their American clients moving into the European Common Market and other areas, approximately 25 percent of their revenue now comes from foreign clients. This indicates several important benefits to our economy:

1. There has been a substantial increase in U.S. employment and income from service industries engaged in international business. The Commerce Department estimated this to be $1.2 billion in 1957; it certainly now exceeds $1.5 billion a year. Although it is exceedingly difficult to estimate the American employment in such international service industry work, it can conservatively be figured at between 20,000 and 30,000 jobs.

2. Greater American experience and professional specialization in business services enable U.S. firms to occupy a strategic position in world marketing. Seven of the largest fifty British advertising agencies are U.S. subsidiaries, accounting for some 20 percent of total British advertising. The two leading German advertising agencies are U.S. subsidiaries. About 75 percent of the international public relations expenditures are accounted for by American firms. Much the same situation exists in economic and market research, and in management consulting. As a result, U.S. servicing firms are not only benefiting from increasing international trade; they are also strengthening our overall capabilities to compete effectively in world markets.

3. Continued expansion in international trade will benefit U.S. service industries, as well as our whole economy. Advertising activity is increasing must faster abroad than in the United States—with Japan showing a 25-percent increase in 1960, and most European countries a 15-percent increase, against only 4 percent in the United States. Total foreign advertising expenditures in 1960 reached 50 percent of the U.S. level or $12 billion, and Advertising Age estimates oversea advertising will catch up to the United States in 10 years. Similar growth is occurring in economic research and planning, public and government relations, management consulting, law, and accounting. Since American firms are so favorably situated in these professional fields, the international trends will certainly result in greatly increased U.S. earnings and employment.

In conclusion, I believe that expanding international trade is benefiting our economy-and I have indicated to the committee the substantial, but little noticed, role of business service firms in this process. I believe that the Trade Expansion Act of 1962 is essential to further expansion of U.S. trade, and that it will provide an international environment in which business service firms can make an even greater contribution to our economy and our foreign policy.

The CHAIRMAN. The Chair asks unanimous consent that Mr. Seabury Stanton, president of Berkshire Hathaway, Inc., New Bedford, Mass., be permitted to include a statement in response to a telegram the chairman received from him which will also be included in the record.

(The telegram referred to follows:)

Hon. WILBUR D. MILLS,

Chairman, House Ways and Means Committee,
House Office Building, Washington, D.C.:

BOSTON, MASS., April 9, 1962.

Am unable to appear in person today to testify on H.R. 9900 and would greatly appreciate opportunity to file a written statement for the record on or before next Friday, April 13.

SEABURY STANTON, President, Berkshire Hathaway, Inc.

(The statement is as follows:)

STATEMENT OF SEABURY STANTON, PRESIDENT, BERKSHIRE HATHAWAY, INC., NEW BEDFORD, MASS., ON H.R. 9900

My name is Seabury Stanton. I am president of Berkshire Hathaway, Inc.. New Bedford, Mass., which operates six textile mills located in Massachusetts and Rhode Island and employs 4,600 people. I have spent my adult life in the textile industry and in recent years have devoted considerable time to the foreign trade problems of the industry. I am a member of the Management-Labor Textile Advisory Committee established by President Kennedy. I served on the

Textile Advisory Committee established by President Eisenhower. I am a member of the New England Governors Textile Committee, chairman of the Northern Textile Association, and a director of the American Cotton Manufacturers Institute. I have had the opportunity of acting as adviser to our Government in connection with negotiations for both the short-term and long-term Geneva cotton textile arrangements and the Japanese bilateral cotton textile agreements.

I cite this background not for the purpose of speaking for these organizations but to indicate that I have had some firsthand experience and knowledge in connection with the foreign trade problems of the industry and their impact on our mills.

The textile industry has suffered severely in the past 8 years as a result of imports, changing patterns of trade in textiles, and the growth of modern, efficient textile facilities throughout the world, including Europe and eastern countries. The record of this experience is more than adequately covered in the three reports of the Special Subcommittee of the Senate Committee on Interstate and Foreign Commerce under the chairmanship of the Honorable John O. Pastore, of Rhode Island. These reports are No. 42, February 4, 1959; March 14, 1961 (not numbered); and No. 1314, April 2, 1962.

