exports, and four countries raise that total close to 95 percent. Four countries combine for more than 50 percent of the world supply of natural rubber. Four countries possess over one-half the world supply of bauxite. And a handful of countries are coming to dominate each of the regional markets for timber."

In our increasingly interdependent world, a high degree of responsibility must be exercised by all countries. Industrialized nations have an obligation to asure that developing countries have an opportunity to achieve desired levels of economic growth by providing technical assistance, market access, credits, and grants in aid. At the same time, countries that have valuable resources have an obligation to use those resources in a manner which will not injure but benefit the world community.

Nations have obvious concerns about guarding the domestic supplies of raw materials when threatened by shortages or other national emergencies. Although the United States used such justifications last spring to impose export controls on soybeans, oil seeds, and other products, in taking such steps without prior consultation with our traditional trading partners-Japan and Europe— we set a bad example for the rest of the world.

It is naive to assume that our trading partners will give us greater access to their markets if we do not assure them stability of supplies. How can we expect, for example, the European Economic Community to liberalize its common agricultural policy and forgo self-sufficiency in food production unless we provide reasonable quarantees that we will not cut them off each time our stocks run low?

An assurance of markets is necessary for an assurance of supplies. The United States should play a leading role in working to liberalize trade barriers. But we also must build a system of world food reserves to make certain that export commitments can be met and that food will be available to the developing countries in time of emergency needs.

For an assurance of markets and other economic benefits also requires an assurance of supplies. We must take the initiative in negotiations to achieve an international set of rules to assure access, on an equitable basis, to supplies of food and scarce raw materials.

The amendments I offer today are designed to accomplish these goals.

First, my amendments would provide the basis for collective trade agreements on export controls. I recognize that there is already a general prohibition against export controls in GATT, article 11. But there are many exceptions in GATT articles 11, 20, and 21 which need to be tightened and reformed; and the general prohibition has never been enforced.

The President would be directed to seek to strengthen the GATT provisions or other international agreements to include rules governing access to supplies of food, raw materials, and manufactured products. An extension of the GATT provisions would also be sought to authorize multilateral sanctions in GATT, or any other multilateral forum, against countries which by their actions substantially injure the international community, and thereby threaten the entire existence of the GATT system. If we can suggest curtailing our services to nations which give refuge to hijackers, and if we can suggest denying port facilities to nations which pollute the oceans with their tankers, then we can certainly consider multilateral trade and aid embargoes on nations which unjustifiably withhold vital raw materials.

While I would hope that such retaliatory measures would not have to be used, if they became necessary, rather than acting as helpless giants, members of the GATT system must work together to maximize their leverage against the offending countries. Just as the international community reacts together against import quotas, so it should react against countries which place unreasonable controls over exports.

For 20 years GATT has focused on the liberalization of import restrictions. These amendments would mean a major expansion of GATT responsibilities. Events of the past 2 years have demonstrated that it is crucial that these responsibilities be expanded.

We have an immediate crisis over oil. But in considering sanctions against producing countries, we must recognize the many practical problems that are involved. For example, would enough countries be willing to cooperate so that sanctions would be effective? How would we prevent the transshipment of products in the event a counterembargo were imposed?

Recent studies have cast doubt upon the effectiveness of a counterembargo imposed by the United States alone. We have also seen indications of an unwill

ingness on the part of the European states and Japan to resist the demands of oil-producing countries in the Middle East. The European countries have so far been unable to cooperate even among themselves in responding to Arab threats; and it is therefore unlikely that we can immediately secure cooperation between Europe, the United States, and Japan.

But it is obvious that the thrust of the Trade Reform Act must be redirected toward export control policies because of rapidly changing events. It is equally clear that the scope and powers of the general agreement on tariffs and trade must be enlarged to deal with this crucial issue. My amendments are designed to speed movement in this direction and to stimulate discussion so that we can arrive at the most effective means of responding to recent events.

