Mr. BETTS. I was very much interested in your position, because I don't have to tell you that back in Ohio where I come from the Farm Bureau, I think, is one of the great farm organizations. Mr. SHUMAN. Thank you. Mr. BETTS. I always listen with a great deal of interest to what you have to say, and I gather from your testimony the sum and substance of it is that we have to put our own house in order so far as the farm program is concerned, if we are going to enter the Common Market which is growing more and more toward self-sufficiency. Mr. SHUMAN. That is absolutely correct. Mr. BETTS. Thank you, Mr. Chairman. Mr. KING. Any further questions? Mr. ULLMAN. Mr. Chairman. Mr. KING. Mr. Ullman. Mr. ULLMAN. Mr. Shuman, your position, basically, in the long run is aimed at freer trade. Is that right? Mr. SHUMAN. Yes, sir. Mr. ULLMAN. And this would be true in agriculture as well as in industry? Mr. SHUMAN. Yes, sir. Mr. ULLMAN. What is your position on the problems of the wool industry and the cattle imports, and these other problems that plague us from time to time with respect to imports? Mr. SHUMAN. We believe that the proper use and redefinition of the escape clause device will give adequate opportunity for relief when it is needed and when definite injury or threat of injury has been demonstrated. We have rather consistently resisted attempts to erect greater barriers. The fact is, you can't make a general statement that all imports ought to be banned. At the present time there is some evidence to indicate that in the lamb and wool industry, particularly, agreement to use imports of lamb into some parts of the country in some seasons of the year might actually increase the consumption of lamb and help us build a better market for domestic producers. So we think that the escape clause procedure under the redefinition and "tightening up" that we would suggest here would provide adequate opportunity for relief. Mr. ULLMAN. You keep referring to uneconomic enterprise. Isn't your stand on a stronger escape clause inconsistent with your position against maintaining uneconomic production? Mr. SHUMAN. No, I don't think so, because there would be times and there would be situations with commodities where a foreign country could afford to dump products on our market that would not be consistent with the concept of economic production. There are other countries which stimulate production by subsidy and price-fixing devices similar to ours; and if they do, we don't believe that we should tolerate that kind of price-wrecking activity by subsidized production from some other country. Mr. ULLMAN. You believe in an escape clause procedure to industry as well as agriculture? Mr. SHUMAN. Yes, sir. Mr. ULLMAN. I note in your statement that you are very strongly in favor of lowering farm costs by importing from abroad. But each time we import from abroad, aren't we threatening some domestic 81843-62-pt. 3--31 industry that could very well go under without the escape clause procedure? Mr. SHUMAN. Not necessarily. I think that each case has to be examined on its own merits. If an industry in this country has demonstrated that it has done everything it can to control costs and prices, and if it can be shown that the foreign competition has some advantage which can't be justified on the basis of an economic determination; then, I think there is reason for relief. And, of course, there have been cases such as this. I think the escape clause device should be considered as a method of giving temporary relief for agriculture or business. Reexamination should be made, of course, as to whether it need be continued. So when you look at it as temporary relief, I think the answer is "No." Mr. ULLMAN. In other words, you do believe in redevelopment, which is the principle behind this bill; but you think it should come through natural economic channels rather than be aided by the Government, because you stand against the escape clause as a long-term solution? You think it is a temporary thing and we should eliminate the escape clause just as quickly as possible; is that right? Mr. SHUMAN. I think that the time might not be predictable, but the objective of reducing barriers to trade, of course, is to obtain a relatively free flow of commerce. I don't think this is imminent at all, but as a temporary device the escape clause would prevent industry or agricultural production from being destroyed by a temporary situation in another country, or it would provide the opportunity for us to gradually make adjustments in our country to compete. Mr. ULLMAN. I am just asking these questions to try and clarify in my own mind as to where you stand on this problem of freer imports. I am trying to find out, in other words, whether you are a freer trader than the administration, or whether they are freer traders than you are; and I think possibly this might split the argument. Mr. SHUMAN. I would not be able to help make that determination, because I am not really certain how far the administration would go in freeing up trade. All of us, if we are going to be for freer trade, must be willing to