A petition on dental burs was filed during May 1957 and the processing of the case was concluded. However, on August 28, 1957, just prior to a decision, the American Dental Trade Association withdrew this petition. Within the last 2 weeks, this petition has been refiled and is now being studied. A petition on fine mesh wire cloth remains inactive, with the industry's concurrence, awaiting the handling of an escape clause petition the industry has also filed. The Tariff Commission has just concluded initial hearings in this matter and now has the case before it for decision. A petition on wool textiles was filed in 1956 and public hearings were held June 3-4 1957. After investigation, this petition was denied on January 6, 1958. Finally, on March 7, 1958, the General Electric Co. and others filed a petition indicating their belief that Government procurement of imported heavy electrical generating equipment constituted a threat to the national security. A comprehensive examination of this petition is now being conducted with the assistance of all the agencies involved. The cases which may now be said to be active or open are those involving finemesh-wire cloth, analytical balances, clinical fever thermometers, wooden boats, wool felt, dental burs, and heavy electrical-generating equipment. It may be noted from what I have said that the interest of the Office of Defense Mobilization in the pending legislation tends to be of a specialized character. In that narrow sense, as I have indicated, it seems to me that the national security amendment has provided a necessary opportunity to review and consider threatened impairment of the national security arising out of imports and that the proposed revision before your committee will appropriately support continuing review and consideration. Finally, although it goes beyond the direct responsibilities of the Director of the Office of Defense Mobilization, I should like to emphasize my support of the proposed legislation as a whole for the reasons advanced by the President. STATEMENT OF JAMES T. O'CONNELL, ACTING SECRETARY OF LABOR, ON EXTENSION OF THE TRADE AGREEMENTS ACT Mr. Chairman and members of the committee, I am pleased to submit this statement in support of the 5-year extension of the Trade Agreements Act, as embodied in H. R. 12591. I shall direct my comments to those aspects of this proposed program which directly concern the welfare of the American workers. Foreign trade generates employment. This is one indisputable fact that emerges from any consideration of the foreign commerce of this Nation. We in the Department of Labor have estimated that the jobs of about 41⁄2 million workers are attributable to the activity created by foreign trade. This is about 1 out of every 14 workers in the United States. These 41⁄2 million workers comprise 4 major groups. By far the largest of these 4 is the group composed of 21⁄2 million nonagricultural workers in our factories producing goods for export and in the clerical, manual, transportation, and communication activities associated with actual shipment and exporting. In addition, agricultural exports account for the employment of approximately 600,000 agricultural workers. Imports of foreign-produced goods also generate employment opportunities in the United States. These employment opportunities come about in the first instance because imported goods must be transported and distributed within the United States, either to distributors or to industrial enterprises which process the imported materials. Over 500,000 workers in the United States are engaged in jobs in this transportation and distribution process. Then, there are about 850,000 workers who are employed in the "first factory processing" of imported materials, which includes such activities as roasting and grinding coffee or making alumina from imported bauxite. These 4 groups I have described fall into 2 components which comprise the total of 4.5 million workers whose jobs are attributable to foreign trade. Approximately 3,100,000 American workers are involved in our exports from industries and agriculture, while the importation of goods from foreign countries provides jobs for a total of almost 1,400,000 workers. This figure of 4.5 million has been used extensively in discussions of our foreigntrade program. In this connection, I might point out that the figure is a product of studies made during the past 10 years. The first figures on employment attributable to export industries were published in 1947 on the basis of data from the Department of Labor and other Government agencies. The current figure was first published in the Compendium of Papers on Foreign Economic Policy, published for the use of the Subcommittee on Foreign Trade Policy of the House Ways and Means Committee. I am sure you are interested in the relationship of our present unemployment to foreign trade. An analysis of the situation in the industries which have had the greatest employment declines in recent months has been made in the Department of Labor. It appears that exports helped to cushion the declines in employment in the very industries which have experienced the largest drops in production and employment. Thus, the extension of the Trade Agreements Act would have a beneficial effect to the degree that the conclusion of new trading arrangements over the next 5 years would create more opportunities for the exportation of American goods and services in the long run. In this connection, I am sure we all agree that our national economy must continue to expand. Our attention should be focused on this goal of expansion, and I believe expanding world