My amendments would also give the President authority to retaliate against export controls which injure the United States. The definition of unfair trade practices provided in the Trade Reform Act would be expanded to include unreasonable and unjustifiable export restrictions-including quotas and embargoes on exports to the United States of manufactured goods and raw materials required for a stable and growing economy. The President would be given authority, subject to certain specified procedures, to counter such restrictions by the imposition of export and import quotas of our own and embargoes against any country which engages in these unfair trade practices.

In addition, the President would be empowered to deny economic and military assistance, as well as participation in any program of the United States which extends credit or investment guarantees to offending nations. Finally, the President would be authorized to restrain foreign direct and indirect investment by U.S. companies in these countries.

These amendments would give the President the leverage he needs to negotiate with other governments from a position of strength. Hopefully the President would use this authority within a multilateral context as called for by my proposed changes in the GATT rules.

We must begin now by rebuilding our relationships with the Europeans and the Japanese. Over the past 4 years, the administration has devoted most of its attention to superpower politics and has largely overlooked our traditional trading partners and the less developed countries. This neglect has left both the Atlantic and Pacific Alliances in an unprecedental state of disarray.

For example, in the President's most recent energy message, he made no mention of the need of our allies in planning their energy programs. Self-sufficiency for the United States by 1980 in energy would not end our problems if Europe and Japan were still totally dependent on Arab oil.

There has been a failure of advanced consultation on a whole array of issues involving our allies. But one symbolic example of the administration's neglect is its refusal for more than a year to appoint an Ambassador to the prime forum for cooperation with our allies-the OECD-during this time of acute crisis in world economic relationships. It is the OECD in which oil policies are coordinated among the industrialized countries and in which basic economic policies are reviewed among the industrialized countries together.

We must start to work together to build new procedures and rules within GATT and the OECD-rules that will serve notice that the United States and its allies will be prepared to act together to counter any threat to our collective economic security. One immediate step would be to join together and form within these organizations a coalition of oil-consuming nations to present a common front in bargaining with the Arab States.

Rules must be formulated in a manner which insures a fair return to producing countries for their precious resources and which insures their economic development. I believe that we can devise a system which is equitable to producing countries and to the industrialized world.

While many obstacles must be cleared, we must seize this opportunity to make our international economic institutions more responsive to the problems of scarcity, of inflation, and of unfair trade practices which deny raw materials to member countries-just as these economic institutions have dealt in the past with problems of abundance, of unemployment and of unfair trade practices in which imports unfairly penetrated markets.

Economic self-sufficiency is a good rhetorical catch phrase. But it no longer is a realistic or meaningful goal as we enter the final quarter of the 20th century. We must learn to cooperate in accordance with recognized principles of fair trade so that the people of all countries can look forward to a more secure and prosperous future.

The agreements concluded in the Tokyo round of negotiations will in great measure determine the future shape of international economic relations. We may find ourselves in a world dominated by growing hostility between rich and poor and among the rich unless the United States takes the lead in strengthening the community of interest among our Nation, our principal trading partners and the developing countries.

Mr. President, I ask unanimous consent that the full text and a summary of my amendments, along with a recent editorial from the Washington Post and a statement from a group of Cambridge economists, be printed in the Record. There being no objection, the material was ordered to be printed in the Record, as follows:

SUMMARY OF MONDALE AMENDMENTS TO TRADE REFORM ACT OF 1973

The Mondale amendments would:

Amend the Trade Reform of 1973 to make access to supplies of raw materials one of the major goals of U.S. trade negotiations;

Direct the President to seek to extend and strengthen provisions of the General Agreement on Tariffs and Trade (GATT) or other international agreements to include rules governing export embargoes by member nations that deny equitable access to supplies of food, raw materials, and manufactured products;

Direct the President to seek to negotiate authority for multi-lateral sanctions, through GATT or any other international forum against member or non-member countries which impose export embargoes that substantially injure the international community; and

Amend the definition of unfair trade practices to include the unjustifiable or unreasonable use of export embargoes, and authorizes the President, subject to procedural safeguards, to retaliate against countries which deny raw materials to the United States by imposing a counter embargo, by prohibiting economic and military assistance, credits or investment guarantees, and by restricting foreign direct and indirect investment by U.S. companies.

