This survey, entitled "Foreign Trade Interests in the State of Michigan," was, incidentally, the first such survey on a statewide basis.

What does the survey show? It covered 76 percent of all employment in manufacturing in the State of Michigan and disclosed the following results: 8 out of 10 workers in manufacturing employment in Michigan are on the payrolls of firms having a positive interest in foreign trade. This positive interest was defined by the survey as companies "which export some of their product, or use imported materials, or both."

Only 1 out of 10 workers was employed by manufacturing firms which encountered competition from imports or firms whose import competition outweighed its export interest.

The remaining 1 out of 10 workers in manufacturing employment were on the payrolls of firms which had no interest in foreign trade whatever.

I should point out that these results do not mean that 8 out of 10 workers are directly employed in foreign trade, but rather that this number of workers are with firms which have a real stake in foreign trade and investment.

The result of this survey bears out the correctness of the consistently forwardlooking views of the Detroit business community on the subject of United States foreign-trade policy, as expressed by the Greater Detroit Board of Commerce. The survey, requested by Michigan's Senators and a majority of the Representatives from Michigan, was made by the Legislative Reference Service of the Library of Congress, under the direction of its senior specialist in international economics, Dr. Howard S. Piquet.

Cost of the project was borne by the Legislative Reference Service, except for travel and expenses involved in duplicating and mailing the questionnaires. Funds for these purposes were made available by a committee of Michigan businessmen, under the leadership of the Greater Detroit Board of Commerce. Persons with widely divergent points of view in regard to foreign-trade policy were members of this committee.

The results of the survey are based on answers to a questionnaire sent to manufacturing firms, mining enterprises, and agricultural organizations throughout the State, supplemented by personal interviews made on field trips covering all of Michigan.

This, the first statewide study made of the importance of foreign trade to employment, is not an economic analysis of the effects of foreign trade on the overall economy of Michigan. The study is an analysis of the responses to a detailed questionnaire which probed for facts on attitudes toward exports, reliance on imports and the inroads (actual or potential) of import competition on each respondent's business.

The overwhelming importance of foreign markets and sources of supply to Michigan employment is underlined by the fact that, when there was doubt whether the export interests or the fear of import competition was predominant, the company was allocated to the import-competitive column. The survey showed

"The automotive industry stands by itself with a heavy interest in exports and imported raw materials. The other industries within the State may be grouped according to their predominant foreign-trade interest. There are

5 industries in which a positive foreign-trade interest far outweighs any concern over import competition, and 5 in which concern over import competition outweighs any positive interest in foreign trade.

"The five industries in which a positive foreign-trade interest is predominant are machinery, fabricated metals, primary metals, electrical machinery, and transportation equipment (other than automotive). Together, they employ 36 percent of all manufacturing workers in the State.

"The five industries in which concern over import competition outweighs any 'positive' interest in foreign trade are chemicals, lumber and millwork, leather products, instruments, and petroleum products. These 5 industries, considered together, are much smaller than the 5 in the 'positive' interest group and account for not quite 7 percent of all manufacturing workers in the State.

"Other manufacturing industries, accounting for the 18 percent of all manufacturing workers, are food products, tobacco products, textiles, apparel, furniture and fixtures, paper products, printing and publishing, rubber products, stone-clay-glass products, and miscellaneous. In all of them, the 'positive' foreign-trade interest outweighs concern over import competition. In two of them, concern over import competition comes close to equaling the 'positive' interest-namely, stone, clay and glass products, and apparel."

Since companies with a positive interest in foreign trade tend to be the larger employers of manufacturing labor, it is interesting to compare the numbers of companies which either have a direct interest in foreign trade, or in which the positive foreign-trade interest outweighs the fear of import competition, with those companies claiming import competition.

Reporting firms having a positive interest in foreign trade made up 43.5 percent of the total, and employed 83.6 percent of the workers covered by the survey, while 11 percent of the reporting firms (employing 6.4 percent of the workers covered) report that they encounter import competition. Reporting firms claiming to have no interest in foreign trade made up 11 percent of the total and employed 10 percent of the labor covered by the survey.

The survey found that

"The value of output of all the reporting companies in 1954 amounted to almost $20 billion, of which the automobile industry accounted for over $12 billion.

"Companies reporting that they face import competition, while neither selling for export nor using imported raw materials, produced goods valued at $354 million in the same year, which was less than the value of the goods exported by companies reporting a positive interest in foreign trade. In the same year, companies reporting a 'mixed' foreign-trade interest had an annual output of $11,300 million and exported goods valued at $433 million.

"Although companies which report that they have no direct interest in foreign trade account for over 46 percent of all the companies reporting, they produced goods valued at only slightly more than $1 billion in 1954."

The overall result of this survey shows that, by whatever standard used, the State of Michigan has an overwhelmingly important stake in exports and imports and their expansion. The value of Michigan production and a large share of its employment are directly related to the health and vigor of the international economy.

I would like to give one other illustration of the importance of exports to the health of the Michigan economy. In 1954, the period on which this survey was based. Michigan was the third most important supplier of exports to Switzerland, following New York and Ohio.

