Congress before giving away and bargaining power on her most important import from the United States-soybeans.

Here it is appropriate to point out that Japan bought $220 million worth of soybeans in calendar year. This is an increase of nearly $6 million over the year before. Taiwan bought over $40 million worth of soybeans, an increase of $3 million over the year before. See the attached fact sheet. We can expect an 8 percent to 10 percent increase in sales to both countries in the years ahead.

So Japan and Taiwan, the No. 1 and No. 2 sellers of textile products to the United States are also the No. 1 and No. 2 buyers of soybeans in the Far East.

Europe buys over half of all the soybeans sold and more than threefourths of the soybean meal. The ÈEC accounts for about a half billion dollars in sales of soybeans and soybean meal. Sales to the EEC from this one crop equals $100 million more than all the textile fabrics and apparel combined the common market countries sold to the United States.

Germany is our No. 1 buyer of soybeans and meal in Europe paying $216 million last year with the dollars earned as the No. 1 European seller of textile products to the United States. The other major buyers of our commodity in Europe in order are the Netherlands, France, Spain, and Italy. You quickly recognize that the ones who sell to us are the ones who buy from us.

Figures for Germany, France, and the Netherlands are for calendar year 1969. This is an estimate since much of the meal and beans are transhipped through the Rotterdam port. These figures present a more true picture than export figures which list the destination of the ship, not the eventual destination of the beans or meal. Figures for the other countries are actual for the 1968-69 marketing year, figuring a price at port of $2.82 per bushel, 1967-68 and $2.75 per bushel 1968-69, and meal at $93 per ton and $90 per ton.

Earlier I spoke of the major trade crisis that developed between the United States and the European Economic Community. The threat of an EEC tax, or worse yet, a compensatory levy is still very much alive. When I was in Europe last fall several leaders of the soybean industry in different counties, especially the German oil millers and the German margarine manufacturers, warned there are certain EEC leaders waiting for an excuse to rally world support behind their scheme to raise money by taxing their major agricultural importssoybeans and soybean meal. The German organizations and others in Europe have worked hard to prevent this unjustified tax or levy but they frankly said we have done all we can and what really counts

is what you folks in the United States do. EEC leaders have said if the United States restricts imports of textiles and shoes they will do the same to soybeans. Congress must keep in mind this half-billion dollar market and weight the consequences not only directly to soybeans but indirectly to the whole world trade attitude, when considering special legislation for two industries, important as they are to certain States, including my own State.

As you know, the American Soybean Association administers a sizeable market development program in seven countries. Our studies indicate Italy deserves top priority as we expand our market development work. So while some view Italy as the No. 1 exporter of footwear to the United States, we view Italy as the No. 1 potential to increase sales of soybeans and soybean meal.

As growers we want to be sure that just because our numbers are spread out over a wide area that the committee members and Congress remember there are 500,000 to 600,000 growers plus the many others I have mentioned depending on soybeans for all or part of their living.

Every survey shows a continued upward trend in world-wide demand for protein. For example, FAO predicts 25-percent increase by 1975. Soybeans have been capturing an increasing share of that increase and it can continue to do so with good salesmenship and free entry into the major markets of the world. (USDA February 1970, World Exports of Meal, average 12 percent increase per year 1960-69.)

We are here to ask you not to jeopardize the present favorable export position for soybeans. Soybeans and soybean meal are the major farm commodity in world trade and at the same time have fewer tariffs and non-tariff barriers than any other major commodity. Restrictive action by Congress could result in retaliation by the offended country against our major export to them.

In Spain, for example, there is a very strong demand for both soybean meal and soy oil. Purchases are limited by opposition from the Olive Oil Syndicate, which is to be expected, and a shortage of trade dollars. They must sell in order to buy.

In Taiwan hard currency is very short and while over 40 percent of all grain purchases are soybeans the potential increase in sales would be endangered because of a lack of trade dollars if Taiwan cannot sell her mushrooms, asparagus, textiles, canned vegetables, and other commodities to the United States. Taiwan would be especially hard hit by using 1967-68 figures as a base for setting textile product imports. Japan's policy of diversification would be stepped up should the Congress take unwise steps toward import restrictions. The costly Longshoreman's strike of over a year ago prompted Japan to move rapidly in the direction of finding new sources of farm commodities where they could in turn sell their products. Japan is now backing work in Thailand to start a major soybean growing industry there. Japan is also studying the advisability of buying competitive oilseeds from other countries and developing a synthetic industry in Japan. Other countries may be compelled to buy such exclusive items as computers, certain aircraft parts, and other special items from the United States but any country can buy their protein and oil needs

from any number of salesmen eager to sell competing products such as sunflower, peanuts, cottonseed, rapeseed, and fishmeal. There is a high substitutability and availability of competing products, especially for soybean oil.

