from the United States. In one case a trade agreement was negotiated a number of years ago in which wheat flour was included among the United States export items in return for which the United States gave special concessions on sugar and other items of that country.

The import of United States flour into that country is now being sharply curtailed by import license and quota controls.

In another case the foreign government has recently taken unilateral action without any consultation with the United States to increase the duty on wheat flour by 250 percent. The existing duty of around 50 percent is already a very high one and must be paid by all of the poor consumers of bread in the country.

The new duty, of course, represents a virtual embargo by means of a prohibitive duty. At the time the duty action was being taken it is of interest to note that a special mission from the country was in the United States asking for financial assistance.

When the Sugar Act is again considered by the Finance Committee, it is quite likely that a larger quota will be requested by the country even though its recent action against the United States would seem to have removed any basis for reciprocity of trade relations between the two countries.

No action reportedly could be taken in regard to the establishment of the new prohibitive import duty on wheat flour because technically flour is not listed as a trade agreement item for that country.

Should further trade agreement negotiations with that country include flour and the duty were to be reduced at the United States permissive rate of 5 percent per year, it would require the next 50 years to undo the increase imposed unilaterally on one day.

It appears obvious that notwithstanding the constructive work being done under the trade agreements program in negotiating new agreements and reducing many existing trade restrictions, there is a big need for more attention to discouraging the imposition of new trade barriers wherever possible.

Otherwise, the program resembles a mountain climber who slips back a half step or more for each step he takes forward.

For many countries, in fact, it is now evident that some United States programs, especially involving aid or financial assistance, are resulting in increased restrictions against United States exports.

While it is recognized that the many acts passed by the Congress in recent years relating to foreign trade and economic matters have been for specific purposes and the responsibility for administering them is scattered among numerous agencies in various departments of Government, it would seem doubtful that the Congress would have intended that one act should increase the problems being handled under another act.

If this situation is allowed to continue for any length of time, considerable damage is likely to result to United States exports which the trade agreements program can never resolve satisfactorily.

We believe that a more coordinated economic policy regarding foreign trade can be handled effectively by administrative action and without amendment to the act at this time if the record is made clear that such coordination should take place.

The present anomalous situation of United States exports being severely restricted in many countries by various forms of import controls or other measures, while special requests for aid and assistance

as well as access to the United States market are being made and granted by the United States should be subject to careful review.

There is no other important trading country in the world that operates its foreign trade and foreign economic activities on as unrelated as basis as the United States at the present time. It is believed that much of the criticism of the trade agreements program could be overcome and effective safeguards provided if the United States were to operate the program on a broader and more coordinated basis. In concluding its statement in support of H. R. 12591 the federation believes that if the act is extended for 5 years which will permit a real effort to be made under the program to reduce existing barriers and a more coordinated economic policy is developed regarding foreign trade aimed at preventing new barriers from being established, United States foreign trade and the national welfare will make real progress in the years ahead.

Senator ANDERSON. The next witness is Mr. Dan Daniel, of the American Cotton Manufacturers Institute, Inc.

STATEMENT OF DAN DANIEL, THE AMERICAN COTTON MANUFACTURERS INSTITUTE, INC.; ACCOMPANIED BY R. HOUSTON JEWELL, VICE PRESIDENT OF CRYSTAL SPRINGS BLEACHERY OF CHICHAMAUGA, GA., AND BUFORD BRANDIS, CHIEF ECONOMIST FOR AMERICAN COTTON MANUFACTURERS INSTITUTE, INC. Mr. DANIEL. Thank you, Senator Anderson.

Senator Anderson and gentlemen of the committee, my name is Dan Daniel, assistant to the President of Dan River Mills, Inc., of Danville, Va.

I appear here today in the absence of Mr. W. J. Ervin, the scheduled witness, who is out of the country.

Mr. Ervin is president of Dan River and is chairman of the foreign trade committee of the American Cotton Manufacturers Institute.

Seated with me this morning is Mr. R. Houston Jewell, vice president of Crystal Springs Bleachery of Chickamauga, Ga., who is vice chairman of the ACMI's foreign trade committee.

Also appearing with me this morning is Dr. Buford Brandis, chief economist for ACMI.

The American Cotton Manufacturers Institute represents the great bulk of those segments of the textile industry of the United States processing cotton, man-made fibers and silk.

Geographically, our hundreds of member companies are concentrated in the great textile-producing arc swinging from Maine through Texas.

The textile mill products industry currently employs a million people. Our friends and customers in the related garment industry, who convert our product to wearing apparel, employ another million and a quarter people.

Our member mills together constitute the largest single customer of the United States cotton farmer.

Our industry is one of the largest customers of the United States chemical manufacturers. We purchase about $2 billion worth of materials annually from the chemical industry, of which about threequarters represents man-made fibers.

Clearly the textile industry is a major factor in the economic activity of the United States economy.

Let us make clear at the outset that the textile industry favors mutually advantageous, truly reciprocal trade among nations. Therein lies our basic opposition to the program before this committee. A large number of well-intentioned and fine American citizens really believe that the so-called reciprocal trade agreements are actually reciprocal.

Nothing could be further from the truth. There is little, if any, reciprocity to be found in the administration of our present tradeagreements program.

The textile industry does not stand for "protectionism" in the sordid sense of its current usage. The textile industry does not stand for isolationism. We want to see a healthy foreign trade and we want to enjoy the friendship of other nations. We sincerely believe, however, that this trade and this friendship can be had on a fair basis.

If a foreign manufacturer can make something better and sell it in the United States on the basis of quality, he is entitled to do so. If a foreign manufacturer is more efficient and can sell his product cheaper in the United States because of this efficiency, he is entitled to do so.

