To illustrate what I have in mind, I have in my hand a letter of December 31, 1962, in reply to questions I asked about Yugoslavia. This letter came from Frederick G. Dutton, Assistant Secretary of State. It reads in part:

I am pleased to furnish you with the additional information requested in your letter of December 17, 1962, addressed to Mr. Lee. Of the $153.9 million of U.S. exports to Yugoslavia in 1961, the $80.9 million were for Public Law 480 shipments. This sum included $64 million under title I and $16.5 million under title III.

Senators will not believe this, but we have 312 billion

Mr. AIKEN. Million?

Mr. LAUSCHE. Billion dinars; 312 billion.

Mr. SYMINGTON. The Senator will The Senator will agree, will he not, that if the amendment is adopted this unfavorable balance of payments can only increase?

Mr. LAUSCHE. No. I believe that if we wish to liberate the Yugoslav, Hungarian, Polish, and Czechoslovak people from communism we must stop giving aid to the governments, by which they perpetuate themselves.

Mr. SYMINGTON. This is trade, not aid.

Mr. LAUSCHE. I understand that this is trade.

I voted a moment ago in favor of the amendment by the Senator from Ohio amendment by the Senator from Ohio which dealt with aid being given to Communist countries under the foreign-aid program. I voted against granting such aid. I voted against it the two or three times it has come up in recent years. I commend the Senator for his amendment.

However, we must make a distinction between the question of aid, whether it involves loans or grants under the foreign aid bill, and the question of normal commercial trade on a quid pro quo basis. We sell tobacco; we get back gold. We do not enter into the exchange unless we think it profits us to do so. Obviously, to the extent that we can promote exports, we are helping to adjust the serious balance-of-payments just the serious balance-of-payments problem that the Senator from Missouri problem that the Senator from Missouri has referred to.

Moreover, I think it should be pointed out that the export licenses required under our laws, dealing with ordinary commercial trade, preventing the export of any kind of strategic material that might contribute to the war power potential, or any other material that might strengthen the Yugoslav Communist regime, in any way that is considered to be inimical to the interest of the United States, remain intact. Control over

Mr. LAUSCHE. But trade is aid.

Mr. SYMINGTON. I do not wish to belabor the point, but believe we must consider the state of our own economy as of today. A great many of our friends and allies are not only trading with the Russians, private business, but at the same time are also trading heavily, for gold, with the Communist Chinese. We have reached the point today where we must borrow money from foreign countries in order to handle our foreign aid program, through the International Monetary Fund and through the sale of bonds to central banks abroad. Under those circumstances, how can this economy continue to exist successfully if we not only use more money in the aid program-and I heard the Senator say the other day he did not think the aid program should be cut below what it was the other night-but also we do not allow our private corporations to trade with these countries? While the private companies of other countries trade freely. I think this could guarantee economic catastrophe.

Mr. LAUSCHE. Yes, but when we sell to those foreign countries, those countries also sell products to us. I predict that at the 1964 Trade Conference, which is to be held in Geneva, we shall suffer a reversal that will be shocking, because GATT will be ruined and Red Russia will be wanting to sell to us and every other country will be wanting to invade our market.

disturbed.

What the committee was trying to do was encourage normal trade with Yugoslavia in nonstrategic commodities, beslavia in nonstrategic commodities, because the committee felt strongly that cause the committee felt strongly that this was in the national interest of the United States.

Do we want Yugoslavia's trade oriented toward the Western World, or do we want it cemented in the Communist world? Do we want to encourage Tito's regime to augment its independence, or do we want to so root Yugoslavia's trade inside the Communist countries so as to leave it forever cemented within the Communist bloc?

If we are to look at all of the Communist lands as they are painted red on the map, we are conceding that the Comthe map, we are conceding that the Communist empire is going to remain intact, and that we are going to deal with one monolithic entity forever more. But if we are to deal realistically with the situation and look at the differing national conditions that exist from one end of the conditions that exist from one end of the Communist empire to the other, then we naturally should try to encourage the schism that is developing with respect schism that is developing with respect to Yugoslavia and the rest of the Communist world. This is obviously in our national interest.

That is the reason why the committee is trying to strike down the prohibition which would prevent us from extending which would prevent us from extending ordinary commercial relations to Yugoslavia. The real question is whether we want to do this in our own interest, or whether we want to lead Mr. Tito into Mr. Khrushchev's hands and glue him

Mr. MONRONEY. Mr. President, will the Senator yield?

Mr. LAUSCHE. I yield to the Senator from Oklahoma.

Mr. MONRONEY. I support the committee with respect to this amendment.

A few weeks ago, with the Interparliamentary Delegation of the United States, I had the privilege of being in Yugoslavia and having a conference with the officials that correspond with our Cabinet. They made it clear that they did not wish any more aid; that they were selfsufficient in agricultural commodities; that they were self-sufficient in other aspects of their economy. We saw a prosperous country filled with our products bought by their earnings from exports to the United States.

