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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 Ajjderson. 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 middenly take you by surprise.
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 Ibe 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. Tliere seems little justification for an agency spending 9 months in (biding 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 irea 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 »f analysis which it should follow.
Fnder 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 ?mbrace.
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 extended—
without causing or threatening serious injury to the domestic industry producing like or directly competitive articles « * »
The present act attributes to peril points the further purpose of indicating when—
increases In duties or additional import restrictions are required to avoid serious injury to the domestic industry • • •
and what the increases should be.
In either case, the peril points can serve their purpose only in the initial stages of a trade negotiation. That is the time when the forces of good or of evil are unleashed.
A mistake made then may lead to costly and possibly irreparable injury. Yet, we have as our standards of reference and our guide posts, a set of peril points manufactured without even a semblance of statutory prescription.
A condition of sharp contrast exists with respect to the language governing the disposition of escape clause oases. There, great care and reasonable exactness have been exercised to define the scope of the Tariff Commission's investigation and to supply, very specifically, the criteria on which the Commission's findings shall be based.
The Commission is required, without excluding other factors, to take into consideration production, employment, prices, profits, wages, sales, increased imports (actual or relative), inventory, on decline in the proportion of the domestic market supplied by domestic producers. Not one of these considerations has a counterpart in the peril-point provisions of the act.
We regard the escape clause provisions of the act as essential, because they make possible the correction of injury brought about by economic change or unpredictable developments.
At the same time, we consider it to be extremely unfortunate and highly damaging to our economy, as well as to our trade relationships, that escape-clause actions should have to be relied upon to correct injuries due to avoidable errors of judgment and procedure at the peril-point level.
Higher standards of accuracy in peril-point administration \voul<l not only avert much needless injury to domestic industry, but \vouW also serve to establish a firm set of practical considerations. The*? guideposts, such as comparative costs, prices, production, employment, the ratios of supply and demand, the factors of growth, na^e to do with the realities of trade.
Yet. the Trade Agreements Act relegates them to escape-clause action which is our secondary line of defense.
They should be brought up to the front line where they can bo used affirmatively as elements of a positive and overall policy which has for its objective a sound and mutually beneficial trade, instead of the pursuit of political doctrine.
Since peril-point determinations precede negotiations and do noJ involve any contractual obligation with a foreign country, they art exclusively a matter of domestic responsibility, a fact which does nor. of course, preclude the use of foreign sources of information. At thi.; level, the finding of economic truth can lead to no trouble.
The way of the escape-clause route, on the other hand, as the only effective way of safeguarding American industry from injurious foreign competition, is an arduous, poorly charted and somewhat dangerous road to travel. It is clearly for emergency use only.
One of the foremost issues in trade agreements legislation i* th* question of Presidential authority in the disposition of Tariff Commission findings and recommendations. It is an issue which is not likely to be resolved, one way or the other, by direct action, and we do not refer to it at this point with that idea in mind.
However, it is very pertinent to the major substance of our testimony to point out that Presidential intervention in trade cases is almost always a consequence of errors made in trade-agreement negotiations.
Had the original concessions been made on the basis of considerations more fitted to their purpose, there would have been no ensuing string of calamities to find their way to the President's lap.
A concession which is sound in the beginning is not likely at a later date to become a vehicle of serious injury, except under conditions of radical economic change.
If it is unsound, it becomes a festering sore and, as it seeks remedial treatment, it draws into itself many corollary evils, as we have explained. By the time it reaches the White House area for final adjudication, it is entangled in a web of international interests and commitments and counter adjustments extending throughout our trade structure. Thus, the President in his final decision, rightly or wrongly, is pressured into taking account of considerations which are not within the intent or provisions of the Trade Agreements Act.
A major objective, therefore, in the revision of the act should be an enlightened revision of its peril-point provisions by the incorporation of definite and comprehensive criteria, and of realistic and effective procedures.
Senator Anderson. Senator Williams?
Senator Williams. No questions.
Senator Anderson. Senator Carlson?
Senator Carlson. Mr. Daniel, just this: I can assure you that every member of the committee is advised of the difficulties of the textile industry because of our distinguished chairman, the very able Senator from Virginia, Mr. Byrd, who has continually called it to our attention, and a former chairman, the late Senator George of Georgia, was always reminding us, so therefore, I am not only familiar with it, I am concerned with some of the problems of the textile industry.
You do, however, have a very substantial export trade.
Is that not correct?
Mr. Daniel. Well, we had at one time, I would say, Senator, a substantial export trade, but that export trade is slowly diminishing. For example, in 1947, 15 percent of our production went to foreign markets.
Today that has been reduced to about 5 percent.
So it is a trend, actually, sir, that we are worried about or one of the major things we are worried about.
Senator Carlson. The figures I have here show in 1953 you had exports of $272 million, and in 1957 they were $253 million; the figures that have been furnished me by the Department of Commerce, which is, after all, a substantial export trade.