During these 8 years the industry has attempted to solve the increasing complications of the textile trade situation. In recent months a reasonably satisfactory solution has been developed for cotton textiles and apparel, and similar plans can be expected in the near future for all branches of the textile industry. This has been done without benefit of the Trade Agreements Act. For many years the industry unsuccessfully sought remedies within the framework of the Trade Agreements Act. The peril point and escape clause provisions are not suited to an industrywide import problem. Such proceedings on a product-by-product basis are cumbersome and time consuming, and the remedies are not available until the damage to the industry is too great.

The record shows that past trade agreements legislation has failed insofar as the textile industry is concerned. The division of authority between the Tariff Commission and the President has contributed to this failure.

Traditionally, the textile industry has urged that the Congress retain and not delegate its right to fix the terms of trade, including tariffs and quotas. It is apparent now, however, that the Congress will not withdraw the discretion and authority in these matters which it has for so long delegated to the President and that a situation of divided authority and responsibility should cease. It is, therefore, incumbent upon us to accept a new approach.

I favor granting to the President the broad powers contained in H.R. 9900 to deal with foreign trade problems. The bill places the responsibility for successful trade agreements squarely on the Executive and avoids the delays and complications of securing Tariff Commission recommendations which can be disregarded by the President.

H.R. 9900 will grant to the President the power and authority commensurate with his responsibility to the Nation during the crucial years ahead. I assume that this authority and power will be used in the interests of the Nation to improve its balance of trade and balance of payments position, to meet the challenge of industrial growth and development in other nations, to accelerate the growth of U.S. economy, to assist in the struggle against totalitarian nations for the uncommitted countries, and protect the national security, including the economic health of major industries.

1

The cotton textile arrangements were negotiated under authority granted to the President in the Agricultural Act of 1956.

I would suggest that H.R. 9900 could be strengthened by adding to the President's authority to negotiate tariff reductions, authority which would put the United States in a position to protect American interests by adjusting imports through international agreements, tariff increases, quantitative limitations, and such other means as the President may choose to use from time to time. With

1 The cotton textile arrangements constitute a rational approach to international trade in textiles. They are significant because they demonstrate the willingness and ability of our Government to bring about an equitable distribution of trade within the framework of our trade policies. Many European countries which severely restricted imports of textiles from eastern countries and underdeveloped areas have agreed to accept more imports, and exporting countries have agreed to restrain their exports to countries such as the United States and Canada so as to avoid the market disruption which was caused by the rise and volume of imports in recent years. Such arrangements are clearly in the interests not only of a stronger domestic economy but of liberalized trade on a worldwide basis.

such authority, the bargaining position of the United States would be improved in carrying out the objectives of the bill.

This broad authority should include the right to withhold favored-nation treatment from nations which do not offer appropriate concessions, and to take retaliatory action against trading nations which fail to live up to their obligations under the GATT or other international understandings.

The national security provisions of H.R. 9900 are an improvement of section 8 of the Trade Agreements Act but could be further clarified so as to carry out the intention of the Congress in its 1958 amendment to the act.

The CHAIRMAN. Are there any further requests?

Mr. KING. Mr. Chairman, I have a statement from the distinguished Governor of the State of California, the Honorable "Pat" Brown. Governor Brown regretted that he could not be here in person to deliver it to the committee. I know all members of the committee will find it enlightening, and I ask unanimous consent to have it included in the record.

The CHAIRMAN. Without objection, that statement will also be included in the record.

(The statement referred to follows:)

STATEMENT BY HON. EDMUND G. BROWN, GOVERNOR of CALIFORNIA

Thank you for your invitation to present a statement on President Kennedy's proposed Trade Expansion Act.

As the Nation's largest exporter, California is deeply interested in expanding trade with other nations.

In 1960, the year for which the latest figures are available, California exported $1.780 billion worth of manufactured and agricultural products. For the same year, Illinois exported $1.728 billion and New York $1.477 billion.

