golfcart in here because they will sell under the price of an American golfcart, but if they are building these golfcarts and they are doing as I was illustrating

Mr. KRAUTHOFF. Incremental prices for export.

Senator FANNIN [continuing]. They are selling at a lower price in the United States than they are in their own country, we have laws under the statutes which should apply.

I appreciate very much your testimony, gentlemen. We are not in disagreement. We have to go beyond what you have placed in the statement to fully realize the complexities of the situation. We appreciate your being here.

The hearings will stand in adjournment subject to call.

[The prepared statements of Mrs. Brown and Mr. Krauthoff follow:]

STATEMENT ON BEHALF OF THE CONSUMER EDUCATION COUNCIL ON WORLd Trade BY DOREEN L. BROWN, CHAIRMAN, CECWT

I am presenting this statement on behalf of a number of national organizations, members of the Consumer Education Council on World Trade, who are linked by a common interest in United States trade policy and the welfare of the consumer. The list of organizations joining in this statement is attached. I serve as Chairwoman of this Council on a volunteer basis, as do all of our officers and board members.

The Consumer Education Council on World Trade was established almost two years ago, through the efforts of twenty two national public-interest and consumer-oriented organizations, who felt that the American consumer was neither adequately informed nor adequately represented on trade issues. There had never been sufficient debate on the implications for the consumer inherent in United States trade policy, and individual organizations who attempted to speak on behalf of the citizenry, were being overshadowed by the very vocal vested interest groups.

The Consumer Education Council on World Trade serves as a clearinghouse for the purpose of channeling information to and coordinating activities on trade matters of its participating members, with the objective of achieving more effective action on behalf of the American consumer. Its ultimate goal is an informed and concerned citizenry who will be able to assume its proper role in the formulation of U.S. trade policy.

Our member organizations are in unanimous agreement that every consumer in the United States has a major stake in international trade; that this is an issue that directly affects their economic well-being, as well as their freedom of choice in the market place; that protectionism is against their interest and that it herefore behooves the American consumers to become vigorous advocates of a freer trade policy.

We are anxious that the public become aware of the adverse effects on their welfare of tariffs, quotas and voluntary export restraint agreements, with the danger of retaliatory action, all of which would inevitably reduce the quantity of foreign imports available and thereby raise the price on all goods, as well as limiting significantly the range of consumer choice by making some goods totally unavailable. We are particularly concerned because the low income consumers generally suffer most, since they are most sensitive to any increase in prices, and since low-priced goods from abroad are normally the primary target of U.S. import restrictions. These concerns have increased considerably, both in intensity and in validity, since the inception of this Council, as we all realize that the brunt of the consequences of an inflationary period in our economic history is borne by those least able to compensate.

Although we favor strongly the prompt passage of dependable and effective trade legislation and recognize the importance of such legislation to meaningful GATT negotiations, we are deeply troubled that the pending legislation does not address itself sufficiently to the specific interests of the consumers. Considering that the American consumer is the one most likely to be affected adversely by

trade barriers, and from the potential trade wars which such barriers are prone to generate, this seems to be assigning the consumer a very low priority. During the last year we have been watching with mounting concern, quotas come and go in response to domestic needs. Protective measures are imposed one day, then as inflation becomes intolerable, lifted the next. The uncertainties of such a policy, while it may offer temporary relief, are not very reassuring and make it increasingly difficult to convince the consumer constituency that its best interests are foremost in the mind of the trade policy formulators or are even being taken into proper consideration.

We presented a statement to the House Ways and Means Committee urging additional consideration for the consumer and we were gratified to see as part of the bill passed by the House of Representatives, the inclusion of consumer representatives on the Advisory Committee for Trade Negotiations which will work with the Special Representative for Trade Negotiations. We do not feel, however, that this is sufficient to protect the consumer and would urge that this Committee seriously consider the following recommendation:

That whenever there is a matter of adjudications, negotiations, determinations or interpretations, or the creation of advisory bodies to the President, the Tariff Commission, the White House Council on Economic Policy, the GATT negotiating authorities or any other entity concerned with the formulation and implementation of U.S. trade policy, there should be included on these bodies representatives of consumer interests. Such representatives would be responsible for voicing and protecting consumer interests only, as distinguished from the other self interests of any particular segment of the population.

I feel certain that the members of the Senate Finance Committee are aware that this is not an original or radical idea. The concept, in fact, has already been approved by Congress in the past. Some years ago a piece of legislation was being considered by Congress related to Tariff Commission matters and containing a provision to include a consumer representative on the Tariff Commission. The entire bill, including the proposal for a consumer representative, passed both houses of Congress. The legislation, unfortunately, was vetoed by President Hoover. To the best of our knowledge, such a proposal has not been reconsidered by Congress. We think it is time that it was, and expanded to include other trade entities as well, so that consumer interest can become a prime factor in the consideration of trade policy, particularly if such a policy is designed, as it is claimed to be, for the benefit of both our national and international interests.

There are several other aspects of the proposed legislation which are potentially dangerous to the welfare of the consumer. We refer in particular to a) the power given to the President to increase, under certain conditions, tariff rates by 50%. b) the easing of standards by which the Tariff Commission determines injury to a domestic industry and the devices which the legislation authorizes the President to use to ease domestic injury. c) the authorization to impose temporary surcharges or import quotas to correct persistent balance of payment deficits. d) the provisions for relief to industries from unfair trade practices.

