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turn invited the reciprocal raising of trade barriers by other countries, so today it is urgent that we go beyond our policies of recent years during which we extended the Reciprocal Trade Agreements Act for merely 2 or 3 years. We cannot afford to risk leaving the initiative in this area to the Communists whose system of grants, gifts, loans, trade, aid, and barter are all bent to a single purpose—the reinforcement of Communist power. We must meet this threat in all aspects of our foreign policy, of which one of the most important is trade.
The minimum requirement to bolster the economies of the Western and uncommitted nations and to meet the Communist challenge is an extension of the Trade Agreements Act for at least 5 years, and the retention of the power of the President to negotiate with foreign countries through his authority to reduce tariffs. We oppose further strengthening of the peril point and escape clause provisions, believing that as they stand they afford adequate protection to our domestic Industries.
We hope that your committee will report favorably on H. R. 12591, and that you will oppose any attempts at attaching crippling amendments.
Statement Fob Presentation To The Senate Committee On Finance In Support Of H. R. 12591 By P. G. Wlnnett, Chairman Of The Board, Bullock's, Inc.
Gentlemen, deeply concerned with the importance of increased two-way trade to the growth of the American economy and with the need for American leadership in easing world tensions before it is too late, I should like to express my support for a 5-year extension of the Trade Agreements Act as proposed in H. R. 12591.
Bullock's together with other leading retail institutions in the United States have exerted much effort in encouraging the importation of salable articles manufactured abroad, having done so not only with the idea of stimulating domestic business but also with the aim of encouraging reciprocal trade.
The premise on which we base our support for a meaningful extension of the Trade Agreements Act without any further weakening amendments is made up of many things, including the following:
Reciprocal trade is not only good business for the American economy; it is also the keystone of a foreign policy designed to foster a world climate in which the American people can best fulfill their aspirations for ever-rising standards of living.
Expanding two-way trade is one of the main bases upon which we and our friends abroad can prosper without artificial Government supports which offer no enduring remedy to economic problems.
A liberal trade policy on the part of the United States, while the basis for the steps that must be taken to reduce the barriers to trade and to economic progress in general, is also a symbol of the role the United States wishes to play in the free world. It symbolizes our national outlook on the desirability of effective cooperation and enduring unity in the society of free nations. It is also a symbol of the dynamic free enterprise system which we like to hold high as an emblem of American economic strength.
The United States has an Important stake In it own rapid economic growth as well as in the rapid economic growth of the other nations with which it is associated in the preservation of world peace. Failure to reduce further the barriers that impede trade between our country and the rest of the free world will hurt American industry, agriculture, and labor by increasing the obstacles to expansion of our country's export trade. An expanding economy needs expanding exports. The most important source of dollars for the rest of the world is sales to the American market. Our expanding economy needs and can easily absorb a greater volume of imports, which is also essential if we are to realize in dollars the earnings from the investment of American capital in foreign countries.
The European Common Market is only one example of the many new developments now taking place in the world with which the United States must be in a position to deal, if our economic and political interests are to be preserved and enhanced. We need a foreign trade policy adequately tooled to enable us to take suitable action in the face of these new developments. H. R. 12591, while not in every detail as strong an extension as we would prefer, still in our judgment provides adequate machinery to permit the United States to move quickly and effectively In the field of foreign trade.
We understand that there is considerable donbt in the Senate about the sirability of a 5-year extension, in view of the fact that we have never to past had an extension for longer than 3 years. We are convinced that a 5-; extension is the minimum if we expect to be effective in meeting the many tingencies to which I have referred, and these inclnde also the Soviet c offensive against the free world. But I wish to emphasize that a 5-yeu tension is not a crash program designed to meet an emergency. There is emergency, but a 5-year extension is undeniably within the capabilities of American economy and necessary for the kind of stability American flnot I in the Nation's foreign trade policy if proper, business-like planning is t. achieved. In view of our own economic strength, and considering the recor 24 years of trade agreements legislation and of the contribution it has mad our Nation's prosperity and security, the United States is ready for a 5-; extension. Anything less would be a sign of weakness.
We urge the Committee on Finance, and the Senate as a whole, to apprnn bill as it passed the House of Representatives. To do so, would be more 1 an important step forward in fostering American prosperity. It would constitute an important support for American prestige and leadership i troubled world.
