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[Press release August 16, 1957]

• MiiMAX .lEIlE COOPER OF THE COMMITTEE ON WAYS AND MEANS RELEASES A LETTER TO THE PRESIDENT RELATIVE TO THE ADMINISTRATION'S PROPOSAL FOR A.

Sliding Scale or Import Excise Taxes On Lead And Zinc

Chairman Jere Cooper, Democrat of Tennessee, Committee on Ways and Means, •eleased the attached letter which was delivered today to the President relative to ie administration's proposal for the imposition of a sliding-scale of import Jictee taxes on lead and zinc.

In the letter, Chairman Cooper points out that the President not only has ample luthority under existing trade agreements legislation to provide whatever relief le may deem necessary to the lead and zinc industries but that can do so in a tore expeditious manner than is provided in the administration's proposal which t submitted to the Congress.

Chairman Cooper stated that the other 14 Democratic members of the Commit*e on Ways and Means concur fully In the letter.

In the letter to the President, Chairman Cooper states:

"I sincerely urge you to personally review the situation in the lead and zinc nrlnstries and the proposal submitted to the Congress. Upon such a review, I un sure you will be convinced, as I am, that you do have ample authority to jrovide such relief as you deem necessary in the national interest to the lead and :inc industries. I am also confident that you will agree that to bypass the listing provisions of our trade agreements law will undermine the trade igreements program."

Chairman Cooper was here referring to the escape clause provision and the lational security amendment. He points out that the administration has not nafle recourse to these existing provisions.

The letter also refers to the unanimous finding of the Tariff Commission in 1954 iat dalles be increased on lead and zinc, which was rejected by the President, rho gave among other things, the reason that the proposed relief did not meet he needs of these industries. The letter points out that the instant proposal is ilmost identical to the Tariff Commission's recommendation. Reference is also nade to the fact that the State Department submitted a strongly adverse report w almost an identical proposal which was pending before the Committee on Ways ud Means in 1953. Chairman Cooper reminds the President that the proposal to TOTide relief by legislation to the lead and zinc industries is just one of many tfoposals now pending before the Committee on Ways and Means, and states:

"I am confident that you would not want to see the Congress bypass and nndernlne your present authority under the trade agreements legislation by acting on adlviflual items."

Chairman Cooper made it clear that in making these statements he does not mend to imply that the lead and zinc Industries may not need relief.

August 16, 1957. foe President,

The White House.

Mt Dear Mb. President: I am writing to you in connection with the proposal * the Honorable Fred A. Seaton, Secretary of the Interior, on behalf of the itoinistratlou, for the enactment of sliding-scale import excise taxes on lead nd zinc.

Although the communication from Secretary Seaton on this subject was not weived by the Committee on Ways and Means until June 19, 1957, at a time rhen the session was far advanced and the committee was diligently following a agenda previously detremined by it, due to the importance of the subject and :M to conditions in the lead and zinc industry as depicted by the communicaion of the Secretary, the committee broke Into its agenda and conducted hear««8 on August 1 and 2,1957.

I have now had time to carefully review and study the testimony which was "Dented to the committee at the public hearing on this important subject. It s my sincere conviction that you already have authority, previously delegated to °n by the Congress in the trade agreements legislation, to afford relief to domes« Industries from import competition in appropriate cases. The testimony of '"or representatives at the public hearings, in conjunction with the written etflnvmendation of the Secretary of the Interior, indicates that the lead and "C Industries properly constitute such a case in the opinion of the administration. The testimony further shows that your present authority is adequate to afford the relief which you have recommended to the Congress.

As you will recall, one of the principal purposes of the so-called escape-clause provision (section 7 of the Trade Agreements Extension Act of 1(61) and Uknational-security amendment (section 7 of the Trade Agreements Extension Act of 1955) was to afford you an avenue under which yon can provide relief from import competition to domestic industries according to the procedures and standards set forth therein. As may further be recalled, the Committees of the Congress and the Congress in past years have devoted much time, thought, and attention to providing yon with these powers so that our domestic industries can be afforded protection in appropriate cases and so that the national interest can be served by presidential action without resort to further legislation.

It is clear that in this instance you have not made recourse to existing administrative procedures which are available to provide relief to these industries. In addition you have not advised the Congress that your existing authority under the escape clause and the national security amendment is inadequate in these matters generally, although a subcommittee of the Committee on Ways and Means last fall sjiecifically called upon the administration for any recommendations which it might have for modifying or strengthening these provisions of existing legislation.

The testimony presented to the Committee on Ways and Means during th« course of the public hearings on August 1 and 2, 1957, Indicated that the proposal for a sliding-scale import excise tax on lead and zinc is almost identical in major respects with the recommendations of the Tariff Commission made to you under the lead and zinc escape clause proceeding in 1954. You rejected this recommendation, stating among other things, that the proposed relief did not meet the needs of these Industries. The testimony of your represetnatives further indicated that the situation today in the lead and zinc industries is substantial!? the same as it was at the time of the escape-clause investigation by the Tariff Commission and your rejection of the unanimous finding of the Tariff Commission.