On page 5, line 7, strike out "and", and after line 7 insert the following:

(2) to insure equitable access to supplies of food or raw materials required for production of energy and orderly economic growth and development; and On page 5, line 8, strike out "(2)" and insert “(3)".

On page 16, line 6, strike out "and".

On page 16, line 11, strike out the period and insert ", and".
On page 16, after line 11, insert the following:

(7) the strengthening and extending the provisions of GATT or other international agreements to include rules governing access to supplies of food and raw materials, including rules governing the imposition of export controls and the denial of access to supplies of petroleum, raw materials, and manufactured products.

(8) the extending the provisions of GATT or other international agreements to authorize multilateral sanctions by contracting parties against member or non-member countries which deny equitable access to supplies of petroleum, raw materials, and manufactured products, and thereby substantially injure the international community.

On page 106, line 3, after "import" insert "and export".
On page 109, after line 3 insert the following:

SEC. 302. RESPONSES TO CERTAIN EXPORT PRACTICES OF FOREIGN GOVERNMENTS (a) Whenever the President determines that a foreign country or instrumentality imposes unjustifiable or unreasonable restrictions, including quotas or embargoes, on the export to the United States of food or raw materials required for the production of energy or for orderly economic growth, he shall take all appropriate and feasible steps within his power to obtain the elimination of such restrictions, and he may take action under section 301 with respect to such country or instrumentality and its products, and, in addition, he may(A) impose restrictions, including quotas and embargoes, on the export of United States products to such country or instrumentality,

(B) deny economic and military assistance and participation in any program of the Government of the United States which extends credits, credit guarantees, or investment guarantees, to such country or instrumentality, and

(C) prohibit or restrict investments, direct or indirect, in such country or instrumentality by United States citizens and domestic corporations and by other corporations and entities which are controlled by United States citizens and domestic corporations.

(b) In determining what action to take under subsection (a), the President shall consider the relationship of such action to the international obligations of the United States and to the purposes stated in section 2.

(c) The President shall provide an opportunity for the presentation of views concerning the export restrictions referred to in subsection (a). Upon request by any interested person, the President shall provide for appropriate public hearings with respect to such restrictions after reasonable notice, and he shall provide for the issuance of regulations concerning the conduct of hearings under this subsection and subsection (d).

(d) Before the President takes any action under subsection (a) with respect to any foreign country or instrumentality

(1) he shall provide an opportunity for the presentation of views concerning the taking of any such action,

(2) upon request by any interested person, he shall provide for appropriate public hearings with respect to the taking of any such action, and

(3) he may request the Tariff Commission for its views as to the probable impact on the economy of the United States of the taking of any such action. On page 109, line 4, strike out "302" and insert "303".

On page 109, line 6, after "301" insert "OR 302".

On page 109, line 8, after "301(a)" insert "or under subparagraph (A), (B), or (C) of section 302 (a)".

On page 109, line 19, after "301(a)" insert "or section 302 (a), as the case may be,".

On page 43, line 11, strike out “302 (b)” and insert “303 (b)”.
On page 43, strike out line 13 and insert

of the "Trade Reform Act of 1973' (with the blank space being filled with '301' or '302', which applies); and".

On page 43, line 26, strike out “302(b)" and insert “303 (b)".
On page 46, line 11, strike out “302 (b)" and insert “303 (b)”.
On page 46, line 18, strike out "302 (b)" and insert "303 (b)".

OIL, GRAIN AND THE TRADE TALKS

The massive and ponderous process of world trade negotiations has now begun, to the accompaniment of loud public fanfare and quiet private doubts. The doubts arise from the basic aims of the negotiations, which are now to a significant degree obsolete. These trade talks were originally organized as a further attempt to reduce protectionism among the rich nations, and open up markets for the poor. But the world's economy has changed suddenly and profoundly over the past year or two. The central issue now is not so much the various countries' attempts to shut out each others' goods. To the contrary, the real and pressing danger is the savage competition for access to limited supplies of those imported goods crucial to every nation's life-above all, grain and oil.