I would like to depart for a moment to speak on a different but related subject, and that is the U.S. policy of maintaining an American selling price on certain select products. This provocative policy is all out of proportion to its importance to the American economy. It is the thorn in the side whenever the United States is involved in trade. negotiations. It is used as an argument for similar protective tariffs overseas by many countries as I learned when in Europe last fall. The EEC uses ASP as an excuse to impose the tax or compensatory levy against soybeans and soybean meal.

The American selling price not only jeopardizes continued free access of soybeans into its major markets around the world but increases consumer costs in this country and farmers are major consumers.

I know that you men are fully aware of this interplay of conflicting interests in this complex arena of world trade. I appreciate the opportunity to appear before you so that our voice might be heard.

In summary, weigh the jobs and the income to farmers-$2,600 million-and many segments of our economy in many States of this multibillion dollar industry. It is overseas sales that make the market at the local elevator and that was never more clear than this year. Not only does 40 percent of the crop go overseas but much of the increase in the years ahead will come from overseas demand if soybeans and soybean products have access to the major markets as they do now. We cannot stand on one foot and call for reduced trade restrictions in other counrties and then stand on the other foot and pass special legislation to protect certain industries in the United States.

The total agricultural complex, especially soybean farmers and those in town who depend on soybeans for their pay check, will be the first to be hurt if there is retaliation, or, a lack of trade dollars with which to buy because of a general downward spiral caused by escalating protestionism. For that reasons, we oppose legislation creating additional import restrictions that could result in retaliation by other countries and cause a reduction in exports of soybeans and soybean products. Thank you, gentlemen.

The CHAIRMAN. Mr. Tindal, we thank you, sir, for coming to the committee and bringing your very fine statement and delivering it to us. We appreciate it very much.

Are there any questions?

We thank you, sir.

Mr. TINDAL. Thank you, Mr. Chairman.

(The following statement was received for the record:)

STATEMENT OF NATIONAL SOYBEAN PROCESSORS ASSOCIATION

The National Soybean Processors Association appreciates this opportunity to outline its official position on U.S. trade policy, as it relates to the U.S. soybean industry.

This year. members of NSPA will crush 700 million bushels of soybeans95 percent of the nation's total crush. Most of this crush will produce oil for edible purposes, and protein meal for use in livestock and poultry feeds.

The soybean economy in the United States has grown rapidly in recent years— the most dramatic sector being export markets. Currently, more than 44 per

cent of the total U.S. soybean crop is exported as soybeans and soybean products. This movement in world trade of soybeans and products processed in the U.S. provides an estimated $1.4 billion in currency toward the U.S. Balance of Payments-more than from any other single commodity.

Exports of soybeans and their products now provide a viable market for about 500 million bushels of the nation's soybeans. These soybeans are produced on more than 20 million U.S. crop acres. Benefits from these exports are spread among farmers, marketers, processors, and the nation as a whole. Our industry supplies over 90 percent of the soybeans and soybean products currently traded on world markets. This remarkable growth in foreign sales stems mainly from these factors:

1. A rapid increase in the demand for livestock and poultry products, especially in Japan and Western Europe.

2. Domestic farm programs that have encouraged expanded production of soybeans, and permitted them to be priced competitively on major world markets. 3. Relatively favorable conditions allowing access of U.S. soybeans and products to growing markets abroad.

Prime examples of these current conditions include:

a) European Economic Community-The EEC has no duties on soybeans or soybean meal as bound under terms set down by GATT. Use of soybean meal in the EEC's livestock and poultry rations has also been encouraged by EEC policies which have held grain prices at relatively high levels.

b) Japan. This nation has low duties on soybeans as a result of concessions obtained in the Kennedy Round of trade talks. Current duties are about 6 percent ad valorem. The Japanese more recently put further duty reductions into effect on May 1, 1970, although these will not become mandatory until 1972. Less favorable conditions, however, exist for soybean meal in Japan. This product is currently subject to quotas established annually by the Japanese Food Agency (about 50,000 metric tons will be imported during this fiscal year). Our industry has the assurance that Japan will remove these quotas by the end of 1971, with an effective 5 percent ad valorem duty remaining.

