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So I think I have answered your question in saying that if it is that choice-and I do not think it has to be that choice if it is that choice, then I would say let us give détente diplomacy the chance that it deserves. And let us drop the Jackson amendment and find some other way of dealing with this objective. Senator BENNETT. Thank you, Mr. Chairman. The CHAIRMAN. Senator Dole. Senator Dole. No; I do not have any questions, I think there are a number of us who are presently sponsors of the Jackson amendment who are not quite certain what may have inspired it, but I am sure the objectives of human rights may be something else. We hope they are based on human rights, but there may be some cosponsors to that amendment who take some hope from suggestions you make, trying to find some middle ground. I do not think we want the bill to go down, nor the Jackson amendment totally, but there has got to be some solution. If you come up with any, let me know. Mr. STEINBERG. May I offer this comment, Senator Dole and Mr. Chairman: There has been a lot of talk about the possibility of veto of the bill if the Jackson amendment as now worded remains in the bill. In my view, presuming a good trade bill is passed by the Congress, and if it does include the Jackson amendment as now worded, I do not think that bill is going to be vetoed. I think a way can be found through diplomacy, should be found, in the event of that contingency, to explain to the Russians how the American political system works. The administration would find a way of perhaps criticizing the Congress for what it did and did not do, but a way can be found to get through this problem.
Now, I recall, if I recall correctly, that back in 1962, when the epochmaking Trade Expansion Act was passed—and the chairman can correct me on this if I am wrong—that the Congress in effect withdrew MFN from Yugoslavia and Poland. It did not mention Yugoslavia and Poland. It denied MFN to all countries dominated by a Communist form of government. I have forgotten the exact language. Now, the only two Communist countries at that time were getting JFX were Yugoslavia and Poland. I am sure that the Yugoslavs and the Poles were greatly disturbed by this. This was a foreign policy issue of no small proportions. And yet I believe that President Kennedy found a way of explaining to both governments his regrets; and, before long, MFN treatment was restored to Yugoslavia and Poland through other legislation.
So, I think a way can be found, through very careful diplomacy, in the event we should reach the contingency of a good trade bill passing including the Jackson amendment as now worded.
The CHAIRMAN. Well, you were just saying that when you have two good objectives, you try to get the best you can of the two; you try not to sacrifice one to the other, but try to get as much as you can of both. That is what you were saying. Mr. STEINBERG. That is exactly what I am saying, Senator. And I think that is what the exercise is. The question put to me by Senator Bennett was, if I may-and I say this respectfully-I think more an academic question than where I think the action really is on this issue.
The CHAIRMAN. You just do not think, that while you favor both, you just do not think that the answer is to sacrifice both by trying to
get the whole hog or the whole olaf, when you can part of it. And that is how legislation usually goes. You work in the spirit of compromise to get the best of both worlds insofar as you can. And you have to yield on some points in order to get the best you can under the circumstances.
Mr. STEINBERG. That is right, Mr. Chairman. I am confident that none of the objectives involved—détente diplomacy and human rights-have to be sacrificed. I think a way can be found.
I note in the press a colloquy between Senator Nelson and Secretary Kissinger on this issue. And I think that something along the lines they were not in detail—but I think something along the lines that Senator Nelson was talking about, in terms of Presidential accountability to Congress on progress made toward the human-rights goal, and Congress always retaining the power to withdraw MFN if it wanted to something along that line can be worked out with the Secretary of State. And in fact, he himself, I believe, is acceptable to that kind of accommodation.
The CHAIRMAN. Well, I think that—and I am a sponsor of the Jackson amendment, too—I think if we can work out an arrangement that improves our relationship to the Soviet Union and the Iron Curtain countries and at the same time makes freer immigration possible, we would achieve a lot more than we are going to achieve if all we do is cause both sides to harden their position toward the other and to slam the door shut on the many people who are being permitted to emigrate from the Soviet Union and the other countries toward this side.
Mr. STEINBERG. That is right.
The CHAIRMAN. Of course, one good thing about it is that we are trying to practice our side of it. Anybody who wants to go with ours is privileged to go; and some do.
Thank you very much.
The CHAIRMAN. The committee is adjourned until 10 a.m, tomorrow morning.
[The prepared statement of Mr. Steinberg follows. Hearing continues on p. 1271.] PREPARED STATEMENT OF DAVID J. STEINBERG, EXECUTIVE DIRECTOR, COMMITTEE FOR
A NATIONAL TRADE POLICY The Committee for a National Trade Policy, for over 20 years a leading advocate of a freer world economy, is a broadly based organization supported by businesses large and small, by trade associations, and by individuals as citizens and consumers. It speaks for no special interest, only for what it regards as the total national interest. We have earnestly dedicated ourselves to this single standard.
The time has come for a new effort, particularly by the industrialized countries, to lower and hopefully remove artificial distortions of international trade, and up-date the ground rules of fair international competition. CNTP has urged legislation to advance these objectives. We have opposed legislation that would impair them. We are, therefore, in basic support of the liberal-trade authorization in the Administration trade bill as modified by the House of Representatives, and we totally oppose the trade-and-investment controls of measures like the BurkeHartke bill.
