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Secretary Weeks. Are you talking about raw materials or agricultural products?
Senator Malone. I am talking about everything. You cannot even make monkey wrenches in this country in competition with American machinery in $2-a-day labor countries.
Secretary Weeks. We are doing very well in our trade in manufactured products. I do not see how you can go behind those figures.
Senator Malone. I do go behind them because your figures do not take into account the billions of dollars of subsidies with which you are buying your foreign trade.
Secretary Weeks. We have figured every dollar.
Senator Malone. Figure it again and put it in the record.
Secretary Weeks. I will.
(The Secretary of Commerce subsequently forwarded to the committee for insertion in the record the following information on a point raised by Senator Malone:)
United Stales total exports, finished manufactures exports, and Government grant-aid to foreign countries, 1951-57
It is both statistically and theoretically impossible to allocate United States foreign-aid expenditures (many of them in lump-cash sums) unequivocally to specific classes of United States exports. The problem is analogous to that of a man who gets part of his income from a salary and part from dividends, and who is asked to specify how many of his lunches during a year he bought out of his salary and how many out of his dividend income. lie can answer the question only on an arbitrary view as to which source of Income he used for particular outlays. Similarly, the amounts of United States exports of manufactured goods which were financed from foreign aid funds can be specified only on an arbitrary view as to particular foreign uses of dollar receipts from various sources, including aid.
The residual export figures shown In lines 7 and 9, above, may be viewed as absolute minimum estimates of"unaided" exports of finished manufactures on the arbitrarily extreme assumption that all net grants to foreign countries were spent for such goods. This assumption, of course, seriously exaggerates the value of eiports of finished manufactures financed through foreign aid, since sizable proportions of the grants were in fact used for other types of merchandise, such as agricultural products, or for services, such as ocean freight. Moreover, substantial amounts of aid have been authorized for expenditure by the recipients in other foreign countries, which may have used the funds for debt retirement or dollar asset accumulation, as well as for procurement of United States goods or services, but where these dollars were unidentlflably merged with those obtained from other sources.
Since the deduction based on all net grants Is seriously overstated in application to exports of manufactured BOOds alone, net Government loans to foreign countries—which In any event have consisted during the past few years primarily of foreign currency claims accumulated specifically through disposal of surplus agricultural commodities—are omitted from these calculations.
Relationship between above tabulation and preceding table, inserted in the record by Senator Malone, entitled " United States Production of Movable Goods, Proportion Exported, and Foreign Aid, Selected Years, 1909-57": With regard to the United States export and foreign-aid statistics, these 2 tabulations are tiaseil upon essentially the same approach and In large measure upon the same basic data. The difference Is sunply that one deals with total United States exports, while the other focuses upon exports of finished manufactures alone.
More specifically, the data listed in lines 1,4, and 6, above, are Identical with those shown for corresponding years in cols. 2, 4, and 5, respectively, of the preceding table; and the residual figures in line 7, above constitute a component of the residual totals for corresponding years In col. 8 of the other table.
Senator Malone. I do not want to spend too much time on th I will ask you first if in your negotiations for a bilateral or a multilater trade agreement, whether or not the Tariff Commission is asked determine what the so-called peril point might be. Then if ti President of the United States can trade a part or all of any industi if he believes that it will further his foreign policy regardless of any pel point recommendation by the Tariff Commission.
Secretary Wkeks. You mean regardless of the peril-point recoi mendation?
Senator Malone. Yes.
Secretary Weeks. He can, but he has not.
Senator Malone. I beg leave to differ with you. Of course it well known that he has not recognized the recommendations of tl Commission whenever he wanted to trade a part of the industry fi his foreign policy.
Secretary Weeks. The peril point established by the Tariff Cot mission has never been penetrated since we have had the peril-poi procedure, with one possible exception of a technical nature.
Senator Malone. What is that?
Secretary Weeks. It happened in the fall of 1953, Venezui' petroleum.
Senator Malone. I have some news for you then. You have yoi lead and zinc case pending now.
The Tariff Commission has made a recommendation. You hm not taken cognizance of it.
Secretary Weeks. For the good arid sufficient reason that t\ President wants to see if Congress takes any action on the propos^ he has made for stabilization.
Senator Malone. You are not here telling me that every time t\ Tariff Commission has figured those peril points, that the Preside^ has always conformed to them. Are you telling me this?
Secretary Weeks. I say the peril point lias not been penetrated t the present occupant of the White House, not once, and if it wi penetrated in the case of Venezuelan petroleum it was by the previoi occupant of the White House.