make sacrifices to some extent of existing protections and restrictions. We must be willing to adjust our production and increase our efficiency. That applies to labor particularly. This is the area I am not sure in my own mind as to how far the administration will go. But we must make adjustments: capital, business, management, agriculture, labor. If we are going to move for freer trade, adjustments are essential. Mr. ULLMAN. Basically, however, you stand with the free trade? Mr. SHUMAN. Yes; we are for freer trade. I am not yet ready to say "free trade," because it is a matter of time. Whether or not we can go to completely free trade, I have no opinion at this time. Our position is to reduce trade barriers and move in the direction of freer trade. Mr. ULLMAN. I thank you. Mr. ALGER. Mr. Shuman, you would not be for this bill without amendment? Mr. SHUMAN. At the present time, no, we would not. Our present position is as stated here. Of course, if substantial changes were made in the bill or a substantial number of the Farm Bureau amendments were not adopted, we would need to go back to our board of directors or executive committee for direction. Mr. ALGER. That is important, Mr. Shuman, because your statement "While we support the major objectives of H.R. 9900" may be lifted out and used as though with the present proposing barrage you are indeed for the bill. I wanted that to be very clear in the record. You are not for the bill without amendment? Mr. SHUMAN. That is substantially our position. Mr. ALGER. Yes, sir. Mr. SHUMAN. As of today. Mr. ALGER. Yes; I understand. Now as to the three attachments you have, and I appreciate these figures, how does foreign aid and Public Law 480 relate to these figures? Are they included in these shipping figures? Attachments I, II, and III where you have countries of destination of U.S. domestic exports to the Common Market countries. You have it by country and by product. Mr. SHUMAN. Public Law 480 does not apply to the Common Market, so that our exports to that area are all "dollar sales." In the total of all countries, Mr. Harris advises me, that agricultural exports amounted to $4.9 billion. This includes $1.6 million of Public Law 480 shipments. Mr. ALGER. I see. In this total. Mr. SHUMAN. Of all countries. Mr. ALGER. Yes. You recognize, Mr. Shuman, we have not been able to get from the Cabinet officers, the State Department included, the percentage of our total trade that is a result of our giving money to others who then buy from us. It is in that context I ask this question. We are still trying to find out how much of our total of $20 billion of exports is the result of our having given money to other countries which they then use to buy from us. Which, of course, is not free trade in any sense; it is as a result of a gift. Mr. SHUMAN. That is correct. Actually, about 30 percent of our total agricultural exports have Public Law 480 assistance. Mr. ALGER. About what? Mr. SHUMAN. About 30 percent. Mr. ALGER. Thank you very much. Thank you, Mr. Chairman. The CHAIRMAN. Mr. Curtis? In the charts Mr. CURTIS. Just one question for information. here and in your statement, I didn't see any reference to restrictions, say, in the European Common Market against agricultural imports from other nations, which would be imports that we experience in our own country. Here is what I am getting at. I haven't worded this very well, but this is a multilateral trading operation and we find in nonagricultural products that the United States has become the market for, say, Japanese goods and the European market has been closed to those goods, which means that there is an undue pressure on our market to take the Japanese goods because we are concerned about Japan. I was wondering if we had a similar picture in agricultural products. I think that is a better way of phrasing what I am trying to get at. Mr. SHUMAN. Yes; we do, and I appreciate your bringing this problem into focus. While we didn't include it in our complete statement, we do have a policy on that. Our policy states: We urge the nations of Western Europe and the European Common Market to abandon those policies which have discriminated unjustly against other nations of the free world. For example, Japan's inability to earn foreign exchange through trade with Western European countries could impede the opportunity for expanded U.S. agricultural exports to that industrial nation and create pressures in this country against imports from Japan. Mr. CURTIS. Yes. Then I would ask this question. I wonder if you have, or could prepare, a list somewhat similar to your very excellent attachment IV, which gives us examples of agricultural products still under import controls in Western European countries that applies, I assume, to you, imports that would relate to this problem, defining the rest so we know what we are talking about. Mr. SHUMAN. We will try to do that. (The information requested follows:) In the main, import restrictions on agricultural products affect U.S. agricultural producers directly by impeding exports and impairing export potentials. This is understandable