Mr. MCNEILL. It went to $33 million. In November 1963 the remission program was expanded to cover a broader range of parts on which remission could be made. Senator GORE. Yes. Mr. MCNEILL. In that year, automobile exports from Canada went from $33 million to an estimated level of $90 million in 1964. So this great increase occurred pursuant to the tariff remission program. Now, since the tariff remission program Senator GORE. Excuse me just a moment. Could we state, I would like to state in the record, restate for the record, that the 6-month level this vear is, I believe it was testified, at a rate of $120 million. Mr. MCNEILL. If I may, sir. Senator GORE. If I may go on for one moment, which means a 1,000-percent increase since 1962. Mr. MCNEILL. Senator, the point I am trying to make is that the most rapid growth Senator GORE. Is that true? Mr. MCNEILL. If I may explain, the most rapid rate of increase came as a result of the remission scheme. It went up to $90 million. For the first 6 months of this year it went to $60 million, which if you doubled it, would give you $120 million, so it is true you have gone from $33 to $120 million. Secretary CONNOR. I think you have to look at the entire picture, and during this entire period you are talking about, the net favorable balance of trade in our favor or in favor of the United States has gone from about $390 million in 1961 to $460 million in 1962, to $530 million in 1963, to $564 million in 1964, and it shows a modest increase again in the first 6 months of this year. So we have not done badly. Senator GORE. Well, if you wanted again to fall back on the general proposition then you might find out what the balance of trade is between the United States and Canada on paper. If we are going to have a more liberal trade policy between the United States and Canada, then I am prepared to go with you. But I am not prepared to go with you for the exclusive benefit of the Big Four, and to the detriment of small business in the United States, and to the detriment of jobs in the United States. Secretary CONNOR. Well, sir, we do not think it is going to have that effect. I do have a statement Senator GORE. I have just given figures that this remission plan does have that effect, and the Canadian Government said that the purpose of it was to continue the effect of the remission scheme. Secretary CONNOR. As I understand it, there was a later retraction or revision of that statement. I do not think it should have been accepted. Senator GORE. I think the record ought to be revised. Mr. TREZISE. Senator, I think the record ought to be clear on that statement. You made it earlier in the hearing. This is the one taken from the Tariff Commission statement. I do not think it refers quite in the manner you suggested. Senator SMATHERS. Talk a little louder, please, sir. Mr. TREZISE. All right. The Tariff Commission, Senator, sent a report to the Congress on the Canadian agreement. In the course of this, it is on page 19, it said: The Government of Canada announced that it was taking this immediate action that is eliminating duties— in order to provide continuity where "the present automotive plan," that is, the 1960 tariff rebate plan, and to enable Canadian producers to proceed with expansion plans. I can explain that, Senator. Under the remission plan, most parts were coming into Canada free of duty under the arrangement that had then prevailed. When we negotiated the agreement, and the Canadians then had to decide what would they then do, they had to get rid of the remission plan, and they realize that if they were to reimpose duties which had, as I say, not been collected under the remission plan, then they would cause real consternation and difficulty for the Canadian companies. So they processed forthwith to eliminate duties as they had to in order to give the companies continuity, and that is the continuity referred to. It had nothing to do with the continuity of the remission plan. It is the continuity of zero duty and we discussed this at great length with Canadians and this is precisely why this statement was made, not to say the remission plan was being continued, because it was not, it was being withdrawn. Senator GORE. I have asked for the text of the statement. But whatever the statement may say, the facts stand that this agreement has, in fact, continued it and made it better for Canada and better for the automobile concerns and worse Mr. TREZISE. With all respect, Senator, I would say this agreement has not continued the remission plan, and has indeed caused its withdrawal. Senator GORE. I said the effects of it. Mr. TREZISE. And not the effect of