Mr. HOWARD S. PETERSEN, Foreign Trade Adviser to the President, GRANVILLE'S JEWELERS. A DIVISION OF GRANCO, INC., DEAR MR. PETERSEN: This memorandum in support of the administration's foreign trade legislation H.R. 9900 is submitted by Granville's Jewelers, whose headquarters are in San Francisco, Calif. Granville's has three stores in the San Francisco area and through its parent corporation, Granco, Inc., operates or will be operating jewelry outlets in eight other States in 1962. Our support of H.R. 9900 stems from our conviction that increased foreign trade redounds to the benefit of the American consumer and stimulates increased purchasing for the further benefit of domestic manufacturers, importers, and the retail trade. Furthermore, from our experience, we are convinced that efforts to protect domestic manufacturers by resorting to higher tariffs frequently fail to achieve the intended objective, but instead results in substantial dislocations and hardships. We are strong believers in the American system of competition. Our conviction concerning these matters has been underscored during recent years as a result of our experiences following the Government actions in 1954 in raising the duty on imported jeweled-lever watch movements. As a substantial retailer of both imported and domestic brands of watches, we feel well qualified to evaluate the effect of the 1954 tariff increase on the watch industry and other retail jewelers. The restrictive duty on jeweled-lever watches was originally designed to aid the domestic manufacturer to compete with foreign imports. What has actually happened, however, is that quality jeweled-lever watches have declined in sales and pin-lever watch sales have increased rapidly. The decline in the market for the jeweled-lever watches has, of course, injured the very firms that the duty increase was intended to benefit. Perhaps even more important, the trend to pin-lever movements has resulted in failure to serve the best interests of the American consumer. A superior quality jeweled-lever watch cannot effectively compete for the mass market in light of the very high duty. It goes without saying that the higher the price of a product, the smaller the consumer market for this product. Retailers, such as ourselves, who believe that the American consumer should only be offered items of substantial quality, which we are willing to recommend, are unable to do this because of the present high tariff on jeweled-lever movements from abroad. We have seen the mass market for watches diverted from the quality conscious retailer to other marketing channels, whose experience and knowledge of quality in this field is extremely limited, if, in fact, exists at all. Even the individual watch repairmen, the backbone of service in our industry, has been disadvantaged by the marketing changes which have been forced upon the industry by the present high tariff rates. Most pin-lever watches are either nonrepairable or are repairable only at the factory. The diminishing share of the market for quality jeweled-lever watches has resulted in a smaller market for the servicing of such watches. Many retailers are now given the choice of operating their repair facilities unprofitably, or short-cutting their service to customers. This is not a happy choice, either from the standpoint of the customer, the retailer, or the manufacturer, whether domestic or imported, of quality jeweled lever watches, whose reputation is at stake. As a reputable retailer, we ask an opportunity to be as competitive as possible by having made available to us quality jeweled-lever watches at a reasonable price. Lower quality pin-lever watches should not be given an unfair advantage in the marketplace through Government regulations by means of high tariff's. While the jeweled watch import-export business may not be a major factor in terms of total foreign trade, it does affect many thousands of retailers and the millions of consumers they serve. There is no question but that foreign trade is important to this country and to the free world in general. We cannot expect any nation to purchase from us unless we in turn purchase from them. On behalf of Granville's Jewelers, we urge passage of H.R. 9900 by the Congress of the United States. We would appreciate our views being incorporated into the hearings of the House Ways and Means Committee on this legislation. Very truly yours, GRANCO, INC., President. (The above letter was also filed by Hon. William S. Mailliard, a Representative in Congress from the State of California.) POLAROID CORP., Hon. WILBUR MILLS, Chairman, Committee on Ways and Means, Cambridge, Mass., March 21, 1962. DEAR SIR: Please register us in favor of H.R. 9900 now being considered by your committee. Very truly yours, LEO H. IRWIN, Chief Counsel, Committee on Ways and Means, CARLTON P. FULLER, Vice President and Treasurer. BAUSCH & LOMB, INC., Rochester, N.Y., March 8, 1962. DEAR MR. IRWIN: This letter constitutes the written statement of Bausch & Lomb Inc., in connection with the public hearings to be held by your committee on the President's reciprocal trade agreements proposal. We desire that this statement be made a part of the printed record of the hearings. Article I, Section 8 of the Constitution reads in part as follows: "SECTION 8. The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, * "To