technological development with an obvious slow-down in productivity so vitally needed for us to improve our export position.

Fourth In the area of taxation, we again need to analyze the real situation and compare the proposed Burke-Hartke remedy. One form of tax change proposed by Burke-Hartke would be to impose a tax on a U.S. company on current earnings of a foreign subsidiary operating in a country with a tax rate lower than that in the U.S. In such a case, it would seem logical to me that the foreign government would move to institute a tax rate on current earnings of subsidiaries of U.S. companies equal to that which would be imposed by the United States Government. I can see no reason why a foreign government would stand aside while the U.S. Government imposes punitive taxation on legally constituted foreign subsidiaries of U.S. companies operating in that country. Simply stated, if a higher tax is to be imposed, I would think the foreign government would seek to obtain it for its own treasury.

Further, the Burke-Hartke view is that American corporations receive tax subsidies that cause them to move production offshore for shipments back to the U.S., thus causing a drop in U.S. employment.

An examination of last year's trade figures, as I mentioned previously, shows that of the $6.4 billion trade deficit, $4.2 billion was from Japan-a country where the United States has very little investment. Stated differently, about of our trade deficit in 1972, and all of our deficit in 1971, can be attributed to Japan, where we have only 2% of our direct foreign investment.

I think it is clear that if imports are seriously affecting domestic employment, they are not coming from countries where U.S. firms have made significant investments and, therefore, the proposed taxation does not address the real problem. On the contrary, the studies I have cited show that our investment abroad has created, and continues to create, U.S. jobs.

Because so much of the "AFL-CIO-Burke-Hartke-antimultinational corporation" rhetoric is based on unemployment and tied to the cry for jobs for American workers, it is important to comb out of the woolly mass of labor statistics several basic facts regarding American jobs.

The current (February 1973) seasonally adjusted unemployment level is 5.1% of the civilian labor force. The total labor force contains $85.7 million people, and the number of unemployed is approximately 4.5 million. But of this 4.5 million, only 1.7 million (less than 2%) of the labor force are males over 20 years of age. Approximately 1.5 million are women over 20 years, and the remaining 1.3 million are youngsters 16 to 19 years of age.

During 1971 only 2.3 million workers became unemployed because they lost their previous jobs. The others had either left work voluntarily or were looking for work for the first time. More than 75% were unemployed for less than three months. Only 1.8 million were family breadwinners. And. for the teenage segment, more than half were in school and seeking part-time jobs.

I do not mean to disregard unemployment, but I do mean we should understand it, and for the benefit of the subject we are discussing, we should understand it in terms of our international economic problems.

In 1964, we had a trade surplus of $7 billion. That year employment increased by 1.5 million. In 1972, we had a trade deficit of $6.4 billion, but our employment increased by 2.6 million. In fact. U.S. employment-on a national basis is really not import sensitive. It is U.S. domestic economy sensitive. The difficulty is that loss of jobs by imports are highly visible and give the labor leader and his political exponent in Congress a specific, from which he makes a sweeping, but false, generalization.

I suspect the labor leader's problem is that he resents the mobility of the American corporation in contrast to the immobility of his own constituency. But we must not let his desire to keep our labor force immobile be the basis for national policy development. Look at where we would be if we had done this in our agricultural industry. From 1950 to 1970, we have reduced the jobs related to agriculture from 7.2 million to 3.5 million-and. at the same time, have tripled output to make us the best fed people in the whole world.

U.S. agriculture provides $11 billion in exports, contributes about $3.5 billion to trade surplus, and is vital to our future trade position. But this industry did not improve its productivity and its contribution to our farmers and naional welfare by refusing to accept the mobility of labor.

Conclusion: In the interest of the American working man and our entire society, it is important that we clear away the woolly thinking from our international economic policy deliberations. I would hope that we will develop an understanding throughout our society of the real causes of our problem. I would hope our government can take prompt steps to terminate excessive spending abroad, and to create the necessary monetary and trade mechanisms based on international equality, rather than U.S. paternalism. I would hope, particularly, that our society will recognize it is the American business establishment that is the means of correcting our international payments deficit, and that it behooves our entire nation to encourage the maintenance of the environment in which this can be accomplished.

