADE WITH COMMUNIST COUNTRIES

The bill authorizes the President to change most-favored-nation status and to make commercial agreements with Communist countries if they grant emigration rights to their citizens.

(a) Most-favored-nation treatment (extending to imports from a country the lowest tariff rates that have been negotiated with other countries) could be granted to Communist countries which do not now receive it. The bill gives the President authority to negotiate bilateral 3-year commercial agreements with Communist countries. Safeguards are to be included in these agreements. The President may act to remove the mfn treatment at any time either by product or by country for the Communist or non-Communist countries under other provisions of this bill.

This provision would lower tariff on imports from countries with slave labor camps, countries which do not provide the right of workers to have unions, countries which have completely different systems of production and pricing from that of the United States. Thus a massive rise of imports from these countries could be expected.

The equal treatment for tariffs from these countries will not mean equal treatment for U.S. producers or for U.S. trading partners, because these countries do not engage in "business as usual," normal commercial trade relations.

(b) There is a market disruption provision in this section of the bill which does not require any action, but allows the President to impose special quotas on imports from these countries if the U.S. market is disrupted and material injury to U.S. industry is found.

(c) Commercial agreements with countries that will use the trade for political, military and other purposes, controlled by state monopoly do not make sense.

(d) U.S. firms, which have already shipped some of the newest U.S. technology to these countries, will be encouraged to transfer even faster out of the U.S. In these cases, the transfers are to countries who use trade for political purposes and whose goals are against the objectives of the United States. Thus, the newest technology will be available, often from U.S. firms, to produce goods with cheap. oppressed labor, behind state-controlled walls, with special rights into the United States markets for their exports.

At present, the U.S. has more imports than exports in its trade with many parts of the world. The largest surplus of U.S. exports with any areas last year was $1.9 billion with the Communist countries. The exports are largely financed with U.S. credits. But the subsidized exports and transfers of U.S. technology with special entry rights will make that surplus vanish too.

(e) Preferences (zero tariffs for 10 years) could be available to some Eastern European countries as developing countries if the President so decided. The oppressed labor of any Communist country could be used by U.S. firms who locate there or by foreign state-controlled industry to ship duty free to the U.S.

GENERALIZED SYSTEM OF PREFERENCES

For developing countries, the bill authorizes the President to give special benefits (zero tariffs) for imports from these countries to markets of the U.S. There are some restrictions on this authority. The bill allows the President to grant ten-year zero tariffs on most manufactured and semi-manufactured imported products from whatever developing countries the President chooses, except for 27 countries listed in the bill.

These special provisions imply that such countries have not had access to U.S. markets and that they are all needy. But the U.S. has had more imports than exports from some of these countries already. Future privileges would further distort our economy. Imports have risen rapidly. According to a World Bank publication, "Brazil is exporting clocks to Switzerland, refrigerators to the United States, furniture to Scandinavia, fashion garments to Italy, testing and measuring instruments to Germany and photoelectric cells to the Netherlands. Iran's exports consist not only of traditional goods such as textiles and footwear, but also sheet glass, trucks and buses. In 1969 intermediate and capital goods accounted for 10 per cent of Iran's exports and a major export program in machine tools and heavy equipment is planned." (Prospects for Partnership, pp. 11-12)

The "poor" countries are not all the same. Nor have rapidly growing economies and rising exports solved their problems. But the economic development and social well-being in these countries are not healthy. They have not necessarily improved their economic and social health despite the end of production of U.S. musical instruments, shoes, TV sets, radios, and auto parts in cities and towns across America.

The real beneficiaries of such special rights are often U.S.-based (or foreignbased) multinational firms, who are required to produce in some developing countries in order to sell there. Some developing countries also require the companies to export and subsidize these exports. The bill's special provisions for zero tariffs on imports into U.S. market would merely encourage more unfair disruption of more U.S. industry and further runaway plants from poor and rich countries.

Items 806.30 and 807 prove that preferential entry coupled with governmental help can force imports into and production out of the U.S. at a rapid rate. Now that such countries have attracted many U.S.-based firms whose expansion was lubricated by preferences, the whole product is made in those countries, and Items 806.30 and 807 are not needed.

The President's International Economic Report, March 1973, page 38, shows that preferences are expected to continue the export of U.S. production and jobs behind foreign barriers to send goods into the U.S. market: "Our exports will face higher import barriers than goods coming from participating countries. Moreover, rather than export goods from their U.S. plants our manufacturers may be forced to build plants abroad, behind the higher barriers, in order to remain competitive in those markets." In September 1973, the U.S. negotiated at Tokyo an agreement to allow all developing countries to maintain their barriers, and increase them while developed countries reduced their barriers through negotiations.

