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Mr. Hooker. I would rather, sir, have an opportunity to get some

facts

Senator Douglas. Yes, I understand.

Mr. Hooker (continuing). Than to try to give

Senator Douglas. I hope, Mr. Chairman, that Mr. Hooker will be free to submit such a memorandum and it will be printed in the record at the conclusion of his remarks this morning.

Mr. Hooker. I would be very happy to do so if I have your permission.

Senator Frear. You may do so.

(The information is as follows:)

Synthetic Organic Chemical Manufacturers Association

Of The United States, New York, N. Y., July 2,1958. Re hearings, H. R. 12591. Hon. Harry F. Byrd,

Chairman, Senate Committee on Finance, Senate Office Building, Washington, D. C. Dear Mr. Byrd: In accordance with the request of Senator Douglas, made of Mr. R. W. Hooker, president of this association, at hearings on the above bill on June 27,1958, there is enclosed a supplemental memorandum on behalf of the association pertaining to the point that the administration of the trade-agreements program has not been truly reciprocal insofar as the synthetic organic chemical industry is concerned. Yours very truly,

S. Stewart Graff, Secretary.

Supplemental Memorandum H. R. 12591, To The Senate Committee On Finance In Response To A Request To A Request From Senator Paul Douglas, Of Illinois

On June 27,1958, Mr. R. W. Hooker, president of the Synthetic Organic Chemical Manufacturers Association, appeared before this committee and during his testimony was interrogated by Senator Douglas, of Illinois. In response to a question, Mr. Hooker stated, in effect, that the association Is not opposed to a truly reciprocal trade-agreements program, but that it feels the administration of the present program has not produced reciprocal results for the organic chemical industry of the United States. Senator Douglas requested that this opinion be supported by a statement of facts (transcript, pp. 1266-1267).

The organic chemical industry of the United States has found it increasingly difficult to export many of its products. In some instances, foreign countries which formerly were export markets have practiced numerous devices to restrict organic chemical imports or to establish absolute embargoes. Many countries of the world, including the Soviet, are establishing or expanding their organic chemical industries. These efforts are governmentally encouraged to provide these nations with equipment and know-how, which is essential to the conduct of modern warfare of either an offensive or defensive character. Just as the United States after World War I deemed it a prudent national policy to foster and encourage the development of a strong organic chemical industry in the United States, today the United Kingdom, Soviet Russia, Italy, India, West Germany, and other nations are following the policy so vigorously suggested to the Congress by President Woodrow Wilson.

It is almost impossible to introduce certain synthetic organic chemicals and chemical products into Italian commerce. Aside from its conventional importlicensing system, which may be administered unequally, a wide variety of restrictive devices outside the field of tariffs are employed. For example, a completely effective embargo has been imposed in Italy barring the sale of certain American-made organic dyes and intermediates. In order to import these products into Italy it is necessary for the American exporter to disclose the complete chemical structural formula of each product. Such disclosure of unpatented Information would reveal carefully guarded trade secrets to the private import

ing party in Italy and also to Italian governmental officials. As a consequence, exportations of these chemicals to Italy have ceased.

Another example of a restrictive device is the practice followed in the United Kingdom of not granting import licenses for organic chemicals in instance* where a similar product is produced in that nation; In other instances, the United Kingdom permits only token importations to supplement its own dome** productions.

Since the conclusion of World War II, foreign countries, particularly France and West Germany, have increased rather than decreased their tariff rates insofar as certain organic chemicals are concerned.

The Committee on Ways and Means of the House of Representatives, in reporting out H. R. 12591, proposed an amendment to existing law requiring the President to submit a report to the Congress of "the results of action taken to obtain removal of foreign trade restrictions (including discriminatory restrictions against United States exports, remaining restrictions, aud the measures available to seek their removal in accordance with the objectives of this section."

It is significant that the Ways and Means Committee found it necessary to direct the President to seek the removal of discriminatory restrictions against American exports. If the administration of the act over the past 23 years bad resulted in the elimination of restrictions it would not have been necessary (or the House of Representatives to incorporate this provision in H. R. 12591.

The association is aware of balance-of-payment difficulties of many foreign nations and of obstacles which must be overcome to achieve a substantial con* vertibility of currencies. Efforts of the United States to ameliorate these conditions have been attempted outside the administration of the trade-agreements program. Pertinent in this connection is the Ninth Report of the United State! Tariff Commission, Operation of the Trade Agreements Program, July 1955 w June 156 (p. 231 et seq.).