from two standpoints: (1) U.S. farmers are the most efficient agricultural producers in the world; and (2) the United States is the largest agricultural exporting nation in the world. The most important indirect effect of restrictions in Western Europe is the impairment of the ability of other nations to earn foreign exchange to purchase American farm products. One of the most important third country restrictions which caused an increased flow of trade to the United States was the failure of many countries to accord Japan full benefits of her accession to the GATT. At one time as many as 16 countries invoked article XXXV of GATT against Japan. This meant that, although Japan became a member of GATT, these countries withheld concessions and thus forced Japan to seek increased outlets in the United States. This was particularly true for cotton textiles and a number of other finished manufactures. Currently 11 countries-Austria, Australia, Belgium, France, Haiti, Luxembourg, the Netherlands, the Federation of Rhodesia and Nyasaland, the Union of South Africa, the United Kingdom, and the Federation of Malaya continue the article XXXV restrictions. Under the recently concluded international textile agreement, many of the textile importing countries have agreed to increase their imports of textiles. A number of different kinds of trade restrictions have been invoked in the past by foreign countries which disrupt the normal flow of trade and in some instances has caused an increased flow toward the United States. Bilateral arrangements were popular until recently and were used to balance trade between certain countries and avoid external payment difficulties. Except for some underdeveloped countries, these arrangements are not generally used now. Mr. CURTIS. Thank you. The CHAIRMAN. Any further questions? Mr. Shuman, again we thank you, sir. Mr. SHUMAN. Thank you. The CHAIRMAN. Mr. Harding, Mr. Hill, Mr. Adams, and Mr. Brown. Mr. Adams, I understand you are to be the spokesman for the group and if you will identify yourself for the record and identify those with you at the table, we would appreciate it. STATEMENT OF BENJAMIN ADAMS, COMMISSIONER OF EMPLOYMENT SECURITY, STATE OF NEW HAMPSHIRE; CURTIS HARDING, STATE ADMINISTRATOR OF EMPLOYMENT SECURITY, STATE OF UTAH; ELDRED HILL, STATE ADMINISTRATOR OF EMPLOYMENT SECURITY, STATE OF VIRGINIA; AND PERRY BROWN, CHAIRMAN, EMPLOYMENT SECURITY COMMISSION, STATE OF TEXAS Mr. ADAMS. Thank you, Mr. Chairman. We have all decided that I would have the honor of being the spokesman for the group. Mr. Chairman and gentlemen of the committee, I am Benjamin C. Adams, Commissioner of the Department of Employment Security of the State of New Hampshire. I am not appearing in favor of, nor in opposition to, the general objectives of the Trade Expansion Act. My presentation shall be brief and confined to that portion of H.R. 9900 which provides for trade readjustment allowances. Although I am not authorized to represent any other State than my own, I have discussed the provisions of the bill with other administrators of the unemployment insurance programs of several States and I believe my views represent those adhered to by these gentlemen. As I understand the provisions of this bill, allowances or benefits are to be made available to individuals who become unemployed because of the Federal Government's deliberate action in adopting certain trade policies. These benefits will be in an amount considerably in excess of those available to individuals eligible for unemployment benefits under those State systems. These benefits will continue beyond the duration payable under any State law. It is my understanding that the bill also provides for supplemental assistance to defray certain transportation and subsistence expenses in connection with training. As an administrator of an unemployment insurance program, I have difficulty reconciling the benefit payments made under H.R. 9900 with those made under existing State unemployment compensation laws. While characterized in the bill and by its proponents as something different from unemployment compensation, these allowances or benefits appear closely akin to unemployment compensation benefits both with respect to the problem they are designed to meet and the conditions under which they are to be paid. Obviously, a dual standard to the treatment of unemployed persons is established. Preferential treatment is accorded workers whose unemployment is a result of deliberate Federal action. I, as well as other administrators with whom I have discussed this bill, am concerned that this limited Federal unemployment program may serve as a pattern for future efforts to federalize the unemployment insurance program. It is to be noted in this respect that several factors of the allowances program closely resemble those under the administration's permanent unemployment compensation bill, H.R. 7640. Recently, this Congress has passed the Manpower Development and Training Act, which is designed to provide training for workers displaced, among other causes, because of foreign competition. That |