Agricultural exports in fiscal year 1956-57 amounted to $4.7 billion (a record level). About 42 percent of our exports moved under direct Government programs such as sales for foreign currency, gifts and barter (title I of Public Law 480 accounted for 19 percent). Sales for dollars increased by $648 million with cotton sales under the cotton export subsidy program accounting for 75 percent of the increase. The following table indicates fiscal year 1956-57 exports by principal commodities and the amounts moved under direct Government program:

1 Programs: Public Law 480, all titles, Mutual Security 402, Export-Import Bank loans (only $70 million).

If we included the exports made possible by subsidizing the sales price, we estimate that about 70 percent of our agricultural exports were the result of Government assistance. For example, every bushel of wheat and every pound of flour that we export carries some kind of Government subsidy.

Although Farm Bureau sponsored the original Public Law 480 legislation, we have continued to emphasize the point that Public Law 480 is a temporary program. We have said that it is imperative that American agriculture not become overdependent on these types of sales. A program of sales for foreign currency can benefit American agriculture only a limited length of time before markets start orienting to this way of doing business. The trade becomes acclimated, as it were, to such sales. In short, customer nations start to considerunconsciously or consciously-the Public Law 480 operations as a normal part of commercial trade. There are indications that just this already has happened in some instances. We view with serious concern evidence that some countries are adjusting their dollar exchange so that very little of it is used for the purchase of American farm products. They are taking for granted that they will be able to purchase a substantial portion of their food and fiber needs from the United States with local currency. This places United States farm products in a very vulnerable position and jeopardizes future dollar markets. Agriculture's primary task in the export field is to develop dollar markets for its products on a permanent basis.

FARM EXPORTS TO TRADE AGREEMENT COUNTRIES

As

Maintenance of a high level of exports is of great importance not only to the producers of export crops but also to the producers of all other agricultural commodities. If we lose our export outlets and find it necessary to take out of production the 60 millions of acres of cropland now devoted to the production of commodities for export, this land undoubtedly will be shifted to the production of other commodities such as dairy products, beef cattle, hogs, fruits and vegetables, poultry and poultry products. This increased production within the United States would expand the supply of these commodities, and consequently reduce the price and income of the producers now raising such commodities. regards specific commodities, over 90 percent of our soybean exports, 80 percent of our cotton exports and a like percentage of our fruit and fruit products exports, and about 75 percent of our unmanufactured tobacco exports moved abroad under a trade agreements concession. As shown in attachment IV, supplementary farm products imports have remained fairly constant during the post-war period. In contrast, our agricultural exports are currently at an all-time record level. There is almost a 3 to 1 ratio of farm exports when compared with supplementary imports (attachment V).

In addition to the tariff concessions obtained, these trade agreements are important to United States farmers because of the provisions they contain regarding the gradual liberalization of the import restrictions that many foreign countries have imposed for balance of payment reasons.

A substantial amount of trade liberalization has taken place in recent years on the basis of these provisions.

Details as to the trade liberalization of specific countries in the agricultural field are contained in attachment VI.

Considering strong protectionist trends in most food-deficit countries, it is unlikely that the United States would have obtained this degree of agricultural trade liberalization, had it not been for the obligations those countries had accepted under GATT or other trade agreements with the United States.

However, many important countries have not yet liberalized large sectors of their agricultural import trade. The extension of the trade agreements program will give the United States an opportunity to impress upon other countries the desirability of taking further steps toward liberalizing their imports of our agricultural products.

We do not mean to talk in general or abstract terms in this regard. There are specific laws, regulations and policies individual countries are now employing which are causing bottlenecks for expanded exports of United States farm products. We have included as attachment VII a list by country of some of these “bottlenecks." We strongly recommend that in future negotiations the United States delegation place special emphasis on obtaining liberalization and elimination of these impediments to trade.