regulate Commerce with foreign Nations, * * It appears to us that the proposed bill (H.R. 9900) may violate this constitutional provision in that the bill gives the President extremely broad powers over the setting of duties and takes away from Congress any opportunity to participate in the President's trade program. In this respect we believe that the proposed bill is defective. One of the inescapable consequences of the proposed bill is that some American industries, firms, and people are going to be injured. This can be demonstrated by the fact that lengthy provisions for assistance to such injured parties are included in the bill. However, no procedure is provided in the bill whereby Congress will have a part in deciding, or even to express its views about, which industries, firms and people are to suffer these injuries. This decision is left entirely to the President. We think the bill should be revised so as to preserve in Congress at least a portion of the authority given to it by the Constitution. Rather than discard the constitutional system of checks and balances here, this system should be utilized to prevent the possible abuse of the powers given by the bill to whomever may be President. The bill permits the President to reduce duties by as much as 50 percent of the July 1962 rates. This will undoubtedly mean that there will be firms and industries which will be forced to discontinue the domestic manufacture and sale of products they now sell and to develop new products. In order to enable industries, firms, and workers to adjust to the effects of such reductions, section 243 of the bill requires that the reductions be made no faster than 10 percent per year. In our opinion, however, a decrease of 10 percent per year will not give the industries and firms affected sufficient time to adjust to the lower duties by introducing new products. We further believe that by the time governmental assistance will be available to any firm so affected, the firm will be on the road to bankruptcy and that such assistance would be ineffective. The adjustment should be made long before that time has been reached and can best be made if the firm has the opportunity to make it itself, as opposed to having the firm rely on help from the cumbersome and costly mechanism for governmental assistance provided in the bill. In essence, We believe that setcion 211 of the proposed bill should be omitted. under this provision, the President may eliminate all duties on any category of articles if he determines that 80 percent of the world exports of those articles are exports by the United States and the European Economic Community. However, it is not logical that the President should have the authority to eliminate all tariffs on the articles in any given category simply because the United States and the European Economic Community together account for 80 percent of the world export value of all such articles. For example, among other factors, this provision ignores the distinction between those articles as to which the United States produces only 2 percent of the world export value and those articles as to which it produces 90 percent. Furthermore, under this section 11 duties on such articles may be eliminated by reducing the duties as much as 20 percent per year for 5 years, which is twice as fast a reduction as is the case for articles not qualifying for this 80 percent rule. However, the fact that 80 percent of the world exports are exports by the United States and European Economic Community does not in any way lessen the adjustment problem of the particular firm or industry affected by this extremely rapid reduction in tariffs. It is unfair to require the firm which makes product A to adjust twice as quickly as the firm which makes product B, simply because 80 percent of the world exports of product A are exports by the United States and the European Economic Community. We also object to the most-favored-nation principle as now set forth in section 241. Under this section, any elimination or reduction in duties proclaimed as to a member of the European Economic Community would likewise automatically apply to all other foreign countries. The application of trade concessions to the European Economic Community, with its rising standard of living, is not in itself a threat to the American domestic economy. However, the automatic application of these tariff reductions to low cost areas under the most-favored-nation principle is an entirely different matter and will injure our economy on a broad front. Although the President, under section 242, may suspend the reduction or elimination of a duty as to the products of any foreign country which discriminates against U.S. commerce or which engages in policies which tend to defeat the purposes of the proposed bill, we believe that the application of the most-favored-nation principle should be subject to the control of Congress. Accordingly, we suggest that the President be required to certify to Congress that, in his opinion, based on an investigation he has made, the foreign country involved is not engaging in discriminatory treatment of U.S. commerce or engaging in other acts or policies which would tend to defeat the purposes of the bill. We further suggest that Congress then be required to consider and decide upon whether to extend the benefits of the tariff reduction to