In 1956, according to recent data published by the American Society for Friendship with Switzerland, Michigan outranked both Ohio and New York in the value of goods sold to Switzerland, one of our best European cash customers, which has consistently been buying more from us than we have bought from her.

These illustrations, I believe, give you a good idea why we in Michigan believe that freer trade is essential to us. However, we don't think our position is unique. We are firmly convinced that a forceful and forward-looking trade policy is essential to the Nation as a whole.

There are several reasons why the extension of the Trade Agreements Act is of vital importance to the United States.

One of these is the emergence of the European Economic Community, the socalled Common European Market, which came into operation in January of this year and which may in the future become part of a European free-trade area. While we must welcome efforts to break down the unnecessary barriers which for so long have held back a stronger, more viable Europe, we also recognize the need for the Trade Agreements Act to provide us with an opportunity to negotiate with the Common Market for the mutual reduction and stabilization of trade barriers. We believe that continued negotiation authority is necessary to preserve our commercial stake in Europe and to prevent discrimination against American goods in that area.

The European Economic Community has a population almost as large as that of the United States and has been a good customer of ours. Last year, approximately $3 billion worth of American goods was purchased from us by the 6 Common Market countries. That stake must be preserved, and for the United States to abandon the only proper vehicle for safeguarding this interest would be shortsighted indeed. Since the Common Market will take some 12 to 15 years to bring about the economic integration of the 6 Common Market countries, we feel it is important for the Trade Agreements Act to be extended for a long-term period. In order to give us that extended negotiation potential to work with our European trading partners for a reduction of trade barriers and to prevent the rise of a common tariff wall in Western Europe, some stability of legislative intent and at least a 5-year extension of the Trade Agreements Act is essential.

We must also be fully aware that a lapse of the Trade Agreements Act would be a warning to our trade partners that the United States is about to return to protectionism in its commercial policy. The result would be a vicious cycle of growing restrictions against American exports around the world, with a seriously adverse effect on our economy. This result would, in all probability, also be the case, should the basic Trade Agreements Act be seriously weakened. Another reason why a weakened and debased Trade Agreements Act might have calamitous consequences for the United States is due to the real threat of the commercial warfare promised by Khrushchev. We cannot take lightly Khrushchev's boast that he is declaring war on the United States in the field of commerce, or, as he put it, "We declare war on you in the peaceful field of trade."

We may not be able to counter every move the Soviet Union makes to wean away from the family of free nations those who are less committed, or less prosperous, or weaker. But we can give our trading partners a better opportunity to earn their way, with less reliance on financial aid from us, and we can show them the promise of a better tomorrow by permitting them a fair chance on the market place.

We wish to give our support to the extension bill now before you, believing it to be the very minimum program to preserve the gains made in freeing our trade from unnecessary barriers.

We continue to believe that it would be highly desirable, and even essential, to achieve stability for United States trade policy by extending the basic Trade Agreements Act not for a mere 5 years, but to provide for an extension for 11 years. Such an extension would be most dramatic proof that we accept Khrushchev's challenge in a field of warfare that America knows best. It would prove to our trading partners in the free world that American leadership in world trade was not being abandoned, but reasserted in a most constructive way.

We should point out that a long-term extension of the Trade Agreements Act is also in the interest of American traders and producers. We cannot emphasize too strongly the need for stability in our trade policy so that the businessman can engage in long-term planning. Only by having a set of rules that is not changed every other year can the real productivity and real efficiency become effective for the American trader and manufacturer. The frequent reviews and changes in the Trade Agreements Act, through the recent past, have been a hardship for our trading partners as well as for American foreign traders.

We do not agree with the provision permitting the increase of tariff rates on the 1934 base rather than the 1945 base as at present. No need has been demonstrated for tariff-increase authority on such a sweeping scale. It would introduce an element of even greater instability in United States tariffs than has recently been the case.

We can see little reason for providing, in the bill now before your committee, for the institution of an escape-clause investigation following a finding by the Tariff Commission in a peril-point investigation that a given tariff rate may cause injury to domestic producers. Since, under present legislation, a request for an escape-clause investigation is the right of any industry suffering or threatened with injury, this new provision can only bring up the question, “Why did not the affected industry request an escape-clause investigation on its own behalf?"

In our view, the Trade Agreements Act, both in design and execution, should be regarded as being in the national rather than specific interest. For this reason, we are firmly convinced that the safety features which are now part of the legislation, such as the escape clause, should be so administered that it continues leaving the determination of facts up to the Tariff Commission. The executive branch, on the other hand, should retain authority to accept or reject Tariff Commission recommendations which are based on narrow standards of judgment. No one agency, such as the Tariff Commission, is now or should be in the future charged with determining what is in the national interest. The possible overriding considerations of national security, of foreign policy, or of relations with specific countries can only be determined by the administration as a whole. Thus, the President must continue to be allowed to consider the national interest in accepting or rejecting recommendations based on narrow criteria. The amendment proposed in H. R. 12591 is, in our view, an unfortunate step backward in creating new instability in our trade policy.

