labor, frequently dealing with the adequacy of workloads; changing styles and patterns of use for textiles, with the trend always toward lighter-weight fabrics; the industry pattern of consolidation of smaller mills into the large and growing integrated textile companies; managerial deficiencies; and, finally, intensified competition in textile markets, provided by both the large, integrated textile firms and foreign suppliers.

Contrary to popular impression-with two exceptions (Burlington's Peerless Mill in Georgia and Ames' Richmond Mill in Maine)-these mill closings had created very little economic dislocation in their communities. In fact, a shortage of skilled textile workers was reported in New England, with operating mills competing for skilled hands laid off as a result of the closings.

In summary, the Economic Associates study did not bear out the frequent assertion that import competition in woolen and worsted fabrics was one of the major causes for wool-mill liquidations in this country. Other and more compelling reasons were set forth.

We do have some information on the 13 mills recently alleged by the National Association of Wool Manufacturers to have been closed due to import competition. The closing of the Marland plant of the J. P. Stevens Co., was allegedly due to competition from Japanese fabrics, selling, it was stated, at a price 40 cents per yard below that of the Marland fabrics. So far as we have been able to determine, this mill produced flannels. If this is so, the allegations cannot be accurate. Japanese flannels actually sell at a higher price than domestic flannels because they are so different in weight, quality, color, and yarn count. Furthermore, Japanese exports of flannels to the United States are so small that they could have made no measurable impact on the market for these fabrics. In 1961, only 78,000 linear yards of worsted flannels were exported to the United States from Japan. In 1962, 238,700 yards were exported, and in the first quarter of 1963, 53,000 linear yards. Woolen flannel exports were insignificant. In 1961, a total of 17,000 linear yards; in 1962, 7,500 linear yards; with no shipments in the first quarter of 1963.

We suspect, although only a thorough investigation can determine, that the Marland Mill was closed by J. P. Stevens as part of its pattern of consolidation, modernization, and movement to the South.

We commissioned Economic Associates to look into several of the other mills referred to in the most recent statement of the National Association of Wool Manufacturers. We picked the Mapleville plant of the Stillwater Worsted Mills, and the Yorkshire Worsted Mill because it was indicated that they produced worsted fabrics, which predominate in the Japanese imports. We also selected the Bonin Spinning Co. because it was on the previous list. The following quotes are extracted from these reports:

The Mapleville plant of Stillwater Worsted Mills, reportedly closed in January 1963, is continuing in operation following a reorganization in which the weaving plant has been leased to a new company, Mapleville Worsted Co., Inc. When visited on May 15, 1963, the Mapleville plant was weaving the same lines of good quality men's worsted fabrics formerly produced by Stillwater. The management reported that production levels are being maintained or increased, and the number of workers employed at the plant has increased since January. The entire output of the Mapleville plant continues to go to Stillwater.

Mr. Chairman, a reorganization and a lease to a new company is not a "mill closing."

Then I refer you to the Bonin Co., which indicates that competition from imports was not a major factor in the closing of this mill, and, indeed, the mill might be opened again.

The final mill we had investigated was the Yorkshire Mill.

The Yorkshire Mill, a manufacturer of fancy worsteds, was closed in March 1963, following a period of declining production. Its machinery has been sold at auction and the management is now liquidating its inventory. Major causes of the shutdown appear to be: Inability to adjust to changing styles and uses in men's wear, costly production attributable to lack of integration, management problems, and domestic and foreign competition.

Here imports were a factor, although other causes seem to have been equally important.

In our view it is not possible to attribute most U.S. woolen mill closures primarily to import competition. Such shutdowns, rather, are symptomatic of other problems of the indusrty, which should be taken seriously by the U.S. Government. We would hope that this subcommittee will lead the way in attempting to find constructive solutions to these problems without seriously damaging the U.S. international position as a leader in the movement toward an expanding world trade.

Senator PASTORE. Thank you, Mr. Stitt.