Since the fall of 1973, it has become clear that some developing countries have used selective boycotts and massive price increases in the oil embargo. Others have minerals and other resources which they may embargo. The bill does not recognize these changes or the rapid industrial growth of many so-called developing countries. It merely seeks to improve their competitive position in the U.S. market for manufactured goods.

APPENDIX VI

THE ADMINISTRATION'S ADJUSTMENT ASSISTANCE PROPOSALS

The Administration's Trade Reform Act contains so-called "adjustment assistance" provisions to the present inadequate programs designed to aid workers who lose their jobs because of import competition.

The present program was established in the Trade Expansion Act of 1962. The idea of adjustment assistance was proposed by organized labor in 1954. The program was designed and viewed by its supporters as a stop-gap program for small groups of workers adversely affected by imports. It was not meant for use against the critical onslaught of imports the nation is now undergoing.

Adjustment assistance is at best burial insurance. What the AFL-CIO seeks is restoration of a diversified industrial society that provides jobs, not jobless pay. The AFL-CIO conditioned its support for the Trade Expansion Act on the promise that adjustment assistance would be made to those adversely effected by imports. That promise was not kept.

H.R. 10710 includes so-called "adjustment assistance" provisions. These are too little too late. The record shows that adjustment assistance cannot solve modern trade problems.

Between 1962 and 1969, not one worker received adjustment assistance under the Act. Since that date, a total of 90 petitions have resulted in adjustment assistance for 44,139 workers. Between 1962 and 1973, millions of Americans lost their jobs from a rise in imports of manufactured products and parts of products at an accelerating rate. In 1962 manufactured imports were $7.6 billion and in 1973 they reached $44.8 billion. Total U.S. outlays for adjustment assistance have been $63.3 million.

The industries in which adjustment assistance has been received have been industries where the impact of imports has often been denied as a serious problem for the United States: shoes and leather products-where no U.S. action has been taken to stem imports; electrical equipment, where only a series of misguided attempts to look at dumping, countervailing duties, and other programs have been used, and textile products. Three fourths of the total spending has been in New England, the Middle Atlantic and East North Central States.

The BLS record shows that more workers have been denied adjustment assistance than have received it. Thus 49,384 workers got nothing-not even a short-term dole when they petitioned for help.

For industry, the adjustment assistance record has been one of similar failures. The outlays for firms has already reached 38 million for sheet glass, footwear, barber chairs, textiles and apparel, industrial electronics, pianos, consumer electronics and stainless steel flatware-industries with need for import restraints.

The Trade Reform Act merely patches up some technicalities and adds some more hurdles for receipt of adjustment assistance. There will not be any better performance from the new promises than in the past. In a changed world, the cruel hoax of yesterday will merely be perpetuated if H.R. 10710 becomes law. Under Section 221 of the bill, the Tariff Commission would no longer be directly involved in adjustment assistance, and the Secretary of Labor would be the determining officer for these cases.

The Secretary of Labor would have to make three findings: (1) a "significant number or proportion of workers" is unemployed or threatened with unemployment: (2) sales or production or both of the firm has decreased absolutely and (3) that imports have contributed importantly to both the unemployment and the decline in sales or production.

The Trade Expansion Act required that the injury be linked to a trade concession and that increased imports had to be the major cause of the injury. Thus the causal step is changed, but there are far stricter rules in terms of the impact-two tests instead of one. And the injury test is stricter. Unemployment must be significant and imports must have caused both the unemployment and the decline in sales or production-or no benefits could follow.

Section 224 of the bill requires the Tariff Commission to notify the Secretary of Labor wherever there is an industry section under the "import relief" sections of the bill. The Secretary of Labor must then study the employment conditions of the industry and the possibilities of adjustment assistance. He must report to the President within 15 days of the time the Tariff Commission reports on the import relief findings.

The Secretary of Commerce has similar provisions for adjustment assistance to firms. The Secretary of Commerce, not the Tariff Commission, would make the determination and the test of cause that imports "contributed importantly" to the injury.

