of member companies are occasionally in conflict, we nevertheless have a collective and, I believe, objective and overriding interest in trade, monetary and investment reform which we believe will benefit the United States, our major trading partners, less developed countries, even those with whom we have historically been at odds, and, hopefully, the entire world society.

In preparing for my appearance today, I concluded that my views on international economic matters could best be conveyed by submitting with your permission-a copy of a speech I gave before the Economic Club of Chicago on March 12, 1973 entitled, "World Trade, Woolly Thinking and the Working Man", and another which I gave before the Rotary Club of Chicago on November 6, 1973 entitled, "Turning Point and the Multinational Corporation". With your permission, copies of both these speeches are attached to this brief statement, and have been presented to the committee previously, as requested.1

In this world of rapidly changing and interdependent international economic circumstances, I think it is imperative that the President be given greater responsibility and authority for the negotiation of our international trade relationships. Therefore, I generally endorse the provisions of II.R. 10710, with the following two specific exceptions.

First: On adjustment assistance, I would agree that provisions for assistance to workers are appropriate. Based upon the experience I had as Assistant Secretary of Commerce in trying to implement effective adjustment assistance for firms, however, I hold a different view. I have concluded that it is very difficult to fairly apply adjustment assistance to firms within the concepts of our private enterprise

economy.

The responsibility for a given firm's adjustment to any business adversity, including excessive imports, inherently rests with the management of that company. It seems to me unfair for the Government to provide assistance to one firm when very often other companies in the same industry, through their own resourcefulness, have found a way of overcoming the import competition problem by entering into new lines, transferring to new technology, et cetera. I have concluded, therefore, that the only meaningful assistance Government can give such firms is through the provision of restricting imports of competitive products on a declining basis over a 4 or 5 year period to give the firm the time necessary to adjust.

I appreciate it may be difficult, politically, to not provide adjustment assistance to firms, especially when troubled companies are concentrated in one geographic region. At the most, however, I would recommend that this committee limit the assistance to firms to support for an entire industry, such as research and development grants. This would avoid giving the poorly managed company the benefit of Government assistance while denying it to the well managed one. Second: My principal concern in the legislation you are considering rests with section 402 of title IV dealing with the freedom of immigration and its relationship to non-discriminatory tariff treatment and U.S. Government credits.

1 See p. 1384.

I believe we have arrived at a point in time where international, political, military, economic and social circumstances have aligned themselves in such a manner that we have an opportunity to movehowever slowly-from a posture of military confrontation with the U.S.S.R. to one of economic cooperation. It seems to me that the leaders of the Soviet Union recognize that their claim to international fame must shift from a military competence to an economic competence. To expedite the development of an economic competence, the Soviets require Western technology and Western management methods. Because of their large population and centralized management structure, they logically want to procure these from the large scale economic experience of the United States.

The potential movement from a posture of military confrontation to one of economic cooperation could lay the foundation for progress toward a political balance-if not political agreement-and hopefully to a world at peace. To attempt to overly influence their domestic policies at least until we have a closer relationship-could fracture à fragile, but fundamental, development and we of the United States must realize that we cannot suddenly extract from the Soviets all of our wishes for human freedom from a new economic relationship that has barely begun. I think Secretary Kissinger dealt with this subject very effectively in his testimony before this committee on March 7 and I would encourage the Congress to delete section 402 of title IV of the proposed legislation.

Mr. Chairman, this completes my statement. I would welcome any questions.

Statement of Robert L. Roper

Mr. ROPER. Mr. Chairman, thank you very much for this opportunity to appear. I am Robert Roper, executive director, International Executives Association, Inc. Our association is headquartered in New York City and has nearly 400 members, about two-thirds of whom are located in and around New York with the remainder being mostly located in various major cities throughout the United States. Over two-thirds of our members' companies are engaged in manufacturing, the remainder being in shipping and other export-related activities or services. Of the manufacturing component of our membership, less than 25 percent have annual total company sales, both export and domestic, of $1 billion or more. Most of the manufacturing companies whose members we represent are in the smaller size categories, with more than 50 percent having less than $100 million in sales, both export and domestic, per year and with an average export sales volume per company of between $1 million and $10 million per year. Our association was originally founded as the Export Managers Club of New York, Inc. in 1917.