Mr. Barnhard.

STATEMENT OF WILLIAM J. BARNHARD, COUNSEL FOR THE TEXTILE COMMITTEE OF THE ITALY-AMERICA CHAMBER OF COMMERCE, INC., AND FOR THE AMERICAN ASSOCIATION OF APPAREL & TEXTILE IMPORTERS, INC.

Mr. BARNHARD. Thank you, Mr. Chairman. My name is William J. Barnhard. I am a Washington attorney appearing here today on behalf of the Textile Committee of the Italy-America Chamber of Commerce, Inc., and the American Association of Apparel & Textile Importers, Inc.

I wonder if I might ask permission to have my statement inserted in the record at this point.

Senator PASTORE. Without objection, it is so ordered. (The document follows:)

STATEMENT OF WILLIAM J. BARN HARD, ATTORNEY, ON TEXTILES IN WORLD TRADE

Mr. Chairman and members of the committee; I am Wm. J. Barnhard, a Washington attorney with offices in the Woodward Building. I appear here today as Washington counsel for the Textile Committee of the Italy-America Chamber of Commerce, Inc., and for the American Association of Apparel & Textile Importers, Inc. (AAATI).

The chamber is an American organization of American businessmen which has just celebrated its 75th anniversary as an active organization in the promotion of mutually beneficial trade and other economic relations between the United States and Italy. Its membership includes American businessmen interested in all phases of this economic relationship, including U.S. exports as well as imports, banking, insurance, shipping, and a variety of other services. The textile committee within the chamber is, of course, primarily interested in the field we are discussing here today.

The AAATI is of more recent vintage, having been organized only a little more than a year ago out of two preexisting groups of importers. The interest

of the AAATI is directed exclusively to world trade in textiles, including all fibers and all stages of manufacturing.

In my previous appearances before this subcommittee, the scope of the hearings covered the broad field of world trade in textiles, and my testimony ranged broadly over this extensive field. In the interest of time, and in recognition of the more limited scope of today's hearing, I will not repeat that testimony, but it might be worthwhile to have in the record a brief summary of the major points.

1. The U.S. textile industry is itself the major importer and consumer of foreign-made textiles. Official statistics show that the majority of textile imports are in the form of semimanufactured goods intended for processing and manufacturing by textile companies in the United States.

2. There is no single pattern which fits all categories of textile imports. In some products, domestic production has increased while imports have declined. In others, the opposite is true. In most cases, domestic production and imports have increased side by side, with both contributing to new developments in the industry and to the serving of expanding markets with particular products. Much more significant than imports are the style changes and the revolution in fibers.

3. The capacity of the U.S. textile industry has steadily increased, despite the reduction in the number of spindles and looms, because of the tremendous advances in automation and manufacturing techniques. Productivity in the textile industry has more than doubled, in square yards per man-hour, in the last 15 years.

4. Obsolescence in the U.S. textile industry remains a serious limiting problem, although new depreciation rates and other governmental aids are helping to remedy that situation. It is reported that as much as 80 percent of America's textile equipment is obsolete.

5. Industrial concentration in the U.S. textile industry continues to be one of the most significant, as well as the most neglected, aspects of the industry's problem. The giants of the industry continue to expand, usually at the expense of their small domestic competitors and often with the aid of former competitors whom they have absorbed. The growing oligopoly in the textile industry not only dominates the small U.S. mills and controls the U.S. market, but also provides the personnel to administer the quotas that restrain their import competition.

Today I should like to restrict my testimony primarily to the nature and form of the international agreements which have been regulating our trade in cotton textiles and have been suggested to impose similar restraints on woolen textiles. The International Cotton Textile Agreement has now been in effect for something more than a year, and it is difficult to find anyone who is happy with the results.

