EMPLOYMENT CHANGE FROM JUNE 1969 TO JUNE 1973, BY INDUSTRY-Continued

Source: "Employment and Earnings: United States 1909-72" (Bulletin No. 1312-9) and "vol. 20, No. 3, Septe

1973" Department of Labor Bureau of Labor Statistics.

22.5

24.3

+1.8

4.0

3.8

-.2

238.0

292.7

+54.7

59.3

68.4

+9.1

299.4

262.9

-36.5

49.3

42.6

-6.7

AFTERNOON SESSION

The CHAIRMAN. The next witness will be Mr. Simon Katz, president of the American Importers Association.

STATEMENT OF SIMON KATZ, EXECUTIVE VICE PRESIDENT OF NEW YORK MERCHANDISE CO., PRESIDENT OF AMERICAN IMPORTERS ASSOCIATION, ACCOMPANIED BY GERALD O'BRIEN, EXECUTIVE VICE PRESIDENT, AIA, AND DAVID PALMETER, DANIELS & HOULIHAN

Mr. KATZ. Thank you, Mr. Chairman.

Mr. Chairman, members of the committee, it is not easy to follow a witness like Mr. George Meany, but we will do our best.

My name is Simon Katz. I am executive vice president of the New York Merchandise Co. of New York City. My company is an importer of variety store merchandise. I appear here in my capacity as president of the American Importers Association, New York City. I am accompanied today by Gerald O'Brien, executive vice president of AIA, and David Palmeter of the law firm of Daniels & Houlihan of Washington, D.C.

I will refer to our association as AIA. It is a nonprofit organization formed to foster and protect the importing business of the United States. As the only association of national scope representing American companies engaged in the import trade, AIA is the recognized spokesman for importers throughout the Nation.

We welcome this opportunity to present our views on the Trade Reform Act of 1973. I ask at this point that my complete testimony be accepted for the record, and that I be permitted to summarize. The CHAIRMAN. We will print your entire statement.

Mr. KATZ. Thank you.

We generally support the bill as passed by the House. We believe it is far superior to the original administration bill, particularly in the area of establishing standards and criteria to guide, and limit, Presidential action. However, we believe there are serious defects in the bill, and we propose changes. During the course of this brief testimony I will be able to stress only a few of the most important recommendations. And I will dwell mostly on the safeguard provisions and the Countervailing Duty Act.

With regard to the safeguard provisions, first, there is no question that requiring petitioning industries to show that increased imports were caused in major part by tariff concessions has been the stumbling block to escape clause relief. While the complexity of some of the Tariff Commission cases makes precise calculation impossible, it can fairly be stated that in at least 18 of the 25 escape clause cases decided since 1962, negative votes were cast by members of the Tariff Commission based on this principle.

We believe that some relaxation of this principle is in order, but that total elimination of the causal link is not justified. Accordingly, we recommend that the link to prior tariff concessions be retained, but that phrase employed prior to 1962, "in whole or in part," be substituted for the term "major."

Second, there is another major cause test in the present law, and this one we believe should be retained. It is the requirement that the imports

involved be the "major cause" of actual or threatened injury. The Trade Reform Act would require that the increased imports be only a substantial cause of actual or threatened injury.

Clearly, if the concession linkage has been the main hurdle facing industries petitioning for relief, then its removal, or reduction, from "major" to "in whole or in part" eliminates any justification for any further changes in the statute.

The weakening of this criterion, when combined with the removal of the link to tariff concessions, would in fact open the gates to import restrictions even in cases where it could be demonstrated that such restrictions would be little or no help to the complaining industry. Now, with respect to the Countervailing Duty Act:

The amendments to the Countervailing Duty Act contained in the Trade Reform Act are the most far-reaching, significant, and unwise provisions of the bill. We refer specifically to the inclusion of time limits and judicial review for domestic producers of determinations by the Secretary of the Treasury that a bounty or grant exists.

