Deferral really is not a meaningful thing in the industrialized countries where we do most of our business. It has more of an impact in some of the less developed countries.

Senator BENTSEN. You made the point that one of the reasons you went overseas is that you ran into tariff barriers and non-tariff barriers. Does that argue somewhat for our using such mechanisms to bring U.S. companies back to do their manufacturing here?

Mr. HELTZER. I don't believe so.

Senator BENTSEN. What is the difference?

Mr. HELTZER. I don't think they should be there or here.

Senator BENTSEN. But they are doing it to us and they are forcing fine companies like yous to establish plants abroad and hire foreign nationals instead of Americans.

Why shouldn't we be forcing them? Why shouldn't we have a quid pro quo?

Mr. HELTZER. The reason why we go over there is related to the fact that the market is there.

Senator BENTSEN. We have a market for their goods here?

Mr. HELTZER. We have a market for their goods here as well. If you continue to try to build the barriers, non-tariff or tariff barriers, in the long pull you have created a chinese wall and you have eliminated an opportunity to move technology both ways. It is important to move it both ways.

Senator BENTSEN. I couldn't agree with you more. I would like to see the barriers lowered. I get deeply concerned when other countries raise barriers and we don't and we don't have a quid pro quo. We should work more forcefully for a quid pro quo.

Mr. HELTZER. That is correct. This is what you have to have in a negotiation package. It has to be on a fairly broad spectrum. You can't negotiate individual elements by themselves. You have to resolve the trade issues, the monetary issues and the political issues all at the same time.

Senator BENTSEN. They just rang the bell on me.

Senator MONDALE, presiding. Suppose you can't get other countries to bring their non-tariff barriers down and because of that, we are encouraged to set up plants over there. Should we set up reciprocal barriers here to force them to set up plants and create employment here?

Mr. HELTZER. Obviously, Senator, in a negotiating position you use all of this sort of thing. You have got to be careful that you don't narrow the scope down and focus just on one product, like, for example, scotch tape. You don't let scotch tape become the central issue because there are a multiplicity of products we are involved in and there are a number of raw materials we need to get.

If you handle any individual item in that narrow parameter you are unlikely to be successful in the overall negotiation. You have to have the ability to take all those elements and resolve all the differences the best you can, which means the non-tariff barriers as well as the tariff barriers at the same time. You don't do it all overnight.

Senator BENTSEN. This is a particularly knowledgeable witness and I am not trying to be argumentative. I am trying to develop my own information so may I ask another question?

Senator MONDALE. Yes.

Senator BENTSEN. On the problem of cartels, I notice the number of supplies and materiels that you bring from abroad in the countries involved.

Have you seen any trend on the part of these companies to follow the OPEC nations in the idea of cartels to control the price?

Mr. HELTZER. I haven't, other than what I read in the news media. As far as I know individually, I cannot recall a single instance where there has been a governmental action which has been equivalent to the kind that has gone on with the energy.

Senator BENTSEN. Thank you, I will put you on my Christmas card list.

Senator MONDALE. Senator Dole?

Seantor DOLE. I read your statement and I, too, was late. We had Mr. Meany before our committee last week. He takes a rather dim view of multinational corporations.

Mr. HELTZER. I am aware of that.

Senator DOLE. As I recall, he takes a dim view about everything. He is against imports and against exports, and that may be the proper view. In addition to the deferral mentioned by Senator Bentsen, he also lambasted multinationals for their foreign tax credits.

Do you get involved in that?

Mr. HELTZER. It is not a question of only being involved in it, but suppose I am emotionally involved in it. If you didn't have the foreign tax credit situation which we worked out over the course of years, you would not be able to compete for world markets.

If we operated in say the European market and we did not have a tax credit and a local producer over their paid substantially less taxes than we did, our chances of competing for the market is virtually

zero.

Senator DOLE. Mr. Meany referred to that provision as a loophole. Do you see it as a loophole for multinationals?

Mr. HELTZER. No, I certainly do not. I am speaking strictly from my own experience and thinking in terms of my own company. Senator DOLE. How many countries do you do business in? Mr. HELTZER. 37, and we manufacture in 20.