We were told they tremendously appreciate purchases, under Export-Import Bank financing, of the new type of diesel locomotives that power their railroad systems. They have bought several million dollars' worth of our transport equipment. They have bought factory machinery. We saw U.S.-built computer machines, which certainly are not the product of a suspect Communist organization, inside that Communist country. Many of our large corporations have gone into that country and have been licensed to do business there.

The men with whom we talked represented the equivalent of the Secretary of the Treasury, the head of their parliament, and the head of their state department. They explained why it is important to become a part of the most favored nation group, because they have oriented 75 percent of their trade toward the West, because they wanted to pay us in dollars for our exports, and because they thought the products that they had bought from us were the best in the world.

They said that had been so since they broke from the international trade pact with Communist Russia in 1958, and intended to continue that way, because they liked to trade with the West. We asked why? The answer was that the only way we could trade with the Soviets was to let them have the choice products they produced and that the Soviets needed, and the Yugoslavs would be offered surplus products that the Soviets and their Communist neighbors had in abundance, and for which the Yugoslavs had no use.

Mr. President, this is the way to penetrate the Iron Curtain. This is the way to show what freedom-loving America can produce and sell on the world market, if we give it a chance. We have cut out aid to Yugoslavia. We would be doing ourselves a great disservice, and doing freedom a great disservice, if we said we were going to have no trade with that country. We would force her to look to the East and reject the West. Perhaps the Government of Yugoslavia does not love us, but certainly the people of Yugoslavia do. They have many relatives in this country. They want to trade with America and sell us shoes and their carved woodenware. But, with the threat that this restriction is to be applied and they are not to receive the favored nation treatment, this trade has already decreased by 25 percent.

Mr. President, I think it is high time to take an adult stance in world trade. As was pointed out, an export license cannot be obtained to export anything of strategic value to such countries. Let us

be adult. The Red Kremlin does not give us a free ride or a sanctuary anywhere in the world without seeking to penetrate our trade areas. It is high time we were realistic. We have an opportunity to establish our trade in this area, where a strong Communist nation has maintained its independence from Russian trade treaties and the Russian military organization. I think it is high time to extend to this country that which we extend to almost every other nation except the Communist-controlled countries that are a part of the Moscow conspiracy. I think they ought to have a chance to buy American products and compete with the rest of the world on an even basis, to be given an opportunity to obtain dollars to buy goods from this country.

Mr. LAUSCHE. The Senator from Oklahoma has presented very effectively an argument that is applicable to what the Communist countries, and especially Yugoslavia, want, but in December of 1962, Tito went to Moscow. He conferred with Khrushchev. Khrushchev made statements. Tito made statements, redeclaring the fidelity of Communist Tito to the worldwide Communist cause.

Subsequently, Khrushchev went to Belgrade, and in Belgrade Tito and Khrushchev rededicated themselves to the cause of communism. Khrushchev

went so far as to say to the Communists:

How can you argue that Tito is not a Communist? How can you say that, when practically everything is socialized?

In Moscow and in Belgrade this redeclaration was made to destroy capital

ism and our country.

All that Tito has to do is honestly reorient himself to the West, which has done so much to help him-$2,500 million of our money has gone to Tito. Less money, of course, has gone to Poland. Three hundred eighteen billion dinars are now in our possession.

Mr. SYMINGTON. What is a dinar worth?

Mr. LAUSCHE. That is an interesting question. The Senator's hair will stand up when I tell him. In 1955 when we initially began selling under Public Law 480, the dinar was worth 300 to the dollar. The last transaction of which I have a record shows that the dinar was worth 750 to the dollar. With a 750 to $1 dinar Yugoslavia is paying off the 300 dinar to $1 value of the 1955 debt. Our agreements provide for repayment in dinars. Most of the agreements provide for that.

Mr. MONRONEY. On trade?

I do not know the name of the Communist who made the statement:

Borrow money, sell to them. See to it that it is repaid in zloties or dinars. Zloties, cruzeiros, or dinars will become cheaper in value, and in that way you will pay off debts with reduced zloties, cruzeiros, dinars, and other paper money.

Mr. LAUSCHE. I yield.

Mr. SYMINGTON. The Senator is making statements which have to do with the aid program. I am talking trade and remind the Senator that West Germany, France, Britain, Canada, all the other countries in the free world are operating their economies, in the main most successfully, under the nuclear umbrella of the United States. If these countries, some of which now have greater prosperity than we have, and certainly more prosperity than they ever had, continue to let their private companies deal with countries behind the Iron Curtain, while our country in effect, Iron Curtain, while our country in effect, furnishes them their defenses, how does the Senator expect corporations in this country to live, if we so stifle their chance for trade? Everyone who has been in business knows that that last 10 percent of volume obtained nearly always is the difference between making a profit or suffering a loss.

