Under the existing peril-point procedure, where the Commission determines with respect to an article listed for consideration in proposed trade-agreement negotiations that additional import restrictions are required in order to prevent serious injury to a domestic industry, the President must either negotiate the additional restrictions in the projected trade agreement or report to the Congress his reasons for failing to do so. Instances where the Commission has determined a peril point above the existing rate of duty have been rare in the past. In only four instances has this occurred. The inclusion of one of these instances is doubtful in view of the division within the Commission on the peril point. Another should not properly be included in this group because the peril point actually involved the reestablishment of treatment previously established pursuant to the escape-clause procedure but which had been nullified by a court decision. Thus there are in reality only two instances where the Commission determined perilpoint rates above existing rates. In both of these instances the President did not negotiate the peril-point rates and reported to the Congress his reasons for failing to do so. In so reporting, the President advised the Congress that his failure to negotiate the increased duties did not preclude the industries concerned from filing an escape-clause application. This was followed by the filing of an escapeclause application by one of the domestic industries concerned, and after investigation a majority of the Commission found that escape-clause relief was warranted, and so recommended to the President. The President, however, did not accept the Commission's recommendation and no change in the customs treatment of the commodity occurred.

The proposed amendment to section 3 (b) of the 1951 Extension Act would make it mandatory upon the Commission to institute immediately an escapeclause investigation on any commodity on which it found a peril-point rate higher than the existing rate and if the commodity was already the subject of a tradeagreement concession. If this had been done in the case referred to above, the institution of the investigation for escape-clause purposes would have been 6 months earlier than it actually did occur. However, the result would presumably have been the same.

It is possible that a reason for the proposed amendment is that it is recognized that it would be most unusual for a foreign country with which we are negotiating for the granting of reciprocal concessions to be willing to accept a concession in the form of an increase in duty, particularly in a case where there has previously been granted a reduction in duty. Apparently it is thought that since this procedure would not be likely to result in obtaining a negotiated increase in duty the purpose could be accomplished by having an escape-clause investigation, which, if culminating in a justification for an increase in duty, could be accomplished unilaterally, without negotiation excepting for compensation purposes.

A peril-point determination is made after an investigation under section 3 of the Trade Agreements Extension Act of 1951 and public hearings in connection therewith. While a peril-point investigation usually involves many items, and the determinations are made by the Tariff Commission in a relatively short time, the determinations are nevertheless considered sufficient by the Congress to justify Presidential decreases in duties on the basis thereof, as well as increases in duties where increased restrictions are found to be necessary. The fact that the negotiation of an increased duty might not be feasible does not alter the fact that Congress considers it to be appropriate to bring about an increase in the duty on the basis of a peril-point determination.

In a peril-point investigation interested parties are given notice of the investigation and hearings and are given opportunity to appear and be heard in connection with the items listed for consideration in proposed trade-agreement negotiations. They may appear and testify either for a reduction in duty or for an increase in duty, and the Commission's determination is based on the evidence obtained in the investigation, including the hearing.

The adoption of the proposed amendment would require the Commission, after having made an investigation including a public hearing, and having arrived at a determination regarding the need for increased import restrictions, to institute immediately another investigation and to hold another hearing for the purpose of determining the very same question. This appears to be anomalous and implicitly suggests that peril-point determinations are inadequate for the purpose of justifying an increase in duty, but are adequate for the purpose of justifying a decrease in duty.

If a peril-point determination of an increased rate of duty is considered an adequate basis for an increase in duty, it seems that it should also be considered adequate for the purpose of escape action. There is no obligation on the part

of the United States as to the length of time in which a determination for the purposes of the escape clause should be made or as to how extensive an investigation should be. The Congress may therefore wish to consider whether, instead of requiring the Commission to institute an escape-clause investigation immediately upon the conclusion of a peril-point investigation, it should provide that whenever the Commission finds under the peril-point procedure with respect to an article on which a tariff concession has been granted that increased restrictions are necessary, the determination should be considered as though it had been made under section 7 of the Trade Agreements Extension Act of 1951, as amended and require the publication of its findings and the basis therefor and appropriate recommendation to the President for escape action.