If, however, a highly competitive American industry loses its own market to a foreign competitor solely because the foreign competitor has the advantage of cheap raw material and cheap labor, we do not believe that there is any degree of fairness to the domestic industry when it is hamstrung by regulatory decree.

We believe a comprehensive reappraisal of our foreign trade policies is long overdue. Since 1934, the statutes relating to United States participation in trade agreements literally have amended the original Cordell Hull concept of reciprocal trade out of existence. That concept had as its prime purpose the stimulation of United States export trade on the basis of bilateral pacts with other nations.

In fact, it is our observation that after a quarter century of the trade agreements program, export markets for United States textiles and other goods are constantly being restricted by overseas govern

ment action.

This alone is a matter of great concern to us.

In a "free enterprise economy," the textile industry exists today as a virtual pawn of government manipulation.

Senator ANDERSON. We have a rule that we will let you finish your statement. I hope I am not breaking that rule too badly, but I do not understand your phrase.

You say the "goods are constantly being restricted by overseas gov

ernment action."

You mean our Government acting overseas or the actions of foreign governments overseas?

Mr. DANIEL. We mean overseas government action, but actually it could be said of both, I think.

Senator ANDERSON. I see; I am sorry.

Mr. DANIEL. That is all right, sir.

In a free enterprise economy, the textile industry exists today as a virtual pawn of government manipulation. Our wage rates are

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established by legislative and executive determinations. Our primary foreign competitor pays his employees only one-tenth of our scale. Others pay even less. He produces his goods under terms and conditions which are barred by statute in the United States.

His utilization of modern machinery, some of it provided by our Government with our tax money, is equally as efficient as ours. His modern management techniques are equal to ours because we have supplied the technical know-how. These factors being equal, now comes the most telling blow of all.

Our Government buys raw cotton at a Government-fixed and subsidized price from the American farmer and sells it in turn to foreign mills at a price 20 percent below that paid by the American mill. Our Government says we should compete.

In all fairness, gentlemen, we ask, "How?"

In an effort to be practical and realistic, we make the following several proposals with reference to H. R. 12591:

1. A 2-year limit of its authority.

2. Tariff reduction by 5 percent per year, nonaccumulative and not applicable to any article on which a reduction has been made since January 1, 1955.

3. A change in the terms of the present escape-clause procedures whereby a finding of injury on the part of the Tariff Commission would be deemed final

Senator ANDERSON. May I stop you again?

Mr. DANIEL. Yes, sir.

Senator ANDERSON. As you know, this is a point very dear to my heart.

We have a big argument now with the antidumping bill because of it.

Would you in the course of your later presentation, or at some future time, supply me with some information as to what other countries do about a finding of injury on the part of the Tariff Commission being deemed final?

Mr. DANIEL. Yes.

Senator ANDERSON. I ask that, because you will find in the testimony a day or two ago, when Secretary Dulles was testifying, I pointed out to him that Under Secretary Dillon had said if we wrote into the antidumping bill the fact that if the Tariff Commission did not act within 90 days this inaction should be presumed an affirmative finding; and he thought that was extremely severe treatment and horribly bad. I thought, well, if Canada by the mere finding of dumping can determine there is injury, that is infinitely worse. Why is it all right for Canada, under that law of 1947 to do one thing, and other countries to do the same thing and this country not be able to do it?

I apologize to the other Senators for interrupting here, but since this is the point of controversy in the conference now going on, on H. R. 6006, I just happen to ask this morning for information on this point. Any information you can give me I would be very happy to have, because the amendment which I introduced in an effort to help the potash industry was originally the rayon industry's amendment. I think it is doctored down now to where it is so mild that even its authors feel it is something ineffective and yet it seems to be a complete stumbling block. It may turn out to be more of a

stumbling block to reciprocal trade than contemplated, because if we cannot really get anything done we are in frightful shape.

Mr. DANIEL. Well, Dr. Brandis has some information on that which I am sure he will be glad to supply you now or at a later date.

Senator ANDERSON. I am trying to keep to the rule. I will get it at the end of your presentation, but I did not want to omit it and suddenly take you by surprise.

Thank you.

Mr. DANIEL. Thank you, sir.

Fourth, the establishment of practical and workable criteria for the determination of peril points.

In the case of the third proposal we feel that there have been entirely too many instances where the President has superimposed his judgment on that of a congerssional agency vested with statistical facts and authority to find injury. We submit that any extension of this act should declare the intent of the Congress that any finding of injury or threat of serious injury on the part of the Tariff Commission, except as noted, shall be deemed final.

We recognize that in the interest of national security there may be extenuating circumstances in some instances which may very well entail the recognition of other factors. In such cases then let the President state those other considerations and so advise the Congress. If a determination of injury is to be made by a fact finding body then let that body have the facts before they make such determination. There seems little justification for an agency spending 9 months in finding injury to domestic industry and then have the President say "But you did not have all the facts, and therefore I find your determination in error."

We consider an escape clause amendment to be one of the two real major changes that should be made in the act by this committee.

The other is the establishment of peril-point criteria and this is the area to which we shall address the balance of our testimony.

Experience has proved that one of the most serious deficiencies of trade agreements legislation is the inadequacy of its peril-point provisions. These provisions specify no criteria whatever for use in the determination of "peril points."

The statutory language directs only an "investigation," without indicating either its nature or scope. There are no requirements relating to the factual basis of such an investigation, or to the pattern of analysis which it should follow.

Under the law, there is no way of knowing how a particular peril point is arrived at, or what considerations of fact or policy is may embrace.

Yet these undefined and mystical peril points are burdened with a purpose which is essential to the successful operation of any trade agreement.

Regardless of how they may be constructed, their legal purpose is to mark the limit to which modifications of duties may be extendedwithout causing or threatening serious injury to the domestic industry producing like or directly competitive articles * * *