The trade bill needs substantial improvement to make it a more effective instrument, and the kind of instrument needed, for achieving a more open world economy. Suggestions for improvement are presented below. Under no circum
stances should the bill be made more trade-restrictive through automatic triggering of import controls or through other protectionist devices. Trade legislation and overall trade policy should reject import controls unless such controls, after careful diagnosis of the real problems and real needs of the petitioning industry, are found to be indispensable to a constructive solution. They should be invoked only as temporary, marginal measures of last resort in a coherent, balanced program of constructive assistance to an ailing industry. Anything short of this exacting standard would unjustifiably be : Damaging to workers, businesses and communities dependent on the international movement of goods and capital; damaging to the creation of new and better jobs for our expanding labor force; damaging to our more than 200 million citizens as consumers; damaging to the future of an innovative and successful private enterprise system; damaging to U.S. credibility and influence in world councils; damaging to the health of the Free World economy; damaging to the aspirations of workers around the world ; damaging to the total national interest.
We basically support the President's trade message and the Administration trade bill as modified by the House, because in general they serve the objective of more and better jobs, the best interests of consumers, a more innovative and productive private enterprise system, U.S. effectiveness in world councils, freer relations with the rest of the world, a stronger U.S. economy and world economy, indeed the overall national interest. That is, they can serve these objectives. However, the bill has potentials that are less progressive, leaving U.S. tradepolicy intentions less than convincing.
We regret that U.S. trade policy, and this bill as its primary instrument, are not a more far-reaching, more ambitious effort to achieve free and fair international trade. The times call, not for just another round of trade negotiations, but for a climactic round of negotiations to program the removal of all artificial trade distortions in accordance with a realistic timetable. This is not just theoretically desirable. It is urgently necessary. It can and must be made politically palatable.
In international economic terms, the trade bill should convincingly reflect our national determination to attack and remove the widest range of trade distortions. Both the tone and substance of U.S. trade policy should be addressed, not just to certain foreign practices we find particularly irritating, but to what a few of us have called a "grand design" of freer and fairer international trade. Confrontation on particularly controversial issues may be inevitable. It should not be shunned. But there is a much better chance of success in getting what we need and merit, if our tactics on these stickiest issues are part of a clear, convincing and over-arching strategy capable of exciting the widest interest and winning the widest support.
In domestic economic terms, both the bill and other policy instruments (such as a dependable commitment to full employment) should ensure that a trade policy that is essential to the national interest is not built on sacrifice of the living standards and job opportunities of Americans whose jobs might be dislocated by such a policy. If freer trade is good for consumers (as we believe it is), it must be made good for all consumers. If it is good for the nation (as we believe it is), it must be made good for every state in the Union.
The following are major ways the trade bill could be made an effective vehicle for achieving these objectives, even just the trade-policy objectives outlined in the President's trade message.
TARIFF-CUTTING AUTHORITY The President should be given authority to negotiate the removal of tariffs, not just cut them by the percentages now authorized in the bill. Authority to negotiate tariff removal should not be limited to the removal which the bill authorizes on tariffs that are 5 percent ad valorem or less. Alternatively, tariff removal should be permitted for those products in which exports by the industrialized countries are 80 percent of world exports (adaptation of the zero-tariff authority legislated in 1962, which expired in 1967).
NONTARIFF BARRIERS We applaud the Administration's determination to attack the thorns thicket of nontariff barriers (NTB's). The United States has for too long lacked adequate legislation for effective progress in this area. The trade bill as proposed, and now as passed by the House, does not adequately fill this void.
We regret the House bill's rejection of the Administration's request for advance authority to negotiate and implement agreements affecting customs valuation, country-of-origin markings, and certain other customs matters. Authorization to convert nontariff barriers into tariff equivalents, to be negotiated just as regular tariffs would be, may be productive in handling some NTB issues (though we share the Ways and Means Committee's reservations on this point). The provisions for accountability to Congress on NTB agreements that modify existing legislation are thoughtful recognition of the role of Congress in this policy area. However, the President's authority to lower and remove nonta riff barriers seems overly circumscribed by the likely consequences of the required consultations with Congressional committees (including the possibility of public hea rings) on each cluster of NTB's on which U.S. concessions are intended. These procedures could prove to be serious deterrents to the far-reaching liberalization which ought to be the objective of these negotiations. Focusing in practice on whether the proposed concessions should be made, not (as they should) on the adjustment policy needed to backstop them, these procedures would tend in some cases to ossify the “sector approach" the bill requires (reciprocity within product sectors "where feasible”), an approach which in itself and particularly when influenced by the prescribed procedures for Congressional consultation, could substantially shrink the scope of the negotiations. A new NTB strategy is needed, giving Congress the most constructive role it can play in this difficult aspect of trade policy. NTB strategy should be aimed resolutely at the widest and deepest dismantling of nontariff barriers, with the role of Congress primarily that of ensuring adequate adjustment policies to backstop this progress toward freer trade.