such other country. Very truly yours, Hon. WILBUR D. MILLS, W. W. MCQUILKIN, President. GENERAL PRECISION EQUIPMENT CORP., Chairman, Ways and Means Committee, DEAR REPRESENTATIVE MILLS: This letter is written to express our support of the need for our country to take the lead in carrying out a comprehensive long-range program to reduce and ultimately eradicate tariff and other barriers to normal trade between the nations comprising the non-Communist portion of the world. Consistently with this concept we also support reasonable measures to protect this and other countries from export dumping and other steps which extend beyond normal commercial activity and assume the aspect of economic or political aggression. Obviously, any tariff reduction program must also deal with foreign exchange, the availability of it and restrictions on its use. For this reason, among others, we believe that Congress should support a national policy of progressive and scheduled tariff reduction and the President should have authority to negotiate the total measures necessary to carry the broad policy into effect. In the Communist countries trade is an instrument of national policy. Therefore from our point of view the Communist countries should be considered as essentially constituting one free trade area as between themselves. The nations of the free world, on the other hand, have erected and are still maintaining too many tariffs, import quotas, currency restrictions and other trade barriers against each other, despite EEC, EFTA and other efforts to deal with the problem. Better trade relations between the countries of the free world will produce better overall relations between them to the great advantage of the free world. Both history and commonsense show us that strong and mutually profitable trade relations between two or more countries exert a very strong and favorable influence upon all other aspects of their relationship, including political and military. Because so much attention has been focused upon the United Kingdom and upon the EEC, we wish to emphasize the importance of Japan in this context. Surely another feature of any comprehensive tariff reduction program is that it will encourage many of the less developed countries to help themselves. This is healthy in any case and in this instance offers the prospect of our being able progressively to reduce the present foreign aid program. Even strong supporters of foreign aid may be forgiven the thought that the pristine beauty of that concept will not be irretrievably destroyed by the prospect of eventual reduction of such expenditures to a more manageable level. Finally we would like to express disagreement with any idea of compensating either capital or labor for supposed injury suffered as a result of a national freer trade policy. Commonsense and a due regard for the national interest suggest that both industry and labor should be spared the shocks and dislocations attendant upon unprogrammed, abrupt tariff reductions. However, neither capital nor labor has a vested interest in the present or any other tariff schedule. A program of tariff reduction, published and enacted now, to take progressive effect in installments over, for example, a 5-year period as negotiated by the Executive will afford sufficient time for adequate private adjustment in the great majority of nationally significant industries. In fact, the net readjustment is very likely to be much more temporary and smaller in total than some people have suggested because of the stimulation to our exports which would result from the reciprocal reduction of present tariffs against our exports. If, in the last analysis, because of a change in national tariff and trade policy, some industries or some segments of them, and the labor involved therein, find themselves in a less protected and favorable position than they now enjoy, we think it would be most ill-advised and dangerous precedent to adopt the novel idea that a change in national legislative policy either confers the right or imposes the duty upon Government to offset the effect of such change by the appropriation of tax revenues for private compensation. In fact, so-called special relief measures along such lines, by blunting the economic forces which would otherwise operate, will only retard and impede the natural tendency of the economy to adjust to the new conditions. In the end we must put our trade, imports and exports, where they belong, that is, on a free competitive market basis, retaining only the protection necessary to deal with those cases in which trade is used as an instrument of economic or political aggression. Very truly yours, ROBERT T. RINEAR, Executive Vice President. A STATEMENT FOR THE CONSIDERATION OF THE HOUSE COMMITTEE ON WAYS AND MEANS RE H.R. 9900 By The Scientific Apparatus Makers Association, Chicago, Ill., March 23, 1962 The Scientific Apparatus Makers Association is a trade association of manufacturers and distributors of scientific instruments and apparatus, founded in 1918, and representing 225 member companies. The association has five sections, each representing a well-defined sector of the scientific instrument industry. They are industrial instrument section, laboratory apparatus section, laboratory equipment section, optical section, and recorder-controller section. It is the only trade association actively