The testimony at the public hearings also clearly showed that the proposal which the Secretary of the Interior now recommends on behalf of the administration is almost identical in effect to a proposal that was before the Committee on Ways and Means in 1953 and on which a strongly adverse report was submitted by the State Department. The State Department set forth 10 reasons why this proposal was inadvisable and contrary to the national interest This report was made a part of the recent public hearings.

The proposal which the administration has now recommended would not become effective, in event of its enactment, until January 1, 1958. Yet under the national-security amendment any relief found appropriate could be put into effect by you almost Immediately. Also, under the escape clause I see no reason why you cannot direct the Tariff Commission to report to yon within a stated time a* to measures which it may deem appropriate for relief of these indusrtles, and I see no reason why you could not have done so on June 19, the date of the proposal, or even earlier for that matter. It is clear from the testimony presented to uar committee, aside from the merits of the proposal, that relief can be afforded by you much more speedily than would be the case even with enactment of the proposal..

As you of course know, I have been a strong and consistent supporter of the reciprocal trade agreements program since the inception of the program in 1S84I have consistently supported and worked for proposals which you have made to continue our foreign trade policies, including, for example, your proposal during the last Congress and In this Congress for approval by the Congress for membership in OTC.

You have gone on record strongly supporting the reciprocal trade agreements program. At your request the Congress has provided three extensions of your authority during your administration. An important consideration of the Congress in providing these extensions was the fact that should trade agreements concessions result in such import competition that domestic industries are injured or are threatened with injury you would have the authority where it is In th* national interest to relieve domestic industries of such injury.

I cannot refrain from expressing to you my very great concern as to the impac' of a proposal such as the one which your Administration has made concern lead nnd zinc on the whole structure of the trade-agreements program. stating this, I do not intend to imply that the lead and zinc industries may no* iced relief. My concern is due to the fact that this proposal would completely lypass existing authority given you in present trade-agreements legislation. ion are asking the Congress to do that which you already have ample authority o do. The authority which you have is not selective, but broad and general, nd applies to auy and all industries which are injured or threatened with injury s a result of trade-agreements concessions. I am sure you are aware of the act that there are many other industries that are asking for relief from Import ompetition. Among these are textiles, velveteen and ginghams, tunafish, hardrood-plywood, stainless steel flatware, fluorspar, natural gas, petroleum, and way others. There are numerous bills now pending before the Committee on Fays and Means which would provide relief from import competition on the bove specified items and many additional ones. I am confident that you would ot want to see the Congress bypass and undermine your present authority under rade-ajrreements legislation by acting on individual items.

1 sincerely urge you to personally review the situation in the lead and zinc idustries and the proposal submitted to the Congress. Upon such a review, I m sure you will be convinced, as I am, that you do have ample authority to rovide such relief as you deem necessary in the national Interest to the lead nd zinc industries. I am also confident that you will agree that to bypass the xisting provisions of our trade-agreements law will undermine the trade-agreelents program.

I can only observe in closing that there is considerable sentiment that, in the bsence of yonr exercising such authority as you may have for an expansion f our foreign trade and the protection of domestic industries, the Congress will f forced to study again the delegation of authority made to you under the tradepeements legislation. This is an eventuality which neither you nor I would aiteroplate with equanimity.

The other 14 Democratic Members of the Committee on Ways and Means conw with me in this letter. Very cordially yours,

Jere Cooper, Chairman, Committee on- Ways and Means.

[For release August 23, 1964]

United States Tariff Commission,

Washington. Public Information

"iiite House Statement Concerning The President's Action On Lead And Zinc

There is reproduced below the White House announcement concerning the resident's action on the Tariff Commission's report with respect to lead and »c:

*******

[Immediate release, August 20, 1964]

James C. Hagerty, Press Secretary to the President.

The White House

The President today outlined an expanded stockpiling program for strengthenJ? the lead and zinc industry as an integral part of the Nation's defense ftbUlzatton base. The President took this action in lieu of accepting the wnmendations of the United States Tariff Commission for an increase in the 'ty on imports of these two metals.

In letters to the chairman of the Senate Finance Committee and the House sys and Means Committee describing his program and explaining his decision i the Tariff Commission's recommendations, the President said that "a serious iwtion exists as to the magnitude of the direct benefits that could be expected om the recommended tariff increases" and that "since the benefits to be 'rived from an increase of the tariff on lead and zinc are so uncertain, I am "prepared to seek them at the exi>ense of the serious adverse consequences that "vild follow for our international relations."

The President stated that he la "taking affirmative steps at this time to strengthen and protect our domestic mobilization base for lead and zinc." These steps are:

1. Increased purchases at market prices of newly mined domestic lead and sine nnder the long-term stockpile program. In this fiscal year the Government could purchase up to 200,000 tons of lead and 300,000 tons of zinc.

