Mr. BARNHARD. Mr. Chairman, when you encourage the export of mill machinery, which pays wages of $3 an hour, and because of that you may lose a few jobs in the textile industry, which pay wages of $1.50 an hour, I think we are getting the better of the bargain.

Senator PASTORE. It depends on how many jobs you are talking about. I would rather lose a $1.50-an-hour job than a $3-an-hour job.

Mr. BARNHARD. I think the figures show we have many more highpaying jobs that depend on exports than jobs that could be possibly hurt by imports.

Senator PASTORE. I repeat again, we spend $55 billion a year for the defense effort, and we pray to God we will never use them. We are the only nation in the world-I am talking now about the free world-which maintains a tremendous Army, tremendous Navy, tremendous Air Force, a tremendous stockpile of nuclear weapons. I mean, we actually serve as the military bulwark of the free world, which costs the American taxpayer a terrific amount of money, it employs I don't know how many millions of our people. We are the only nation in the world, in peacetime, that is on a war

economy.

and

Mr. BARNHARD. Then the taxpayer which such high taxes, Mr. Chairman, should have the opportunity to save some money by buying some lower priced textile products.

Senator PASTORE. Provided he doesn't end up losing his job, so he doesn't have the money to buy it. That is what I am trying to protect.

Mr. BARNHARD. But the point made by Secretary Hodges in presenting the administration's picture of this trade was more highwage jobs were created by trade than the low-wage jobs hurt by it. Senator PASTORE. Those are cliches that are kicked around pretty easily.

Mr. BARNHARD. These are facts.

Senator PASTORE. I don't know. I don't think these people are here shedding crocodile tears.

Mr. BARNHARD. Mr. Chairman, these people were here

Senator PASTORE. Now, it may be management. Management may have an angle, although in this case I don't think they do have. Maybe they are not making as large profits as they would like to make. But when I am surrounded with a lot of people, who are engaged in a labor movement, who are standing shoulder to shoulder with management, on this issue, I am impressed. I am impressed.

Mr. BARNHARD. What do the spokesman of the labor movement in the United States have to say about trade?

Senator PASTORE. You sit here this afternoon and you will get an earfull.

Mr. BARNHARD. I am not talking about a local. I am talking about the national interests and the nationwide labor unions.

Senator PASTORE. It all depends. If you talk to Reuther, he is making automobiles, he wants a lot of international trade. If you talk to the textile workers in the State of Rhode Island, they are against it. It all depends which side of the fence you are on.

Mr. BARNHARD. If you talk to the labor movement as a whole, they have the same view as business.

Senator PASTORE. As a whole. What does that mean?

Mr. BARNHARD. The national interest.

Senator PASTORE. Some resolution that somebody introduces at the national convention, that nobody ever read before.

Mr. BARNHARD. These are the men who recognize there are more jobs dependent on our exports than those threatened by our imports. But these are broad problems, Mr. Chairman, and not within the scope of today's hearing.

Senator PASTORE. I know. But while Eisenhower was the President and I was in the Senate, I voted for the extension of the Reciprocal Trade Act, and I voted for the Trade Expansion Act under Kennedy. I am for international trade. I am not a protectionist. I never want to be. I realize we can't close ourselves into a shell, and operate in this vast world. I know that.

You can have isolationism in many forms. I understand that, too. But I don't want to see the domestic textile industry die, and if it is dying, I want to know why. And if I know why, I want to know what the answer is.

Mr. BARNHARD. I think we all face the same problem, Mr. Chairman. We must know the facts.

Senator PASTORE. Of course. And that is what we are here for. Mr. BARN HARD. Now so far as this international cotton textile agreement is concerned, a brief word on it.

I would like to say only that we question very seriously the legality of the International Cotton Textile Agreement and the method in which it is being administered. I think it is one of the outstanding examples in modern juridical history of a "star chamber" proceeding of undue and unnecessary secrecy, where the life and death of hundreds and thousands of American businessmen can be determined by an arbitrary agency decision made behind closed doors.

But this is a matter now before the U.S. district courts and will be determined by them in due course. Our immediate interest here, I think, Mr. Chairman, is wool.

As to wool, the suggestion has been made repeately by the domestic industry that they would like to see an international woolen textile agreement, comparable to the cotton agreement now in existence, and the suggestion has been made by members of the subcommittee that there is no really effective legislation which can accomplish this result, that the answer is really in such an agreement, executed by the White House.

Now, it seems to me, Mr. Chairman, the primary objection to adoption of an international agreement on wool is that it cannot legally be done. The Cotton Textile Agreement, on which the wool agreement would be modeled, is itself, I believe, legally deficient in many ways. But if it has any validity, its only basis or only color of authority to exist is that the cotton agreement was negotiated under section 204 of the Agricultural Act of 1956.

The Agricultural Act of 1956 is labeled, and deals with "surplus disposal." In title VII of the United States Code, you will find this section of the law under the title "Agricultural Surplus Disposal." Section 204 of that act was written purporting to give the President

power to negotiate international agreements, looking to a restriction. on imports of agricultural commodities which we have in surplus, or on products made from such commodities, specifically including textile products.

But if there is any validity to the International Textile Agreement, it can only be as a means of promoting the disposal of America's surplus cotton. This is the only power which was delegated to the President by the Congress, which has the ultimate and constitutional authority over foreign commerce, and this is the only basis on which the President's exercise of that power can be sustained.

