As a whole, the equivalent share of agricultural exports from Indiana is over 2 times as large as the equivalent share of competing imports. Indiana, like every other part of America, is an importer of agricultural products. These are largely tropical or semi-tropical products not grown here, such as coffee, tea, spices, bananas, rubber, etc. In addition, there are imports of competing products, often of special grade and higher in price. Under section 22 of the Agricultural Adjustment Act as amended, imports of the following commodities are limited: Wheat and wheat products, cotton, cotton waste, cotton produced in any stage preceding spinning into yarn (picker lap), certain manufactured dairy products, peanuts, tung nuts, and tung oil. The domestic market, however, is unable to absorb the total output of America's highly productive agriculture. Fortunately, there is active need for these products in foreign countries. In the more prosperous countries, incomes are rising and there is excellent opportunity to sell larger amounts of U.S. farm products, provided such countries maintained liberal trade policies that permit U.S. agricultural commodities to enter and compete on equal terms with those of other suppliers. In the less prosperous countries, U.S. farm products obtained under such programs as Food for Peace are helping these countries in their economic development and at the same time are increasing U.S. prospects for future commercial sales to them. CARSON CITY, NEV., March 26, 1962. Hon. WILBUR D. MILLS, Chairman, Ways and Means Committee, Washington, D.C.: Please record my support of H.R. 9900, to improve reciprocal trade program, expand foreign trade, increase American industrial and agricultural output and job opportunities. Kind regards. GRANT SAWYER, Governor. STATE OF NORTH DAKOTA, Hon. WILBUR D. MILLS, Chairman, House Ways and Means Committee, DEAR CONGRESSMAN MILLS: You have been hearing testimony on H.R. 9900, to improve this Nation's reciprocal trade program. I regard this legislation as absolutely necessary if the United States is to maintain a philosophical leadership in world economics. This Nation's economic system is based upon competition and free enterprise. Any effort to prove to the world that we are willing to extend our philosophy in the form of positive action in expanded foreign trade would be to assume the initiative in the battle with communism to capture the minds of mankind. The rugged competition which would result from a relaxing of protection through tariff revision would not only be good for our own economic muscles but would be a stimulus to the free world. I feel very strongly about this matter, and urge you to act favorably on H.R. 9900. What might appear as a matter of concern to only a few industries at this point could very well be the most significant development to this Nation's growth and to the free world in this century. The approach, of which H.R. 9900 is but a part, could be a major step in unraveling all of the unnecessary subsidization which has brought our U.S. economy to a hodgepodge of institutional arrangements and false relationships, by the supply and demand and the natural flow of productive resources. Please count me among the enthusiastic supporters of the improved reciprocal trade program. Sincerely yours, WILLIAM L. GUY, Governor. STATEMENT OF THE HONORABLE WILLIAM WALLACE BARRON, GOVERNOR OF THE STATE OF WEST VIRGINIA Mr. Chairman, it is a privilege to express before you and the members of this committee my support of the trade proposals presented to the Congress by President Kennedy. My State of West Virginia has been much in the news in recent months-first with regard to the conditions of sore depression and economic difficulties besetting the State, and later with regard to the vigorous efforts which are going forward to solve these problems, at the local, State, and Federal levels. We are succeeding in eliminating the conditions which created an island of need in the midst of a sea of plenty in West Virginia. Unemployment has been reduced considerably since January 1961, when my administration took office. Thousands of new jobs have been brought into the State. Thousands more are pending. The fact remains, however, that we need every single job now extant in West Virginia. I hesitate to consider the condition of our economy if we were suddenly to lose the 60,000 and more jobs which exist solely as a result of the $156.1 million in exports which the State of West Virginia sends abroad every year. The fact that the exports are a tremendous benefit to West Virginia's economy is self-evident. But perhaps it is little known that our exports fall into several broad categories. Although the economy was based on coal alone in the early days of the State, and coal still is a major factor in our economic life, West Virginia ships exports in four of the major six categories of export industry groups in the United States-chemicals and allied products, electrical machinery, primary: metals and nonelectrical machinery. Add to this the fact that our coal exports from West Virginia amounted to $100.3 million in 1960, and the list becomes impressive indeed. These coal exports represent 17 percent of our total production in 1960. Thus, it is essential that a healthy and strong trade policy be carried forward by the present administration, and I hail and applaud the President's decision