2. The acquisition of lead and zinc of foreign origin for the supplemental stockpile authorized by the recently enacted Agricultural Trade Development and Assistance Act

8. Action by the Secretary of State to seek recognition by the foreign coontries which are principal suppliers of lead and zinc that this Increased stockpile buying is designed to help domestic production.

The President said, "The outlook for lead and zinc is improved." He noted that there were some excess stocks at present but said that "it appear* that these Inventories can be reduced by stockpiling purchases together with a hisn rate of consumption which Is indicated by the general economic outlook." "In addition," the President said, "the volume of imports thus far this year has been considerably lower than the rate during 1953."

The President concluded his letters by saying that If the course of action he Is taking does not accomplish the objectives he seeks, he "will be prepared early next year to consider even more far reaching measures, and to make appropriate recommendations to the Congress."

The text of the President's letters to Chairman Mllliken of the Senate FV nance Committee and Chairman Reed of the House Ways and Means Committee is as follows:

Dear Mb. Chairman: In my letter to yon of July 19, 1954, I indicated that I was extending somewhat the period of my consideration of the recommendations of the United States Tariff Commission with respect to the escape clause investigation relating to lead and zinc.

Readjustment from war-stimulated levels of prices and production has Imposed severe strain on many segments of mining, agriculture and industry. In the case of lead and zinc this readjustment has produced unemployment frr miners in some areas and hardships for their families. Some communities In mining States are distressed. An adequate mobilization base is not being maintained.

During the past several weeks, I have held many long meetings with Cabinet officers, members of the Congress, and other informed persons. It is my belief that we must maintain a strong and vigorous domestic mining industry for the production of strategic and critical materials which have important defense uses, and that this should be done in a manner consistent with our general economic and foreign policy objectives.

After a thorough review of the lead-zinc problem, I am convinced that a serious question exists as to the magnitude of the direct benefits that could be expected from the recommended tariff increases. The increase in duties would probably have only a minor effect on the price of lead and zinc in this country. There is a real question as to whether the tariff action would have important consequences in reopening closed mines. Moreover, the Increase in the tariff would most likely depress the prices of these metals outside the United States. Since the benefits to be derived from the Increase of the tariff on lead and zinc /irp so uncertain, I nm not prepared to seek them at the expense of the serious adverse consequences that \vonlrt follow for our international relations. Lead and zinc are important to several key countries in areas of vital intmrtMnreover, it must l>e recognized that our economy requires substantial quantities of imported lend and zinc to augment domestic production in peacetime, and thnt the United States relies on nearby friendly nations to assist ns in meeting fully our mobilization requirements In wartime.

The Tariff Commission has made a thorough study of the lead and zinc problem hut I reoosmize that it must necessarily confine its consideration within I limited field. Accordingly, after a careful weighing of all of the factors in volved In this complex situation, I have decided that to Implement the recoi* mendatlons of the Tariff Commission would not meet the problem nor be U the public Interest. However, I am taking affirmative steps at this time t( strengthen and protect our domestic mobilization base for lead and zinc.

I am directing the Director of the OfBee of Defense Mobilization to Increaa purchases at market prices of newly mined domestic lead and rinc under tto long-term stockpile program. The Government is In a position where it coil' purchase in this fiscal year up to 200,000 tons of lead and 300,000 tons of tine

I am likewise directing the Secretary of Agriculture to initiate action designed to acquire lead and zinc of foreign origin, from the proceeds of foreign sales of surplus agricultural commodities, for the supplemental stockpile authorized by section 104 of the Agricultural Trade Development and Assistance Act of 1954. This supplemental stockpile is intended to be above and beyond the needs of our regular stockpiles under the Stockpiling Act, and the materials in the supplemental stockpile will also be insulated to be released only under stringent statute.

In addition, I am directing the Secretary of State to seek recognition by the foreign countries which are principal suppliers of lead and zinc that this increased stockpile buying is designed to help domestic production and that they will not themselves seek to take any unfair advantage of it.

It is my belief that the above actions will help bring about the attainment of market prices for lead and zinc that are sufficient to maintain an adequate domestic mobilization base.

The outlook for lead and zinc is improved. There have been some increases In prices since early in the year. There are some excess stocks at present, notably in the case of zinc, but it appears that these inventories can be reduced by stockpiling purchases together with a high rate of consumption which is indicated by the general economic outlook. In addition, the volume of imports thus fur this year has been considerably lower than the rate during 1953.

If the course of action above outlined has not accomplished the objectives we seek, I will be prepared early next year to consider even more far-reaching measures, and to make appropriate recommendations to the Congress. Sincerely,

Dwiqht D. Eisenhower.

The following calculation on lead-zinc imports into the United States indicates that were these countries to continue flooding United States markets with imports in 1958 at the 1957 rate, and were 1958 prices to prevail at their current level throughout the year, exchange derived from sale of this large tonnage would decrease by about $30 million. It further indicates that a reduction of 15 percent in deliveries would increase dollar revenue by $26 million over 1957 if such a reduction would result in maintaining prices at the administration's peril points.

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