Given the facts, I believe the American working man will see through the fog of union leadership to the clarity of the national interest-and his interest. The CHAIRMAN. Next we shall call on Mr. Arthur A. DeSantis, executive secretary of the Italy-America Chamber of Commerce, Inc. You may proceed, Mr. DeSantis.

STATEMENT OF ARTHUR A. DeSANTIS, EXECUTIVE SECRETARY, ON BEHALF OF ITALY-AMERICA CHAMBER OF COMMERCE, INC., ACCOMPANIED BY GUNTER VON CONRAD

Mr. DESANTIS. Mr. Chairman, members of the committee, for the record, my name is Arthur A. DeSantis and I am privileged to appear before you on behalf of the Italy-America Chamber of Commerce, Inc., under the laws of the State of New York. The Chamber's views on the pending Trade Reform Act of 1973 have been submitted in a statement and a summary, and with your permission, I shall highlight our main points of concern. If you have questions, I will, of course, be happy to answer them and for that purpose, we would like to have the liberty of conferring with Mr. Gunter von Conrad, of our customs and trade counsellors, Barnes, Richardson and Colburn, and we are prepared to submit some additional data for the record. The CHAIRMAN. That may be done.

Mr. DESANTIS. The Italy-America Chamber of Commerce, Inc. is a membership corporation established in 1887 and presently chartered under the laws of the State of New York. It is composed of approximately 500 American corporations and businessmen vitally interested in trade relations between the United States and Italy.

Our appearance today is intended to support the basic purposes of H.R. 10710 and, in effect, we support authority for negotiations of duty reductions. We realize that much has been accomplished in prior negotiating rounds.

We also realize that certain commodities require special balances, be it in the form of special duties or in the form of export control guidance, for instance in the health area. But many tariff and nontariff barriers, even if once appropriate, are no longer warranted. These we believe the United States should be in a position to negotiate. We understand, of course, the concern of the Congress in the difficult area of nontariff barriers to have the administration report back negotiation results. We hope this will provide a useful and workable mechanism in international negotiations.

We also endorse the safeguard provisions of the bill generally, although some specific problems deserve attention. Many of these problems have been ably discussed before this committee so that a

supplementary submission for the record of our position would suffice if desired.

We do wish to express our concern that the proposed changes in the escape clause will result in a great number of new petitions and possibly uncertainty. And uncertainty is the fear of every planning businessman, whether he is an American producer, a distributor, an importer, a foreign supplier or any other businessman. It appears to us that the Tariff Commission, already in effect, has liberalized the the interpretation of the escape clause and has made it an effective instrument of international trade relief. We are concerned that the substantial changes may bring out abuses, and we hope that the legis lative expression in connection with the escape clause changes would note and forestall such abuse.

The Chamber fully endorses the proposed changes in the adjustment assistance provision of existing law. We believe that workers should not suffer due to changing trade practices. They should have prompt, effective, and substantial relief where needed. The Trade Reform Act seems to confer the proper relief.

The Chamber also endorses the provisions concerning extension of the most-favored-nation treatment and generalized preferences for less developed countries, with the note that the extension of these benefits should require some adequate quantification of economic results and commercial effects of these privileges. It appears to us that the trading community should know in some detail the prospective results of such benefits as they are being negotiated or prior to implementation.

Our main point is our wholehearted support of the proposal that industry, labor, and the trade communities should have the fullest possible advisory access to negotiations. Our experience has shown us that the negotiators of our trading partners have had the advantage of very close advise of their constituencies during the negotiations. We believe that our American negotiators must have the same assistance and we believe that the trade bill goes a long way in developing an advisory system. We would urge that this very important aspect of successful negotiations should be emphasized and we hope that full opportunity will exist for all American groups interested in international trade to work with an assist our negotiators.

This concludes my highlighted remarks. May I add our appreciation for the opportunity of appearing before you?

Thank you. Mr. Chairman.