ESCAPE-CLAUSE PROCEDURE AMENDMENTS

Section 5 (a) of the bill amends the escape-clause procedure (sec. 7 of the Trade Agreements Extension Act of 1951, as amended) by specifying that an organization or group of employees shall be considered an interested party eligible to file applications for escape-clause investigations. Organizations or groups of employees are considered by the Commission to be interested parties for the purposes of filing an escape-clause investigation under the existing law. However, like any other applicants, they are required to conform to the pertinent rules of the Commission governing applications for escape-clause investigations. This amendment will not, therefore, result in any change in practice.

Section 5 (b) of the bill reduces from 9 months to 6 months the time within which the Commission must complete an escape-clause investigation. The bill provides that this reduction in time will not apply to applications pending at the time of the enactment of the amendment.

Section 5 (c) would authorize the President, in carrying out the escape-clause procedure, to impose a duty not in excess of 50 percent ad valorem on any article not otherwise subject to duty. This amendment was discussed earlier in this memorandum.

Section 6 of the bill would add new provisions to subsection (c) of section 7 of the Trade Agreements Extension Act of 1951 (the escape-clasue procedure) which would enable Congress to override a decision of the President not to fully carry out an escape-clause recommendation of the Tariff Commission.

The present provisions of subsection (c) are that, upon receipt by the President of the Tariff Commission's escape-clause report, the President may make such adjustments in rates of duty, etc., as are found and reported by the Commission to be necessary to prevent or remedy serious injury. If the President does not take such action within 60 days, he must merely report to the Committee on Ways and Means and to the Committee on Finance, stating why he has not done so. No provision is made for any further action.

Under the bill, if the President does not take the action recommended by the Tariff Commission, and if within 60 days following the date on which the President's report to the congressional committees of reasons for not taking the action recommended by the Tariff Commission, the Congress, by concurrent resolution by a two-thirds vote of both Houses, approves the action recommended by the Commission, the President is mandatorily required to put into effect the changes in customs treatment recommended by the Commission within 15 days after the adoption of such resolution. Privileged status would be given to such resolutions.

"NATIONAL SECURITY" AMENDMENT

Section 8 of the bill deals with the so-called national security amendment. Section 2 of Public Law 464, 83d Congress (the 1954 Trade Agreements Extension Act), provided as follows:

"No action shall be taken pursuant to such section 350 [of the Tariff Act of 1930] to decrease the duty on any article if the President finds that such reduction would threaten domestic production needed for projected national defense requirements." This section was amended by the Trade Agreements Extension Act of 1955 by designating the above provisions of section 2 as subsection (a) and adding a new subsection (b) reading as follows:

"In order to further the policy and purpose of this section, whenever the Director of the Office of Defense Mobilization has reason to believe that any article is being imported into the United States in such quantities as to threaten to impair the national security, he shall so advise the President, and if the President agrees that there is reason for such belief, the President shall cause an im

mediate investigation to be made to determine the facts. If, on the basis of such investigation, and the report to him of the findings and recommendations made in connection therewith, the President finds that the article is being imported into the United States in such quantities as to threaten to impair the national security, he shall take such action as he deems necessary to adjust the imports of such article to a level that will not threaten to impair the national security."

The bill would amend subsection (a) of section 2 so as to substitute for the language "if the President finds that such reduction would threaten domestic production needed for projected national defense requirements," the language "if the President finds that such reduction would threaten to impair the national security.' This change is apparently made with a view to conforming the purposes of subsection (a) with the purposes of subsection (b).

The bill would revise subsection (b) so as to require the Director of the Office of Defense Mobilization to make a national security investigation upon request of the head of any department or agency, upon application of an interested party, or upon his own motion. If as a result of the investigation the Director is of the opinion that an article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security, he must promptly advise the President, and if the President agrees with the Director's opinion he must adjust the imports so that they will not threaten to impair the national security.

The principal change made by the provisions mentioned in the preceding paragraph is to eliminate the specific provision in the present law for an investigation by the President in addition to the investigation by the Director. However, if revised as proposed in the bill, the statute would not preclude an additional investigation by the President if he deems it to be warranted.