Statement Prepared Fob The Senate Finance Committee Be Trade Agbeesi Extension Bill, H. R. 12591, Prepared By Carter C. Higgiks, Presib Worcester Pressed Steel Co., Worcester, Mass.
The company of which I am president and general manager is a small i pany, employing less than 250 employees at present. We are in the busi of making stampings of all kinds of metals, and we also produce a Un small pressure cylinders and, through a subsidiary, Mutual Products C« a line of paper punches. As a businessman, I support the reference bill, mltW I would like to see it stronger.
Although my company is a small company, we are greatly affected W volume of business done in this country. Many of our customers are bw companies in their fields, and when their products are exported our compon go with them.
We are very much interested in anything that affects the total unit rol of our customers and business in general. The more that is sold, whether sold in this country or across our borders, the better our business will to be. In this connection, I would make two points. The value of internal^ trade is larger with lower trade barriers. The figures cited showing R' paratively lower average rate of duty on our imports is not a measure n( small interference of present tariffs with international trade. It is nw indicative of the size of the hurdle that goods made abroad can jump. three-quarters of our imports were duty free, and 25 percent could pass percent ad valorem barrier, the average duty would be 25 percent This «1 not indicate that existing barriers were 25 percent barriers. Maybe an eql lent total amount of Imports is being kept out by the 100 percent rate.
People in other countries would like to buy the goods, into which our < ponents go, if they had the dollars to buy them with, and I would prefer get these dollars by free exchange rather than by our making gifts to t of which my company has to pay its share. They are hindered from get these dollars by import regulations and tariffs, and if our great country i be in a reasonable bargaining position, the administration should have Ik to reduce tariffs to maximalize international trade.
The second point, I feel pertinent, is that international trade is a twrstreet with benefits for both the importer and exporter. Therefore, addlti imports are countered by additional exports. I am not as despondent as * about the inefficiency of American industry and its inability to meet tat competition despite substantially lower wage rates In some countries. W do not necessarily determine costs. We could never afford to hare Clili coolies receiving a few cents a day transporting our goods on their baokf of our plant. The trend of international trade, and the "dollar sborti does not indicate inefficiency on our part. We are in a competitive busi and are well aware how competition keeps us on our toes, how we ha* shift to cost-saving methods, and how our customers show a benefit If can buy good quality stampings from our competitors. These benefits wi be taken away if our competitor's products were taxed and ours were
We would be greatly handicapped in what we could buy if we could not select the most efficient supplier.
The principal point I want to make at this time, however, is that if we could import another billion dollars, I am convinced that we will export a like amount, and a few dollars of this will show up in my company's orders for stampings which become parts of typewriters, machine tools, ball bearings, or one of many other products produced by our customers.
Now when we come to our costs, even a small company is affected by price levels of such imports as nickle, aluminum, various ores, heavy oil, and so forth. The cost of these items are already so high in relationship to what our customers and the American consuming public is willing to pay that we are most severely pinched. The same is true of each of our employees who are pinched by the present high-cost of living. There isn't a doubt in the world that some of these items would trend lower if it were not for tariff barriers. I can't see it any other way than that a vote against this extension, or for more limiting amendments, is a vote for higher cost of living, and a vote for higher cost for my company. How we can cover these costs may not be of direct interest to you good committee members, but is, I assure you, a great source of worry to me and to my company.
We, in small business, cannot retain Washington representatives to see that we can charge more for our metal stampings, or whatever we produce, because part of our competition is cut off. That you don't hear from us is not an indication that we do not bleed if tariffs raise the costs of what we have to buy, and what our employees have to buy.
The political realities of today require considerable latitude be granted to whatever administration is in power to do the best they can to keep our costs down to maximalize the demand for our materials. This situation is constantly changing. The Communist countries are more and more tending to try to disrupt world markets. They throw their buying power into making purchases at high prices to try to raise the prices we Americans must pay. They try to dump materials like aluminum in sufficient quantity at costs below fair costs to upset established export relations. The only solution I can see to this is that we have a maximum of flexibility to do what must be done. I am not a free trader; I am opposed to dumping. I recognize the importance of customs and duties as income to the Government of the United States. I would hope that we would see a gradual reduction of tariffs which would allow time for other companies to adjust to apparent situations. Because of rapid changes, we all are aware of, I think we must rely on administrative discretion as provided in this bill which would be enabled to plan its action across a period of years and develop peaceful relationships with foreign countries at the same time as providing for maximum trade and reasonable cost levels.