The CHAIRMAN. Thank you very much for your statement, Mr. DeSantis. We will include it in the record. Thank you.

Mr. DESANTIS. Thank you, Mr. Chairman.

[The prepared statement of Mr. DeSantis follows:]

PREPARED STATEMENT OF ARTHUR A. DESANTIS, EXECUTIVE SECRETARY, ON BEHALF OF THE ITALY-AMERICA CHAMBER OF COMMERCE, INC.

Mr. Chairman and Members of the Committee: My name is Arthur A. DeSantis and I appear before you on behalf of the Italy-America Chamber of Commerce to present our views with respect to the pending Trade Reform Act and to offer such assistance as our Chamber can give you to aid in your deliberations.

The Italy-America Chamber of Commerce. Inc. is a membership corporation established in 1887 and presently chartered under the laws of the State of New York. It is composed of approximately 500 American corporations and businessmen vitually interested in trade relations between the United States and Italy.

Attached to the statement, I am submitting an up-to-date list of the standing committees of the Italy-America Chamber of Commerce and of its chairmen and co-chairmen.

Our Chamber takes pride in its record of assistance to the Congress and to the Administration with respect to a number of trade-policy related issues over the years. The Chamber has appeared before committees of the Senate, the House, and before a number of Administration agencies in matters affecting general trade policy, or such specific issues as crime on the waterfront, importation of cheese, shoes, and other commodities, and in an effort to assist the Congress and our trade negotiators with respect to both tariff and non-tariff barriers. In particular, we take satisfaction from our record of predictions-come-true. Thus, in 1970 when imports of footwear were a matter of great concern, we identified the changing trends in international footwear trade and the impact on US indusOur prediction that Italian performance-which had been remarkable indeedwould be maintained at reasonable import levels, and would not increase to a point where it would be destructive of the very efficient US industry, stands as a mark of the Chamber's objectivity.

The purpose of our appearance before you today is to endorse the basic purposes of H.R. 10710. In particular, we believe that our Government must have the changing trends in international footwear trade and the impact on US industry. Our prediction that Italian performance-which had been remarkable indeed-would be maintained at reasonable import levels, and would not increase to a point where it would be destructive of the very efficient US industry, stands as a and our trading partners around the world.

Since economic policy is becoming a major instrument of international relations and foreign policy we appreciate, of course, that the Congress in giving authority to the President will wish to carefully describe the scope of this authority and the way in which it should be used. This purpose seems to be accomplished by the Trade Reform Act and although individual provisions may yet be changed, we believe, on balance, that the bill provides the necessary tools to move forward from the present position where the United States cannot make any trade agreement commitments. We believe that the opportunity to initiate action on the trade negotiating front is very important to all Americans interested in or affected by international trade, and we believe that the present legislation will be useful in opening up the opportunities for forward movement rather than restricting the United States to residual, retaliatory authority existing under prior trade laws. Further, US authority to take the initiative is most important because it appears that at the present time the initiative lies with other countries and that the United States is not in a position to respond adequately to ideas, threats, or promises. The United States must be in a position to develop advantageous trade relations or to respond properly to undesirable trade policy developments abroad. Our Chamber agrees, in particular, with the provision of the bill which would provide basic authority for trade agreements including the duty reducing authority which would be given to the President. The harmonization of duty structures and the selective reduction of duties on a negotiated basis would go far to eliminate distortions which now exist in international trade solely on the basis of tariffs. In saying so, we make no judgment as to whether a particular tariff or how much a particular tariff should be reduced. We believe this is a matter which has to be considered on a line-by-line basis with respect to our tariff schedules. The same holds true with respect to the Brussels Tariff Schedules, if our structure is transformed into the Brussels format: A specific level of tariff protection must be a matter of individual consideration of the industry involved so that our trade policy experts in various Government departments and agencies and our negotiators may have the specific and practical advice of the industry.