to seek new tariff legislation in keeping with the new challenges and problems; of the 1960's. I am particularly pleased that the Kennedy legislation contains, for the first time, substantial provisions for the relief of industries hard hit by the impact of foreign imports. The trade adjustment assistance provisions must and should be an integral part of the final version of this bill. I can say this with some degree of concern for industries within the State of West Virginia. Our glass, ceramics, coal, and synthetic fiber companies have suffered considerably from the impact of cheap foreign imports in the past. The trade adjustment provisions offering adjustment allowances, retraining, and relocation fees for workers, product diversification incentives, and other provisions are all desirable and a needed part of this legislation, if further economic dislo cation is not to result in West Virginia. I strongly support the President's inclusion of these sections of the act. In this regard, might I also say that it is my hope and wish that the President implement in full the basic provisions with respect to carpeting and certain types of glass at the end of the 60-day moratorium which he recently declared. The domestic glass industry in West Virginia has suffiered a great deal of damage due to low restrictions on imports in recent years, and deserves a measure of relief if employment is not to decline. This Tariff Commission recommendation is vital to the continued improvement of the West Virginia economy. The Kennedy administration's proposals for "the 50-percent authority" to bring American tariffs in line with those of other nations is hardly new, nor is the proposal to expand the most-favored-nation theory with regard to the European Economic Community. With more than 70 firms in West Virginia exporting an annual volume in excess of $25,000 each, and with a large portion of these products going into nations alined with the European Common Market, the necessity for such flexibility is brought home sharply to every citizen of the State. Those are just a few of the reasons why I, speaking for the State of West Virginia, support the President in his efforts to expand, streamline, and simplify our trade policies. I am particularly impressed with the timing of these hearings, for I am pleased to note that I have been selected by the National Governors' conference to be one of a delegation of Governors from States in every geographical section of the T Union selected to travel to Japan during the month of April. Since West Virginia ranks seventh among the States in trade with Japan, I am most pleased to have an opportunity to speak to our neighbors in Japan about the growing prospects for trade in America-and West Virginia-products. But ultimately, the issue of trade policy is one which transcends State borders, the effects on economic blocs or industries, the impact on workers. It is quite simply-in a world where the cold war with the forces of communism has taken on an increasingly economic basis-a matter of national interest, national purpose, and national survival. In this context, the people of West Virginia stand, as they have always stood, as good soldiers in America's battle against the forces of totalitarianism. With this basic fact before us, we are glad and grateful to be able to support a trade policy that will make our Nation stronger and better equipped to fight the lonely battle in which it finds itself engaged. STATEMENT OF SENATOR JOHN SHERMAN COOPER, OF KENTUCKY, CONCERNING H.R. 9900 IMPACT OF UNRESTRICTED OIL IMPORTS ON DOMESTIC FUEL INDUSTRIES Mr. Chairman, in considering the provisions of H.R. 9900, there are several matters in which I have great interest. However, I shall confine my remarks today to the impact unrestricted oil imports have on our domestic fuel industries. Coal is of vital importance to the economy of my State, and especially in eastern and western Kentucky. Unless realistic control of oil imports is included in any new trade program adopted by the Congress this year, coal and other domestic fuel industries will be crippled in the years ahead. The Congress should establish and pursue a policy that will insure the vitality of our fuel industries-for our Nation's security and its future economic growth depend upon this vital segment of our economy. We depend on fossil fuels for energy in peacetime. And for our national security, the fuel which powers our industry, propels our military machines, and keeps our essential civilian activities in operation, is crucial. We must recognize that the economic development of nuclear power is still in the future. Oversea oil supplies are highly vulnerable to interruption in case of war. A strong domestic fuel industry with adequate standby capacity to meet internal needs is prudent preparedness and a deterrent to war. I understand the domestic coal and oil interests are working together to develop an amendment to this legislation which they believe will help maintain our fuel industry in a state of readiness to expand its production to meet future needs and the demands of any emergency. I propose that there be a realistic limit on the volume of oil imports. Such assurance is needed to preserve the stability of domestic fuel industries, including the coal industry. In answer to those who argue that the control of oil imports will hurt friendly nations, it is a fact that