In the export of manufactured products alone, California ranked third with a total of $1.303 billion.

In export of agricultural products, California ranked first in the Nation with shipments of $477.5 million worth of food and fiber. Included in California agricultural exports were $292 million for field crops, $40 million for livestock and livestock products, $32 million for vegetables, and $14 million for fruits and nuts. Because of the tremendous volume of California agricultural exports and their importance to the economy of this State, I will express my views on this phase of foreign trade as it relates to our economy.

Agriculture is California's biggest single economic activity, generating more than $3 billion a year of income for farmers alone. The multiplier effect of agriculture on our economy, in producing thousands of jobs in canning, food processing, shipping, packaging, and other industries, gives it even greater stature in our economy.

In its broad principles, I am in full support of President Kennedy's Trade Expansion Act.

As in many other areas of the Nation, California's economy is heavily dependent on world trade.

We have along our shores three of the west coast's most important ports: San Francisco, Los Angeles-Long Beach, and San Diego.

Through those ports pass billions of dollars worth of manufactured and raw goods to and from world markets. California foods and fibers are consumed in scores of nations all over the world. Our manufactured goods find their way into many foreign ports. Our ports serve importers and exporters in many States.

Because of our longstanding interest in foreign trade, we have an appreciation of the significance of this trade to our foreign policy, our Far Eastern alliances, NATO, the emerging European Economic Community and the broad questions of peace that are involved.

It was at San Francisco that the United Nations came into being. It was there that the first steps were taken toward a dropping of the trade barriers among the nations of the world; trade barriers that have walled in mutual suspicion, distrust, and understanding.

I believe that an expansion of world trade would do much toward tearing down those walls of misunderstanding, of lifting the veils of ignorance and distrust.

At the same time, I fully recognize that foreign trade must also be an instrument of our policy in combating world communism.

As I read the history of the last two decades, there have emerged three major developments or trends which have molded our present postures of defense and foreign policy.

The first, of course, has been the rise of world communism as the second leading force around the globe. The U.S.S.R. and her European satellites and Red China have affected both our defense and trade policies.

The rise of world communism has paralleled the second development: the dissolution of the great colonial structures. In their place we have seen the formation of scores of new nations, some independent, some still clinging to their colonial mothers, but each bringing to world politics and world trade markets a new impact.

Finally, there have emerged the new alinements of the West European community. These took the form of NATO, the Organization for Economic Cooperation and Development, the Common Market, and numerous other alliances based on common interest.

President Kennedy has indicated, in his request for the Trade Expansion Act, that we must strengthen our European alliances and that we must deal realistically with the new trade patterns being established by the Common Market. I fully support that view.

And, in my opinion, the best possible way of effecting this policy would be through the Trade Expansion Act and the principles of granting authority to the President for the modification of tariff barriers on a reciprocal basis as expressed in the proposed legislation.

The American economy is dependent on foreign trade. We produce more than we can sell to ourselves; we can buy some things abroad that we can neither produce ourselves or that we can produce only inefficiently.

California manufacturers, farmers, ranchers and food processors are vitally interested in all aspects of foreign trade and, especially, the possibilities of expanding present markets.

As the largest agricultural State in the Nation, we produce far more food than we consume. And because we have the most diversified agriculture in the Nation, we produce scores of specialty crops in great abundance.

It is precisely because of our diversity and specialization that we at once stand to be greatly benefited by the Trade Expansion Act or greatly hurt by it.

As it applies to agriculture in general and particularly as it applies to California agriculture, the Trade Expansion Act raises many serious questions for our farmers and food-processing industries.

I want to discuss some of these questions in detail.

Our agricultural producers and our economists fully realize that, whether or not the Trade Expansion Act passes Congress, we must continue to make changes in our tariffs, import and export regulations, and trade agreements with other countries.

The European Economic Community, an important customer of California agricultural and manufactured goods, is going its own trade ways and we must recognize the situation and be prepared to deal with it. And we recognize that adjustments must be made with the national interest in mind first and individual interests second.