it either. Senator GORE. Well, we will Mr. TREZISE. We can submit chapter and verse on that if you wish. Senator GORE. Well, the effect of it is to increase Canada's exports to the United States, and we have just had a statement of the statistics. It has increased since this agreement was signed from the level of $90 million annually to a level of $120 million annually, so I am happy to cite statistics with you. I vield. Senator HARTKE. Mr. Drury, the Minister of Industry in Canada, estimates the increased Canadian production of vehicles and parts to be about one-third of $1 billion per year in 1968. Is it the conten tion that the sale of automobiles will be increased by that proportion in Canada? Mr. TREZISE. By one-third? Senator HARTKE. By one-third, or one-third billion dollars. Secretary CONNOR. The estimated growth rate in Canada of the automobile trade is estimated at 8 percent. Senator HARTKE. I do not think they say that the increased production in vehicles alone will be one-third of a million dollars. It will be $241 million plus 60 percent of growth. Where are they going to sell that additional production? Secretary CONNOR. No, sir. That is not the position we take, and I would like to cover some of that. Senator HARTKE. Is that the position Canada takes? Secretary CONNOR. I would like to cover some of the points about this business, Mr. Chairman. I would like to read my statement because this is relevant to many of the questions which have been asked. Senator SMATHERS. May I suggest that it is obvious that we won't get to the Secretary of Labor this morning. I see him sitting here. Would it be all right, Mr. Chairman, to at least excuse the Secretary of Labor this morning so that he might come at some other time rather than have him sit here when it is obvious we won't get to him today? The CHAIRMAN. Is that agreeable to the Secretary of Labor? Secretary WIRTZ. Thank you, Mr. Chairman. Will you continue this afternoon or has it been decided? The CHAIRMAN. It will not be possible for the committee to sit this afternoon as there is going to be a good deal of voting in the Senate. The Chair is very anxious to expedite this legislation. We have seven witnesses today in addition to Under Secretary Mann, whom we will doubtlessly be unable to hear, and a number of witnesses scheduled for tomorrow. Senator SMATHERS. The question is when do we have these witnesses from the Government back. We have not heard them, and Senator Hartke wants to question some of them. Senator Gore does, too. We have not heard from the Secretary of Commerce nor from the Secretary of Labor, so could we set that up for Thursday morning? The CHAIRMAN. I think the Secretary of Labor has other very important duties. Secretary WIRTZ. I have no other duties, Mr. Chairman, and I am anxious to testify. I feel very strongly about this legislation, and I would like to advance a quite different picture than that which has been implied, different from the one implied by the questions about employment, and I would like to press very early my support of this legislation at the earliest possible time. Secretary CONNOR. On behalf of the Commerce Department, Mr. Chairman, I would like to submit my statement. The CHAIRMAN. The Chair suggests that the Government witnesses as well as all other witnesses scheduled today, come back tomorrow at 10 o'clock. The witnesses scheduled for tomorrow will be rescheduled for Thursday. Senator GORE. Whatever the chairman decides will be satisfactory with me. The CHAIRMAN. The committee will be in recess until tomorrow morning at 10 a.m. (Whereupon, at 12:20 p.m., the committee adjourned to reconvene at 10 a.m., Wednesday, September 15, 1965.) UNITED STATES-CANADIAN AUTOMOBILE AGREEMENT WEDNESDAY, SEPTEMBER 15, 1965 U.S. SENATE, COMMITTEE ON FINANCE, Washington, D.C. The committee met, pursuant to recess, at 10 a.m., in room 2219, New Senate Office Building, Senator Russell B. Long, presiding. Present: Senators Byrd, Long, Smathers, Douglas, Talmadge, Hartke, Williams, Carlson, Morton, and Dirksen. Also present: Hon. Thomas C. Mann, Under Secretary of State for Economic Affairs; Philip H. Trezise, Deputy Assistant Secretary for Economic Affairs, Department of State; Hon. John T. Connor, Secretary of Commerce; Robert L. McNeill, Deputy Assistant Secretary for Trade Policy, Department of Commerce; Hon. Willard Wirtz, Secretary of Labor; and Fred Boyett, Assistant Deputy Commissioner, Bureau of Customs, Department of the Treasury. Also present: Elizabeth B. Springer, chief clerk, and Thomas Vail, professional staff member. Senator LONG. I am going to call this meeting to order. Other Senators will