Import licenses issued as reported by United States Department of Agriculture, August 9, 1951, to June 30, 1952, (all cheese shipped on August 1 or later became subject to licensing).

Approximate reduction of Switzerland's sales of cheese to United States of America caused by the import restrictions:

Pounds..

Value...

3, 137, 000 $1, 893, 000

The association therefore urges that section 104 of the Defense Production Act of 1951 be repealed.

Apart from this motive of self-interest, the association submits the following additional reasons in support of repeal:

(a) The effects of section 104 are contrary to the best interests of the consumer. (b) Importers, distributors, and retailers of cheese, who have substantial investments in their businesses, are faced with an unneeded loss of business through the effect of section 104.

(c) The American cheese industry cannot benefit from section 104, and many other segments of American agriculture will be adversely affected.

(d) Section 104 vitally affects the European farmer and the economy of other countries; it is disrupting established friendly foreign relations.

(a) THE CONSUMER

DFO 3, issued by the Department of Agriculture pursuant to section 104, for all practical purposes, limits the consumption of foreign cheese in the United States to 70 percent or less of the quantity used in 1950. The quotas of cheese importers are now almost exhausted. Importers' warehouses are practically empty. Retail stores are finding it impossible to replace their stocks from wholesale channels.

The two principal types of cheese from Switzerland are Swiss cheese and Gruyere process cheese. The supply of these cheeses in this country for distribution has become negligible, and this is also true of many other imported cheeses. The American consumer is deprived of the right to exercise his free choice so long as section 104 continues to be law.

Shortage of imported cheese brought about by section 104 will not cause an increase in the production domestically of foreign-type cheese. Milk production has remained stable, while fluid-milk consumption has greatly increased, so that less milk is now available for the manufacture of cheese and other dairy products. Most domestically produced foreign-type cheeses are also in short supply. Domestic Swiss cheese, for instance, is not available in sufficient quanities to replace Switzerland Swiss cheese excluded by section 104. Assuming the consumer of imported Swiss should now turn to domestic Swiss, he could not get all he needs or wants. He is therefore being deprived of a particular food he prefers.

(B) THE AMERICAN BUSINESSMAN

To most of the wholesale cheese dealers in the United States, imported cheese is a most important item. To some who specialize in it, it is their whole business. They require refrigerated warehouses, experienced staffs, and in some instances fleets of trucks. They depend in varying degree on the income derived from handling imported cheese. There are several hundred cheese importers in the United States; of these, about 50 deal in Switzerland Swiss.

Stocks of cheese distributors consist in the main of domestically made cheeses, but most carry some imported cheese to fill out their lines because of consumer preference. They, too, derive some of their income from the sale of imported cheese. There are many thousands of cheese distributors in the United States whose business depends to some degree on imported cheese.

97026-52-pt. 2—8

Of the several hundred thousand retail stores in the United States that carry a variety of cheeses, many also handle one or more imported cheeses. These stores have invested good money in expensive present-day cheese-display equipment. Their success as retail merchants depends to a large extent on a full enough line to satisfy existing consumer preference.

With no imported cheese available in the months to come, and with domestic producers unable to supply the existing demand, all of these dealers in cheeseimporters, distributors, and retailers will suffer losses in income and considerable hardship because of the import restrictions imposed pursuant to section 104.

The following table demonstrates the approximate loss of revenue suffered by American business as the result of the loss in sales of cheeses of Switzerland as estimated in table 1:

(C) THE AMERICAN DAIRY INDUSTRY AND THE AMERICAN FARMER The cheese producers who manufacture foreign-type cheese in America owe their very existence to the fact that a foreign cheese had been imported and had found acceptance by American consumers.

Swiss cheese had its origin in Switzerland. Yet, more Swiss cheese is now made in the United States than in Switzerland.

