a tremendous advantage over us and would have a very definite bearing on whether or not the Congress should pass a reciprocal trade

act.

Mr. BRANDIS. Yes, sir.

Senator ANDERSON. If we cannot stop dumping because we committed ourselves to something that nobody else committed themselves to, then we are in bad shape.

Mr. BRANDIS. It hardly seems to be reciprocal, does it?

Senator ANDERSON. That is why I enjoyed the very beginning of this presentation, where you said that a large number of well-intentioned and fine American citizens really believe the so-called reciprocal trade agreement program is actually reciprocal.

Nothing could be further from the truth. There is very little or any reciprocity in the administration of our trade-agreements program. That has been my objection to it.

Theoretically, reciprocity is fine. It can never actually be applied, apparently, when the time comes. It cannot be in potash; it cannot be in rayon. It can't be in lead; it can't be in zinc. I think we did find it in oystershells or something.

Mr. BRANDIS. Senator, those of us who have had some experience with that aspect of the law would certainly agree with you that there is nothing more frustrating than to try to obtain reciprocity under the kind of administration it has had in recent years.

Senator ANDERSON. Well, the law does not exactly-I read it very carefully the other day.

Mr. BRANDIS. Yes, sir.

Senator ANDERSON. The law does not absolutely say that a commission must find in 90 days.

Mr. BRANDIS. No, sir.

Senator ANDERSON. I don't know how else you could read it and come to any other conclusion, but it does not get right down to say you act or else.

Mr. BRANDIS. Yes.

Senator ANDERSON. As a result, as Mr. Daniel has pointed out in his testimony, 9 months go by while they try to make up their minds. Then after they have acted at the end of 9 months, they get it kicked back in their teeth and are told, "Well, you did not know anything about it when you acted on it at the end of 9 months."

it.

So I assume it would take really longer to find out anything about

Mr. BRANDIS. Yes, sir.

Senator ANDERSON. I think that is the greatest weakness in reciprocal trade; there is no effective remedy in case you get into trouble. Mr. BRANDIS. Yes, sir.

Mr. DANIEL. That is the point we wanted to make, sir.

Senator ANDERSON. Thank you very much.

Mr. DANIEL. May I read one paragraph that you did not have on your copy in the record, sir?

Senator ANDERSON. Yes; indeed.

Mr. DANIEL. It will just take a minute.

On last Friday, Mr. Chairman, language for several suggested amendments was submitted to this committee by Mr. Hooker, who appeared for the Synthetic Organic Chemical Manufacturers Asso

ciation. We wholeheartedly endorse and urge the inclusion of that language in the bill to be reported to the Senate.

Senator ANDERSON. When you endorse, you say you are the American Cotton Manufacturers Institute. You said something about a million people in this industry.

How many of them are members of your group? How many of the firms that employ these people are members of the institute? Mr. DANIEL. About 80 percent.

Senator ANDERSON. Eighty percent?

Mr. DANIEL. Yes, sir.

Senator ANDERSON. So you speak for 80 percent of all of the employment there is in this particular industry?

Mr. DANIEL. Yes, sir; that is right.

Senator ANDERSON. Thank you very much.

Mr. DANIEL. Thank you, Senator, for the privilege of having appeared before you.

Senator ANDERSON. Mr. Bell, it is nice to see you again.

Will you proceed?

STATEMENT OF W. RAY BELL, PRESIDENT, THE ASSOCIATION OF COTTON TEXTILE MERCHANTS OF NEW YORK

Mr. BELL. Thank you, Mr. Chairman. I am W. Ray Bell and as president of the Association of Cotton Textile Merchants of New York greatly appreciate the privilege of appearance before your

committee.

Our members are marketing firms and sales agencies which sell and distribute through both domestic and export channels of trade, the great bulk of woven cloth and other textile products made by the cotton mills of this country.

Because our functions are concentrated in the market, we have to face at pointblank range the challenge of foreign competition and attempt to cope with the adverse effects of its stimulation under the successive extensions of the trade agreements legislation.