trade will contribute to it significantly. I believe that the net effect of foreign trade is beneficial to the American worker. However, I realize that there are and can be specific problems arising from competition from imports. Where such problems occur, H. R. 12591 would provide, through peril-point and escape-clause procedures, adequate machinery to protect the American worker in the event of a serious injury or a threat of such injury. In connection with the extension of our foreign-trade program, certain proposals for specific aid to communities, businesses and individual workers have been mentioned as alternative devices to providing tariff relief where there is a finding of serious injury under the escape-clause procedures. I believe we should continue to rely on tariff relief under such circumstances. In other circumstances, it is more desirable to rely on programs of general application, such as programs for area redevelopment and the basic unemployment compensation system with improvements in both the amount and the duration of State unemployment benefits. I would also like to make some observations on the allegation which is frequently made, and usually with reference to specific countries, that differentials in wages between the United States and other countries constitute unfair competition in foreign trade in certain industries. If this allegation were true, it would not be possible for the United States to be the leading export nation of the world. In all markets from which our products are not restricted because of exchange problems, we compete successfully in a wide range of items. This alone is ample evidence that in and of themselves high wage levels are not a deterrent to competition in international markets. Finally, I would like to comment on the foreign policy aspects of this problem as they affect American workers. The President has said that the extension of this program is needed to strengthen the economies of our trading partners as well as our own in order to strengthen the free world in its effort to meet the challenge of Soviet communism. This is vital to the welfare of the American worker. The American labor movement has recognized the stake that American workers have in the labor standards and level of living of all other workers in the free world and has for many years concerned itself with this problem. The United States Government, in its objectives in the international labor field, has also recognized this basic principle. The President pointed in his message to the necessity of meeting the new challenges of the Soviet Union in the economic field, and has characterized this challenge as a test of our free enterprise system. The interests of the American worker require that this test be met successfully. His prosperity is enhanced if we can continue to sell a substantial amount of goods in other countries. This can be done only if other free countries can earn the purchasing power to buy these products-a process which depends basically on the ability of those countries and their workers to produce goods to sell to us. In this connection, I would remind you that the more highly developed countries are this country's best customers for our exports. -con For these reasons, expanded foreign trade-both exports and imports-co tributes to the economic growth of both America and the rest of the free world. It is a two-way process: They both grow, or neither grows. GENERAL COUNSEL OF THE DEPARTMENT OF DEFENSE, Hon. HARRY F. BYRD, United States Senate. DEAR MR. CHAIRMAN: Reference is made to your request for the views of the Department of Defense with respect to H. R. 12591, 85th Congress, the proposed Trade Agreements Extension Act of 1958. The Department of Defense has consistently supported the trade agreements program, which has been in effect since 1934. It considers the extension of the authority for 5 years to be highly important, and favors the enactment of the legislation in question. The Bureau of the Budget advises that there is no objection to the submission of this report and that the enactment of this proposal would be in accord with the program of the President. Sincerely yours, ROBERT DECHERT. STATEMENT BY SECRETARY OF AGRICULTURE EZRA TAFT BENSON IN SUPPORT OF THE RENEWAL OF THE TRADE AGREEMENTS EXTENSION ACT OF 1958 I welcome the opportunity to appear before this committee in support of the 5-year extension of the authority of the President to enter into trade agreements. I endorse without reservation the bill as it passed the House of Representatives. Here is our position: 1. American farmers are among the most efficient in the world. They annually produce more agricultural products than we can use at home. This is particularly true of certain crops and products. Thus, if American agriculture and its farmers are to continue to use their resources to the fullest extent we must maintain and expand both domestic and foreign outlets for farm products. 