I believe the passage of this bill will increase the size of the market for American products. I believe its passage will serve as a check to inflation. I believe also in the provision for as much flexibility as possible, not to be exercised capriciously, upsetting the best laid plans, but in order to face political realities as the occasion demands.
I urge the extension be for 5 years. A shorter period is inadequate for planning, because I expect the Russian economic competition will be more marked a year from now than it is today; and, the longer the period we have to meet it, the better.
H. J. Heinz Co., Pittsburgh, Pa., July 2,1958. Hon. Habrt Flood Byrd,
Chairman, Committee on Finance,
Senate Office Building, Washington, D. C. My Dear Senator Btrd: May I express my strong support for the bill, H. R. 12591, Trade Agreements Extension Act of 1958. I urge the committee to approve this bill as passed by the House of Representatives, without further amendment. A 5-year period of extension is the minimum necessary this year, if the reciprocal trade agreements program is to adequately serve our Nation. That historic development, the European Economic Community, has adopted a time schedule for the first phase of its internal tariff reductions and for establishing a common external tariff, of 4 to 5 years. As the United States State Department spokesmen have indicated, the necessary preliminary work and the actual negotiations to follow will require a full 5-year grant of authority to the President. A 3-year extension would expire precisely in the middle of these projected negotiations, and whether they could continue would depend upon a further extension of the program by the Congress at that time. Clearly, this would create a wholly unsatisfactory bargaining position for the United States; and there is real doubt that we would even begin negotiations under those circumstances.
Equally important with the 5-year extension is the 25 percent tariff reducing authority contained in H. R. 12591. The European community will reduce its internal tariffs 30 percent over this period of time, and if we are to enjoy approximate equality for our exports to the European market, we must be able to reduce our tariffs by at least that 25 percent Western Europe is the most important single market for our Nation's exports, and it is of critical importance to the future of our foreign trade that we maintain our present position in that area.
The Soviet economic drive toward underdeveloped countries is another development which has reached serious proportions in the last year or two. In the face of this offensive one of our major economic defenses will be our willingness to accept on a reasonably liberal basis imports from these underdeveloped conntries—imports not only of essential raw materials but of the whole range of goods which these countries export, and upon which depends their foreign exchange position. Obviously, unless we are prepared to cooperate closely with these countries in satisfying their basic needs, their governments will be under heavy pressure to entertain the prospect of close relations with the Soviet bloc.
Finally, an adequate trade agreements extension is essential for our own economic welfare and growth. Expanding foreign trade is one of the major elements in an expanding United States economy. We cannot hope to increase our standards of living and provide jobs for the annual increase in our working population unless we are prepared to provide the economic climate for trade expansion.
The writer has had some direct experience as an adviser to the United States delegation to the GATT. I have become convinced that the Trade Agreements Act provides a workable and vital instrument for the achievement of our foreign economic objectives. From my own observation the negotiations under the GATT have been conducted by the American representatives with great care and with full regard to the interests of American industry, labor, and agriculture. This has been a sound program for some 24 years, and we cannot now afford to renounce it by adopting a 1958 extension which is neither adequate to our current needs nor expressive of the policy we wish to pursue. In my opinion, amendments to this bill, which would provide for only 1-, or 2-, or 3-year extensions; 5-, or 10-, or 15-percent tariff reducing authority; or drastic limitations on the President's discretions in escape-clause cases, will have the effect of making the legislation essentially meaningless. An extension of that kind would continue the program in name only.
May I, therefore, again urge the committee to recommend to the Senate approval of H. R. 12591 without amendment. Sincerely,
Henry J. Heinz II. President.
Statement Before Senate Finance Committee In Support Op Extension or The Trade Agreements Act By Lamar Fleming, Jr., Houston, Tex.
My name is Lamar Fleming, Jr. I am a resident of Houston, Tex. I am chairman of the board of Anderson, Clayton & Co., a corporation whose principal business is dealing in cotton in this country and abroad, ginning, and seed crushing.
