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In his message to Congress on trade the President stated :

"A wide variety of barriers to trade still distort the world's economic relations, harming our own interests and those of other countries. . . These barriers to trade, in other countries and in ours, presently cost the United States several million dollars a year in the form of higher consumer prices and the inefficient use of our resources. Even an economy as strong as ours can ill afford such losses."

We hope that these words are meant to demonstrate a commitment on the part of the United States to develop and implement a new and progressive system of international trade from which all Americans may benefit and which will strengthen our ties with other nations. Such a system to be viable must. be consistent with the principles of fairness and concern for all which we so often and readily articulate.

As members of the Consumer Education Council on World Trade, we recognize that all American citizens are American consumers, and that they represent the largest interest group in our country. Their welfare, therefore, is in the interest of the entire nation, both economically and socially. It should not be denied nor overlooked, but should, on the contrary, be given major consideration in the formulation of a "more open and equitable world trading system."

STATEMENT ON BEHALF OF THE CONSUMER EDUCATION COUNCIL ON WORLD TRADE

BY DR. LOUIS KRAUTHOFF, CHAIRMAN, ADVISORY COMMITTEE Mrs. Brown has just told you generally about our Council and the board consumer interests which it represents today. I am appearing before you, as Chairman of the Advisory Committee of the Council, to speak on a subject of which I think I have particular expertise-trade hearings themselves. As the President of two national trade associations in the 1950's, I gained some insights into the preparation of testimony. Then, as Chairman of the Trade Information Committee of the Office of the Special Representative for Trade Vegotiations, from 1964 through 1972, my inter-governmental committee held public hearings on international trade matters as directed by the Trade Expansion Act of 1962.

During this time I followed the trade hearings of the Congress with especial interest. Those of the Ways and Means Committee building up to this bill were especially lengthy: five thousand eight hundred and twenty seven pages in 1968; four thousand six hundred and fifty one in 1970; and five thousand three hundred and seventeen (including the summary) pages of testimony were generated last year over a period of twenty four days.

In 1968, Ways and means spent eighteen days on trade hearings but never reported out a bill. In 1970 the House spent twenty three days in public hearings on trade. The Senate spent two in October, and the bill died on the Senate floor two months later. The nation has been without trade bill authority now since August 1967. Until then there had never been a lapse of even a week since 1934, when we changed our trade policy. These issues are complex and the policy decisions are difficult, but the country and its over two hundred million consumers want action. They are not unaware that in this area espécially there is apt to be Executive Branch usurpation when the Legislative Branch leaves an unaccustomed vacuum.

In the testimony last year before the Ways and Means Committee, witnesses representing sixty five commodities of direct consumer interest—from aluminum to zinc-were heard. Also appearing at those hearings were witnesses for two hundred and twelve non-governmental organizations. Our Consumer Education Council on World Trade was one of those groups and Mr. Brown has outlined our basic grade goals. I just want to stress that in all this economic mix, the American consumer has an enormous stake. They want to go on having the wide variety of choice that largely unrestricted imports are so essential in providing. They also want ample import entry to insure them as much shelter as possible from inflation, our number one national problem.

It is not often that the consumers in this country get concerned about international trade, but when they do get the wind up they develop ways of being heard. An early case in point was the special import tax on tea that led to the Boston Tea Party.

Today our consumer group is up to nothing so startling. They merely seek early passage of badly needed trade legislation, that is seven years overdue. The House bill: (1) provides for increased U.S. exports and imports, better jobs and economic growth at home; (2) protects legitimate U.S. domestic interests; (3) lays a basis for opening up new export markets and sources of needed raw material supply; (4) provides for the establishment of improved rules of the road and guidelines for harmonization in international trade which can help us become more competitive abroad; 5) provides, in an increasingly interdependent world, the authorities and the negotiating framework necessary for effective international responses to disruptions and imbalance in supply as well as markets; 6) and it does provide for increased consumer consultation in the formulation of trade policy. Finally, and we believe this is of overriding importance to all groups—not just consumers—we are convinved that a good trade bill will advance peace and security by helping to reduce international economic and commercial irritations which can so easily lead to major international disruptions.

The following national organizations, participating members of the Consumer Education Council on World Trade, have approved these statements: American Association of University Women, Americans for Democratic Action, Church Women United, Friends Committee on National Legislation, Japanese American Citizens League, Lutheran Church in America, National Board, Young Men's Christian Association in the U.S.A., National Board, Young Women's Christian Association in the U.S.A., National Council of Churches, National Council of Jewish Women, National Council of Negro Women, National Federation of Settlements and Neighborhood Centers, United Church of Christ-Center for Social Action, and United Presbyterian Church in the U.S.A.