The U.S. textile industry, which eagerly sought to limit its competition by means of a quota system, is dissatisfied because the restraints, while disrupting the pattern of world trade, have not prevented U.S. imports from reaching new record levels. They may be even more disappointed when they realize that the net effect of the restraints imposed upon individual countries which have been traditional suppliers of cotton textiles has been to force the creation of new capacity in new supplying countries to meet the demands of American textile interests and supply the needs of the American textile market.

They are learning the age-old maxim that artificial restraints on a fluid and dynamic economy cannot solve one problem without creating others. It is like putting a tight corset on a fat woman; certain areas may be restrained, but new bulges appear elsewhere.

The so-called voluntary restraints imposed on Japan 8 years ago caused the expansion of textile capacity in Hong Kong and India. The restraints imposed 2 years ago caused a similar increase in productive capacity in Taiwan, Pakistan, Egypt, Israel, Okinawa, Korea, and a variety of other areas that have not previously been competitors in the U.S. market. Thus, the domestic industry, instead of solving the problems it claims to see in import competition, has actually compounded those problems by insisting on the artifical restraints implicit in the international cotton textile program.

The U.S. officials who have responsibility for achieving the essential national goal of trade expansion, are certainly unhappy over the existence of the International Cotton Textile Agreement. They are in an indefensible position in the trade negotiations which have already started, when they insist upon the re

moval of nontariff barriers abroad as well as the negotiation of reciprocal tariff reductions, at the same time that they have to defend the quantitative restrictions of the textile program.

The American manufacturers and merchants who have increased their production and sales by use of imported yarns, cloth, or garments are certainly unhappy with the restraints which have been placed upon their normal supplies. They have faced higher prices, a narrower range of merchandise to buy and sell, and a severe disruption in their normal merchandising schedules. Mailorder houses have been denied merchandise which they have advertised for sale in their catalogs. Retailers have gone through entire seasons with their shelves empty. In short, the restraints have caused much more market disruption than they have solved.

America's world traders are certainly unhappy over the restraints, not only the importers, many of whom have been pushed to the brink of brankruptcy by artifical restraints on their normal purchases, but also the exporters who are finding increasing resistance to U.S. sales abroad because of both retaliation and dollar shortages.

The secrecy which surrounds the imposition of restraint levels makes it one of the most un-American of administrative regulations in recent history. American businessmen can no longer safely place orders for merchandise not only during the period of negotiation but even for months thereafter because the restraint levels which determine their economic existence are kept behind closed doors. They have no opportunity to participate in the administrative determination of market disruption, and no attempt has ever been made by the administrators of this program to show any actual injury or disruption which warrants the imposition of quotas.

The primary objection to an international agreement restricting world trade in woolen textiles along the lines propsoed by the National Association of Wool Manufacturers is that it cannot legally be done.

The International Cotton Textile Agreement, on which the wool agreement would be modeled, is itself legally deficient in many ways. These various grounds of invalidity have been raised in the Federal district court, and we are reasonably confident that the illegality of the cotton agreement and its administration will be sustained by the courts.

The cotton agreement, however, has at least a color of authority that a similar wool agreement could never have. The cotton agreement was negotiated by the United States under the powers granted to the President in section 204 of the Agricultural Act of 1956. This 1956 statute is labeled "The Surplus Disposal Act," and it deals with the handling and disposition of America's agricultural surpluses. Section 204 of that act purported to give the President power to negotiate international agreements looking to a restriction on the imports of such agricultural commodities and the products made from them, specifically including textile products.

If there is any validity to the International Cotton Textile Agreement negotiated under the authority of section 204, it can only be as a means of promoting the disposal of America's surplus cotton. This is the only power delegated to the President by the Congress, and the only basis on which his exercise of that power can be sustained.

It requires no statistics or extended discussion to appreciate that a completely different picture exists in wool. The United States has no surplus stockpile of wool which requires emergency measures of disposition, but in fact must rely on imports of wool to supplement its own limited production. The needs of American woolen manufacturers require imports equal to almost 50 percent of U.S. consumption, and in many particular types and categories of wool the percentage is substantially higher.