The world has no rules for distributing scarce commodities. Or more accurately, it rations them to the highest bidder by raising prices. Currently that means soaring commodity prices that are inciting spectacular inflation rates in the industrial countries, and are lifting these goods altogether beyond the reach of the poor. It is an efficient process, in a mechanical sense, but it is intolerably disruptive and cruel. The trade negotiators seem to be commencing a long solemn discussion of barriers to imports, at a moment when their governments at home are scrambling frantically to grab the imports that they need.

Nearly two years ago, at the time of the first American devaluation, the leading nations all agreed that they ought to work out orderly new rules for world trade and money. The long labor of reorganizing the monetary system is now getting under way at the International Monetary Fund's meeting in Nairobi. The parallel reform of the trading rules, after months of prepararations, now has formally begun with a meeting of 103 nations in Tokyo. They published a formal declaration pledging themselves to seek "the expansion and

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ever-greater liberalization of world trade." That is an admirable objective, but it is not at the moment the most important one. Nor is it likely to be the most important one for some years to come.

The great symbol of the sudden reversal of the issues is the United States and its wretchedly battered trade policy. After years of drumming on the European Common Market to loosen its barriers to American farm products, last June we swung around without notice and embargoed the exports of soybeans on which those same Europeans were counting. Meanwhile, after 15 years of limiting our imports of foreign oil, in order to keep our domestic prices up, we are now desperately trying to buy enough fuel oil in Europe to get ourselves through the coming winter.

The most urgent business for trade negotiators these days are those two commodities, food and oil. In both cases, there will be no international agreement at all unless the United States takes the initiative. But the United States does not seem to have any very clear idea precisely what it wants to do with either of them.

Regarding oil, the importing nations need an agreement on dividing up the available supplies, whatever they may be. Granted, an agreement would be agonizingly difficult to work out. But month after month of snarling and squabbling among the oil-fueled nations would inflict catastrophic damage on the relationships that have, for a generation, guaranteed world stability.

The prospects for an international grain system are, if anything, even dimmer. Solutions exist. Last week a group of eminent economists from Japan, Europe and this country met here at the Brookings Institution and worked out a draft plan for an international grain reserve. It would be expensive and complicated. It would require a kind of international consultation and joint action reaching well beyond the rather rudimentary procedures of the present trade and monetary systems. The only thing to be said for it is the cost of the alternative, in recurrent inflation, panic and anger.

The trade meeting in Tokyo was a sign of progress. The negotiations are now under way. But they are like a big ship, difficult to turn under full steam. There is a risk that this huge enterprise, with 103 nations aboard, will keep sailing ahead, by sheer force of momentum, toward an obsolete purpose instead of turning to the work that most needs to be done.

OIL SHORTAGES AND MIDDLE-EAST POLITICS

A statement by Kenneth J. Arrow, Franklin M. Fisher, John Kenneth Galbraith, Simon Kuznets, Wassily Leontief, Merton J. Peck, Paul A. Samuelson, and Robert M. Solow.

We make the following statement in order to clarify the tenuous and complex relation between current oil supply problems and Middle East policy.

The coincidence of difficulties with the supply of gasoline and heating and residual fuel oils in the United States and the recent war in the Middle East may give rise to misunderstandings about the nature of the relation. It may be felt that American aid to Israel and support for its position are in some way responsible for the energy difficulties (the word, "crisis," is much too strong). There is only a limited and most transitory connection, and our foreign policy should not be deflected in the slightest by the illusion that giving in to oil blackmail will in fact gain us anything.

1. The world crude oil situation has two aspects. First is the cartel of the producing nations, the members of the Organization of Petroleum Exporting Countries (OPEC), which has both Arab and non-Arab members. This cartel has been able to raise prices repeatedly by raising the tax on oil exports. The tax becomes a cost to the oil companies, who are able to pass it on to customers like any excise tax. The upper limit to this monopoly is the cost of alternative sources of fuel. This is obviously a very uncertain ceiling in the short or long run. Some put it near $5 a barrel f.o.b. Persian Gulf, some as high as $10. It is certain that the OPEC nations will keep probing toward this limit. They began this process with the Teheran “agreements" of 1971, which were violated within a few months.