Furthermore, we feel that the Tariff Commission must be charged, in its escape-clause investigations, with requiring proof that the claim of actual or

threatened injury is based on competitive imports being the major cause, not merely a contributing factor, to such alleged injury. Nothing is more destructive of good will and respect for United States policies than the use of escapes economically unjustified and morally wrong.

The Trade Agreements Act is no longer an antidepression measure, as it was when first passed by Congress. It has become an important instrumentality of United States commercial policy. Its impact is worldwide, for good when forcefully extended, or for harm when hedged about with restricting amendments.

To us, here at home, it means faith in a dynamic economy strong through diversification and technological development. To our friends abroad, it has taken on a meaning of American maturity and leadership in a field in which we have excelled, in production and trade.

Let us not jeopardize the important stake that American business, industry, and labor have in an expanding foreign trade and the better availability of the foreign resources that we need for industrial production. We need this legislation, also, because it is evidence of a necessary faith in the visibility of our dynamic economy.

Thank you, Mr. Chairman.

Senator FREAR. Mr. Richard Revnes, Chicago Association of Commerce & Industry.

Have a seat, Mr. Revnes.

STATEMENT OF RICHARD REVNES, DIRECTOR OF SERVICES, CHICAGO ASSOCIATION OF COMMERCE & INDUSTRY

Mr. REVNES. Senator, my name is Richard Revnes. I am director of membership services for the Chicago Association of Commerce & Industry, which is, in fact, the chamber of commerce for the Chicago metropolitan area.

In light of the short time, I shall enter the written statement for the record, and briefly comment on a few of the paragraphs stressing the importance of foreign trade, both to Chicago and the Midwest. Senator FREAR. Without objection, your statement will be made a part of the record.

Mr. REVNES. Thank you, sir.

I should, further, like to state the association's position in regard to H. R. 12591, and make a final statement and remark on a personal note.

The Chicago Association of Commerce makes the following recommendations with respect to H. R. 12591 :

1. That the act be renewed for the period of 5 years proposed in the bill before you. It is our considered opinion that 5 years is the minimum time necessary for the United States and United States businesses to develop a policy and carry out negotiations, particularly with the important new European Common Market.

2. That the President be granted authority to reduce tariffs on a gradual and selective basis, in return for concessions by other countries, as provided for in H. R. 12591.

Recently, we have undertaken a survey to determine the exact extent of the exports emanating from the Midwest. We are still analyzing the ample of our survey, which has been entered also as a part of the record, and according to projections which we think we are now able to make based on the validity of the sample, we estimate that there are some 4,500 to 5,000 companies in the area, the Midwestern area indicated on the map of the survey, which are actively engaged in exporting.

It is interesting to note that 557 firms or 9 percent of the total of the questionnaires sent out have answered, and that they have indicated that their volume of exports is about $900 million.

Projecting this figure for the total of the sample, we estimate that the total in these areas, which are not the total of the Midwest actually, but only a portion of the Midwest, represent about $7.1 billion of exports.

There has been a recent survey, just completed, by the United States-Japan Trade Council, which reports that five States of Illinois, Indiana, Ohio, Michigan, and Wisconsin accounted for $309 million worth of sales to Japan alone in 1957, and that these five States' exports to Japan surpassed all other regions of the United States.

I think it is understandable, the concern of the manufacturers and workers of the Midwest, that Japan is in a dollar-short position due to its $600 million imbalance of trade with the United States inasmuch as we sell so much to Japan.

Preceding witnesses have presented in detail testimony that renewal of the Reciprocal Trade Agreements Act in an effective manner is essential to our national economic and political interests; that the jobs provided by our exports, and imports of needed commodities, far outnumber those adversely affected by the importation of a comparatively small amount of competitive foreign goods.

The reciprocal trade agreements program is a basic cornerstone of our foreign economic policy. The Chicago Association of Commerce and Industry, therefore, strongly urges that the act be extended in an effective form.

H. R. 12591, providing for a period of 5 years and negotiated reciprocal duty reductions, but with provisions for defense essentiality protection and relief from undue import competition, should be passed without amendment.

This, we believe, is in the best interest of not only our members and area, but of the entire United States.

I should just like to enter for the record, if that can be done, that I have completed just recently a 35,000-mile trip through almost all of Western Europe and South America. I have met with literally hundreds of government trade officials and businessmen in these countries, and I have found without exception that both the countries and the businessmen are eager to buy more goods from the United States, notwithstanding Senator Long's concern over the high cost of our production in this country.

Only a small percentage of the cities and areas which I visited are industrialized at all. They need plant investment, capital investment, in very large amounts, and a conservative estimate would place their need at about on an annual trading basis of $35 billion of purchases from the United States, within the next 5 years, if we can get around to negotiating our reciprocal arrangements with these countries on an effective basis and in an effective manner.

That is my statement.

Senator FREAR. Is that on a United States cash basis?

Mr. REVNES. Yes, sir, on a United States cash basis.

Senator FREAR. Senator Bennett?

Senator BENNETT. You mean $35 billion a year, or $7 billion?