IDAHO MINING ASSOCIATION, Boise, Idaho, April 20, 1962. Representative WILBUR D. MILLS, Chairman, Committee on Ways and Means DEAR MR. MILLS: Because the notice of hearings on H.R. 9900 specifically requested that organizations having a similar interest coordinate their testimony through a single spokesman, the Idaho Mining Association did not ask for time to present its own witness. We felt that the testimony of the American Mining Congress and the Emergency Lead-Zinc Committee would adequately represent our views. Now that such testimony is a matter of record, we wish to express our support and endorsement of the statements presented by these two organizations and to supplement them with a brief review and analysis of Idaho's peculiar stake in this legislation. Idaho's economy, as you know, is based almost entirely upon the development and utilization of its bountiful natural resources-land, water, timber, and minerals and metal mining is one of the major bulwarks of the State's economic structure. For the past 10 years or more, this mining industry has been declining steadily. Over that period we have experienced the complete termination of major production of antimony, cobalt, tungsten, columbium-tantalum, rare earths, and mercury. Production of lead and zinc, two of Idaho's principal mineral products, has slumped to the lowest level in decades. Employment in the industry has decreased approximately 40 percent, and the number of producing mines has dropped to about one-third the level of 10 years ago. This slump in Idaho's mining industry can be attributed almost entirely to one factor-the inability of our mines to compete in the open market with lowcost foreign production. The present depressed condition of our important lead-zinc mining industry stems directly from the tariff concessions which were negotiated at Torquay under the reciprocal trade agreements law. Although Congress specifically included in this law peril-point and escape-clause provisions for the protection of domestic industries against the adverse impact of foreign imports, these provisions have been honored more in the breach than in the observance, by virtue of the administrative discretion enjoyed by the executive department under the law. There is little in the experience of the lead-zinc mining industry to inspire confidence that the tremendous expansion of executive authority under H.R. 9900 will work to the benefit of our domestic economy. As we interpret the bill, any trade concessions necessary to adjust to the growing threat of the European Common Market will also be granted to all other foreign countries under the most-favored-nation principle. This means that the emerging underdeveloped nations throughout the world will enjoy the full advantage of any reduced tariff barriers, and their major exports will have to be raw material products-minerals, timber, etc. which compete directly with our Western natural resource economy. Although administration witnesses have vigorously defended the adjustment assistance provisions of H.R. 9900 as an improved method of escape from serious import injury, it is our conviction that these provisions will have extremely limited application as a means of sustaining the economic structure of mining communities. Most of these communities exist solely because of the geologic accident of mineral deposition and very rarely enjoy any of the advantages— marketwise or otherwise that will justify conversion or adjustment to another type of industrial base. Unless production from the mineral deposits can be continued, and on a profitable basis, there will be no reason for the continued existence of these communities. The recent relegation of two modern Idaho communities-Stibnite and Cobalt-to the status of ghost towns is substantial proof of this fundamental truth. The inclusion in the bill of the adjustment assistance provisions is tacit admission that serious damage to some domestic industries is anticipated under the proposed new trade policy. On the basis of the record of the past 10 years. the domestic mining industry has excellent cause for apprehension in this respect. As representative of virtually all the remaining productive mining operations in the State, the Idaho Mining Association shares this apprehension. We recognize that the emergence of the Common Market and its almost phenomenal internal success makes necessary a thorough reappraisal of, and possibly some basic changes in, our foreign trade policy. However, we question the advisibility of choosing our weapons before all aspects of the economic challenge have been thoroughly and competently assessed. A liberalized foreign trade policy may well be the answer to our balance-of-payments and gold-outflow problems, but until the possible effects of tariff reduction have been more intensively analyzed, we believe it would be a grave mistake to surrender all responsibility in this field to the executive department and leave administrative authorities completely free of the traditional constitutional checks of congressional sanction and judicial review. If it is not too late to have this letter included in the hearing record, we respectfully request that this be done. Sincerely, A. J. TESKE, Secretary. STATEMENT OF AMERICAN IRON & STEEL INSTITUTE ON U.S. FOREIGN TRADE POLICY The President of the United States has proposed a national trade policy designed to meet new conditions in foreign trade. He has asked for broad tariff powers to replace the old Reciprocal Trade Agreements Act which expires on June 30. He proposes to exercise these powers in return for "quid pro quo" tariff and other concessions by the Common Market and other countries. He hopes that such a policy will stimulate American exports, as well as increase imports, to the net advantage of all concerned. What is the position of the American steel industry on such a program? The pattern of this country's exports and imports of steel products has drastically changed in the last few years. The United States, for the first time in over a half century, has been a net importer of steel tonnage in the last 3 years. There is no present indication that this trend will be reversed. New and modern steel capacity abroad has now more than caught up with local needs, so that foreign producers may even more vigorously seek an outlet in the United States the largest steel consuming market in the world-for their increased capacity. Existing U.S tariffs on imported steel are already as low as any in the world, averaging less than 7 percent. American steel producers are at a serious disadvantage with foreign steel producers in the important areas of employment costs and taxation burdens. It is well known that our hourly employment costs are three to seven times larger than those prevailing abroad. The more enlightened and constructive tax treatment granted by fereign governments while less generally recognized in this country, has been one of the great contributing factors in the rapid growth and modernization of foreign competitors' steel plants during the past 10 years. These two factors make it increasingly difficult to meet foreign competition either at home or abroad. We are not now enjoying and never have enjoyed (except under war and other abnormal conditions) any significant market in Europe. Tariff reductions on steel products by other countries would be desirable and helpful, but are not likely to overcome the wage and tax handicaps and have any appreciable effect upon our exports. We believe in and subscribe to the objective of a free and growing two-way international trade for this country. No industrial nation like the United States can have any other objective in its best economic and political interest. The Trade Agreements Act was first passed 28 years ago and is no longer adequate to deal promptly and flexibly with the problem in all of its aspects. We believe, therefore, that improved and more permanent governmental machinery should be devised to administer tariffs as well as all other phases of international trade in the best interests of the country. In considering or administering new trade legislation, we must not lose sight on the basic truth, recognized in the Common Market Treaty itself, that it is necessary to bring labor, taxation, and other relevant policies between countries into an equitable relationship, in order that freedom from tariffs and other international trade barriers can be beneficially achieved. The present wide gap between American and foreign employment costs and the greater burdens in the United States of unrealistic and obsolete depreciation and taxation policies are fundamentally the reasons why the American steel industry finds it increasingly difficult to compete with foreign steel producers, in spite of any tariff reductions which can be made here or abroad. Labor and government, as well as management, must cooperate in the solution of these problems, if the American steel industry is to share in the benfits of increased international trade. |