Venezuelan imports increased from 84.5 million barrels in 1956, before controls were imposed, to 113.7 million barrels in 1960, and that imports from Netherlands West Indies increased by 10 million barrels in the same period. I would like to point out that there have been no increases in the import price of oil since mandatory controls were establishd in 1959. The recent 10percent increase of residual oil imports, however, brought a drop in price. Residual fuel oil from the Caribbean can today be shipped to New York and Boston and sold at prices which domestic residual oil and coal cannot meet. Mr. Chairman, I do not believe this country can afford to write off its fuel resources. To do so would be to run the risk of fuel shortages in any future emergency. Nor can we ignore the impact unrestricted oil imports would have on the many thousands employed in the domestic fuel and related industries. The domestic fuel industries are asking Congress to adopt a policy which will give it some stability, by establishing a realistic import control program on crude and residual oil. Such a policy is also necessary to encourage the exploration and development required to keep our coal and oil resources available for use. I sincerely appreciate the committee's courtesy in permitting me to submit this statement, for the constructive action of this committee can assure fuel production facilities, the transportation to move fossil fuels, and the necessary trained manpower in all segments of the fuel and associated industries. STATEMENT IN RE H.R. 9900 BY LAMAR FLEMING, Jr., of HOUSTON, TEX., RETIRED, FORMERLY CHAIRMAN OF THE BOARD OF ANDERSON, CLAYTON & Co., HOUSTON, TEX., AND VICE CHAIRMAN OF THE COMMISSION OF FOREIGN ECONOMIC POLICY (RANDALL COMMISSION) I will add to the great mass of testimony and statements before the committee only some observations of a general nature. I think we should be very proud of our part in the restoration and expansion of the shattered economies of Europe and Japan since World War II. Our outlay was tremendous. But the achievement has been a prosperity and economic strength in Europe, this side of the Iron Curtain, never before seen or even imagined. The nations of this area no longer are burdens to us as poor relations; they now are lusty partners, capable of bearing their parts of our common burdens. Almost the same can be said for Japan. It is unfortunate that the present satellite countries beyond the Iron Curtain were not participants in and beneficiaries of this achievement. The accompanying discords have increased expenses for them and for us and have denied their peoples much of the material betterment that they would have enjoyed had it been possible for all of us to work in harmony. In the approach to the dilemma of the shattered European economies, eminent Europeans and Americans recognized that a fragmentalized Europe, with boundaries for customs, quotas, and immigration every few hundred miles, would not afford mass markets, such as ours, to support the economies of mass production, such as our, and hence that rapid improvement of productivity and standards of living would be hindered to the extent that these boundaries continued to split the European market into a number of small, compartmentalized fragments. Recognizing this, statesmen devised means to overcome the obstacles. The first was the creation of Benelux, a customs union between Belgium, the Netherlands, and Luxembourg, consolidating those three minature markets into one of more viable size. The second was a common market for coal and iron, known as the European Coal and Iron Community, embracing France, Germany, Italy, Belgium, the Netherlands, and Luxembourg. Finally there was the European Economic Community, known as the Common Market, embracing the same six nations. These six nations undertook gradually to reduce and eliminate tariffs and other obstacles to trade between them and to establish uniform rates of duty on imports from other countries. England, Norway, Sweden, Denmark, Switzerland, Austria, and Portugal were not disposed at first to subscribe to all the terms of the Common Market; and they organized a sister group, the European Free Trade Association, whose participants agreed to gradual reduction and elimination of tariffs and other obstacles to trade between them, each remaining arbiter of its own tariffs on imports from other countries. The effect anticipated was the creation of two mass markets consisting of the six nations of the Common Market and the seven nations of the European Free Trade Association, with implications of the possibility of some kind of eventual rapprochment between them. The former effect is being achieved rapidly, particularly in the Common Market, where the reduction of tariffs has been more rapid than originally scheduled. The sequel has been the astonishing increase in production, prosperity, and standards of living in the six member countries. A few of the more enlightened English statesmen foresaw that the English economy would not progress in pace with her continental neighbors unless in association with the Common Market. But time was needed for circumstances to persuade Parliament and public opinion in England. Today England is negotiating for association with the Common Market. I think the belief is general that these negotiations will reach a successful conclusion. Denmark is negotiating toward the