Further changes in subsection (b) would specifically set forth factors which the Director of the Office of Defense Mobilization and the President shall take into account in arriving at an opinion and determination, respectively. The factors specified are (1) domestic production needed for projected national defense requirements, (2) the capacity of domestic industry to meet such requirements, (3) existing and anticipated availabilities of the human resources, products, raw materials, and other supplies and services essential to the national defense, (4) the requirements of growth of such industries and such supplies and services, and (5) the importation of goods in terms of their quantities, availabilities, character, and use as those affect such industries and the capacity of the United States to meet national security requirements. The President and the Director would be permitted to consider, in addition, other relevant factors.

Another new requirement proposed in the bill would be that a report shall be made and published upon the disposition of each request, application, or motion made, and the Director would be required to publish procedural regulations to give effect to the authority conferred upon him.

Another new requirement proposed in the bill is that the Director, with the advice and consultation of other appropriate departments and agencies, and with the approval of the President, shall by February 1, 1959, submit to Congress a report on the administration of the national security provisions. Such report would include an analysis of the nature of projected national defense requirements, the character of emergencies that may give rise to such requiremen5s, the manner in which the capacity of the economy to satisfy such requirements can be judged, and the alternative means of assuring such capacity and related matters.

The Commission assumes that the national security amendment, which is considered to be trade agreements legislation, is intended to be administered in conformity with international obligations of the United States. In this connection, it should be noted that in article XXI of the General Agreement on Tariffs and Trade there is a so-called security exception that permits a contracting party to take any action which it considers necessary for the protection of its essential security interests "if taken in time of war or other emergency in international relations." To be consistent with the general agreement, therefore, action under the national security amendment that would restrict imports in a manner otherwise inconsistent with the agreement would conflict with article XXI of the agreement unless taken in time of war or other emergency in international relations.

EXTENSION OF SUBPENA POWER OF THE TARIFF COMMISSION

Section 9 would amend the existing provisions of the Tariff Act of 1930 which grant to the Tariff Commission subpena and other powers to obtain information in connection with certain investigations and provide general authority for the Commission to adopt reasonable procedures and rules and regulations deemed necessary to carry out its functions and duties.

The present subpena powers of the Commission may be used only in connection with investigations conducted under part II of title III of the Tariff Act of 1930. Part II includes general powers to make investigations under section 332 of the Tariff Act, flexible-tariff investigations under section 336 of the Tariff Act, and unfair import practice investigations under section 337 of the Tariff Act, and investigations regarding discrimination by foreign countries against American commerce under section 338 of the Tariff Act (the latter provision being, for practical purposes, obsolete). No specific subpena authority is given to the Commission in connection with the functions which it is required to perform in trade agreements legislation in section 22 of the Agricultural Adjustment Act, as amended, and in the Antidumping Act of 1921. This has caused the Commission to resort to making escape-clause investigations, for example, investigations under section 332 of the Tariff Act of 1930 as well, in order to make available the subpena power that may be used in connection with a section 332 investigation. This is an unsatisfactory state of the law and there seems to be no reason to assume that Congress deliberately omitted the extension of subpena powers in connection with escape clause and other investigations which the Commission is required to make under statutes other than the Tariff Act of 1930.

The possession of subpena powers by the Commission is an aid in expediting its investigations, even though such powers are rarely used. If the time for completion of escape-clause investigations is reduced from 9 months to 6 months, the enactment of section 9 would be of some help in enabling the Commission to obtain necessary information in time to complete investigations within the curtailed period.

Specific authority for rules and regulations by the Commission is contained in sections 336 and 337 of the Tariff Act of 1930 only. The Commission should have the general authority to make reasonable rules and regulations necessary to carry out any of its functions. Section 9 (c) would provide this authority.

Senator ANDERSON. We will recess until 10 o'clock Monday morning.

(Whereupon, at 12:05 p. m. the committee was recessed, to reconvene at 10 a. m., Monday, June 23, 1958.)