Moreover, the facts show that imports of cheeses from Switzerland do not threaten the American dairy industry in the least. Switzerland's cheeses, because they are of outstandingly choice quality, have always commanded prices far above those obtainable for the domestic Swiss-type cheeses. In 1951, for example, Switzerland Swiss cost 84 percent more at the wholesale level and 70 percent more at the retail level than domestic Swiss cheese. The American producers, unaided by restrictive legislation, have in the past been well able to hold their ground. In 1950, 99,483,000 pounds of domestic Swiss cheese was produced and sold, while only 6,383,000 pounds of Swiss cheese was imported from Switzerland. Domestic production in that year was up 51 percent over the 1945-49 average of 65,816,000 pounds annually, and Switzerland imports were still 28 percent below the 1939 prewar level of 8,925,000 pounds a year. Yet, in spite of this record, the Secretary of Agriculture, acting under section 104, has established quotas for Switzerland Swiss which limit imports to an annual rate of approximately 4,300,000 pounds. It is evident that the imports of cheeses of Switzerland do not adversely affect the market for domestic cheese. In fact, their availability in the American market may well have caused the noticeable rise in the quality of the American-made Swiss-type cheeses, thereby stimulating the consumption of these domestic products.

The per capita cheese consumption in the United States rose from 5.5 pounds (1935-39 average) to approximately 7.2 pounds in 1951. A good percentage of this increase is due to the mounting popularity of foreign-type cheeses, a condition which could not have existed without the interest stimulated by imported cheese.

In

America, on the whole, is an exporter, not an importer, of farm products. 1950 the United States exported over 39 million dollars' worth of agricultural products to Switzerland; in return, the United States purchased less than 71⁄2 million dollars of farm products from Switzerland. With money obtained from exports of cheese, Switzerland buys the American farmers' cotton, his tobacco, his fruits, his fats and oils and his grains, amounting in all to almost six times the value of Switzerland's agricultural products sold to the United States. Switzerland, which is not receiving United States aid, needs that trade in cheese if she is to purchase American farm products as freely as she has been. Evidently, only repeal of section 104 could accomplish that.

(D) FOREIGN RELATIONS

The example of the United States domestic economy, where industrial and agricultural products move freely from State to State to the ultimate benefit of all, has been presented to Europe as the goal to be achieved,

Section 104 has been a most serious blow to that ambition. In Switzerland, it has struck at an ancient and vital industry.

The Federation of European Agriculture, comprising 300 large national agricultural organizations and institutions from 18 countries, expressed the bewilderment of the European farmer in the following paragraph extracted from a recent letter: "The council received a report dealing with the restrictive measure taken by the United States and its effect on the export of dairy products to the United States, especially as it concerns cheese. The burdensome restrictions on the export of the products involved have been cause for anxiety, dissatisfaction, and irritation in the European countries affected. Exports, and the striven-for economic balance between United States and Europe, including the increased productivity of European agriculture which had been encouraged by the United States, are now painfully disturbed. We regret deeply the emergence of such a development, not only because of its economic effects but also in the light of the momentous tasks which the United States and Europe, including its agriculture, were to accomplish together."

The positive effect of section 104 in Switzerland is to force the cheese makers to reduce production; the negative effect may be to force Switzerland to enact its own import controls, not in retaliation but out of sheer economic necessity. Import controls in Switzerland do not mean just a little less cheese; they mean a great deal less of the necessities which Switzerland obtains from American farmers and manufacturers. Switzerland's bread, in a very real sense, is made from America's wheat.

It must be obvious that the exclusion of cheeses of Switzerland serves no useful

purpose to any group, including the American dairy farmer. At the same time it is positively injurious to the consumer, the American firms engaged in importing, distributing, and retailing cheese, to American agriculture as a whole, and to the Swiss dairy farmer and cheese producer. There is no reason whatsoever to perpetuate such legislation, and we respectfully urge the repeal of section 104 of the Defense Production Act of 1951.

STATEMENT OF THE AMERICAn Chamber of Commerce for TRADE WITH ITALY, INC., RE SECTION 104 OF THE DEFENSE PRODUCTION ACT

This chamber comprises most leading American importers of cheese produced in Italy, and, though of course concerned with the defense of their legitimate interests, is even more deeply perturbed by the repercussions that a renewal of the provisions of section 104 would have with regard to American consumers and the higher interest of our national economy.

