It is our understanding that on a motion of Senator Robertson of Virginia, the Senate Committee on Banking and Currency has tentatively adopted a substitute amendment for section 104 of the act. This substitute is somewhat similar to Public Law 590 which was enacted by the Eighty-first Congress. The products covered by the Robertson substitute are probably the same as those covered by

section 104.

Legislation similar to Public Law 590 served a purpose under the conditions that prevailed during the time it was in effect. But it would be wholly inadequate under present conditions to protect the dairy industry against serious harm.

Under Public Law 590, the broad power of allocations could be used to control imports upon a determination by the President that controls were (a) essential to the acquisition or distribution of products in world short supply, or (b) essential to the orderly liquidation of temporary surpluses of stocks owned or controlled by the Government. During the war, fats and oils and dairy products were in world short supply and imports were excluded from this country to assist in channeling those products to our allies who needed them worse than we did. However, neither fats and oils nor dairy products are now in world short supply so this provision is inoperative.

After the war, and particularly in 1950 when Public Law 590 was last extended, there were surplus Government stocks of butter, milk powder, linseed oil, and possibly other products. Import controls were therefore available under condition (b) above, and they were used, particularly on butter and flax products.

At the present time, there are no Government surpluses of butter or cheese and only a relatively small amount of nonfat dry-milk solids. The second condition is therefore also inoperative for all practical

purposes.

It was because of these reasons that Public Law 590 had to be abandoned when it expired in 1951 and some more effective system of control enacted in its place. The same reasons which made it necessary for Congress to change from Public Law 590 to section 104 in 1951 make it utterly impractical to change back to Public Law 590 form of control now.

The Robertson substitute would provide no control whatever on butter and cheese imports at the present time. As a result, such imports would flood the market forcing domestic prices down to the support level. As excessive imports continued, domestic production would be forced into the Commodity Credit Corporation at support prices. Only after a Government-owned surplus had been built up would the Robertson substitute provide relief. In the meantime, the domestic price structure would have been forced to the support level, storing of domestic stocks by commercial interests would have been rendered impractical, and a volume of imports would have been admitted which could demoralize the market and the industry for many months after the controls were actually applied.

This would be a pronounced case of locking the barn door after the horse had been stolen. Both foreign countries and the domestic industry would suffer from such illogical controls. Imports would come in with a rush until a Government surplus built up-then they would be cut off until the surplus was liquidated. At that point the controls would go off and another great rush of imports would come in

until another Government surplus were built up, and so forth. The domestic source of supply of one of our most essential foods would soon dry up under such treatment.

Now, as to why section 104 should be retained:

1. Section 104 of the Defense Production Act provides for reasonable and effective control over imports of foreign dairy products. It also provides for import controls of peanuts and all fats and oils, excluding petroleum and petroleum products, coconuts and coconut products. It is not an embargo. It merely authorizes the Secretary of Agriculture to limit imports which would impair domestic production below present levels, interfere with domestic storing or marketing of the products, or unnecessarily burden Government price support programs. It is a provision of great flexibility. To illustrate, with respect to cheese, butter and the milk powders, the Secretary set as import quotas the average of imports for the years 1948-50. But with respect to casein he chose the year 1950 as the norm.

2. Reasonable and effective controls of dairy product imports are essential to the maintenance of the domestic dairy industry, to the protection of domestic consumers, and to the public interest.

3. In the face of war threats, the maintenance of a dependable and adequate domestic source of supply of such vital foods as milk and dairy products is essential to our national security.

4. Despite statements to the contrary, section 104 is not in violation of the trade agreements entered into by the State Department. Section 104 is drawn under an exception set out in article XXI of the General Agreement. That exception states:

Nothing in this Agreement shall be construed * * * to prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests * taken in time of war or other emergency in international relations * *

* *

Now, Mr. Chairman, I desire to call attention to the fact that the whole import problem, with respect to dairy products, is complicated by the fact that there is no way to protect the consumers of this country from unsanitary, dirty, filthy, imported dairy products.

The responsibility for that protection has fallen to the Food and Drug Administration. The Food and Drug Administration has a relatively small appropriation to carry out many, many different kinds of activities, and I might say, including inspection of hotels and restaurants in the matter of fraudulent sales of oleomargarine.

Compelling economic reasons for the necessity of import controls over dairy products have been pointed out. It has also been demonstrated that the only effective procedural method that would insure that these economic reasons be observed is through the retention of section 104. There are, however, other very serious reasons why dairy product imports should be subjected to more intensive review and control. These deal with sanitary and health aspects.

In the United States great progress has been made to improve the quality of dairy products, through the inauguration and enforcement of sanitary measures and the elimination of cattle diseases. In this, Federal, State, and local governments have all been diligent. On the other hand, while some foreign countries exporting dairy products to the United States have also made real progress, it is a well-known fact that several others have not. This fact is causing our people a great deal of concern.

The United States has been long concerned with the threat to both human health and financial loss from livestock diseases such as tuberculosis, brucellosis, and foot-and-mouth disease. For years large sums have been spent by both the Federal and State Governments to eradicate or control these diseases. In the current fiscal year alone our governments (Federal and State) are spending $11.9 million on brucellosis and $7.8 million on tuberculosis-eradication programs.

