ÆäÀÌÁö À̹ÌÁö
PDF
ePub

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 nontariff barriers seems overly circumscribed by the likely consequences of the required consultations with Congressional committees (including the possibility of public hearings) 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 adequacy 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 upgrades 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 and 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 bill (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 securing-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 be combined 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 injury". 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 restriction, 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.

We are concerned over the apparent lack of standards in the setting of tariffquotas (for example, standards limiting the tariff to be applied beyond the quota), and we oppose the authorization of escape-clause tariff increases as high as 50 percentage points. In the latter connection, 50 percent above the existing tariff seems more appropriate, particularly if escape-clause action is only part of a coherent, comprehensive, constructive industry-adjustment policy-a context not required in the bill (or any time in the past) but should be.

ADJUSTMENT ASSISTANCE

We endorse the bill's easing of eligibility criteria for adjustment assistance. The procedures in the existing administration of this program need simplification, but we regret the bill's limitation of the Tariff Commission's role to conducting investigations at the Administration's request and without being called upon to assess the results of its investigation.

We note with sadness and alarm that every labor union that has spoken out on trade policy is opposed to this trade bill. The opposition of the United Automobile Workers (UAW), completing the circle of outspoken opposition by organized labor, is the most recent and most disturbing, particularly since the UAW was and remains an advocate of freer world trade. A basic reason for UAW opposition is the union's strong dissatisfaction with the adjustment assistance provisions. Organized labor was the prime mover behind the adjustment assistance concept (back 20 years ago), but regards not only the existing program but the proposed changes in the trade bill as woefully unresponsive to today's needs. We urge the Senate to raise the sights of the trade-adjustment policy and make a credible effort to win at least UAW support for the trade bill and for overall progress toward a freer world economy.

The Amtrak model proposed by the United Auto Workers deserves attention as a possible standard to be used in adjustment assistance to trade-impacted workers. If this is not suitable, an approximate alternative should be sought. We also recommend that adjustment assistance be authorized, not only (as in the bill) to workers, and firms injured by imports, but also to workers, firms and communities injured by the restriction of imports. And beyond this legislation, the nation needs an adjustment/conversion strategy addressed to all forms of dislocation, including injury that may result from the shifting of a production line from a U.S. plant to facilities abroad.

Retaliatory and balance-of-payments import controls

Adequate standards, indeed international standards involving the General Agreement on Tariffs and Trade or the International Monetary Fund, are needed for recourse to import controls for retalitory or balance-of-payments purposes. respectively. This is particularly important with respect to balance-of-payments import controls invoked against particular countries. Import control as a balanceof-payments device is unsound in the first place, at least for the United States. It is the wrong approach even for dealing with trade account disequilibrium.

The right road to international monetary adjustment is not through an arsenal of trade restrictions penalizing "surplus" countries, where the "deficit" country may itself not be making a suitable contribution to solving the disequilibrium. Besidess a suitably flexible system of exchange rates and adequate reforms in domestic policy, the right approach is emphasis on a multilateral, enforceable commitment to an "open world economy" involving all the developed countries and entailing accelerated schedules for the "surplus" countries. U.S. trade policy should be seeking such a "grand design" as a fundamental reform whose time has come. But this is not the game plan today.

If import controls are imposed for balance-of-payments reasons, the President should be required to report to Congress-through oral testimony by the Secretary of the Treasury before appropriate Congressional committees-no less fequently than every 90 days on progress being made toward removing such restrictions.

NATIONAL SECURITY

One of the reforms desirable in trade legislation concerns the national-security provisions of existing law. The Administration's trade bill continued intact the present national-security provisions. The House bill adds a requirement that the President explain to Congress his reasons for using the import-control authority, and report annually to Congress on his use of such authority. These changes are

not enough, for they do not require constructive attention to the substance of action dealing with trade-related impairment of national security.

We recommend that, where the President finds that imports are impairing the national-security stake in dependable domestic supplies of the particular product, he should develop a special assistance program to strengthen this sector of the mobilization base. At present (and as envisaged in the trade bill), the only action the President is required to take if he finds impairment is restriction of the imports. Import controls may be necessary, but they should be very selective (to the extent needed at all), and should be only a marginal part of a balanced assistance policy aimed at coherent objectives and emphasizing domestic economic remedies. This policy should be systematically monitored by the Congress, and the President should report to Congress every year on its progress.

It is amazing that the only section of trade legislation that has intimately affected petroleum, and in this connection has worked so poorly as a policy instrument, has escaped the attention of government, business and virtually the entire liberal-trade community.