For 10 months the issues involved have been restated ad nauseam, ever since the notorious Andresen amendment was slyly tagged on to the Defense Production Act Amendments of 1951 under last year's July 31 deadline. To again outline in detail the reasons for our opposition to section 104 would therefore be repetitious. In order to furnish an objective and clear picture of developments to date, it will suffice to enclose with this statement copy of an article appearing in the current issue of the magazine The Reporter, of New York. It is believed that this extremely informative article constitutes a fair and comprehensive summation of all pertinent facts. For the purpose of further stressing the stand of our chamber, we also quote as follows the seven conclusive points of the statement which we submitted on September 13, 1951, before the Senate Banking and Currency Committee:

"Summing up, the opposition of our chamber is embodied in the following points: "1. The law was adopted without public hearings.

"2. The law violates the spirit, if not the letter, of reciprocal trade agreements now in effect.

"3. This law may incite retaliatory measures by other countries which would affect the export of surplus American products.

"4. This law substitutes irresponsible, whimsical legislation for a reasoned appraisal by the United States Tariff Commission, heretofore used to protect American industry against unfair foreign competition.

"5. The inclusion of cheese and dairy products, not previously provided for in the Defense Production Act of 1950, serves notice on the world that we will play the game of international trade within narrow and selfish limits, belying our oftproclaimed intentions to free trade from the grip of governmental quasi-monopolistic practices.

"6. The chamber does not consider normal, fair competition, whether in the domestic or in the international arena, a shibboleth to serve as excuse for legis

lation establishing conditions favorable to monopoly or likely to mulet the Ameri

can consumer.

"7. The chamber does not accept the philosophy that each of us should be guaranteed a profit by law."

To the above can be added with some measure of pride that as of today many facts point unmistakably to the correctness of all our contentions. The inequity of enforcing legislation adopted without hearings has resulted in unwarranted hardships imposed upon American consumers and traders alike. Here and abroad it is being recognized to an increasing extent that the whole structure of American foreign trade is imperiled by this glaring example of restrictive legislation. As foreseen, retaliatory measures are being adopted by friendly countries, where the inconsistencies between avowed American policies and legislation of this kind are being gleefully exploited by our enemies. Benefits have derived exclusively to a very small, but highly articulate minority of American imitators of foreign type cheeses. They do not appear in any way concerned over much greater losses that their selfishness is beginning to impose upon far more important sections of our agricultural production. And with respect to the American consumer, their sole interest can be identified with their eagerness to exact from him higher prices for domestic cheeses, as evidenced by recent market trends.

It is understandable that almost a year ago many legislators, suddenly confronted with an apparently trivial amendment to the all important Defense Production Act, may have voted in its favor without realizing its implications. But now that the real issues have been revealed in all their perilous import, it would in our opinion be unpardonable that the Eighty-second Congress of the United States allow to stand among the essential provisions of the Defense Act a section that is extraneous, contrary to our economic policies and injurious to many more Americans than the few it places in a position of undue privilege.

These are the reasons why our chamber respectfully recommends that your committee report against continuation of present restrictions on the importation of cheese. It is our considered opinion that such action will be in the national interest, beneficial to American consumers, to our agriculture and trade, and consistent with our international policies. Respectfully submitted.

AMERICAN CHAMBER OF COMMERCE FOR
TRADE WITH ITALY, INC.,
FEDERICO G. MENNELLA, President.

When the Defense Production Act comes up for revision this summer, American cheese manufacturers will be among those who keep a very close watch on its progress. Despite the seemingly marginal importance of cheese to United States defense, its producers are singled out for considerable favor by the present act. This courtesy, known as section 104, was initiated last July, when the 1-year-old act was amended to protect United States cheese against foreign imports. When, last January, the administration attempted to kill section 104, it met with its first defeat of this year's session, a resounding "Nay" vote that included every Republican present, as well as seven Democrats who also could not ignore the cheesemakers' pleas.