Mr. LAUSCHE. Mr. President, the best way in which to insure the life of our companies is not to strengthen the enemy who wants to destroy the very business which we are praising and wish

to help. There is only one purpose that is to destroy the business we have. I am the Communist countries have, and that not one who is going to give them aid to destroy that which I want to preserve. I reject absolutely and positively the principle that because if someone has done something, we should do it. That is erroneous. That is one of the weaknesses of what is happening in Congress; because someone has done something, we should do it also.

Mr. SYMINGTON. The Senator is

speaking ideologically-I am talking about the health of the American econ

omy.

transactions.

countries in the free world-the French, West Germans, British, and Canadiansshould be broken off, unless they follow the Senator's recommended program. That would apply to our relations with NATO itself, and would result in little NATO itself, and would result in little organized free world resistance to communism.

Mr. LAUSCHE. That does not follow at all.

amendment of the Senator would make Mr. SYMINGTON. In my opinion, the it impossible for any American manufacturer to compete successfully with a Canadian or British or French or West German manufacturer.

Mr. LAUSCHE. My final answer is that the Senator was a member of the Truman administration, and that administration found that the granting of economic aid and the indulgence in business with Communist countries were inimicable to the security of our Nation. I have presented my case.

Mr. AIKEN. Senator yield?

Mr. President, will the

Mr.LAUSCHE. I yield.

Mr. AIKEN. If the Senator's amendment should become law, and the customs duties on Yugoslav products were raised 300 percent, would the American consumer still be able to get Yugoslav products of the kind that we have been using?

Mr. LAUSCHE. If the Yugoslav Government can sell at a price below ours, we will still be able to buy Yugoslav goods, but we will not give them a special benefit in tariffs and duties.

Mr. AIKEN. The Senator means that if the Yugoslav prices were lower than the prices at which we could purchase the articles from some other country, including the higher duty, we could bypass them. Since Yugoslav business is 75 percent oriented to the West, the major customers of Yugoslavia are West Germany and Italy. Could we perhaps buy Yugoslav products through West Germany and Italy?

Mr. LAUSCHE. I suppose that might be done. I am not prepared to answer the Senator's question. The Senator believes they could circumvent the rule I am proposing to have adopted.

Mr. AIKEN. They have been doing a pretty good job to date of buying American products, processing them, and selling the end products to Communist countries. Is there any reason why they could not buy from Communist countries and resell to us, provided they could sell at a little lower price than the American consumer would have to pay if she bought directly and paid the higher tariff?

Mr. LAUSCHE. I suppose that is true. Mr. AIKEN. I am beginning to wonder.

Mr. LAUSCHE. The Senator has brought up a thought that I think ought to be explored; that is, Communist Yugoslav aid to African and Asian countries. But I am probably getting into a different subject.

Mr. AIKEN. Yes.

Mr. LAUSCHE. But Yugoslavia is getting material from us, and what it is getting from us, it is sending, in part, to India, Pakistan, the Far East, and African countries.

Mr. AIKEN. If the Senator's purpose is to reduce the Yugoslav economy, we would also have to apply those rules to the other countries that handle Yugoslav products and sell to the West.

Mr. LAUSCHE. I suppose one could reach that conclusion.

Mr. KEATING. Mr. President, will the Senator yield?

Mr. LAUSCHE. I yield.

Mr. KEATING. I wish to ask a question or two of the Senator from Ohio, or perhaps the chairman of the committee on a phase of the amendment which has not heretofore been discussed.

As I understand, if the language which the committee has recommended is not adopted, another country, namely, Poland, would also be adversely affected.

Mr. LAUSCHE. It involves not only Yugoslavia and Poland, but all Communist countries.

Mr. KEATING. That is stated theoretically in the language; but as a practical matter, does it not relate largely to Yugoslavia and Poland?

Mr. LAUSCHE. As a practical matter; yes.

Mr. KEATING. The Senator from Arkansas has given some interesting figures, showing that as a practical matter, trade with Yugoslavia will virtually be cut off if we do not permit this relief. Does the Senator have comparable figures for Poland? The reason why I ask the question is that I was in Poland last year. The Senator from Ohio knows that I have no more use than the Senator has for the regimes that control those countries. But, after all, there is a great reservoir of friendship and good feeling among the people of this country toward the Polish people. Through the centuries the people of Poland have had to contend with foreign tyrannies imposed upon them. Yet I am convinced that the people of Poland retain their enduring love of liberty and their deep affection for the people of the United States. That mutual good will is something which I think is well to retain and to cherish. The people of Poland are not Communists at heart and I would hate for their Communist government to be able to say the United States has broken its historic ties of friendship with the people of Poland. Do the figures indicate, in the case of Poland, that the practical result would be the same as in Yugoslavia?