2. We believe the proposed legislation supports an increasing market for United States farm products. This ability to outproduce domestic needs has been with us for several years. It still confronts us today. The "crop prospects" map in the Department of Agriculture's June 10 crop report shows "good to excellent" in much of the United States. The 1958 wheat crop, for example, now gives added promise of reaching a near record total of 1,271 million bushels. For winter wheat the prospect surpasses the previous record 1952 crop which took nearly 9 million more acres to produce. I'm sure wheat growers are rejoicing over the prospects of a good crop, because they have suffered from drought in the past few years. Nevertheless, the wheat crop in prospect is more than twice our domestic requirements. There is a real need for this wheat, as well as other excess United States farm products, in foreign areas, especially where economic development is on the upsurge. Our high level of agricultural exports in the past 2 years has helped bolster farm income, even though industry has experienced some domestic setbacks. We need to pursue an enlightened foreign trade policy to maintain and expand this high level of exports, because high exports relieve the burden of big agricultural production at home. Such a course is to the mutual interest of the United States and its trading partners. Let us examine why we in the Department of Agriculture believe that favorable action must be taken on the proposed Trade Agreements Extension Act. REASONS WHY AMERICAN AGRICULTURE NEEDS AN EFFECTIVE TRADE AGREEMENTS PROGRAM 1. Abundant farm production.-American farmers live and move in an atmosphere of striving to do things better. Our farmers are the most efficient in the world. Our farm population of 20 million people, less than 1 percent of the world's population, produces one-fifth of the world's output of red meat, and nearly one-third of the world's milk. The technological revolution in American agriculture has brought us steadily rising output per acre and per animal. Since 1940 our per-acre yield of cotton has risen 67 percent; corn, 56 percent; and wheat, 40 percent. The 1957 yields of all major United States crops averaged 27 percent above the 1947-49 level. United States total agricultural output last year was one of the highest on recordyet it was produced on the smallest acreage since 1919. This increased output has mainly resulted from the expanded use of science and technology by American farmers. They are using three times as much machinery and equipment and more than twice as many motor vehicles as they were in 1940. The American farmer today produces as much in 1 hour as he did in 2 hours in 1940, and in 3 hours in 1910. The prospects are good for further increases in our future agricultural production. The technological explosion of American agriculture has made foreign markets an essential outlet. Without such an outlet, American farmers literally would smother in their own commodity production. 2. Limited market outlets in United States for farm products.-Although 85 to 95 percent of our total agricultural production is consumed domestically, foreign markets provide an important outlet for such "problem" crops as wheat, cotton, tobacco (particularly flue-cured types), oilseeds, feed grains, and many other farm products. In the most recent marketing year, for example, foreign markets absorbed the equivalent of over half the wheat, cotton, and rice crops; over one-third of the soybean production; one-fourth of the tobacco; almost one-half of the tallow; and one-fifth of the lard production. The United States supplied one-fifth of the world's fresh citrus fruit; one-tenth of the world's fresh deciduous fruit; more than one-third of the world's canned deciduous fruit; and about one-fourth of the world's dried fruit. This represented exports of $230 million worth of fruit. It equaled about one-tenth of United States production. Exports of American farm products help to bring about a better balance between domestic production and markets. In fiscal year 1957, the Commodity Credit Corporation investment was reduced by almost $1 billion. Over 70 percent of CCC stocks that moved were exported. 3. High-level agricultural exports help the economic position of American farmers.In the midst of a nationwide recession, American agriculture's position is remaining relatively strong. Large exports are one of the contributing reasons. In contrast to the recent downturn in United States industry, mainly attributable to a falling off in domestic demand, a slump in United States agricultural exports came about in 1953, an aftermath of the Korean conflict. Since then aggressive efforts have been made to rebuild agricultural exports, and results have been impressive. United States agricultural exports during the 1957 fiscal year reached an alltime high value of $4.7 billion, an increase over 1953 of 68 percent in value and about 94 percent in volume. New export records were estabished for wheat, soybeans, soybean and cottonseed oils, and rice. Exports of cotton were the highest in 25 years. A heavy flow of farm products to foreign markets is being maintained this year. In the current fiscal year, ending June 30, we expect United States agricultural exports to total around $4 billion. Though this would be down somewhat from last year, due mainly to reduced exports of wheat and cotton, it would still be the second, or possibly the third, best export year in history for American farm products. It is well to note, in this connection, that the dollar sales of United States agricultural products this fiscal year are expected to be at least as high as the near-record $2.8 billion of fiscal year 1957. Percentagewise, dollar sales this year are expected to be about 70 percent of total agricultural exports as compared with 60 percent in fiscal 1957. It should also be recognized that special Government programs, particularly Public Law 480, contributed substantially to the record level of agricultural exports in fiscal 1957. What we hope to do in the years ahead is to increase further the portion of United States agricultural exports that moves for dollars. We think that there is good possibility of doing this for many commodities. Despite increasing foreign competition, dollar sales of