Senator DOLE. What are you doing in Russia?

Mr. HELTZER. Nothing.

Senator DOLE. Anything planned?

Mr. HELTZER. We have been examining the possibility. We have been talking to Russians for a period of time, ever since the Department of Commerce set up a meeting some time back. We have selected a given product area, and we are exploring it, but we virtually do no business with Russia.

Senator DOLE. Do you still pay substantial taxes to this country? Mr. HELTZER. It has been in excess of $100 million for each of the last 5 years and I think last year our tax, thinking strictly of Federal income tax, was $139 million in this country.

Of course, we pay more taxes than Federal income tax alone. The total tax bill was in excess of $226 million last year for Federal, State, and local taxes in the United States.

Senator DOLE. That is all.

Senator MONDALE. Senator Bentsen?

Senator BENTSEN. I can well understand your view on tax offsets. What position would you be in as compared with companies from other countries that might be operating in a third country? Isn't it generally the case that other countries also allow tax offsets?

Mr. HELTZER. Yes, sir, we have tax treaties with the bulk of the European countries and in Japan.

Senator BENTSEN. Is it the general practice of other countries as compared to the United States when they have their companies operating in a foreign country to allow a tax offset? Do other countries generally follow the same practice?

Mr. HELTZER. I believe the other industrialized countries follow the same practice that we do.

Senator BENTSEN. They don't allow the tax to be carried as an expense but as an offset?

Mr. HELTZER. Strictly as an offset. I am not quite a tax expert, but I am pretty sure that is right.

Senator BENTSEN. Then I withdraw the question.

Senator MONDALE. Thank you very much for a most effective and illuminating statement. I am most grateful for your testimony.

Our next panel consists of Clifford B. O'Hara, representing various port authority associations and C. Thomas Burke, chairman of U.S. Section, International Association of Great Lakes Ports.

I would like to take this opportunity to welcome Mr. Burke, an old friend of mine.

STATEMENTS OF CLIFFORD B. O'HARA, DIRECTOR OF PORT COMMERCE, THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY; CHAIRMAN, COMMITTEE XI: FOREIGN COMMERCE, THE AMERICAN ASSOCIATION OF PORT AUTHORITIES, AND CHAIRMAN, FEDERAL LEGISLATION AND GOVERNMENT TRAFFIC COMMITTEE, THE NORTH ATLANTIC PORTS ASSOCIATION; ACCOMPANIED BY MRS. ANU LACIS, SECRETARY, COMMITTEE XI: FOREIGN COMMERCE, AMERICAN ASSOCIATION OF PORT AUTHORITIES, AND STAFF MEMBER, PORT AUTHORITY OF NEW YORK AND NEW JERSEY; AND C. THOMAS BURKE, CHAIRMAN, U.S. SECTION, INTERNATIONAL ASSOCIATION OF GREAT LAKES PORTS, AND EXECUTIVE DIRECTOR, SEAWAY PORT AUTHORITY OF DULUTH

Statement of Clifford B. O'Hara

Mr. O'HARA. Thank you, Mr. Chairman and members of the committee.

I appreciate this opportunity to appear before you on behalf of the U.S. corporate members of the American Association of Port Authorities, representing all the major public port agencies in the United States; the North Atlantic Ports Association, which numbers among its members both private and public port interests along the Atlantic

coastline from Maine to Virginia; and the Port Authority of New York and New Jersey, the Nation's principal port gateway for international commerce.

I have here with me Mrs. Lacis, who is my assistant and staff member, Port Authority of New York and New Jersey and also secretary of the Committee on Foreign Commerce of the American Association of Port Authorities.

With over half of the American people living in counties within 50 miles of coasts fringing the Atlantic, Pacific, Gulf of Mexico, and Great Lakes, ports are major factors in the economic well-being of most of the Nation's population centers.

