Class and commodity

I. Imports the supply of which is wholly or almost entirely produced abroad:
Agricultural, total..

II. Principal commodities the supply of which is from United States production in considerable part, but of which substantial imports are necessary to supplement domestic production: Agricultural commodities, total..

Maple sugar and syrup..

Edible nuts (cashews, Brazil, pistachio, coconut meat-no United States production).
Apparel wool, excluding cashmere.

III. Principal imports of goods in general classes for which most of domestic demand is supplied from United States production: 1

Million

dollars

2,438

1,376

135

51

70

124

68

353

25

122

19

95

2,020

95

657

60

193

183

207

121

161

70

92

181

659

458

40

4

51

88

18

1,255

317

285

350

150

153

Agricultural, total..

Cheese.

Canned cooked hams, corned beef, and other meat products.

Fruits, except bananas, and preparations (off season, tropical, specialties).
Vegetables and preparations (off season, specialties).

Wines..

Grains and feedstuffs.

839

26

184

66

67

32

111

Sawmill products (except certain hardwoods) and wood manufactures.

386

Petroleum and products...

1,548

Clay and glass products.

132

Iron and steel and manufactures.

313

Chemicals and related products (excluding certain fertilizers).

Other, including United States articles returned and other noncommercial..

1 In many of the categories listed, however, imports consist predominantly, or extensively, of specialties, distinctive types or grades, or off-season produce not fully competitive with domestic products of the same general classes.

Source: Prepared in the Department of Commerce by International Economic Analysis Division, Bureau of Foreign Commerce, from basic data of the Bureau of the Census, June 1958.

Senator MALONE. Could I ask for clarification?

I thought you meant what imports into our country now have no duty because we do not produce them commercially?

Wasn't that the indication of your first question?

Senator LONG. We might look at the duty question, but what I really had in mind is to look at the overall picture. I believe that this committee should know and I should like to have the information available-the percent of articles that can be produced here that we also import. We are not a producer of coffee. It would be impractical to produce it.

Senator MALONE. You mean that cannot be produced here.

Senator LONG. I mean both what percentage of our imports can be produced in this country and what percentage cannot be produced here. Of those articles that can be produced here, how does the overall importation of articles compare with the domestic production of those articles. I would hope that in making that comparison the sugar industry would be left out of the comparison of those articles that can be produced here because that is a special situation.

My guess is that of articles that we can produce in the United States, sugar would be about 2 percent of our domestic consumption. I do not believe it would be a very high percentage on the overall. Now that leads me to this question, Mr. Secretary. Do you think it is possible for Congress to so act or for you to so administer a program that no particular industry is injured severely while we expand imports at the same time?

Do you have some provision in this bill similar to the one you proposed 3 years ago when you said that we should be able to suspend. the tariff on articles which are imported in no more than negligible quantities? Is that in the present bill before us?

Secretary DULLES. No.

Senator LONG. You brought that provision to us 3 years ago, but the Congress did not give it to you. It now seems to make a great deal of sense to me provided that we had some protection that would go into effect when the quantity of importation became more substantial.

Secretary DULLES. I understand, Senator, that we felt that that provision had only marginal value.

There was considerable opposition to it I think 3 years ago and we just dropped it this year.

Senator LONG. You would have no objection if the Congress saw fit to give you that recommendation 3 years after you advocated it? Secretary DULLES. No.

Senator LONG. It has been my feeling, as I suggested Mr. Secretary, that in expanding foreign trade we ought to try to spread the burden of foreign competition. Fifty percent of our sugar is imported, but only 15 percent of our oil. Certain industries must compete against a great volume of foreign imports, while others have a high tariff wall and have no foreign competition at all.

It seems to me as though in the latter cases a small amount of foreign imports would be a healthy thing. It would help keep prices in line and give the consumer a greater variety of choice. I take it that you would largely tend to agree with that.

Secretary DULLES. I think you have got to think of these things from the standpoint of quite a number of facets that all these pro

grams have, and there isn't any simple single formula that you could apply.

Senator LONG. I have tried to come up with one on occasion. I do not have the experts available to me that you have, but it has several times seemed to me that perhaps we could work out some formula that would exclude a tariff on imports up to about 1 or 2 percent of the domestic production of a commodity above this percent of the market a tariff would go into effect, rising to a slightly higher level at 5 percent and to a much higher level at 8 or 9 percent. I have never seen that sort of thing proposed by the administration. I would hope, though, that some day we could find some way of spreading this burden rather than allowing some people to be faced with the danger of going out of business because of foreign imports while others are being well protected.

Secretary DULLES. Of course, that is the way really I think the peril-point clause is supposed to operate.

Senator LONG. Of course, as you know, even with the peril point provision there are many individual injuries which are not corrected. Last time we held hearings on this matter I voted, I believe, pretty closely to the administration's position.

I received about 3,000 letters from the textile industry in Louisiana. This time I have not received any because these men are out of business. Louisiana has expanded enough in other industries, some of which are related to trade, for us to make this up and perhaps more than make it up, but it does seem to me that some industries do have the right to urge that we spread the burden of foreign competition.

I understand that our commitments with these foreign nations in many instances go directly against any quota limitations, or do we have the right to impose quotas pretty freely?

Secretary DULLES. The general provision that we have is against quotas with certain exceptions.

Senator LONG. That is the General Agreement on Tariffs and Trade.

Secretary DULLES. But the theory is that you do not propose quotas,

yes.