"Of the 43 countries with which the United States had trade agreements fai force during all or part of the period from July 1, 1955, to June 30, 1956. £1 restrict Imports for bahnce-of-paytnents reasons and discriminate between Jtonrrn of supply. There are 23 general-agreement countries in this group, as well a* ^ countries with which the United States has trade agreements on a bilateral has«

• •••*• •

"Although the general agreement lays down the rules for the relaxation and tin a elimination of quantitative trade restrictions, it is not intended to be an irutrt ment for the solution of the basic problvtns that make such restrictions necentrf It therefore remains for other agencies to bring about such improvements in tti internal economic and financial conditions of countries as will assist them II overcome their external economic and financial difficulties. The reduction <1 tariffs under the general agreement, although a type of cooperative effort anwol countries for a particular purpose, does not in itself lead to cooperation in tl^ use of financial aid from the United States or in the solution of such problem as the increasing of production and productive efficiency, Improving the baland of-payments position by increasing exports, combating inflation, and attaining balanced external financial position that will permit currency convertibiliC] Solution of these problems has been the special responsibility of agencies tW have no direct or necessary connection with the General Agreements on TariS and Trade, yet have worked toward the same general objectives as those by the general agreement. • * •

"Most of the countries with which the United States has trade agreements additional progress during lt).r>5-56 In overcoming their external financial 'IUl culties. They continued to match this Improvement by further relaxing quant; tative trade controls and exchange restrictions originally imposed for balann of-payments reasons. * • •

"General tariff revisions by a few countries during 1955-56 and numerous i:| ward adjustments in individual rates of duty bv almost all countries rejleru the general tendency—noted in the Tariff Commission's last two reports—'^ countries to increase the protective incidence of their tariffs as they prwyf sively eliminate the more direct forms of trade control, such as quotas and « port licensing." [Emphasis added.]

This memorandum is not intended to be comprehensive or all-inclusive ?nr«« of the association's position that the administration of the trade-apreenirn program has not been truly reciprocal. The few Instances cited are, howevrr. I accord with other similar data and additional examples of discrimination against the exportation of domestically produced synthetic organic chemicals can be made available. We believe, however, that further specifications are unnecessary, particularly in view of the limited time allowed us to file this memorandum for inclusion in the printed hearings.

Senator Douglas. Did I understand the chairman requested
State Department to prepare such a memorandum?

Senator Frear. Yes; the chairman of the committee will.
Senator Douglas. I thank the chairman.
(The memorandum requested is as follows:)

the Table II.—Examples of United Stales exports of products subject to trade agrur •.-.'. Table II.—Examples of United States exports of products subject to trade agreement

[table]

Table I.

-Changes in tariff levels and in United Stales exports to countries with which trade agreements are now in effect

• Ratio of customs receipts to value of imports. Customs receipts do not include revenue taxes levied at substantially similar rates on equivalent domestic production.

1 Prelim inary.

> Bilateral agreement.

• Not available.
•1956.

•1953.
I 1938-39.
•1954.
•1965.
'•1941.

concessions

The following statement presents specific examples of commodities on which the United States has obtained tariff concessions from foreign countries under the trade agreements program and in which United States exports to those countries have increased.

[In thousands of dollars]

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Argentina:

Trucks and chassis.

Office machinery ..

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Compressors (air or refrigeration)

Due to dwindling foreign exchange reserves during 19S6 and 1857,

A rgentlna took steps to divert imports of many items away from dollar

sources of origin. Continuation of this policy In 1958 is foreseen In view

of the adverse balance of payments situation with the United States.

Australia:

Tobacco -_

Cotton

Sawmill products

Australian restrictions on Imports from the dollar area are applied on an administrative licensing basis, and have remained substantially unchanged since 1947. Austria: i

Lemons

Metalworklng machines

Calculating machines

Bookkeeping machines

40 percent of Austrian dollar Imports have been liberalized. Benelux:'

Oranges

Prunes

Carbon black

Typewriters and parts -...-..-_„.

Civilian airplanes .

87 percent of Benelux dollar Imports have been liberalized. In practice licenses for nonllberallzed commodities are Issued freely. Brazil: In accordance with a waiver granted by the contracting parties to the General Agreement on Tariffs and Trade, all tariff concessions made by Brazil to the other contracting parties were suspended as of Aug. 14, 1957, with the enactment of the new Brazilian tariff law, pending renegotiation of concessions. Quantitative restrictions are not used by Brazil to control Imports. Availability of foreign exchange for Imports is, however, controlled within the foreign exchange budget which Is based on expected foreign exchange earnings. Weekly allocations of exchange are divided into 2 categories, 1 amount for specified essential Imports such as petroleum, newsprint, etc., and another amount for nonpreferentlal imports. Burma:

Condensed milk .

Tractors and parts . ........

Chemical specialties

Although Burma has found It necessary to restrict dollar licensing for private trade to only a few commercial items, there have been substantial Imports on Government account of commodities for which Burma has given OATT trade concessions. Canada:

Electrical machinery and apparatus

Iron and steel mill products

Industrial machinery .

Cotton manufactures

Chemicals and related products •

There are no restrictions on Imports Into Canada except for a few special cases such as certain agricultural products, butter substitutes, secondhand aircraft, etc. Ceylon:

Tractors and parts..

Tobacco

Synthetic broad woven fabrics...

Malted milk

Industrial lubricating oils

In 1956 Ceylon considerably relaxed Its Import restrictions to permit increased Imports from the United States. Many of the more essential Items, such as agricultural machinery, drugs, typewriters, electrical machinery, etc., may be freely Imported.

See footnotes at end of table.

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concessions—Continued

[In thousands of dollars]

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Tires

More than 95 percent of Oreece's trade has been freed from restrictions. Only a few luxury items and certain machines remain subject to import licencing.

Bee footnotes it end of table.

27629—*8—pt. 2 6

1,267

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