be along, but we don't have to have a full quorum in order to conduct a hearing. Now, the plan, as I understood it on yesterday was to hear the Under Secretary of State for Economic Affairs, Mr. Thomas Mann, to hear the Secretary of Commerce, the Honorable John T. Connor, and the Secretary of Labor, the Honorable Willard Wirtz. Now, we did not hear all three of those important witnesses because of the number of questions asked Secretary Mann by members of the committee. I am going to restrain myself and urge all other members to restrain themselves from asking questions until we complete what we set out to do yesterday, to hear the full statements of the witnesses. I would hope that we can then proceed by a 15-minute rule, giving each member 15 minutes to ask questions and hear answers. If the member is satisfied, he can be about his business; if he is not satisfied with the information that he gets in this way he can stay around and have a second turn. On the second round I would suggest that we have unlimited questioning in case someone wants to go into greater detail. Senator CARLSON. Mr. Chairman, yesterday I cooperated fully with the chairman, and I expect to cooperate today and I would suggest that we do try to get these witnesses of the various Federal agencies completed; they may have to come back in view of the fact that some of the members are not here. But we have some outstanding motorcar executives here who I hope we can hear and let them go back. Senator LONG. I think the Senator is entirely correct, and, Mr. Secretary, I want you to know I have already read your statement. I 121 think it is a very fine statement, and I look forward to the answers to the various questions that will be asked. I think for the benefit of our audience, however, that it would be well for you to start right out and read your statement. I will, therefore, call next on the Secretary of Commerce, Mr. John T. Connor. STATEMENT OF HON. JOHN T. CONNOR, SECRETARY OF Secretary CONNOR. Thank you very much, Mr. Chairman. Mr. Chairman, and members of the committee, I am pleased to appear before you in support of H.R. 9042, the proposed legislation to enable us to carry out our commitments under the United StatesCanadian Automotive Products Agreement. As you know, Canada has already eliminated duties on imports of finished motor vehicles and original equipment parts, in accordance with its obligations under the agreement. This legislation, if enacted, will authorize duty-free imports into the United States of finished motor vehicles and original equipment parts produced in Canada. Together with action already taken by the Government of Canada, its general effect should be to lead to expanded production and consumption of automotive products in North America, to the benefit of both the United States and Canada. The Department of Commerce participated extensively with the Department of State in the long series of discussions and negotiations that led to the signing of the United States-Canadian Automotive Products Agreement by President Johnson and Prime Minister Pearson on January 16, 1965. The Department's specific concern, of course, was how best to preserve the very substantial market in automotive products that U.S. exporters have had in Canada, in the face of the Government of Canada's strong determination to increase Canadian production of automobiles and automobile parts. The key statistics and factors are these: In 1963 and 1964 U.S. automotive exports to Canada averaged around $600 million, whereas our automotive imports from Canada in 1963 and 1964 averaged around $60 million. Figures for 1965 show that U.S. automotive exports to Canada during the first half of 1965 amounted to about $385 million and automotive imports from Canada over the same period amount to about $59 million. Thus we have had, and continue to have an exceptionally favorable balance of trade in the automotive sector. As a matter of fact, these U.S. exports to Canada have represented approximately a 40-percent share in the total Canadian automotive market, which averaged about $1.5 billion in factory sales in 1963 and 1964, compared with total U.S. factory sales during the same period of about $24 billion annually. Mr. Chairman, with your permission I would like to introduce in the record at this point a study which has been made by the Department of Commerce entitled "Profile of the North American Automotive Industry." Mr. Chairman, this has been revised as of September 1965 to bring it up to date, and I think it contains a great deal of factual information that will be helpful to the committee in its consideration of this measure. |