same end, and other members of the EFTA are expected to follow suit. I think it is reasonable to expect that within a few years Greece, Turkey, Spain, and Ireland also will affiliate with the Common Market. The result will be a mass market of population and material resources greater even than ours. On the one hand this will be the greatest economic power in the world, of common material interests. This should be of great comfort to us, because the peoples of the area are on our side in the contest between the cults of individual freedom and of despotism. On the other hand, this group will be the biggest export market for the United States and other countries generally, increasingly so as the flowering of its economy increases its buying power and wants. Our own prosperity and that of other nations will suffer if we do not have access to that market on terms equal to those who are part of it, or as nearly equal as possible. Finally, we have to consider our human and political relations with the nations of the area. If the material relations should become those of two bitterly com'peting protectionist markets, the human and political relations could not but suffer. The effect also would be adverse to the economic power of both. of this would militate against the security of both. All A Belgian friend of mine, a cotton manufacturer, was one of many who were very apprehensive of the effects of the Benelux Treaty. He was vehement in his protests to Minister Spaak, one of its principal sponsors. He produced figures which seemed to prove that he could buy yarn in Holland and land it at his mill cheaper than he could produce it, if there were no duties on the Dutch yarn. Several years later, I was passing through Paris and received a message 'to visit him at a hospital there. He wanted to tell me that experience had proved him wrong, that his mills were doing better under Benelux than they had done before. Then he told me that, with the six continental nations moving into a bigger Benelux, the Common Market, he looked for great economic benefits in the six nations generally. He predicted that the scheduled rates of reduction of duties would be exceeded upon the urging of the industries involved. This prediction has been borne out in fact. I think we are at the juncture that the English went through several years ago. I think the more enlightened and objective among us see that the liberalization of trade within Europe, part of it realized and part of it lying just ahead, is a progressive force from which no nation can stand aside without sacrifice to itself and others, and that it is a force which we should welcome, because the progress of it makes more certain the predominant economic power of those who support freedom as against despotism. I think we know that we have no choice as to our eventual association with or disassociation from this progressive force. We can delay association, to our detriment—and adding to the pains of it when it does come. I believe an evolution vastly more powerful than we are will compel association eventually. I think it is idle to contend that no one will be hurt. Buggy makers were hurt when the automobile destroyed their market. Corner grocers were hurt when more economical means of distribution were devised. I am sure less economic producers in the Benelux countries and the Common Market countries were hurt when these two organizations exposed them to broader competition. But many in these categories, aware of what was happening, adapted themselves to it and came out all right. Studebaker turned from buggies to automobiles. Some corner grocers succeeded in more modern types of distribution. My Belgian textile friend got his costs down somehow or the other and prospered. To me the most striking thing about the developments in the Common Market is how little we hear of injuries to industries and businesses there resulting from exposure to greater competition. There is evidence that the fact has proved more gentle than the apprehensions. Some of the developments furnish a partial explanation of this. The economic expansion has brought on full employment and scarcity of labor in the industrial areas, even after the West German absorption of millions of refugees from the East, and has occasioned drafts upon the labor surpluses of the less industrialized areas like southern Italy and Spain. It has brought on a competition for labor and consequently increasing rates of pay. This increased popular buying power greatly, furnishing an unexpectedly broad market for increased production. In our case, liberalization of imports presumably would increase our export sales of the things we produce best and most economically, and increase the activity and prosperity of those lines of production and hence the popular buying power derived from those engaged in them. Some of the domestic productions about which apprehensions are felt would find partial or total relief in the consequent increase in the domestic demand. I think there is little doubt that the benefits to the prosperity of our economic productions would far exceed the injury to the less economic productions. There is always the factor of wage differentials. Here comparisons tend to become obsolete quickly. The scarcity of labor in Europe cannot fail to bring their wage scales closer to ours unless we deliberately keep the gap wide. This force is working also in Japan. |