RECIPROCAL TRADE AND THE COMMON MARKET

There is still another reason why we consider it important that the trade agreements program authority be extended for 5 years. The Common Market Treaty among six European countries which became effective on January 1st of this year is of critical importance to American agriculture. We are told that trade within this community will be freed by progressive elimination of tariffs and quantitative restrictions; while applying a common tariff to imports from third countries. Ultimately, they plan to develop a common agricultural policy and common agricultural institutions. There are indications that the Common

Market will be broadened.

Together, the six countries of the Common Market form by far the largest foreign market for our farm products. In fiscal year 1957, United States agricultural exports to these countries amounted to $1.3 billion or 28 percent of all United States agricultural exports. Secondly, this market has been predominantly a dollar market. American farmers have a real stake in preserving and expanding exports of farm products to this area.

The six countries are all members of GATT. This is of increasing importance to the American farmer because GATT offers an opportunity to work for the safeguarding of the traditional interests of our farmers in the European market. As the delegates to the last annual American Farm Bureau Federation convention stated, "the Common Market can broaden the market for United States farm products if it lowers average restrictions, but it will be harmful if it increases restrictions against outside products or results in new preferential arrangements with other suppliers.' It is extremely important that the Common Market be closely watched during these formative years. It is far easier to encourage favorable consideration for our products at the outset than to undo an established institution with set regulations. Let us not get caught with a policy of "too little, too late." We need to recognize and assess correctly developments abroad and have effective programs to promote and protect the interests of the United States. It is imperative that the President be given the necessary authority to vigorously protect United States trade interests in Europe and to assure that the Common Market does not act to restrict United States exports. To this end the most important factor is the firm expression of Congress that the reciprocal trade agreements program remains a basic national policy and will remain so in the coming years.

UNITED STATES AGRICULTURE'S REPRESENTATION AT GATT SESSIONS For some time Farm Bureau has not satisfied with procedures followed by the United States Government insofar as agricultural representation at GATT negotiations is concerned. We believe that a greater number of responsible farm leaders with a broad interest in the general welfare of agriculture should be ap

pointed as advisers to assist in preparing for and conducting negotiations with foreign governments prior to entering into such foreign trade agreements. To this end we feel that section 3 (e) of H. R. 12591 is a step in the right direction. We have heard numerous comments that the United States is at a definite disadvantage because foreign countries apparently make greater use of agricultural representatives at the negotiations. We would be less than candid if we did not say that, if the GATT is to have the continued support of American agriculture, the Government should make certain that agricultural, as well as industrial interests, are adequately and proportionately represented.

COMPARATIVE ADVANTAGE

One of the most basic economic truths is that individuals and countries gain most when each produces that which he (it) has the greatest "comparative advantage.' International trade is built around this principle. The United States sends abroad a wide assortment of quality products which, because of our technology, specialization and efficiency, we are best able to produce and export for a profit.

We believe H. R. 12591 would give the President authority under which he could reduce the restrictions on trade and thereby facilitate expansion of the exports of products we produce relatively most efficiently and most profitably in exchange for reciprocal concessions on products which we produce relatively less efficiently. The United States would gain not only through the expansion of profitable exports, but by imports which improve United States standards of living.

Most of our exports are products which we produce at least as efficiently as other countries. This is true for many of our farm products. It is not accurate to assume that most segments of United States agriculture cannot compete with the rest of the world. Even in the case of commodities such as wool, where we have large imports, the basic problem faced by producers is not foreign competition but competition with the rest of American agriculture and industry for land, labor, and capital.

Unrealistically high support programs in the United States on most so-called basic farm commodities have protected world market prices. These programs have tended to price us out of the world market during most of the postwar period. High price support programs have weakened our competitive position in international trade. Our farmers can compete in the world market. They must be given a chance to sell quality products for dollars.