Similarly, we endorse the authority which the bill would provide the President for negotiating non-tariff barriers. It is much more difficult, however, to make a general statement in this regard, particularly because the scope and burden of individual barriers are largely unknown and very difficult to quantify. It is, we appreciate, very difficult to establish reliable guidelines for negotiation of the deletion of a specific trade barrier as juxtaposed to a deletion of a similar barrier in a foreign country. We can foresee that non-tariff barrier negotiations, if closely restricted to specific commodity fields cannot be too productive because often a quid-pro-quo cannot be found for the removal of a non-tariff barrier in the same field by two, much less more, countries. We would urge, therefore, that the scope of negotiations with regard to non-tariff barriers be drawn broadly, and

we see little harm in so doing since negotiation results on non-tariff barriers must be returned to the Congress for a review procedure. We do have a number of particular concerns regarding non-tariff barriers. For instance, although there are listings of existing barriers with respect to a number of countries in official records, such as the Committee Print of the Ways and Means Committee, and although we in our Chamber have our own views with respect to what is a barrier here or abroad, international traders and the public at large have not been in a position to adequately review all barriers and hence are not in a position to offer suggestions as to proper subjects for negotiation all with respect to a potential quid-pro-quo. It is our understanding that the Secretariat of the General Agreement on Tariffs and Trade is still restricting the availability of its total non-tariff barrier lists to members of participating administrations in the GATT, but not making them available to the public at large. We believe it would be very useful to have it made clear in our legislative process that our Government should be in a position to make all information available to the public and not to be restrained by institutional restrictions which may now exist. Even if our Chamber is in a position to develop profiles and details on an individual trade barrier-and I hasten to add that our Government has been most helpful in informing us on specifics-our individual members or committees are not now in a position to form a comprehensive view as to how their problems may be negotiated, without meeting an excessive research and analysis task. The free availability of all GATT information will go a long way to assist our members, the Chamber, and the trade community at large.

With respect to the so-called safeguard procedures, the Chamber also endorses, generally, the approach taken by H.R. 10710. We do so, notwithstanding specific concerns arising from the proposed changes in several safeguard laws, such as the international anti-dumping act, the countervailing duty statute, fair trade provisions of section 337 and others. With respect to the Antidumping Act, we believe that the statutory enactment, now proposed, of recent regulatory changes which clearly contradict existing court decisions will be most detrimental to investment, to US labor, and to trade relations in general. I refer here to the proposed statutory change which would allow disregard of established valuation practices under the Antidumping law where so-called "exporter's sales price" comparisons are made. The question of what valuation was proper has long been considered settled by a decision of the US Customs court in the Sherwin-Williams case, and in reliance on that decision, major investments have been made. Not only would such investments in the US be avoided if the unfortunate regulation attains the status and force of law, previous investments would likely become the subject of review with potential adverse effects upon US workers in the affected establishment. Moreover, our trading partners might be justified in deploring the loss of international trade stability which must result if judicial precedent in the trade area is abolished without necessity. Our pride in our system of law, and-most importantly for the businessmen-its stability and reliability, will be seriously undermined by this unwarranted change.

However, with the exception of specific problems on antidumping, countervailing, and patent enforcement, the Chamber approves the basic safeguard approach with regard to these statutes taken by the Trade Reform Act. We are, moreover, in full concurrence with the proposals for improving existing adjustment assistance for firms and workers affected by distortions arising from international trade.

Our support for the proposed changes in the Escape Clause is more qualified: although our members-having had experience with Escape Clause investigations and their burdensome demands-would agree generally that a workable escape valve is necessary, and that the present Escape Clause might be clarified, we have doubts that the sweeping changes now proposed, which will create a massive burden of new cases, are really required. In particular, the removal of concession relation criteria from the law appears to serve only the purpose of introducing additional uncertainty into the appraisal of international trade performance, without guaranteeing the stability of US industries in the US market. We would point out, that the Tariff Commission has already within its powers the opportunity to interpret the application of existing criteria-and has indeed so interpreted them-that it may be unnecessary to make the sweeping changes which are now proposed. However, whatever changes the Congress in its wisdom enacts, we urge here that proper steps be taken to prevent abuse and to develop Escape Clause criteria which will allow American and international businessmen to predict with some certainty whether they may safely promote trade or