Senator Malone. I am going to talk to you next about the pel point. That is the greatest hoax over sold to an unsuspecting publi Let mo ask you this question now so we will save time. If he wail to do it, he can make any trade agreement he cares to make, if thinks it will further his foreign policy, can ho not?
Secretary Weeks. Within the limits sot down by the statute.
Senator Malone. That is right, and he doos not need to consul Congress or the Tariff Commission or anybody else.
Secretary Weeks. So long as he conforms to the rules and reguli tions and the statute.
Senator Malone. That is right, and that means first within percent and then another 50 percent, and now it is an additional percent at 5 percent a year, and you arc currently asking for a 5 percent further reduction, and that would be within the limits, wou it not?
Secretary Weeks. Yes, sir.
Senator Malone. And he could do that regardless, could he no without consulting anybody, except his own Cabinet?
Secretary Weeks. He has to first go to the Tariff Commission for their peril point recommendation.
Senator Malone. Is that in the law now?
Secretary Weeks. Yes, sir; and in the proposed law.
Senator Malone. That he cannot make a trade agreement until he has the advice from the Tariff Commission?
Secretary Weeks. That is right.
Senator Malone. But if he wanted to make the trade agreement regardless, he could make it, could, he not?
Secretary Weeks. No; I do not think he could.
(The Secretary of Commerce subsequently forwarded to the committee for insertion in the record the following information with respect to procedures preparatory to tariff negotiations:)
Trade Agreement Preparatory Procedures
Section 4 of the Trade Agreements Act of 1934, as amended (19 U. S. C. 1354), which contains legislative provisions relating to procedures preparatory to trade agreement negotiations, reads as follows:
"Before any foreign trade agreement is concluded with any foreign government or instrumentality thereof under the provisions of this Act, reasonable public notice of the intention to negotiate an agreement with such government or instrumentality shall be given in order that any interested person may have an opportunity to present his views to the President, or to such agency as the President may designate, under such rules and regulations as the President may prescribe; and before concluding such agreement the President shall request the Tariff Commission to make the investigation, and report provided for by section 3 of the Trade Agreements Extension Act of 1951,' and shall seek information and advice with respect to such agreement from the Departments of State, Agriculture, Commerce, and Defense, and from such other sources as he may deem appropriate."
In pursuance of these provisions and in order to coordinate the trade agreement activities of the several interested agencies, two committees were organized when the program was initiated. These were the Interdepartmental Committee on Trade Agreements and the Committee for Reciprocity Information. More recently, in November 1957, the Trade Policy Committee was established by Executive order2 as a Cabinet-level committee to advise and assist the President in the administration of the trade agreements program. This Committee consists, in addition to the Secretary of Commerce as its chairman, of the Secretaries of State, Treasury, Defense, Interior, Agriculture, and Labor, or of alternates designated by them. Such alternates must be officials who are required to be appointed by the President with the advice and consent of the Senate.
Trade Policy Committee
Under the provisions of the Executive order creating it, the Trade Policy Committee has several functions in connection with the trade agreements program. The particular function of the Trade Policy Committee in the making of new trade agreements is to receive and review all recommendations made by the Trade Agreements Committee to the President and to transmit them to the President together with any comments and recommendations of its own resulting from that review. This Trade Policy Committee review takes place at each of the stages of Trade Agreements Committee action.
The Interdepartmental Committee on Trade Agreements
The Trade Agreements Committee consists of a Tariff Commissioner, and of representatives of the Departments of State, Treasury, Defense, Agriculture, Commerce, and Labor, and the International Cooperation Administration (nonvoting). The function of the Tariff Commission member is substantially that of a consultant.
The Trade Agreements Committee, under the chairmanship of the State Department representative is responsible for assembling and analyzing information
1 i. e., peril point procedure.
'Eiecutive Order 10741 and other documents relating to the Trade Policy Committee.
Norx.—This material Inserted on p. 228 of June 21 transcript.
pertinent to prospective trade agreement negotiations, the detailed conten the agreements, and making recommendations concerning the administ ratio the trade agreements program to the President through the Trade Policy C mittee.
As special problems arise or as new trade agreement negotiations are con) plated, the Trade Agreements Committee sets up interdepartmental subc mittees, sometimes called "country committees," to consider the partic problems or possible negotiations and to submit data and recommendation the Trade Agreements Committee.
Committee for Reciprocity Information
The Committee for Reciprocity Information has at the present time the a membership as the Interdepartmental Committee on Trade Agreements, bu^ Tariff Commission member serves as its Chairman. This Committee was tablished in pursuance of section 4 of the Trade Agreements Act (quoted ab( to receive the views of the public in connection with prospective trade agre*n negotiations, as well as with the administration of agreements already conclui
The Committee for Reciprocity Information holds public hearings prior to < trade agreement negotiation, in order that interested parties may have an portunity to be heard and to have their testimony or other statements of v available to the Trade Agreements Committee and to the President.