When this year's version of the Defense Production Act is brought to the floor within the next few weeks by the Senate Banking and Currency Committee, it will contain a slightly weakened version of what has come to be known as the "Cheese amendment." But even this sop to the Administration may disappear on the Senate floor. The January vote, and the 4-day debate that preceded it, indicated just how hardy a perennial the cheese amendment is likely to become. A census of the dairy cows in each Senator's State might have provided a fairly accurate index to their sentiments in January, but it would not have told the whole story. Dairy interests alone could not have instigated such a vigorous

demonstration of the historic old United States protectionist spirit. The vote indicated how larger issues may be ignored and long-run goals jeopardized in the face of domestic pressure groups, particularly in an election year.

Section 104 directs the President to prohibit imports of fats and oils, peanuts, butter, cheese, and other dairy products, and rice and rice products, "which the Secretary of Agriculture determines would (a) impair or reduce the domestic production of any such commodity or product below present production levels, or below such higher levels as the Secretary of Agriculture may deem necessary in view of domestic and international conditions, or (b) interfere with the orderly domestic storing and marketing of any such commodity or product, or (c) result in any unnecessary burden or expenditures under any Government price-support program."

This amendment is known as the cheese amendment not because butter and rice are unimportant but because cheese was the major single item added by it to the list of commodities that had been previously under import control. Butter, for instance, has been practically embargoed since 1942. During the war this was done via the machinery for allocation of fats and oils among the Allies. After the war, government farm-price-support operations became the basis of its exclusion. Then last year it came under section 104. In addition, even in preceding years the quantity of butter and most of the other commodities imported had never been substantial. Thus, no domestic pressure groups were offended when Congress continued the partial or total exclusion of the other items, and even foreign exporters had become reconciled to considering the United States a closed market for these products.

When Senator Warren Magnuson (Democrat, Washington) added cheese to the list last July, a controversy began which greatly transcends the relatively narrow issue as to whether $20 to $25 million worth of cheese may be imported each year. In the first place, a problem which should be decided in the arena specifically designed for it-the Tariff Commission, established in 1916 to be the central arbiter of tariff matters-has been made into a political issue and fixed rigidly in a piece of ad hoc legislation by Congress. When asked by Senator J. William Fulbright (Democrat, Arkansas) what was wrong with going before the Tariff Commission and seeking relief there, one of the cheese producers' star witnesses, E. W. Gaumnitz, executive secretary of the American Cheese Institute, had nothing better to reply than that the reason for inserting Magnuson's amendment "on the face of it must have been that there was no relief otherwise." Senator Fulbright shot back: "I presume you know more about how it got there than I do." The amendment's raison d'etre is simply that the Tariff Commission is a far tougher court to go before than Congress.

As a growing number of industries seek relief from foreign competition, particularly under last year's more elastic version of the Trade Agreement Extension Act, it is vital that Congress be kept from assuming a function specifically delegated to an executive agency. The argument that it takes too long to wait for a verdict from the Tariff Commission might induce Congress to look into the workings of the Commission and strengthen it where necessary. But it should not be used as a justification for setting up Congress as a competing body. Lobbies are quick to learn, and the spectacular success of the cheese people may next encourage the producers of everything from glassware to felt hats to skip the Tariff Commission and go directly to Congress, as the tuna-fish producers have already done.

SUBSIDIES AND SECURITY

The second objection to the cheese amendment is the underlying philosophy that the Government is obliged to keep in business, at the expense of everybody else, any company that chooses to engage in unprofitable production, and that the American economy has now reached such a degree of maturity, even of rigidity, that shifts from one field of enterprise to another must not be allowed unless they are Government sponsored.

The Senate hearings produced astounding evidence about this attitude. Throughout the hearings the only specific instance of domestic producers who suffer from foreign competition was the case of twenty-odd blue-cheese manufacturers concentrated in Minnesota and Wisconsin, who complained of being drowned in a sea of Danish imports. Yet when asked by Senator Blair Moody (Democrat, Michigan) whether there was "any reason why the blue-cheese manufacturer cannot shift to some other kind of cheese," Mr. Gaumnitz of the Cheese Institute replied, "No, he can shift." During the same hearings, the president of one of the principal companies making foreign-type cheese said that his firm