All of the above, if implemented, would directly affect the quantity and/or prices of imported commodities, the burden of which ultimately would be borne by the American consumer. We do not intend to make specific recommendations to remedy these aspects of the bill, but are commenting on them as a demonstrable example of the lack of consideration being given to the welfare of the consumer.

United States trade legislation, including the pending bill, historically imposes an obligation on the President to protect the interests of American industry and American workers. We do not quarrel in the least with these requirements, but it is necessary that the President should be required to give equal consideration to the interests of the consumer. Their needs should be given particular attention, not merged with other special needs. We would therefore like to see spelled out in the legislation, that whenever the President is mandated to examine the effects on various economic sectors of certain protective or remedial actions before taking such actions, he be obligated to consider the short and long term effects of such actions on the American consumers. In this way, consumer welfare will be given equal priority with that of industry, labor and agriculture.

In his message to Congress on trade the President stated:

"A wide variety of barriers to trade still distort the world's economic relations, harming our own interests and those of other countries. . . These barriers to trade, in other countries and in ours, presently cost the United States several million dollars a year in the form of higher consumer prices and the inefficient use of our resources. Even an economy as strong as ours can ill afford such losses."

We hope that these words are meant to demonstrate a commitment on the part of the United States to develop and implement a new and progressive system of international trade from which all Americans may benefit and which will strengthen our ties with other nations. Such a system to be viable must be consistent with the principles of fairness and concern for all which we so often and readily articulate.

As members of the Consumer Education Council on World Trade, we recognize that all American citizens are American consumers, and that they represent the largest interest group in our country. Their welfare, therefore, is in the interest of the entire nation, both economically and socially. It should not be denied nor overlooked, but should, on the contrary, be given major consideration in the formulation of a "more open and equitable world trading system."

STATEMENT ON BEHALF OF THE CONSUMER EDUCATION COUNCIL ON WORLD TRADE BY DR. LOUIS KRAUTHOFF, CHAIRMAN, ADVISORY COMMITTEE

Mrs. Brown has just told you generally about our Council and the board consumer interests which it represents today. I am appearing before you, as Chairman of the Advisory Committee of the Council, to speak on a subject of which I think I have particular expertise-trade hearings themselves. As the President of two national trade associations in the 1950's, I gained some insights into the preparation of testimony. Then, as Chairman of the Trade Information Committee of the Office of the Special Representative for Trade Negotiations, from 1964 through 1972, my inter-governmental committee held public hearings on international trade matters as directed by the Trade Expansion Act of 1962.

During this time I followed the trade hearings of the Congress with especial interest. Those of the Ways and Means Committee building up to this bill were especially lengthy: five thousand eight hundred and twenty seven pages in 1968; four thousand six hundred and fifty one in 1970; and five thousand three hundred and seventeen (including the summary) pages of testimony were generated last year over a period of twenty four days.

In 1968, Ways and means spent eighteen days on trade hearings but never reported out a bill. In 1970 the House spent twenty three days in public hearings on trade. The Senate spent two in October, and the bill died on the Senate floor two months later. The nation has been without trade bill authority now since August 1967. Until then there had never been a lapse of even a week since 1934, when we changed our trade policy. These issues are complex and the policy decisions are difficult, but the country and its over two hundred million consumers want action. They are not unaware that in this area especially there is apt to be Executive Branch usurpation when the Legislative Branch leaves an unaccustomed vacuum.

In the testimony last year before the Ways and Means Committee, witnesses representing sixty five commodities of direct consumer interest-from aluminum to zinc-were heard. Also appearing at those hearings were witnesses for two hundred and twelve non-governmental organizations. Our Consumer Education Council on World Trade was one of those groups and Mr. Brown has outlined our basic grade goals. I just want to stress that in all this economic mix, the American consumer has an enormous stake. They want to go on having the wide variety of choice that largely unrestricted imports are so essential in providing. They also want ample import entry to insure them as much shelter as possible from inflation, our number one national problem.

It is not often that the consumers in this country get concerned about international trade, but when they do get the wind up they develop ways of being heard. An early case in point was the special import tax on tea that led to the Boston Tea Party.

Today our consumer group is up to nothing so startling. They merely seek early passage of badly needed trade legislation, that is seven years overdue. The House bill: (1) provides for increased U.S. exports and imports, better jobs and economic growth at home; (2) protects legitimate U.S. domestic interests; (3) lays a basis for opening up new export markets and sources of needed raw material supply; (4) provides for the establishment of improved rules of the road and guidelines for harmonization in international trade which can help us become more competitive abroad; 5) provides, in an increasingly interdependent world, the authorities and the negotiating framework necessary for effective international responses to disruptions and imbalance in supply as well as markets; 6) and it does provide for increased consumer consultation in the formulation of trade policy. Finally, and we believe this is of overriding importance to all groups-not just consumers-we are convinved that a good trade bill will advance peace and security by helping to reduce international economic and commercial irritations which can so easily lead to major international disruptions.

The following national organizations, participating members of the Consumer Education Council on World Trade, have approved these statements: American Association of University Women, Americans for Democratic Action, Church Women United, Friends Committee on National Legislation, Japanese American Citizens League, Lutheran Church in America, National Board, Young Men's Christian Association in the U.S.A., National Board, Young Women's Christian Association in the U.S.A., National Council of Churches, National Council of Jewish Women, National Council of Negro Women, National Federation of Settlements and Neighborhood Centers, United Church of Christ-Center for Social Action, and United Presbyterian Church in the U.S.A.

[Whereupon, at 12:30 P.M., the committee recessed, to reconvene subject to the call of the chair.]