As this law has been administered during the postwar period and particularly since 1954, we do not believe it has helped to promote the national welfare or that it has served the original purpose of developing truly reciprocal trade among the nations of the world.

On the contrary, it has been used by our Government agencies to widen the margin of price disadvantages for American producers and to stimulate the flow of low-priced imports into our markets. The concept of reciprocity has vanished and in its place has been established a giveaway program of American markets and jobs.

Nowhere is this more apparent than in the fields of textiles and apparel whose production and distribution are of vital importance to the domestic economy of more than half the States of our Union. In the combined industries over 2 million workers are accustomed to gain their livelihood and many hundreds of communities are primarily dependent on their continued operations. What are we doing to them in the guise of free trade and supposed trade benefits?

As a starter, tariff schedules have been slashed to the bone-to accommodate first one and then another of the dozen or more textile producing nations which covet our markets.

Although peril-point investigations were held prior to each of the GATT negotiations, there is little reason to believe that these hearings gave any weight to industry opinion or judgment. In any event, each GATT session has meant further concessions in the greatly reduced duties, culminating with the broad concessions to Japan which were made effective in September 1955, and those concessions of course were generalized to all the other countries.

Having scrapped this protection for the domestic economy, we next began to sell to all our foreign competitors our Government stocks of raw cotton at a huge discount of 20 to 25 percent below the price which American mills are forced to pay under Government price supports in our quota protected cotton markets. On 1-inch middling cotton the subsidy last month was 62 cents a pound or roughly $32.50 per bale for the foreign producer.

Beyond this availability of cheap cotton, the United States Government has employed special programs for the purposes of financing rawcotton exports, through Export-Import Bank loans, the ICA, and Public Law 480.

In the fiscal year ending July 1, 1957, total authorizations were $402 million and for the current fiscal year ending June 30, 1958, may well reach $500 million.

In addition, the ICA has concentrated its purchases of textiles from foreign mills in fiscal 1957 at the ratio of $89 million of foreign textiles to $7 million of American. Over half of the foreign textile purchases, or $56 million, was from Japan. For justification of the meager American share of this business, it is explained that their higher cost took them out of competition with the foreign product. Beyond these subsidies and special benefits for the foreign mills, their productive operations are exempted from the statutory requirements of American social and labor legislation. In this country sweatshop operations were legislated out of existence many years ago. Child labor has not been permitted in 30 years and products of prison labor were barred from sale in interstate commerce by Federal statute in the early thirties.

American mills must conform to the Fair Labor Standards Act, Labor-Management Relations Act, antitrust laws, State safety laws and many other Federal and State statutes which are built in, mandatory costs of operations in this country.

Yet for foreign textiles and apparel brought into our markets in direct competition with domestic products no standards of working conditions are required and their operations may violate our standards with impunity. Typical of this wide gap in labor costs is the rate of 15 to 20 cents an hour in Japan, or the 9 to 10 cents an hour in Hong Kong and India, less than in Pakistan, versus an average of $1.40 to $1.50 per hour in the United States.

Under these conditions of bounties and special privileges bestowed by the United States Government on foreign competitors, and the American producer tied to compliance with statutory requirements, it is obvious that there must be equalization through adequate tariffs or quantitative limitations on low-priced foreign imports.

Otherwise, it would be a deliberate choice of crippling one of our basic livelihoods and casting away all pretense of equitable principles in international competition.

Recognizing these gross inequities in the long-drawn-out negotiations with Japan during 1956, the administration spokesmen made it clear that

our foreign trade policy must not wreck our own enterprises or destroy the jobs of American workers.

With this end in view and to balance in some measure the one-sided ground rules, the executive branch worked out arrangements with Japan for a voluntary and selective limitation of textile and apparel exports from that country to the United States for a period of 5 years. The program was termed as "extraordinary means to provide a ready remedy for the misfortunes of the textile industry that stem from the import problem.'