Thus adjustment assistance becomes a more complicated problem, with less prospect of usefulness under H.R. 10710. If there is an industry petition, the results of a positive finding would be almost nothing at all: Under current law, the President may give relief as he thinks it appropriate, or he may do nothing at all. Under H.R. 10710, the President must decide whether adjustment assistance is a possibility or he may do nothing at all, or he may provide relief in the following order: (1) tariff increases; (2) tariff-rate quotas; (3) quotas; (4) orderly marketing agreements. The quotas and orderly marketing agreement decisions would be subject to Congressional veto.

For worker petitions, if industry is determined, the benefits merely change as follows: Under current law, cash benefits equal to 65% of average weekly wages up to 65% of average weekly manufacturing wages for 52 weeks (with a few additional time provisions for older workers and training). Under H.R. 10710, cash benefits would equal 70% of the average weekly wage for the first 26 weeks, but 65% of his average weekly wage after that as under present law. The maximum for any week would be 100% of the average U.S. weekly manufacturing wage. Thus the maximum that a worker could collect in a year is estimated to be at $170 per week for 52 weeks in 1974 $8,840. How many Americans want to give up their jobs for $8,840 and a lifetime of unemployment?

In the year 1974, the proposal for adjustment assistance for workers is just one more false promise from those who have already done injury to the wellbeing of American workers, consumers or taxpayers.

In the year 1974, the proposal for adjustment assistance for firms is just one more give-away to American business.

APPENDIX VII

RETALIATION AND THE RIGHT OF AMERICA TO SELF-INTEREST

Fear slogans like "retaliation" and "trade war" are scare symbols when applied to the U.S. These slogans represent the claim that higher trade barriers might be raised by other nations if the U.S. takes legislative action in its own interest. Factually, other nations have been putting up new trade and investment barriers constantly to assure their own well being. They have been "retaliating" against the U.S. and others for years, and have erected many more such barriers than the United States. Furthermore, our government expects these barriers to continue to go up-with or without legislation.

The Arab embargo, the actions of Europeans and Japanese countries, the swift moves to assure self-interest of all other nations should have taught America that trade changes are a fact of life for other countries. The U.S. fails to act at home in its own interests.

Since these are recognized facts, it is time to stop the scare talk aimed at deterring the United States Congress from its right to pass laws in the interests of the people of this country. This is a constitutional obligation. The U.S. recognizes that other sovereign nations have rights and are exercising them. The U.S. has the same rights-free of scare slogans.

The U.S. faces very real trade barriers today-and tomorrow. No clear, detailed documented references are available to the Congress to illustrate the relationships of the trade, investment and other barriers to U.S. exports by foreign countries or their spurs to export to the U.S. Most of the detailed information is considered "foreign policy confidential" or "business confidential." What is available to labor unions is from published government documents, the statements by businessmen and the press. But even the available evidence shows that the threat of retaliation is a scare word.

Everyone knows that the U.S. is now confronted by complex governmental economic arrangements in other countries to spur exports (direct and indirect subsidies, etc.) and to bar or hold down imports (direct or indirect barriers). The examples usually given are Japanese quotas, licenses in European countries to import specific products and laws in many nations which require foreign subsidiaries to produce a certain amount of goods for exports, as in Mexico, Brazil and Spain. These countries also have controls on capital flows and technology flows either by law or practice.

The International Economic Report of the President, February, 1974, states generally that "import barriers in virtually every other developed country are highest and most restrictive in many of those very products where our greatest competitive advantage lies. Moreover, these restrictive devices often take the form of quantitative restraints and other measures that effectively shelter foreign industries from the impact of currency adjustments (pp. 40-41). The report recognizes that "some developed countries impose restrictions long before imports reach so large a share of consumption" (page 41).

As for developing countries, the President's 1973 report stated, "Our exports will face higher import barriers than goods coming from (developing) countries." Moreover, rather than export goods from their U.S. plants, "our manufacturers may be forced to build plants abroad. behind the higher barriers, in order to remain competitive in these markets," the 1973 report said, (page 38).

Thus the expectation of trade war is not realistic. The expectation of continued discrimination against the U.S. economy-if that is the issue—is accepted by U.S. government spokesmen. Even when the Arabs acted. the Europeans acted. Japan acted, the U.S. did not retaliate. The surrendered in the trade war without firing a single shot.

How does foreign "retaliation" work? That's the real question. Vague talks about quotas and licenses and retaliation really doesn't mean much. What are the current actions?

The European Economic Community, for example, is a barrier in itself, and it is going to be a larger barrier. The European Economic Community, the Common Market, is not a United States of Europe as most Americans believe. It is

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