Senator LONG. And therefore, you try to avoid quotas insofar as possible.

Secretary DULLES. That is correct.

Senator LONG. Mr. Secretary, as I understand it, you favor this multilateral arrangement and the favored-nation clause in preference to a bilateral arrangement. I sometimes wonder whether it is to our advantage to strip ourselves of power in international_affairs that could perhaps be used to our advantage on occasion. Do I take it that you feel it is advantageous for us to enter these arrangements without getting any concessions from the foreign country? Other countries are able to benefit from our according them favored-nation treatment even though in some instances those countries act in ways that are very much against the interests of this country.

Do you feel that it is better for us under this Trade Act not to have any power to bring pressure to bear upon them if they nationalize American investments, or if they go very much contrary to our foreign policy:

Secretary DULLES. I believe as a practical matter it is extremely difficult to administer a tariff policy which is other than on a mostfavored-nation basis.

You get into just inextricable quarrels and claims that you are favoring one as against another.

I think it is not possible really to operate on that basis.

It just is too complicated and involves too many hostilities, animosities, comparisons. I just do not think it is practical.

Senator LONG. Sugar, of course, has been a complete exception to that. We like to sell rice to Cuba, and Cuba sells the greatest portion of her sugar crop to us. She is very happy with that arrangement. She always wants to sell us more sugar, and we always want to sell her more rice. If she decides to cut us off from rice, we can always take this into consideration when the Sugar Act expires.

Secretary DULLES. There are a few cases, a few commodities perhaps where this works, and sugar is about the only one where we have found it practical to work on that basis.

Senator LONG. I know that you have urged that this should be a major segment of our foreign policy.

I know that you testified to this effect some years ago, and, if that is the case, why do we administer our foreign trade in such a way that we deprive ourselves of the leverage of using it to further our foreign policy?

In other words, it seems to me as though there would be a great number of cases where, if a country cared to nationalize our investments or to depart completely from the arrangements and the good faith agreements we had made with it over a period of years, there would certainly be a lot of things that we could do with our trade policy if we had the power to do them. I have never understood why we did not at least vest that power somewhere where it could be used. Secretary DULLES. Of course, we are not without other weapons to use, you know.

We are not wholly without pressures to bring to bear without exerting them in this particular field.

Senator LONG. Mr. Secretary, when our people went over to the conference on the law of the sea, a conference I thought very important to us, quite a number of nations declined to give much consideration to defense problems and voted contrary to our position. They simply wanted to catch more fish or to have more territorial waters to claim for fishing purposes.

Secretary DULLES. That is right.

Senator LONG. Now in that case in many instances the market for their fish was right here in the United States. It would seem to me that the United States could have been more successful in achieving its goals if we had pointed out to those people that if they could not understand the defense problem that we could not be very sympathetic to their trade problems as far as the market for their fish was concerned. They might then have cooperated with us.

As it was, some of the very people who depend most on us for the market for their fish proceeded to fight the position of the United States in order to catch a few more fish. I guess the same thing would apply in many other respects, and I hope we do not see ourselves stripped of the power that we could use. Other countries make us accept their position demanding commercial concessions while we strip ourselves of power to act in a similar way toward them.

Secretary DULLES. I would say, Senator, that we have plenty of power in the world.

The question is whether you try to use this power in a coercive and threatening way or not, which raises some serious questions.

I believe that as the world is today, and given the relationships which we for our own sake need to establish with other countries, that it is not a good idea for us to go around just brandishing our power and saying, "If you do not do what we want in this respect, we are going to put you out of business."

Now I know what the answer to that will be. all right, we will tie up with the other fellow."

They will say, "Well,

Senator LONG. Perhaps so, but, of course, there are many facets to the question. The point I have in mind is the question of how far you go.

Secretary DULLES. Yes.

Senator LONG. I recall a situation where, on some votes, even Mr. Syngman Rhee's South Korean government voted against us. Chiang Kai-shek's government voted against us on vital things. It seems to to me it was as much to their advantage to vote with us as against us.

I just wonder whether it is all to our advantage to put ourselves into a position where people who depend upon us for their defense can with impunity disregard our wishes in matters relating to our mutual security.

They can continue to get everything they want from us but they do not have to cooperate or help support our position.

Secretary DULLES. Those situations are distressing, but I believe, Senator, that we are better off to have association and free nations who feel that they cooperate or not according as they see it to their interests rather than try to develop satellites that we crack the whip

over.

Now you may get some immediate advantages through cracking the whip but in the long run I think you accumulate more disadvantages and I just do not think that is the American way of doing it.

Senator LONG. You may describe it as cracking the whip. Mr. Secretary, but I have oftentimes seen the indications that the Golden Rule does not work as well as some of us would like to have it work. Now and then some people tend to advocate a different rule, "Do unto others as they do unto you." When other nations discriminate against us and treat us unfairly, it does seem to me that it might be to our advantage to have the authority, even if we never used it, to act in a similar fashion with regard to them.

I think sometimes they might treat us with greater consideration if we had that particular power.

Secretary DULLES. I think we are not lacking in power. It is not our policy to use our power in those ways except in extreme cases. Senator LONG. I just question the advisability of passing a law so that you cannot use the power even if you think you should. You would not only not have the power but the other fellow would know that you did not have it.

That is the question that occurs to me.

Thank you very much, Mr. Secretary.

The CHAIRMAN. Senator Malone.

Senator MALONE. Mr. Secretary, this act has been extended 10 times, I think you testified.