[Whereupon, at 12:30 P.M., the committee recessed, to reconvene subject to the call of the chair.]

TRADE REFORM ACT OF 1973

WEDNESDAY, APRIL 3, 1974

U.S. SENATE,
COMMITTEE ON FINANCE,

Washington, D.C. The committee met, pursuant to recess, at 10:05 A.M., in room 2221, Dirksen Senate Office Building, Hon. Walter F. Mondale, presiding.

Present: Senators Mondale, Nelson, Bentsen, Fannin, Hansen, Dole, Packwood, and Roth, Jr.

Senator MONDALE. Our hearings will come to order.

We have a very long list of witnesses today and if the committee agrees, we will confine each of them to a 10 minute oral statement and then the written statements will appear in the record as though read. The 5-minute rule which was earlier approved will remain in effect throughout the hearings for questioning witnesses.

Our first panel will be Professor Richard Gardner of Columbia University and Dr. Fred Bergsten of the Brookings Institution, and I wish to thank each of you to your contribution to the development of my amendment which seeks to deal with short supply problems. It was something that I had been thinking about for some time, and then I read an article reporting on a speech by Professor Gardner of Columbia University and also saw some data which had been developed earlier by Fred Bergsten. On that basis I developed my amendment, which is now pending as part of the administration's Trade Bill.

I am very pleased to have the two of you here this morning, and I would ask Mr. Gardner to proceed.

STATEMENTS OF RICHARD N. GARDNER AND C. FRED BERGSTEN

Statement of Richard N. Garner Mr. GARDNER. Mr. Chairman, in the interest of time I shall not read my prepared statement, but simply touch a few highlights that I hope may be of interest to this committee.

At the outset I would like to say that I believe the Trade Reform Act of 1973 on the whole to be a very good piece of legislation and that its enactment would serve the national interest for two main reasons:

The first is that the rules and institutions of world trade are now badly in disarray. They must be revised and strengthened if we wish to preserve an open international trading system. Without the authority to negotiate that this bill provides, we simply cannot do that.

†1621)

The second reason is that the energy crisis has added new urgency to these negotiations. Faced with large trade deficits from higher oil costs, virtually all of the major trading nations in the world will be under severe pressure to resort to trade restrictions and push the burden of adjustment on to others. This would be a serious problem even in a world with strong trade institutions and rules. It could be an unmanageable problem in the present world with a weak GATT and with outmoded, ambiguous and, on some subjects, nonexistent trading rules.

So without this bill one would have to be very pessimistic about the prospects of finding cooperative solutions to the trade problems caused by the energy crisis.

Now turning to the Mondale-Ribicoff amendments, I need say little about the basic rationale because, Mr. Chairman, in your speech on December 3 you spelled out the case for amending the bill along these lines.

Senator MONDALE. I would ask the staff to put that speech in the record following Professor Gardner's remarks.

Mr. GARDNER. Thank you. It is a case with which I fully agree. As you pointed out, some 30 years ago President Roosevelt and Prime Minister Churchill proclaimed as a war aim of the United States and the free world the goal of access on equal terms to the trade and raw materials of the world. As you also pointed out, we forgot about that for nearly 30 years in our preoccupation with access to markets. And now, in a world of burgeoning populations and dwindling resources and accelerating inflation, we have got to come back to this concept of access to materials.

There are two very basic reasons for this, it seems to me. One is that it is morally, economically and politically inconceivable that nations which by an accident of nature have a virtual monopoly over materials the world desperately needs should have the right to hold the world up

for ransom as a result. We must accept, all of us, including the United States, the moral, economic and political implications of interdependence.

The second reason is that we cannot clear away import restrictions unless we also deal with export restrictions. One will breed the other. And if we are in a world in which we can all be cut off without redress at a moment's notice from access to vital supplies, we are all going to be thrust into a new attempt to gain self-sufficiency. We see this happening already. So eliminating export controls is an indispensable element in our strategy to clear away import controls.

Having said this, I think we should recognize that the goal which you have set, Mr. Chairman, will involve very complex and difficult international negotiations, because when we talk about export restrictions we are talking about a wide variety of things. There are export controls put on for political purposes, which is what happened at the outset of the Arab oil embargo. There are export controls established to preserve access for the domestic population to commodities in short supply (we have the bakers of America now asking for export restrictions on wheat for that reason). There are export restraints put on for conservation reasons. There are export restraints put on for price

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