I served on the Commission on Foreign Economic Policy (Randall Commission) as Vice Chairman, and I attended the session to revise the General Agreement on Tariffs and Trade as an adviser to the United States delegation in 1954-55.
Judgment of the merits of a trade policy for the United States must be in terms of the welfare of the American people, of present and future generations. For this purpose, I believe we can define welfare as achievement of the fundamental human desires for material well-being and personal freedom.
The civilized man recognizes that there are limits beyond which unbridled personal freedom becomes infringement on the freedom and well-being of others, and he submits, therefore, to reasonable restraints, imposed hy his own sense of good manners and the laws of society. He recognizes, also, that a great deal
of his well-being comes from maintenance of public order and security and from publicly provided services like roads and schools, which he enjoys as the effect of concerted action of all society, and that, therefore, it is just that he bear his share of the costs and burdens of them, in the just measure of the benefit he derives. The sum of It is that he enjoys the fullest measure of worldly goods and freedom as a team player for what our forefathers called the common weal, rather than as a lone wolf. The test of this is whether the net effect of his wrrender of goods and freedom to society is the enjoyment of more goods and freedom in the ultimate.
The basic purpose of protective tariffs is to enable certain producers to sell as their goods for more than we would pay were we permitted to buy like foreign goods duty free. This diminishes the value of our goods and services In exchange for the protected goods; and it abridges our freedom as buyers. What are the compensating benefits?
In the beginnings of our Republic, Hamilton's answer was that we needed to ZTzrtnre infant industry until it developed the capacity to relieve us of our then treat dependence on manufacturers from Europe, the availability of which had teen interrupted by wars, blockades, and legalized piracy periodically during hit lifetime. Whatever the merits of this answer then, there are no Infant iaiustries in the United States today, If we exclude those born of new intuition which are Infants wherever situated.
A modern variation of this answer is assurance of essential supplies against the eventuality of war. This justification has been invoked for products ranging trozn military hardware to chocolate bars. It Is a difficult one for the scantily informed citizen to evaluate. Only those with the top responsibility for our defense and the information indispensable thereto are qualified to judge what «* wm need and have time to use in a war with the all-obliterating weapons ttat now are available.
An answer sometimes heard is that no one need be discriminated against in * jiervasive protectionism that shields all from foreign competition—industry ind mining by tariffs; agriculture by tariffs, price supports, and quotas; labor by immigration restrictions and minimum-wage laws. If this answer had no> nthfT flaws, it still would be damned by the fact that what it contemplates is * regimented welfare state, whose impracticability has been proven over ind over again, throughout history. But it has obvious particular flaws. Since its aim is high prices and wages, its effect would be inflationary. No protection has been devised for the white-collar man or those dependent on tensions or fixed income, who suffer always In times of high prices or inflation. Xo protection is feasible for our productions that serve the export markets— «tner than Government subsidies and gifts, of the order recently applied to our tjpioiltnral exports, which condemn themselves by the fantastic enormity of Die cost.
Even If all-pervasive protection were feasible, It would require a horde of Government functionaries for administration of It; and we taxpayers would tare to support them. Moreover, even-handed apportionment of all-pervasive protection, with equal justice for all, would be beyond the limits of human intelligence and conscience.
Congress had a long experience with the difficulty of formulating protective programs with fairness and equity to all. The trouble is that by no means all *« desirous of any protection and that only small fractions of the people are desirous of any particular protection. So there never was a majority interested In adoption of every schedule of a Tariff Act In these circumstances, the mastering of a majority for a catchall, omnibus bill depended on a trade between countless factions, each swapping votes for the whole bill in order to «k the rotes of the others for its particular schedule. The essence became fix* trafficking, not equity.
Thin produced some bad tariff acts; but a more harmful product was a deewration of the legislative system. It showed the way for unrelated small nJiwriUes to win particular privileges for each by conspiratorial combination rwnltlng In an aggregate 51 percent majority for a catchall, omnibus bill. *i* use of this device has spread beyond tariff legislation, into agricultural, •scat and other Important legislative fields. It threatens the effectiveness of inr suffrage of the remaining 49 percent, as well as the basic integrity of the l^tatitive system.
Congress moved against this cancer in enacting the Trade Agreements Act « 1984, lifted the fixing of individual tariff schedules from its functions. In