Now when you come to the import picture which is also the figures I have here, the imports of cotton manufactures doubled from $73 million in 1953, to $154 million in 1956, and amounted to $136 million last year. In other words there was a reduction of $18 million over 1956.
I want to ask you this question: If Japan did not on its own initiative make some revisions in the imports they were making to this country.
Mr. Daniel. I would like, Mr. Anderson, if I may, sir, to have Mr. Jewell comment on that question.
Senator Anderson. Surely. Mr. Jewell?
Mr. Jewell. Senator, Japan did make a voluntary agreement to limit imports into this country, and the agreement was that there would be no more than 235 million yards coming into this country either in the form of piece goods or cotton products.
This figure contrasted with about 50 million in the preceding year or two which meant that it was increased greatly, but it did put a limit on the number of vards that Japan might send in, and I might say that they have kept that agreement.
Senator Carlson. Did I understand you to say they had been keeping that agreement?
Mr. Jewell. Yes, sir.
Senator Carlson. That is all, Mr. Chairman.
Senator Anderson. Senator Bennett?
Senator Bennett. No questions.
Senator Anderson. You started off by recommending first, a 2year limit to this authority, a 2-year extension in other words.
Mr. Daniel. Yes, sir.
Senator Anderson*. I commend you for that. We have so man] people recommend it f&r 5 years and 3 years and we are glad to get il down to a figure that some of us regard as more probable.
Mr. Daniel. Senator Anderson, it occurs to us that it is impossibli to judge just what our economic condition will be 5 or 10 years fron now and actually when we talk about a 5-year extension we are talkinj about a 10-year extension because agreements negotiated, for exampl< in the last 2 or 3 months of this program, would actually extend ore a 10-year period.
Senator Kerr. You mean 5 years from that time?
Mr. Daniel. That is right; extends 5 years from the date of tha negot iation.
Senator Anderson. I know the Senator from Oklahoma is intei ested in your 2-year proposal and I just wanted you to know that am also.
Mr. Daniel. Thank you, sir. We think it is realistic.
Senator Anderson. Now this third clause is the one on which want, to have some comment. It suggests a change in the terms <i the present escape-clause procedures whereby a finding of injury" the. part of the Tariff Commission would be deemed final.
The amendment which is now pending on the antidumping hi provides that in case there is a tie, 3 to 3, as sometime happens, tiuj that will be regarded as an affirmative finding. The State Depsui ment. 1 must say does not take strong exception to the first pixmsi»>1
There is further provision that in case the Tariff Commission dcH not act within the time that seems to be prescribed by the statufl namely, 90 days, that that failure to act will oe regarded as an affinal tive finding of injury. That is what seems to be causing trouble and the constant statement is made that no other country is so drastic in it provisions.
Would you regard the Canadian dumping provision, which finds dumping as an injury per se, more necessary for the protection of American industry than the mere fact that we are bound by some other provision?
I brought it up last Saturday when the attendance was limited, and I would be happy to bring it up again.
Mr. Brandis. Senator, I would agree in that the provision you have just described is certainly not as drastic a provision as that that exists elsewhere in the world.
As you know, antidumping provisions differ around the world considerably and with your permission I would prefer to file a statement for the record with respect to how other countries handle that problem of injury and dumping.
Senator Anderson. I would be happy to have you file it.
Only we get an awful lot of pressure to dispose of this antidumping legislation before we get to this one, and if you can help me by filing it earlier ■
Mr. Brandis. Yes, sir.
Senator Anderson. It would be that much more appreciated.
Mr. Brandis. We will do it very promptly.
(The information is as follows: )
The American Cotton Manufacturers Institute, Inc.,
Washington, D. C, July 2, 1958. Hon. Clinton P. Anderson, United States Senate,
Senate Office Building, Washington, D. C. Dear Senator Anderson: During the Senate Finance Committee hearing on Monday morning, you asked that I promptly submit any information which I might have concerning the application of the injury provisions of antidumping acts in countries other than the United States.
I have made a preliminary investigation of the subject as a result of which it is my understanding that, with the exception of Canada and possibly Germany, all foreign antidumping acts require a finding of injury by the administrators of the act before the remedial provisions become effective. I also understand that the failure of the administrators in these countries to make any finding whatsoever, or, in other words, mere inaction on their part, is not sufficient to constitute a finding of injury and does not result in the application of the remedial provisions of the act. Of course, this problem does not arise in Canada which does not require a finding of injury; and, in the case of Germany, the operation of the act in this regard is uncertain. Respectfully yours,
R. Buford Brandis,
Senator Anderson. The problem is this one: The troubles of the potash industry attracted me to this dumping problem.
Mr. Brandis. Yes, sir.
Senator Anderson. There was a long study of it, and then after dumping was found 3 Commissioners thought there was injury and 3 Commissioners thought there was no injury.
Mr. Brandis. Yes, sir.
Senator Anderson. The simplicity of that determination attracted me a great deal. Because when we got to the lead and zinc case, 3 Commissioners thought there was some damage, 2 thought there was none, and 1 thought there was something else and the decisions