Nevertheless, as Governor, it is my duty to represent the interests of California and it is with that self-interest in mind I would like to illustrate one of our questions about the Trade Expansion Act as it might affect California agriculture:

In 1960, the United States shipped to the six Common Market members about $3.4 billion of products, of which about one-third were agricultural items, many from California.

Imports from the Community were about $2.25 billion, of which about $220 million were in agricultural products.

One could infer from this comparison of exports and imports that the Common Market members might very well be interested in increasing their own production and in expanding their agricultural exports inasmuch as they represent such a small portion of their total exports and they loom so large, on the other hand, on their import ledger.

In attempting to project the possible effects of the Trade Expansion Act on our agriculture in this situation, I am particularly concerned with the application of the "80 percent" or "dominant supplier" section of the act.

As our economists read this provision, from the viewpoint of farming, processing, and distributing of California agricultural products, for example, the three-digit classification of the SITC is rather meaningless.'

In fact, it may be that rarely would California agricultural products fall within purview of the 80-percent rule.

The reason can be found in my earlier statement that California's agriculture is highly specialized.

With the exception of the States of Washington, Oregon, and Florida, no other state has such a large dollar volume export of fruits and vegetables.

While it is true that our No. 1 crop is cotton; that we are the Nation's second largest producer of cotton; and that it looms large in our value of exports; it is also true that because cotton is of national importance it will be better represented at the trade bargaining tables than, say, our Valencia oranges.

The same thing might be said of rice which is also an important dollar volume crop in California, and of which we are the Nation's largest producer.

In fact, all of the crops with a national character-the cereals and the socalled basic crops-share the same political protection that cotton and rice do. But California is the leading producer of 35 different crops including, to mention a few, almonds, apricots, artichokes, broccoli, brussels sprouts, dates, figs, garlic, peaches, pears, prunes, spinach, strawberries, tomatoes, and walnuts. And we are second in the Nation in production of nine crops, third in the Nation of two crops and fourth in five others.

In addition, we are first in cattle slaughtering, fourth in milk production, first in eggs, second in turkeys, sheep, and lambs and third in wool production. California exports 10 to 15 percent of the Nation's fresh grapes, 20 to 30 percent of the fresh lemons and limes, 10 to 17 percent of the fresh oranges, 20 to 35 percent of the prunes, 12 to 18 percent of the single-strength orange juice, and 22 to 30 percent of the hot-pack orange concenerate.

We are one of the world's leading exporters of almonds.

New processing and preserving techniques being developed by University of California researchers at the University of California, the U.S. Department of Agriculture laboratories at Albany, Calif., and other places, and by private industry indicate that our role as the leading exporter of specialized agricultural products will grow, not decline.

One point I make with the above citations is that the 80-percent clause is so broadly stated that it is not clear how it would affect California agriculture. Anoher point is that in the trading and bargaining process to reduce tariffs we feel that our specialized agriculture is peculiarly vulnerable.

We can see, for example, tariffs on California asparagus being traded away for French apples. It might be difficult for a world-oriented tariff economist in Washington to get worked up over the California asparagus industry but to our State it is a $23 million crop. To cite another example: California prunesan important export crop-produce more than $50 million of income to farmers alone.

Our fear that California's specialized agriculture might be hurt in the bargaining process of tariff negotiations has been reinforced by reports from persons closely associated with this Nation's trade policy. Mr. Howard W. Peterson, the President's special assistant on trade policy, earlier this year suggested to a group of California fruit industry officials that they should maintain a representative in Brussels, headquarters of the European Economic Community, to protect their interests there.

Under existing procedures and relationships such a suggestion may be meaningful. Many U.S. commodity groups have been successful in promoting and selling their crops abroad. The State itself has had some success in this type of operation.

But the question arises whether, under the Trade Expansion Act, such a representative would be either effective or desirable. Would an agent, representing an individual commodity from a single State, be able to bring any influence to

1 Much of the economic analysis in this statement is dependent on the work of Dr. Signey Hoos of the Giannini Foundation of Agricultural Economics of the University of California. His complete analysis is attached.