Thus, Congress would authorize the President to negotiate agreements to reduce or remove nontariff barriers. This authorization would include a mandate to the President that, whenever he reduces or removes a nontariff barrier affecting a U.S. industry which claims it cannot operate effectively without this or equivalent government assistance, the President must (in cooperation with the industry, and to the extent that government help is needed) formulate a special adjustment policy with respect to that industry, emphasizing domestic economic remedies. If the President finds that he needs additional legislation to implement such a policy, he would be required to seek such legislation at the earliest opportunity. This would provide Congress an opportunity to assess the adeqnacy of the assistance intended for that industry. Other forms of Congressional review might also be provided.
ACCESS TO SUPPLIES Because trade-policy imperatives today involve effective action to ensure access to world supplies as well as access to world markets, the President's negotiating and other trade authority should include the basic provisions of the MondaleRibicoff bill dealing with export-control ground rules (applied to all countries including the United States) and other steps to ensure adequate and equitable U.S. access to foreign supplies.
INDUSTRY-ADJUSTMENT POLICY The Committee for a National Trade Policy has long advocated a coherent, comprehensive adjustment policy providing domestic-economic remedies for import-related damage to workers, firms and communities. The House-passed bill commendably restores authorization of assistance to import-damaged firms and ungrades the level of adjustment assistance to import-damaged workers. But. like the Administration bill and previous legislation, it does not establish the overall industry-adjustment policy urgently needed to backstop consistently ani progressively freer trade. By this omission, there is also less basis on which we can persuade other countries, most of which also lack such policies, to avoid or at least minimize import controls as a "safeguard" against injurious import competition.
The only policy vehicle in the hill (and in existing law) for dealing with industry-wide import problems is the escape clause. Its primary instrument is trade restriction. We urge as the primary instrument of industry assistance a balanced policy of constructive aid to ailing industries and communities that have convincingly proved their need for government help. Such a policy would deal with the real problems and real needs of the affected industries and communities.
U.S. policy, both present and prospective, provides no identifiable mechanism for coherent, coordinated government attention to industrial (including agricultural) adjustment problems that have not escalated into the escape-clause standards of "serious injury" or "threat of serious injury". There may be policy inequities that materially impair an industry's competitiveness. Ways should be found to correct these inequities before they seriously aggravate the industry's adjustment problems. Certainly recourse to import controls in "serious injury" situations should itself trigger comprehensive attention to the industry's real problems and real needs a policy framework for whatever import restrictions may be instituted, and a device for phasing them out as soon as possible and for precluding future recourse to trade restriction. The criteria for imposing such trade restrictions should be tightly drawn so as to make trade controls (if needed at all) only a marginal part of a balanced policy of constructive help.
THE ESCAPE CLAUSE ("IMPORT RELIEF") The proposed phasing-out of escape-clause relief is commendable. However, the criteria for invoking trade restrictions are too permissive. They open the door to extensive pressures for import controls. Petitions for "import relief" would probably increase substantially, as would the flow of injury findings to the White House. The loosened criteria and the administrative burden at the Tariff Commission would, in combination, tend to generate these results. The President would be exposed to formidable pressures to do what these petitions are aimed at recuring-restriction of imports in one way or another. Political exigencies would impel him to yield in some of these cases if only to show that the procedures work.
We applaud the bill's requirement that, in deciding escape-clause cases, the President must consider consumers, international economic interests and other significant factors. And we note with approval that, unlike the Administration's bill but as we had urged in the House hearings, the President would be required to explain his decision in an escape-clause case where he provides import relief as well as when he does not. We also note approvingly acceptance of our proposal that import restrictions not be imposed unless the effects on interests who may be adversely affected are properly considered in public hearings. And We also note with approval that, unlike the Administration bill, suspension of the privileges of TSUS Sections 806.30 and 807 is authorized as an escape-clause remedy only where serious injury can be traced to the use of these privileges.
The following are additional ways the "import relief" section of the bill should be improved.
We would prefer retention of the criteria established in the Trade Expansion Act of 1962. Alternatively, we recommend requirement of at least some link to a trade agreement concession, and that "primary cause of injury." (the standard proposed in the Administration bill and meaning the largest single factor) should le coinbined with, not replaced by, "substantial cause", the standard now in the bill and meaning important but no less than any other single cause. The new standard would thus be "an important cause and more important than any other single cause".
We commend the House for deleting the prima facie "market disruption" criterion in escape-clause evaluations. But we deplore the weakening of the criteria for threat of serious injury". These criteria (in the past basically the same as for "serious injury") have been made significantly weaker than those for "serious jujury". Arithmetic indicators displace professional judgment. Yet a "threat" finding is capable of energizing the same administrative result. We also question the ranking of "orderly marketing agreements" as the least desirable form of import restrietion, less desirable than import quotas. Moreover, the bill should require that every effort be made to phase-out import quotas more rapidly than tariff increases.
We recommend in addition that the industry's effort to adjust to foreign competition should be considered in the Tariff Commission's evaluation of the petition, not just (as the bill implies) when the President acts on cases that reach the White House. We also propose that the role of the Tariff Commission include recommendations on the degree of import control necessary to help the affected industry solve its problem.
The Administration bill's unlimited authority to impose tariff and quota restrictions in escape-clause cases has been only partly, and inadequately, corrected.