Tariff preferences to developing countries

The long-delayed step to fulfill this commitment is made inadequate in many

ways.

The exemption of products covered by special import controls is understandable. But there is no deliberate effort to phase out these import controls. The proposal is weakened even more by (a) the quantitative limits restricting the eligibility of supplying countries, (b) the burdensome requirement calling on the President to judge whether particular industries in particular developing countries need such preferences, (c) the overly permissive "import relief" (escape clause) criteria capable of penalizing foreign producers impressively successful in attracting American consumers to their products, and (d) overly permissive Presidential authority to withdraw tariff preferences. Moreover, tariff-preference authority should not be limited to zero tariffs as the only option. Gradations of preference should be permitted, left to the President's discretion.

These shortcomings in the authorization of tariff preferences to the developing countries should be carefully reviewed for correction. This is, among other things, a foreign-policy issue of very high priority. America needs a new, dramatic Third World strategy. This bill does not provide the trade dimension so urgently needed. Foreign access to the American market for both goods and capital is not only a major instrument of U.S. assistance to the developing countries. It can also be of both carrot and stick utility in developing the new and equitable economic partnership essential to repairing the worsening fault line in relations between the advanced countries and the world's less-developed areas.

Freest access to the American market is America's best economic weapon. America should use it with great skill and vaulting statesmanship. The nation has the resources and resourcefulness to adjust fully and effectively to such an initiative.

Title IV (trade with Russia etc.)

We urge the President and Congress to negotiate a mutually acceptable accommodation on this issue-an accommodation that (a) gives the President the moral support and legislative authority he needs for his highly desirable but very delicate diplomatic initiatives in relations with Communist countries, (b) finds an appropriate way, consistent with these objectives, to send the human-rights message which large majorities in Congress and supposedly in the country want to send, and (c) provides for frequent, effective Presidential accountability to Congress on these issues.

CONSULTATION WITH CONGRESS

In his trade message, the President said:

"I invite the Congress to set up whatever mechanism it deems best for closer consultation and cooperation to ensure that its views are properly represented as trade negotiations go forward."

An effective mechanism for such consultation and cooperation is crucial for progress in trade negotiations and for Congressional action to backstop agreements reached. For this purpose, particularly for effective consultation between the President and Congress on industry-adjustment measures pursuant to the new dimension of an effective trade policy proposed above, a joint "select committee" should be formed, roughly on the following lines:

Alternating chairmen: the chairman of the House Ways and Meaus Committee and the chairman of the Senate Finance Committee. Other members would include the chairmen of the following committees (or their alternates):

[blocks in formation]

In addition to the report required in the bill (the same kind required in existing legislation), the bill should also require the President to report annually to Congress on the progress of national adjustment and conversion across the board, and on the international competitive position of the American economy. Such a vehicle for better understanding of these issues (first proposed by CNTP in the 1962 trade hearings) would contribute immeasurably to the more dependable free-trade policy so urgently needed.

SUSPENSION OF IMPORT RESTRICTIONS FOR ANTI-INFLATION OR BALANCE-OF-PAYMENTS REASONS

This authority to suspend import restrictions is commendable in principle. We doubt seriously that it should be restricted to an arbitrary percentage of total U.S. imports, to the time limitations specified in the bill, and to situations where, in the President's judgment, the suspension would not injure "firms or workers". Suspension essential or helpful to the overall national interest should not be sacrificed to the short-run interest of certain firms or workers, whose needs should be dealt with by domestic policies addressed to the imperatives of their particular situations. A coherent industry-adjustment policy of the kind proposed in this testimony would augment the flexibility the President seeks for dealing with inflation or persistent balance-of-payments surpluses through suspension of import controls.

OTHER RECOMMENDATIONS

We recommend for anti-inflationary purposes the immediate suspension of import duties on as many products in short supply as possible, including all imported meats.

We also urge, as an amendment to the trade bill, the immediate repeal of the 1964 legislation triggering quota controls on meat imports. The President's suspension of these quotas is not enough. There is a world shortage of meat, and mere suspension of the quotas does not provide a firm basis for stepped-up commitment of foreign supplies to the U.S. market. The fact that over 90 percent of imported meat does not compete with U.S. production, but supplements U.S. supplies going into hamburgers, hot dogs and luncheon meats, should convincingly complete the case for repealing this import-control legislation.

We recommend authorization to the President to terminate the ban on imports of seven furs and skins from the Soviet Union and the People's Republic of China.

[Whereupon, at 3 p.m., the committee adjourned, to reconvene at 10 a.m. Thursday, March 28, 1974.]

« ÀÌÀü°è¼Ó »