Since the outbreak of the foot-and-mouth disease in Mexico in 1945 the United States has spent $123 million on the control of that disease. Recent outbreaks in Canada are presenting additional problems. The Department of Agriculture is currently proposing an expenditure of $25 million for the establishment of a foot-and-mouth disease research laboratory. Imports of fresh and frozen meats from countries presently infected with foot-and-mouth disease are now prohibited. We are informed that foot-and-mouth disease is prevalent in every country of the world except the United States, Australia, New Zealand, and Central America. The disease is of a recurring epizootic nature.

The incidence of tuberculosis in cattle in the United States has been reduced from 4.9 percent in 1918 to 0.14 of 1 percent in 1951. Compared to this the incidence of tuberculosis in cattle in specified countries has been variously reported in recent years as follows:

2 Requested but not yet available-Thought to be very high.

Source: From data secured from Bureau of Animal Industry, USDA,

Percent

40-45

30-35

5-10

(2)

In the United States the incidence of brucellosis in cattle has been reduced from 11.5 percent in 1935 to 3.1 percent in 1951. In contrast, brucellosis is reported to have the following incidence in certain foreign countries (proceedings of the Third Inter-American Congress on Brucellosis, Washington, D. C., November 1950):

A recent exchange of correspondence between Representative August H. Andresen of Minnesota and Commissioner C. W. Crawford of the Food and Drug Administration brings out some very revealing points regarding Italian cheese, as reported in the Congressional Record. (The full text of the exchange is carried in appendix pp. 5 through 11.)

Mr. Andresen wrote the Commissioner in part as follows:

As a specific example I would appreciate knowing how many separate lots of cheese have been imported from Italy during the past 12 months, how many of these have been inspected, what tests have been made to guard against the transmittal of communicable diseases such as those mentioned above, and what were the findings on these tests.

To this question the Commissioner replied:

You have asked for specific information on the number of separate lots of cheese imported from Italy during the past 12 months, on the number of these lots inspected, and the results of the examinations made. We regret that we do not have complete statistics of this kind immediately available. However, you may obtain an idea of the volume of importations and type of coverage given from the following: According to the Bureau of Census approximately 15,000,000 pounds of Italian cheese were imported during the calendar year 1951. We estimate that at least 1,600 different entries were involved. Each entry probably represents a composite of cheeses from a number of producers. During this period, the three offices which deal with the bulk of Italian cheese importations examined samples from 77 lots. Of the lots examined 12 were denied entry because of filth and 1 because of failure to conform with the requirements as to fat and/or moisture.

From this it appears that of 1,600 lots of Italian cheese imported in a year the Food and Drug Administration, because of limited personnel and budget, was able to inspect only 77 lots or 4.8 percent. Of these 77 inspected lots, 15.6 percent were denied entry because of filth. But remember that only 4.8 percent of the 15 million pounds imported was inspected as a sample. If this sample was representative it may be concluded that of the 14,280,000 pounds that were not inspected that 15.6 percent, or 2,227,680 pounds, was so filthy that it would have been denied entry if it had been inspected.

Further on that, Mr. Chairman, the Food and Drug Administration, for several years has been inspecting American dairy manufacturing plants and doing a very fine job of it.

We are advised that most of their inspections, however, result from tip-offs as to the condition of plants. Consequently, their inspections are spot and surprise checks and are not as representative of the total quantities of dairy products produced as would be the import samples taken by Mr. Crawford's assistants. As you will note, he states that every one of these entries undoubtedly came from a great many shippers.

Now what does the Food and Drug Administration do in our case? It closes up the plant, or it closes up the department of the plant that it finds is not providing the right kind of milk supply and handling that milk supply under the right kind of methods. And that plant remains closed until the organization or company that owns it has qualified as to the standards which the Food and Drug Administration requires.

No such control over foreign dairy plants or farms is available to the Food and Drug Administration of the United States, and for years we have felt that that was one of the greatest weaknesses in our whole program.

Now I will come to the recommended action.

Let us be practical. Friendship is a fine thing, but it is a reciprocal matter. When our Food and Drug people find an incidence of filth in food imports from a given country of these proportions what should be our course of action: (1) accept this intolerable situation; (2) increase the cost of inspection so that each of 1.600 lots would be

properly inspected; or (3) require the offending countries to keep the product at home until satisfactory assurance is given that it complies with our standards.

In regard to the danger of diseases being carried by imported dairy products the Commissioner wrote:

The only effective procedure for the detection of the organisms of brucellosis and tuberculosis in dairy products is animal inoculation tests which, in the case of both diseases, require a period of 6 weeks to 8 weeks before results are available. The application of such test procedures to all imports of dairy products is therefore practically impossible as a routine procedure.

Yet we know that, while the United States is practically free of tuberculosis in cattle and has a very low incidence of brucellosis, many of the countries exporting unpasteurized cheese and other dairy products have an incidence of these diseases commonly ranging from 40 to 50 percent.

It must be concluded that the State Department is overenthusiastic in its blanket endorsement of free trade. In the case of blue cheese we have seen how another governmental agency, the Department of Agriculture, which is close to the subject, has pointed out that the domestic blue cheese industry was being ruined by trade policies followed before the enactment of section 104. In the case of Italian cheese just cited, the Food and Drug Administration has pointed up crying needs for reviewing our import policies.

Our Government was originally set up for checks and balances of power. These cases exemplify the need for a preservation of that principle rather than a blind policy of following one broad generalized procedure with instructions to "permit no contradictory action."

Mr. Chairman, that concludes my direct statement. I ask that the charts and appendixes to my statement be included in the record. The CHAIRMAN. Without objection, that may be done. (The documents referred to are as follows:)