TITLE I, NEGOTIATING AND OTHER AUTHORITY

The International Executives Association, Inc. heartily endorses the negotiating authority provided under title I.

These provisions comprise a realistic approach to today's international trade problems. Under this title, U.S. negotiators would be provided the necessary legislative sanction for participation with

representatives of other countries in forthcoming negotiations for the orderly reduction of nontariff as well as tariff barriers to world trade. Through such negotiations the necessary foundations can be laid for expanded industry and increased job opportunities in this country by the greater accessibility of our industry to overseas markets.

The enactment of H.R. 10710 at this time would also, we feel, provide a healthy counteractive to increased signs we see in the world today of a possible relapse into regressive and self-defeating economic unilateralism, isolationism and protectionism. The specific provisions of title I are realistically drawn with appropriate limits to negotiating authority and with the administration's accountability to Congress in any trade negotiations as well as advisory opportunity from industry both properly and, we feel, adequately provided.

Under title II the relief granted to injured domestic industry is considerably greater than that provided under present law. We question whether this is needed. For example, a finding of injury under this bill need only show that increased imports are a substantial cause of injury or threat of injury, rather than a major cause attributable to past trade concessions, as under present law. Also, upon a finding of injury, this bill permits an increase in duty on the offending import of up to 50 percent ad valorem above current rate, as against the present 50 percent ad valorem above the rate existing July 1, 1934. This liberalizing of import relief provisions would open the door to the filing of excessive claims, many of which could well be by those whose real source of difficulty might not be imports of competing products at all, but simply inefficient management or some other problem not necessarily related to imports. The provisions covering adjustment assistance for workers and for firms under this title appear to be well conceived and well drawn.

TITLE III, RELIEF FROM UNFAIR TRADE PRACTICES

The provision under chapter 3 of this title on countervailing duties whereby the Secretary of the Treasury is given 4 years discretionary authority after enactment in which to determine whether or not any additional duty under this chapter "would be likely to seriously jeopardize the satisfactory completion" of trade negotiations under the act, is we feel, a wise provision. We urge that this. however, extended further to apply as well to "any article which is the product of facilities owned or controlled by a develop country if the investment in, or operation of, such facilities is subsidized." Limiting the Secretary's discretion to 1 year from date of enactment in the latter case, as in the present bill. is clearly insufficient for negotiations and could equally jeopardize trade negotiations on such international subsidies which might then be in progress. Also, we suggest it is possible that considerations other than possible jeopardization of trade negotiations should also merit the attention of the Secretary of the Treasury in a determination as to whether countervailing duties should or should not be imposed. An obvious example is the effect the imposition of a countervailing duty might have on certain U.S. exporters. Other domestic interests could also be adversely affected.

TITLE IV-TRADE RELATIONS WITH COUNTRIES NOT ENJOYING

NONDISCRIMINATORY TREATMENT

We share the feelings of the majority of the Congress and millions of American citizens in deploring the restrictive emigration policies, limitations on intellectual freedom, and circumscribing of fundamental human rights which unfortunately characterizes certain nations which are not blessed with the freedoms which we in this country too often take for granted. We feel, however, that legislation seeking to influence the emigration or other domestic social policies of the U.S.S.R. and other nations does not properly belong in a trade bill. We feel that if title IV, in denying nondiscriminatory treatment and trade credit. to such countries, is enacted as it now stands, its effect, far from strengthening the rights of Soviet Jewish citizens or others as intended, could well be the opposite and result in even tighter Soviet restrictions than exist now or have existed in the past. We hope a suitable compromise in title IV can be reached, but if not we would still support the overall bill.