Specifically, as shown in a 1972 American Association of Port Authorities study of the economic impact of individual port-generated employment on the surrounding communities, nearly 1,200,000 persons residing in U.S. port hinterlands earn their livelihood directly from the handling, documentation, promotion and financing of foreign trade. The range of their jobs is endless-from longshoremen to ship pilots to foreign exchange dealers to marine insurance brokers and international bankers and many more.

Economists view every dollar of incremental income as capable of generating $2 of additional income. Thus, activities attributable to international trade and waterborne transportation in U.S. port regions can be viewed as ultimately responsible for providing employment opportunities for at least 2,500,000 persons.

On the basis of 2.5 dependents per job-the employee and 1.5 family members-a total of 6,253,000 port area residents throughout the United States-men, women and children-rely upon the continued flow of the waterborne commerce of the nation for their livelihood.

Clearly, the ports of the U.S. have a tremendous stake in the trade policies of this nation. The U.S. Corporate Members of the American Association of Port Authorities have accordingly adopted standing resolutions favoring reciprocal international trade liberalization on a fair and equitable basis, and have endorsed negotiations and legislation which implement this goal.

Trade restrictions, which curtail the level of international trade, represent a serious threat to the economic well-being of port regions where a great many people depend on the movement of exports and imports for their jobs and income.

The organizations for which I speak view the Trade Reform Act as fulfilling the objectives of these resolutions. The American ports wholeheartedly endorse the purposes of H.R. 10710 "to promote the development of an open, nondiscriminatory, and fair world economic system" and urge its early enactment, with certain modifications, but without protectionist amendments advocating the imposition of import quotas or other severe restrictions on international commerce. Before commenting on specific provisions of the Trade Reform Act where we would hope the committee would consider modifications to help attain the overall goals of the bill, I would like to note that the ports of the United States view H.R. 10710, as passed by the House of Representatives, as capable of allowing the United States to partici

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pate in far-reaching international negotiations which can make major advances in improving the equitability of the world trading system and give rise to substantial growth in world commerce.

We are particularly pleased that the comprehensive negotiating authority bestowed upon the President encompasses the reduction of nontariff barriers to trade as well as tariffs. And we applaud the innovative authorities to suspend import barriers to restrain inflation and to modify restrictions on imports temporarily for balance of payments purposes.

We also approve of the imposition of limits on the authorities to raise tariffs in conjunction with trade negotiations and impose import restrictions to remedy balance-of-payments situations, as well as the requirement that the effect of import restrictions on consumers and domestic competition be considered.

And we strongly support the preference expressed by H.R. 10710 for adjustment assistance as a form of import relief and the preferred order of other remedies should import restrictions be deemed

necessary.

In all, it is our considered opinion that the bill before your com'mittee represents a considerable improvement over the draft submitted by the administration to the Congress last year, and we hope that the modifications I will now suggest in certain of its provisions, will not obscure our strong support for its basic thrust toward trade liberalization on a fair and equitable basis.

TITLE I.-NEGOTIATING AND OTHER AUTHORITY

The ports of the United States strongly support the comprehensive negotiating authority granted to the President by the Trade Reform Act to dismantle both tariffs and nontariff barriers to trade and the mandate to promote the development of an open, nondiscriminatory and fair world trading system.

In our view it is essential that the United States, as the world's largest trading nation, maintain its leadership role with bold new initiatives aimed at removing the inequities posed by artificial trade barriers and thus establish more equitable trading relationships between members of the international trading community while furthering the expansion of world commerce.

Consequently, we urge the committee to consider broadening the tariff cutting authority provided by H.R. 10710. Certainly the authority provided under section 101 is not particularly extensive in comparison with that granted under the Trade Expansion Act when overall tariff levels were considerably higher than today.

We believe that broader authority to lower tariffs--along the lines of the administration's original request or patterned after the Trade Expansion Act-would provide additional bargaining leverage and increase the potential effectiveness of U.S. negotiators.

We also urge the committee to reconsider the requirement in H.R. 10710 directing trade negotiations to proceed on the basis of reciprocity within product sectors lest it hamper the flexibility of our negotiators in their efforts to dismantle nontariff barriers.