The committee is well aware of the arguments in favor of these provisions. They deal primarily with the notion of fairness. Particularly in the case of judicial review, it is said that if one side can appeal, why should the other side be denied a comparable right?

The surface appeal of these arguments grows out of a fundamental misconception of the nature of the Countervailing Duty Act in American law. Implicit in these arguments is the erroneous notion that the Countervailing Duty Act, like the Antidumping Act or the escape clause, is a remedy for private injury.

To the contrary, the Countervailing Duty Act is not, and should not be, a remedy for private injury. It is, and it should be, a conferral of authority to the executive in order to empower Government to deal flexibly with the complicated problems caused by the impact of governmental programs on international trade-the programs of the U.S. Government as well as those of foreign governments.

All governments obviously need the power to react with countervailing duties to "unfair" subsidization of exports by other countries. Furthermore, because the programs involved can be so varied and subtle in both their operation and their effect, the power to countervail must be, and is, phrased in extremely broad terms. But the very necessity of phrasing the power in extremely broad terms creates a parallel necessity that the executive have the discretion not to countervail against programs even though technically within the ambit of the law.

The Countervailing Duty Act is invariably directed at the programs of sovereign governments. Consequently, its implementation raises questions of international relations not present in proceedings under other laws, such as the Antidumping Act or the escape clause.

Such a decision should not be subject to interference by private parties.

The Trade Reform Act, by imposing a decisional time limit and expanding judicial review, invites private interference on a large scale. These provisions of the bill fail to distinguish between needed governmental power and private remedy. They ignore the right, indeed the obligation of the political arms of government to determine the proper

adjustment between foreign, economic, and domestic policy in light of the national interest. These provisions constitute an ill-advised prescription for diplomacy by litigation. They amount to an invitation to a trade war.

For these reasons, we believe that the decisional time limit and judicial review provisions should be stricken from the bill. We recognize, however, that to some the seeming inequity of the importer having the right to appeal somehow requires a comparable right for the domestic producer.

First, we would note that the importer's right to judicial review is grounded in the fundamental right of any party required to pay a tax to challenge the authority of the tax collector. There is nothing novel or unusual about this. Viewed simply as a tax matter, we submit that there is no rational basis for the proposed alteration in the relative rights of judicial review.

But we believe that much more is involved. Determinations under the Countervailing Duty Act, as we have said, are an exercise of political power involving delicate government-to-government relations. Such decisions should not be subject to interference by private parties, whether they be domestic producers or importers.

Consequently, while we oppose the extension of the right of judicial review of the Secretary's determination to domestic interests, we suggest that it would be appropriate to remove the importer's right of review on this question as well.

This position applies only to the question of the Secretary's determination as to the existence of a bounty or a grant, for this is the important question. This position does not extend, however, to the determination of the amount involved in a particular shipment.

Accordingly, we suggest that the appropriate sections of the Tariff Act of 1930 be amended to make clear the importer's right of review of the Secretary's determination of the amount of a countervailing duty on particular shipments, and to extend this right to domestic interests. In conclusion, Mr. Chairman, our testimony submitted for the record contains a more detailed discussion of these and a number of other important points. But we would like to emphasize the overall thrust of the position we have taken. AIA has recommended that relief from import competition be easier to obtain than it presently is, especially under the escape clause provisions.

AIA also has suggested that a portion of the importer's right to judicial review of determinations under the Countervailing Duty Act be eliminated, and that domestic interests have an equal right to judicial review of determinations of the amount involved.

The recommendations of the American Importers Association are based on our belief that the broader national interest requires the exercise of responsibility on the part of everyone. Just as it is no time for nations to act for their own short-term benefit, we believe that it is no time for the various sectors of our economy to consider themselves alone.

We believe that the answer to the problems we face lies in policies that would reduce inflation, overcome shortages, and wasteful misallocations of resources, and promote international cooperation and understanding. A liberal trade policy furthers these essential ends. We are not advocating unilateral free trade overnight.