TITLE V GENERALIZED SYSTEM OF PREFERENCES

We are here concerned with the broad discretionary authority this title gives the President "to withdraw, suspend or limit", without public hearings, the application of duty free treatment with respect to any article or any country. Once duty free treatment has been established, there should be provided, it seems to us, adequate opportunity for public hearing from those who might be adversely affected before such suspension becomes effective.

TITLE VI-GENERAL PROVISIONS

No comment or recommendations.

Mondale-Ribicoff amendments-we appreciate the intent of these amendments as a start toward attacking the growing problem of worldwide shortages of critical raw materials and as a corrective to forestall or abate real or threatened monopolistic abuses on the part of some nations who are themselves richly endowed with scarce resources. However, we submit, that retaliatory economic sanctions and reprisals as envisaged in these amendments have historically never been an effective means toward gaining desired results and, in this instance, would, we feel, be inimical to the avowed purposes of the trade bill of promoting world trade and strengthening economic relations between nations. Because the President, through other previously adopted acts of Congress, already has ample authority for unilateral sanctions, should he desire to use them, and because adequate multilateral sanctions are already provided for in and through GATT, we do not favor the inclusion of these amendments in the trade bill. Thank you, Mr. Chairman.

Senator ROTH. Thank you, Mr. Roper.

A number of witnesses before this committee, both business and labor, have testified that they have, I would say, a lack of confidence.

in past negotiations, that this country has not adequately protected its interests in the Kennedy round and other trade negotiations. Do any of you gentlemen care to comment on that?

Mr. MCLELLAN. I would, Mr. Chairman.

It seems to me that in the Kennedy round of 1962, there clearly was inadequate communication between the Government negotiators and the business community, the labor groups, and so forth. I do not want to blame Government for that. I think industry should carry a lot of that responsibility. But if the attitude that existed with regard to international trade matters in 1962-you may recall that we were running a very substantial trade surplus at that time, topping out at about $175 million in 1963-it was not a crisis kind of thing and just did not generate the interest that international trade has in recent years. So I suppose it is philosophically understandable that the Government simply went ahead with the negotiations and then in the process ended up with a number of arrangements, express or implied, that industry came later to be very much concerned with.

My experience in Government brought this home to me when, time and again, I would have industry people call me and make the point that they had been, one way or the other, denied any involvement in the 1962 negotiations. They certainly hoped that that would not be the case in any new international trade discussions.

I think it is imperative that we do have a close working relationship in this, and I would say, and I think through Ambassador Eberley's Office and the Office of the Special Trade Representative and the organization we have set up to reach into the industrial groups, we are getting a good communication. I would just hope that that would continue.

Senator ROTH. Concern has also been expressed about the size of or dimension of authority granted the President to cut tariffs, that past experience has shown that U.S. negotiators have sort of taken this discretionary authority as their mandate to cut in that degree and that as a result, we have given much more than we have received. For that reason, it has been proposed that we ought to narrow the discretionary authority with respect to tariff cuts. Again, would any of you gentlemen care to comment on that?

Mr. MCLELLAN. Senator Roth, that may be the cause, but I wonder if we really have not fielded the best we can in this effort of trade negotiation? As one speaking, and perhaps not all that directly acquainted, certainly personally, with the team that we have, I have certainly, over the past number of years, been able to track the activities, let us say, of Ambassador Eberle and the fine group of STR people on this job. I do not think there is any way that, short of having the best team you can out there and advising them as best is possible, as is provided in this bill through the policy and advisory committees, to do anything else than carry through with negotiations on the most effective basis. Clearly, it cannot be second guessed by too many restrictions away from the negotiating table. And, of course, whatever is negotiated would have to have the support of the Congress

anyway.

So I do not know that there is a better way that we could approach this complex problem than what we are doing at the present time. Senator ROTH. In other words, you see no serious problems from the standpoint of too broad a delegation of authority?