Thus, while it is at least arguable that the International Cotton Textile Agreement can be justified under the terms of section 204 of the Agricultural Surplus Disposal Act of 1956, there is no rational or legal basis on which section 204 could be construed as promoting or authorizing an international agreement with respect to wool and products made from wool.

Does Congress have the power to impose an import quota by legislation? Yes, of course it has. But such a unilateral quota imposed by the United States would contravene the express provisions of a variety of international agreements, principally the General Agreement on Tariffs and Trade (GATT). These agreements, which are comparable to treaties, have the force and effect of law and are recognized by our Constitution as the supreme law of the land, on a par

with legislative enactments. Thus, unless a waiver could be obtained from the other signatory members of the GATT, a statutory import quota imposed by the United States would contravene existing law as well as our solemn international obligations.

Aside from the legality of such a unilateral import restriction, adoption of such a program would contravene essential national policies and would almost certainly wreck the "Kennedy round" of tariff negotiations. Only last week, Gov. Christian Herter, as the President's Special Representative for Trade Negotiations, stated in Geneva that a primary objective of the United States in the forthcoming tariff talks would be to avoid quantitative restrictions, particularly on the products of the developing nations. The industrial revolution now making its start in various nations of Asia, Africa, and Latin America is evidenced first in the textile field, just as the industrial revolution in Great Britain and the rest of the Atlantic Community had its start in the field of textiles. How to reconcile this policy objective of the American Government with the existing cotton agreement is difficult enough to perceive. To encumber it further with a unilateral wool import restriction would be unconscionable. There is in the law today only one method by which an international agreement affecting woolen textiles can properly be imposed, and that is under section 352 of the Trade Expansion Act of 1962, the so-called orderly marketing provision. This provides that, after a Tariff Commission hearing and investigation establishing that imports of a particular article or class of articles are causing or threatening serious injury to the competitive domestic industry, the President may enter into negotiations with the supplying countries in order to reach agreement on import restrictions. Congress has wisely provided that import restrictions are proper and desirable only when they are indeed the major cause of economic distress in a domestic industry and when that industry is suffering serious injury as a result of the imports.

Congress has long since determined that trade expansion is a desirable, indeed an essential, goal of this country, and that artificial restraints on expanding levels of world trade should be imposed only when specific tests of injury have been met. In effectuating this policy, the Congress has limited the power of the President to impose import restrictions. This policy, which is essential to the national interest, is as applicable to trade in woolen textiles as it is to steel, brass, cement, automobiles, and the thousands of other commodities on which our extremely favorable balance of trade is based.

The Congress has said that if the wool textile industry, or any other industry, can show that increasing imports are causing or threatening serious injury, then and then only can import restrictions be imposed. The adoption of import restrictions in the absence of such a showing is illegal, illogical, and contrary to the national interest.

Thus, under existing domestic law and international obligations, the President cannot and the Congress should not adopt or impose international woolen textile restraints, unless the injury tests of the escape clause can be met. Why the U.S. woolen industry has scrupulously avoided this long available congressional factfinding remedy is easy to see. The facts do not support their plaintive claims of import-caused injury.

In these circumstances, we hope that the report of this subcommittee can remove, once and for all, this continuing irritation to our national policy of trade expansion and allay the fears of America's trading partners throughout the free world that our country, while endorsing tariff reduction, is once again moving toward the self-defeating goal of protectionism.

Thank you, Mr. Chairman, that completes my statement.

Mr. BARNHARD. One point I should like to make at the beginning, Mr. Chairman, is that the two organizations I represent here today are American organizations of American businessmen. I do not speak for the Government of Italy or for the manufacturers of Italy, nor for the government or manufacturers of any other foreign country. I am talking about American businessmen, representing their viewpoint, businessmen who play a significant part in the American economy, and who maintain their rights as American citizens, despite the fact that they are importers.