RECIPROCAL TRADE AGREEMENTS PROGRAM NOT A FREE-TRADE PROGRAM

The reciprocal trade agreements program is not a free-trade program. It is a systematic approach toward reducing the barriers to increased international trade. Under the present law the President's authority to reduce tariffs is highly restricted with numerous protections for domestic industry. Some of the restrictions on this authority are:

(1) The President may reduce a tariff only when reciprocal concessions are made by other countries. He is not authorized to reduce a duty on a unilateral basis.

(2) Before negotiations can commence on a trade agreement, the Tariff Commission must determine for all items on which negotiations are contemplated "the limit to which such modification might be extended without causing or threatening serious injury to domestic industries." Should the agreement break

these "peril points," the President must report to Congress. (3) The so-called escape clause has been included in every agreement since 1943 although it has been a part of the law only since 1951. An industry can apply to the Tariff Commission for a recommendation of increased restrictions on competitive imports by showing serious injury or likelihood of injury caused by tariff concession under the reciprocal trade agreements program. Farm Bureau policy for 1958 is as follows:

"The 'escape clause' should be maintained as an appropriate means of avoiding undue hardship to any industry. Final authority for action under this clause should remain with the President in order to assure the proper consideration of all factors influencing the Nation's well-being."

We believe it is in the best interests of the United States to continue the current procedure for hearing and deciding actions under the "escape clause."

If this program is to continue as a method for reducing trade barriers and if it is not to be used as a vehicle for increasing overall trade restrictions, it is essen

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tial that the President retain the authority to take into consideration all the factors affecting the Nation before applying Tariff Commission recommendations. (4) National security amendment: Farm Bureau policy on this matter is as follows:

"The Tariff Commission has been established by Congress as the body responsible for evaluating requests for import controls. An amendment to the Reciprocal Trade Agreements Act provides that this congressional mechanism can be byWe believe this circumvention of Appropassed under the guise of national security.

the Tariff Commission establishes an extremely unforunate precedent. priate action should be taken to correct this situation."

We, therefore, recommend that the law be amended so that no action shall be taken pursuant to the national security amendment unless the Tariff Commission finds that imports are entering the United States in such quantities as to threaten to impair the national security.

quotas

(5) Section 22 (Agricultural Adjustment Act)-increased tariffs or While may be applied to any commodity, the importation of which is disrupting a This is an important agricultural law. Federal agricultural program. Farm Bureau has supported the use of section 22 as a measure for the protection of domestic programs, AFBF has opposed its use when the real objective has been to impose trade barriers rather than to protect domestic programs. Furthermore, the Farm Bureau has worked to revise domestic farm programs to insure that they make economic sense to farmers and the national welfare.

Section 22 contains a number of safeguards designed to prevent abuse. Import fees may not be imposed at a rate in excess of 50 percent ad valorem. Imports may not be limited to quota to less than 50 percent of the quantity of a commodity that was imported during a representative period. These provisions are intended to prevent section 22 from being used to completely embargo imports, and to permit the continued importation of products that might be expected to come in in the absence of a domestic support program.

(6) Antidumping an additional duty must be applied to the importation of any product which is being sold in the United States at a price less than in the country of manufacture and where such imports are causing injury to a domestic industry.

(7) Čountervailing duties-whenever a foreign government subsidizes a price on a product being exported to the United States, additional duties may be imposed to the full extent that the price is subsidized.

(8) Forced labor-any products produced or manufactured by forced labor may be prohibited from importation into the United States.

(9) Another very important protection is that Congress has the final authority It has been necessary to return to Congress under the trade agreements program. periodically for reenactment of trade agreements, legislation, which has provided This periodical review by a recurring opportunity to appraise the program. Congress has served as a check to insure that the trade agreements program is administered as Congress intended.

However, with all of these protections and built-in procedures for relief, the reciprocal trade agreements program is constantly threatened by special legislation in Congress increasing the tariff rate on a specific commodity or group of commodities. Legislated tariffs threaten the structure of the trade agreements program because it has been demonstrated that it is difficult to legislate an increased tariff for one product without doing so for a whole series of products. It would also undermine the procedures and safeguards outlined above if it were possible to obtain special protective legislation from Congress.