Now, 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. In fact, U.S. woolen manufacturers must rely on imports of wool to supplement domestic production. The imports have been as high as 50 percent, and in some categories even higher, in order to sustain the operations of the American woolen textile industry. Thus, while it might be arguable that the International Cotton Agreement can be justified under the terms of section 204 of the Agricultural Surplus Disposal Act of 1956, there is no rational or legal or logical basis on which section 204 can be construed as permitting or authorizing an international agreement with respect to wool and products made from wool.

I am sorry that the Senator from New Hampshire is not here, because I would like to address myself now to the question which he asked of almost every witness, and that is, "Is there any legislative action which can be taken?" In short, does Congress have the power to impose an import quota by legislation?

Legally, yes, of course it has. This is legally. As a practical matter, though, it does not. Such a unilateral quota, imposed by the United States, would clearly violate the express provisions of a variety of international agreements, principally the General Agreement on Tariffs and Trade (GATT).

These agreements, which have been held by the courts to be comparable to treaties, have the force and effect of law, and are recognized as the supreme law of the land, on a par with legislative enactments. Thus, unless a waiver could be obtained from the other signatories of GATT, the statutory import quota would directly contravene this existing legislation and our international obligations.

Aside from the legality of such unilateral quotas, imposed by statute, I think the adoption of such a program would raise serious questions as to our national policy and particularly at a time now when Governor Herter is engaged in the preliminary rounds of this most important "Kennedy round" negotiations.

So the answer, I think, to Senator Cotton's inquiry is, first, that there is no direct legislative action that can be taken. I think we have the second point, which I think is legally supportable, that there is no international agreement which can legally be adopted by the President, along the lines of the Cotton Agreement, that is, with regard to wool.

Now, the third answer to Senator Cotton's inquiry: is there anything Congress can do?

The third answer is that Congress has already done it. There is in the law today only one method by which an international agreement affecting woolen textiles can properly be imposed or adopted, and that is under section 352 of the Trade Expansion Act of 1962. This is the provision which results from proposals paid by an earlier witness here, Senator Muskie of Maine, and which has come to be known as the orderly marketing provision. Orderly marketing is the objective of this committee, I believe, and this is what could be accomplished by section 352.

This section provides that after a Tariff Commission hearing and investigation, establishing that imports of a particular article or class of articles are really causing or threatening serious injury to the competitive U.S. 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 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 and indeed 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, Congress has limited the power it delegated to the President to impose import restrictions. This policy, which is essential to the national interest, is as applicable to trade in woolen textiles as to steel, brass, cement, automobiles, and the thousands of other items on which our favorable balance of trade is based.

Congress has said 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. Therefore, under existing domestic law, as well as international obligations, the President cannot and the Congress should not adopt or impose any 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 fact-finding remedy is, it seems to me, easy to see. The facts just do not support their plaintive claims of importcaused injury.

Now, there is one recommendation, a legislative recommendation, that I would like to submit as a proposal for discussion. Section 332 of the Tariff Act permits the Tariff Commission to investigate imports on a broad industrywide basis. This is available to the woolen textile industry and in fact is available particularly to this committee, which has the authority to initiate such an investigation by the Tariff Commission.

The escape clause, however, is limited, as is the language of the earlier escape clause, section 7 of the Reciprocal Trade Extension Act, to imports of articles. And the claim has been made that the Tariff Commission, operating under the escape clause, cannot look at the wool textile industry as a whole. I think there is some substance to this.

I think perhaps this committee might investigate the possibility of amending the escape clause, to allow escape clause investigations to be conducted on a wide category of merchandise, rather than being limited to individual articles. This would be in perfect accord with the Trade Expansion Act of 1962, which for the first time allowed the negotiation of tariff reductions on a broad category basis, rather than on the basis of individual articles.

This, I think, might offer an opportunity for the wool textile industry as a whole to use the escape clause as a broad remedy, rather than their current problem, where they feel they are faced with individual applications on individual products.

Now, in this circumstance I should 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 reductions, is once again moving toward the self-defeating goal of protectionism.

As you pointed out, and has been evident from many witnesses, there is a significant dispute as to the facts, and the facts are what we must have before you can determine policy. On one hand we have a claim, "destruction of American industry by cheap foreign wool textile imports," and against that we have a claim, backed by statistics, that the domestic woolen and textile industry never had it so good. On one hand we have imports classified as 20 percent of domestic production and, on the other hand, we have a claim that imports are only 7 percent of domestic production. On one hand we have mills that are alleged to be closed because of import competition, on the other the mills are being closed because the owner was a tax evader. On one hand we have a claim imports are destroying U.S. competition, on the other hand we have a claim that most of the imports are specialty items, not comparable to things produced domestically. These are matters of fact and nobody can make a proper determination of policy unless these facts are resolved.

Now, this subcommittee, with its very limited staff and very capable members, who are not only able but knowledgeable in this field, can only do so much.

The Congress has created a Tariff Commission, with a staff of 250 experts, who are equipped to do exactly the job of determining the facts in this situation, where there is a claim of import-caused injury. The complaint has been made by the domestic industry that the President's seven point program has never been adequately implemented. The chairman mentioned several times during the course of this hearing that one of the purposes of the hearing was to determine whether the seven point program is still valid, whether it requires further implementation, or whether it should be drawn back, because the problem has been solved. It seems to me the domestic industry has completely ignored the two most significant points of the seven point program the President issued on May 2, 1961, which are points 5 and 7.

Point 5 is the one in which the President said that he was soon proposing to Congress a trade adjustment feature, which would help companies and workers who are hurt by imports. Since that time, that trade adjustment feature has been adopted and enacted by Congres and is now the law.