tobacco should do quite well. We anticipate substantial increases in dollar sales of cotton, wheat, rice, feed grains, fats and oils, and most fruits. We believe that dollar exports of American farm products could reach $4 billion by 1965, or more than 50 percent above the present level of $2.8 billion. This projection is based on a continued expansion of the world economy, in an environment conducive to a mutually profitable exchange of products. But trade expansion does not come about automatically. The future of our dollar exports will depend on the kind of judgment on trade matters that we as a nation are able to exercise. Successful foreign marketing has three basic re quirements. One is that our farm products must have access to foreign markets so that foreign consumers have the opportunity to buy them. The second is that foreign consumers are able to earn dollars with which to buy from us. third is that we operate constructive market development programs abroad. The It is our sincere belief that the type of legislation we are considering today, more than any other single program, supports these basic requirements; giving access to foreign markets for our exports, and giving foreign customers, in turn, the opportunity to earn dollars. Under Public Law 480 we are expanding our market development work. We should all take careful note that the inevitable result of lower exports is lower acreage allotments for the basic crops. 4. What the trade agreements program has meant, and what its continuation will mean, to American agriculture.-American agriculture today is maintaining a high level of exports within the framework of the trade agreements program. Nearly four-fifths of United States agricultural exports go to countries with which the United States has trade agreements, either under GATT or under bilateral agreements. In fiscal 1957 almost two-thirds of these exports-roughly the equivalent of $2.5 billion worth of farm product-moved under some form of trade concession granted to the United States under trade agreements. Nearly 80 percent of United States cotton exports, 90 percent of soybean exports, about 75 percent of unmanufactured tobacco exports, and about 80 percent of fruits and fruit product exports were moved under trade agreement concessions. During 1957, and thus far into 1958, many trade agreement countries have liberalized their import policies on one or more agricultural products from the dollar area. This easing of quantitative restrictions has resulted in part from the multilateral consultations held in Geneva under the auspices of the GATT. Many American farm products have benefited from this easing of restrictions. Examples are numerous in such commodity groups as fruits and vegetables, cotton, live-stock and its products, grains, fats and oils, and poultry products. The trade agreements program acts as a restraining influence on the tendency of countries to increase trade restrictions on agricultural products. A member country is inhibited from taking arbitrary action to exclude products from another country; it must be guided by the rules of the program. If we did not have the trade agreements program, there would be no impelling reason why many nations could not arbitrarily go as far as they wanted in limiting imports of our farm products. The program is our best single hope-through international cooperation-of keeping open and of deepening the channels of trade through which our farm products flow. American farmers recognize that two-way trade in farm products helps to expand foreign outlets. That is why many farm organizations in past years have testified in support of the continuation of the Trade Agreements Extension Act when it has come up for renewal before Congress. You and I know that we must buy from other people if we expect them to buy from us. The trade agreements program supports and encourages this basic necessity. The United States today is the world's largest importer of all goods; we are the second largest importer of agricultural products. Examples of such imports are coffee, rubber, tea, bananas, sugar, and wool. These products contribute to a higher level of living for the American consumer. To provide substitutes for such products would entail an uneconomic use of our resources. A similar situation prevails in other countries. Moreover, these imports into the United States provide an important source of dollar earnings for our customers abroad. Thus, a relatively free exchange of goods among countries based on the law of comparative advantage results in mutual gain. This There is a new element of urgency as we look toward the extension of the Trade Agreements Act. On January 1, 1958, the European Economic Community became a reality. The six governments of Germany, France, Italy, Belgium, the Netherlands, and Luxembourg are now establishing a common market. truly revolutionary step has received the support of the United States. As the nations work toward a common external tariff, which will involve several years, it is important that countries outside the common market be able to negotiate freely. Only by keeping tariffs at the lowest possible level, and by encouraging the six members to do likewise, can they achieve an outward-looking policy, rather than become a restrictive and inward-looking group. Beyond this effort lies a larger European free-trade area, involving 11 additional nations. To bring these various trade changes into fruitful operation will require years of patient negotiations. A liberal policy, stable and definite, on the part of the United States, can contribute much to the common advance in world trade. |