engaged in all segments of the scientific instrument industry. This industry has often been referred to as the master-key industry, critically essential to our Nation's defense capabilities in time of national emergency, and now filling a basic role in the science and technology contest of the cold war. Providing the tools of the scientist, engineer, and technician, the essence of technological advances in automation, process engineering, and quality control, the scientific instrument industry forms much of the foundation of numerous segments of U.S. industrial strength and growth. Thus the members of this diverse but basic industry feel that we are in a unique position to observe the impact and effects of governmental policies and programs particularly in those areas of foreign trade, tariff, and certain regulatory programs which constitute problems within this industry. As enlightened American businessmen we are most conscious of the need for foreign trade and the expansion of world markets. We are equally conscious of the pressing need of preserving our American free enterprise system and maintaining a domestic posture of strength and leadership. Serious businessmen and industrial leaders are becoming more and more aware that the increasingly high U.S. labor costs really constitute the basic problem regarding competition in world markets. Postwar pressures of organized labor, fueled in a boom economy with pent-up wartime shortages and supported by numerous liberal pressure groups, have forced wage rates up in an ever increasing spiral. Efforts to curb wage increases were met with demands for increased fringe benefits, increased paid holidays and vacations, shorter workweek, higher unemployment compensation, and more liberal pension and social security benefits. Federal, State, and local governments have cooperated with the necessary laws and regulations. U.S. industries manufacturing products with inherently high direct labor content have been the first to suffer, and in those product areas where low-laborcost imports were shipped into our American markets, many of these domestic industries, some essential to our national defense, have been virtually put out of business. Larger, capital-oriented firms have been able to compete more successfully in home markets but find themselves steadily losing ground in competing on world markets. The members of the scientific instrument industry fully recognize that a large portion, if not the major portion, of the burden for solution of this basic problem rests on the shoulders of business management. Under our free enterprise system, the often brutal forces of competition are well known to us. Our industry's back is bowed against the task of assisting in the improving of production technology, process control, and automation, to reduce the labor content of products in numerous industries. Capital expenditures by industry are reaching new all-time highs in an effort to compete. Increasing attention is being given to more austere designing for export markets. We do urge, however, that the powerful influence of our Government and elected officials be oriented to assist and supplement these efforts of industry and that enlightened cognizance be paid to our basic problems. We urge that long-range planning be undertaken in concert among the several Government agencies involved: Commerce, Labor, Treasury, Defense, and State. International diplomacy, world monetary policies, and foreign trade policy must be integrated with domestic commerce, labor, and defense planning in a single consistent program directed toward the preservation of U.S. world leadership. Such an integrated program appears to be the only path toward an orderly expansion of international trade among the nations of the free world. Vacillating attitudes on tariffs and quotas, uncertain bargaining in trade nego tiations, fluctuating monetary policies, and unofficial restrictive trade agreements can only result in loss of sovereignty and national prestige. From our studies of the President's trade policy proposals, as embodied in H.R. 9900, we recognize that a material effort is being made to establish longrange trade objectives and to pursue these in a constant manner. We trust that the Congress in acting on this proposed legislation will not only make its intent abundantly clear that the provisions of H.R. 9900 are administered fairly and consistently, but will also attempt to insure through whatever means possible that the policies of all agencies of Government are consistent with the objective of strengthening the American free enterprise system and permitting fair competition of U.S. manufacturers on world markets. It is equally important that this spirit of constancy of administration and fair treatment be adhered to by all nations participating in trade programs with the United States and receiving the benefits of this proposed trade program. The failure to achieve realistic reciprocity under U.S. trade programs in the past has been widely attacked, and we feel with some justification. Nations not possessing domestic sources for scientific instruments generally tend to encourage imports of these commodities, but as soon as the minimum market for these products is developed trade restrictions are imposed to keep imports out. Often dollar shortages or other "legitimate" excuses are invoked as the |