The joint announcement of this program on January 16, 1957, by the Departments of State, Commerce, and Agriculture, stressed the mutual benefits of orderly trade between the two countries and its demonstration of understanding on the part of Japan.

Among the immediate effects of these arrangements were a Presidential veto of Tariff Commission recommendations and I think it was a unanimous recommendation with respect to velveteens and withdrawal of the industry from escape-clause proceedings on ginghams and related fabrics as an understood condition of the overall adjustment with Japan.

The resourcefulness of the administration in concluding the Japanese arrangements without positively acting to correct its prior excessive reductions of tariff, and without itself setting quotas, cannot conceal that this was an extraordinary means of granting relief to an industry quite apart from the provisions of the Trade Agreements Act itself, and that it involved inducing action by Japan rather than a direct move of our own country.

In effect it means that authority to regulate our foreign commerce delegated originally by Congress to the President has in turn been delegated to a foreign country.

Let me emphasize that important point. Congress, in which power to regulate trade is fixed by the Constitution, delegated that power to the President. The President delegated it to the State and Commerce Departments. The State and Commerce Departments delegated it to the Japanese Government. And the Japanese Ministry of Trade and Industry carries on this quota, defines the goods that go into it, polices what it sends here, and if it goes over the quota on any item it apologizes and the injured American industry lacks any real court of appeal.

This delegation of Congress' constitutional powers and obligations to a foreign state is without precedent or lawful basis or real regard for the rights of American citizenship and American business.

While this extra-legal quota system has benefited us to a degree, the negotiated arrangements demonstrate anew the arbitrary nature of the powers vested in our bureaucratic officials through this vital legislation.

From peril-point investigations to escape-clause proceedings, Tariff Commission findings of injury or threat of injury would remain subject to Presidential dismissal, and redress must be found in extraordinary procedures always subject to the vagaries of world politics.

Practically, the temporary relief from intolerable quantities of Japanese imports has been diluted because of largely increased shipments of similar goods from Hong Kong and more recently Formosa. Soon it may be India, Pakistan, and the Philippines since all of these countries are developing textile industries through our bounty. And the poison of unconscionably low prices continues to flow in the bloodstream of American commerce.

So long as this legislation continues to dominate our foreign-trade policy and its administration is weighted on the import side, we are fearful of the potential consequences to many American industries and their millions of workers whose jobs depend on the domestic market for their products.

Instead of competing in a free economic system based on American standards of work and living, they must compete with foreign producers, heavily subsidized by our own Government in raw-material costs and exempted from our minimum requirements in productive operations.

Simple justice demands on equalization of these fundamental conditions, either through adequate tariffs or quota limitations applicable to all countries which sell in the United States market.

We believe the Congress should make this a responsibility of the United States Government rather than rely on the sufferance of foreign nations.

If the proposed legislation does not include corrective provisions for the gross inequities, we are convinced that the coming years will see a multiplication of escape-clause proceedings and their adverse influence on friendly international relationships.

Thank you, sir.

Senator ANDERSON. Thank you very much, Mr. Bell.

Senator Kerr?

Senator KERR. I want to congratulate you on a very able statement and an indictment of the administration of this program.

Mr. BELL. It is a sincere one, Senator.

Senator KERR. I believe that, and I think it is an accurate one. Mr. BELL. Thank you.

Senator KERR. That is all.

Senator ANDERSON. I would be tempted to think it was a sincere one because this Association of Cotton Textile Merchants of New York is an old and fine and well-respected institution.

Mr. BELL. Thank you, Senator.

Senator ANDERSON. When we were dealing with agricultural problems, the association never came in with anything that was not sound and well reasoned, because it took time to study before it came to a point of view.

Senator Williams?

Senator WILLIAMS. No questions.

Senator ANDERSON. Senator Carlson?

Senator CARLSON. Just this, Mr. Bell: I notice you make two suggestions that would be helpful, either an adequate tariff

Mr. BELL. Yes, sir.

Senator CARLSON. Or a quota limitation or a quantitative limitation on imports.

Mr. BELL. Yes, sir.