These three committees provide the machinery to carry out the object i\ section 4 of a thorough examination and review of both the concessions we sh seek from other countries and the concessions we should offer in order to oh them, which takes into account the views of interested persons and groups, cerning the proposed negotiations, as well as those of all of the govern me agencies concerned, including the peril point findings of the Tariff Commit
Senator Maloxe. I think you had better look that up. Are ] telling me that he could not do it regardless of the Tariff Commisa recommendations?
Secretary Weeks. The peril-point procedure is established in legislation.
Senator M.vlone. But it does not say that he has to conform tc All he has to do when he does not conform to the peril point, as set the Tariff Commission is to explain to Congress why he did not c form.
Secretary Weeks. Senator, he has to get the peril point findi
Senator Malo.ve. He has—but he does not need to accept it.
Secretary Weeks. But he does not have to conform to what finding is.
Senator Maloxe. That is what you should have answered in first place.
Secretary Weeks. Yes; that is correct, but as I said, he alw has—-—•
Senator Maloxe. Let's go to the next question. He does not n to conform. That is the purpose of the question.
Secretary Weeks. He has to get the information, but he does need to conform.
Senator Maloxe. He does not have to do anything but sell industry down the river if he believes it will further his foreign polio
Secretary Weeks. That is right.
Senator Malone. Now then, that only required an additional minutes to get the answer. Then, in effect, what he can do if thinks it will further his foreign policy, he can sacrifice all or f part of any industry under consideration, can he not?
Secretary Weeks. Ho can go beyond the peril point if he sees fi
(The Secretary of Commerce subsequently forwarded to the committee for insertion in the record the following information with regard to the peril-point procedure:)
The Tariff Commission, in its recent publication Investigations Under the "Peril Point" Provision, third edition, May 1958, gives the following brief description of the statutory requirements concerning peril-point determinations:
"Sections 3 and 4 of the Trade Agreements Extension Act of 1951 set forth the statutory requirements regarding 'peril point' determinations in connection with proposed trade-agreement negotiations. The peril-point provisions of the 1951 act * * * require the President, before entering into any trade-agreement negotiation, to transmit to the Tariff Commission a list of the commodities that may be considered for possible concessions. The Commission is then required to make an investigation (including a public hearing) and to report its findings to the President on (1) the maximum decrease in duty, if any, that can be made on each listed commodity without causing or threatening serious injury to the domestic industry producing like or directly competitive products, or (2) the minimum increase in the duty or additional import restrictions that may be necessary on any of the listed products in order to avoid causing or threatening serious injury to such domestic industry.
"The President may not conclude a trade agreement until the Commission has made its report to him, or until 120 days from the date he transmitted the list of products to the Commission. If the President concludes a trade agreement that provides for greater reductions in duty than the Commission specified in its report, or that fails to provide for the additional import restrictions specified, he must transmit to the Congress a copy of the trade agreement in question, identifying the articles concerned and stating his reason for not carrying out the Tariff Commission's recommendation. Promptly thereafter, the Tariff Commission must deposit with the Senate Committee on Finance and the House Committee on Ways and Means a copy of the portions of its report to the President dealing with the articles with respect to which the President did not follow the Tariff Commission's recommendations."
Senator Malone. That is right, and now like the proposal coming out of the Department of the Interior, with 5 minerals—lead, zinc, tungsten, and others—they make a proposition of paying the difference between the world price and the production price up to a certain limit, and that limit in most cases is about 25 to 35 percent of the American market.
You are aware of that, are you not?
Secretary Weeks. Yes, sir.
Senator Malone. You are.
Secretary Weeks. Yes.
Senator Malone. All right; then that means in the proposal to subsidize it, the tariffs are already so low they are ineffective. Most of them are under trade agreements. Then they are sacrificing at least two-thirds of the market to foreign nations, aren't they, for example, in tungsten?
They trade two-thirds of that now while we produced more tungsten in the United States than the country could use under the MaloneAspinall Act of 1953. It was extended in 1956 with a limited number of minerals and it is good until 1959 but the House did not follow the Senate in appropriating the money.
The Senate sent the appropriation to the House four times. But it showed by having a set price or tariff that made the difference in the wages and the cost of producing goods here and in the chief producing country that you could produce all the tungsten you need. But now they are limited in this offer so that it cuts that market in two. So