The soybean foreign trade outlook, although generally favorable now, does have problems. Consider these potential problem areas:

1. The European Economic Community has discussed the implementation of a domestic tax on soybean meal and oil. This would, if enacted, sharply reduce consumption of these products within the EEC. No action has been taken on this proposal to date, mainly due to a clear indication from the U.S. that it would retaliate. This warning was strongly supported by a resolution introduced by Chairman Mills last year. But the threat of the EEC tax still lingers. It is still too early to determine if the EEC Commission intends to drop its original plans. 2. Developing nations still press for an international fats and oils agreement. Such an agreement would seriously limit export prospects for both U.S. soybeans and soybean products. These nations' plans-especially those in Africa and Southeast Asia are currently stymied due to firm insistence by the U.S. that such an agreement is impractical. We agree, especially now in view of strong world oil prices.

NSPA is aware that other U.S. products have not fared as well as soybeans and products have on world markets. The nation's textile industry has likely suffered as a result of low-cost imports, although it is difficult to determine at this time where the major impact has fallen.

Efforts to redress any such injuries to trade-outside the framework of GATT can jeopardize both the present position of the soybean processing industry, and the institutional framework within which its gains have been made and secured. We are referring specifically to legislated or "voluntary" quotas. Here is our position on the nation's foreign trade legislation:

1. We believe that the proposed Trade Act of 1969 represents a constructive approach to the nation's trade problems.

2. We support the proposal that would grant the President authority to reduce tariffs by 20 percent (or two percentage points ad valorem below the rate established on July 1, 1967). We understand this proposal is designed to facilitate use of an escape clause to provide relief-within GATT rules-for industries injured by low-cost imports.

3. We support amendments designed to make escape clause relief more readily available.

4. We support provisions that would make the adjustment assistance pro

gram a more useful tool in assisting industries threatened by low-cost imports. We feel the proposal to drop the link between increased imports and prior tariff concessions is constructive.

5. We urge the House Ways and Means Committee to act on the Bill during the current session of Congress. Enactment would provide tools that are badly needed to protect the existing institutional framework for international trade. It would allow the Congress and the Administration to develop constructive proposals for comprehensive long-term trade policies.

NSPA feels it is imperative that the U.S. maintain a favorable free trade climate throughout the world. The nation's agricultural commodities must be allowed to compete on major world markets, while maintaining the freedom to aggressively expand sales. Sound economic and trade policies are needed to meet these goals.

The nations must also maintain its ability to respond swiftly and effectively to any future threats to its world agricultural trade. To this end, the NSPA takes special note of the inestimable value of the Office of Special Trade Representative, The White House. We feel that this Office should be strengthened and expanded to meet its increasing world trade role. It has provided a valuable vehicle for swift communication between the nation's commodity groups and the Administration on past trade policies and problems.

We submit this official position paper in the hope that sound and effective trade legislation will be forthcoming.

The CHAIRMAN. Without objection, the committee will recess until 2 p.m.

Our colleague, the Honorable John S. Monagan, will be the first witness at that time.

(Whereupon, at 12:35 p.m. the committee was recessed, to reconvene at 2 p.m. the same day.)

AFTER RECESS

(The committee reconvened at 2 p.m., Hon. Sam Gibbons presiding.) Mr. GIBBONS (presiding). The meeting will come to order.

Mr. Monagan, you are recognized.

STATEMENT OF HON. JOHN S. MONAGAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CONNECTICUT

Mr. MONAGAN. Thank you, Mr. Chairman.

Mr. Chairman and members of the committee, I represent a highly industrialized district and trade problems and trade legislation have been matters of deep concern for this district for many years.

This concern has not been lessened by the feeling that too often decisions on trade matters are made by bureaucrats who have no relation to the industries and their workers on the ground but are motivated purely by international considerations and believe that industries and people can be manipulated like counters on a chess board while following a line of doctrinaire adherence to the principle of free trade. Disraeli long ago said that "free trade is not a principle, it is an expedient," and this implied counsel of moderation should be heeded today. What we must do is look at the facts with a sense of proportion and decide whether or not we want to happen what is happening in the world of trade and whether or not the continuation of present policies will advantage the people of the United States.

I favor an enlightened trade policy and I believe that this is the attitude of the majority of the people in our country. At the same time,