THE NEED

Although restrictive amendments adopted in prior years have reduced somewhat the potential effectiveness of the program, Farm Bureau feels the reciprocal trade agreements program can continue to contribute substantially to the security and prosperity of the United States if additional restrictive amendments are avoided.

Protectionists quickly latch on to any downturn in business activity and employment as an argument for greater import restrictions. A similar argument was advanced in 1930 when Congress passed the restrictive Smoot-Hawley Tariff Act. Passage of this act not only failed to halt the downturn but undoubtedly contributed to the development of a worldwide depression. The reciprocal trade agreements program originally was designed to help this Nation recover from a recession. Expanded trade means more markets, more opportunity, an expanded The dangers of a recession do not indicate the need for more restrictions. They emphasize the need for and importance of a vigorous trade program.

economy.

Recent developments on the international scene have alarmed many of our people. The advent of atomic power, hydrogen bombs long-range rockets, earthorbiting satellites has intensified the recognition that alliances of the free world must be cemented and that inducements must be presented to all freedom-loving people to join with the free world.

Trade the ability to sell, to earn, to buy-is the greatest inducement we can offer any nation. Without expanding international trade, free world unity is most difficult, if not impossible, to attain.

ATTACHMENT I. 1958 POLICIES, AMERICAN FARM BUREAU FEDERATION,
INTERNATIONAL AFFAIRS

RECIPROCAL TRADE AGREEMENTS

In order to promote a high level of trade among nations the following policies should be supported:

(1) We consider the long-term extension of the Reciprocal Trade Agreements Act to be of critical importance to the American farmer and to the Nation as a whole. The reciprocal trade agreements program has been a basic national policy for over 20 years. It has provided a means toward obtaining an expanding economy based on a high level of mutually beneficial international trade and unity of the free world necessary for national security. This program is fundamental to the maintenance and development of foreign markets for American farm products. Unless foreign customers are given a greater opportunity to earn dollars with which to buy our farm products, American agriculture may be forced to resort continually to interim programs such as sales for foreign currency. In order to create the confidence necessary for permanent trade relations, it is important to assure stability in our foreign-trade policies.

Continued efforts should be made to negotiate agreements to reduce trade barriers, eliminate unfair or discriminatory trade practices, and develop measures of international cooperation for the expansion of trade.

The United States should insist that other nations adhere to their commitments under reciprocal trade agreements.

Reduction of duties on those items which are needed for farm production and which are a significant factor in the price-cost squeeze should receive special emphasis.

The escape clause should be maintained as an appropriate means of avoiding undue hardships to any industry. Final authority for action under this clause should remain with the President in order to assure the proper consideration of all factors influencing the Nation's well-being.

Section 22 provides a necessary protection for Government programs and should, where necessary, be applied with minimum delay.

ATTACHMENT II. TRADE Barriers to THE IMPORT OF AGRICULTURAL PRODUCTS 1

BELGIUM

In the summer of 1954 Belgium-Luxembourg and the Netherlands published a common list of commodities freed from quantitative controls when imported from the dollar area, including such agricultural products as cotton, tobacco, coarse grains, canned fruits, etc. For some products, not on the free list, licenses are nevertheless granted freely. It goes without saying that commodities which are subject to protective measures as mentioned above are also subject to quantitative restrictions if imported from the United States.

CANADA

Canada controls grain imports through a trade monopoly but admits most of the other United States agricultural export products without restrictions.

DENMARK

Denmark has, for many years, exercised quantitative control over imports of United States farm products by way of foreign exchange regulations and licensing. Fruits have been especially hard hit, because they have been considered luxuries. Cotton, tobacco, oilseeds, rice, sorghums, feedstuffs, raisins, and some less important products have been freed from control.

1 From official sources.