Mr. FULBRIGHT. It would be, with It would be, with this variation: That there is a larger percentage of Polish exports to this country, exports on which there is no tariff. Those exports would not be affected to quite the same degree.

However, from Poland, for example, we get bentwood furniture, on which there would be an increase from 251⁄2 to 422 percent; bristles from 2 to 3 cents; calf hides, wet salted, from 4 to 10 percent; glass Christmas tree ornaments, from 252 to 60 percent and so forth. The same is true of poppy seed and wicker baskets.

Mr. KEATING. Can the Senator inform us the extent to which imports from Poland are not subject to duty in the United States?

Mr. FULBRIGHT. The increase in tariff rates resulting from withdrawal would affect more than $5 million of trade.

Mr. KEATING. Of a total of how much?

Mr. KEATING. It is not so serious a matter, with respect to actual practice. Mr. FULBRIGHT. It is the same principle, but not to the same degree.

Mr. KEATING. It is just as serious so far as the psychological effect is concerned. I do not know to what extent that information is known to the people generally, but certainly the Communist government of Poland can be relied upon to put the United States in as bad a light as possible. I think it is not worth it, and I therefore feel that it is unwise not to permit, under proper protective provisions, such as are included in the committee amendment, the extension of this treatment in the case of those countries. No other Communist countries are involved at the moment, are they?

Mr. FULBRIGHT. These are the only two to which this principle has ever been extended since the war. I know of no intention whatever on the part of anyone to do it. However, I am in accord with the statement of the Senator from Oklahoma [Mr. MONRONEY]. Suppose a situation developed in which the Hungarians or the Rumanians desired to trade with us, and they made a good proposal, one that was considered to be in our interest. I would certainly say that we should develop that trade. But such a situation has not occurred.

Mr. KEATING. The language requires that the President must find that the trade would be in the national interest and would promote the independence of such country from domination or control by international communism. The President would report that determination to Congress, and if the Congress believed he had made an incorrect determination, I feel certain that there would be strong protests.

Mr. FULBRIGHT. The Senator is absolutely correct.

In the case of Poland, President Eisenhower made just such a finding in 1960. When the Senator asked me about what could happen, I said that if such conditions occurred in regard to one of the other countries, I would follow the procedure the Senator has mentioned. I would hope that it would happen. I do would hope that it would happen. I do not mean that I hope it would happen improvidently or speedily, but that there would be genuine reasons for doing so. But those reasons have not developed yet.

Mr. DOUGLAS. Mr. President, will the Senator from Ohio yield?

Mr. LAUSCHE. I yield.

Mr. DOUGLAS. I wanted to ask a question of the chairman of the committee.

Mr. LAUSCHE. Mr. President, I yield the floor.

Mr. DOUGLAS. I should like to ask for confirmation or rebuttal of the point which the Senator from Idaho [Mr. CHURCH] and the Senator from Oklahome [Mr. MONRONEY] made; namely, whether export licenses would still be required on commodities which we would ship to Yugoslavia or Poland.

DOUGLAS. Would

export li

Mr. censes continue for those countries and for other countries inside the Communist bloc?

Mr. MORSE. For strategic and combatant goods.

Mr. FULBRIGHT. That is another matter; but it is my information that they are required on the same kind of goods. But that is handled under the Export Control Act, and this provision would not affect that situation.

Mr. DOUGLAS. I understand. This then would be trade primarily in consumer goods, not trade in capital goods or war materiel. Am I correct?

Mr. FULBRIGHT. The Senator is correct. I have a list of all our imports. I believe I also have a list of our exports. Mr. DOUGLAS. In In the case of Poland, I think I can supply the chief items of imports: Polish ham and Polish sausage.

Mr. FULBRIGHT. They are the primary ones; and that is why there is a difference in the relative effects of the tariff.

Mr. President, in order that the record may be complete, I ask unanimous consent to have printed at this point in the RECORD a memorandum prepared by the committee staff, which contains the material from which I have been quoting. It is given in more detail and states the exact amount of the effects.

I also ask unanimous consent to have printed at this point in the RECORD a telegram I have received from four gentlemen of Polish extraction who are the mayors of four American cities.

There being no objection, the memorandum and telegram were ordered to be printed in the RECORD, as follows: U.S. TRADE WITH YUGOSLAVIA-POSSIBLE EFFECTS OF WITHDRAWAL OF MOST FAVORED NATION

Nature and extent of trade: Yugoslavia's current patterns of trade are Western oriented. In recent years more than 70 percent of its total trade has been with free In 1962 this figure had world countries. risen to 77 percent. The United States is one of Yugoslavia's most important trading partners.

Trade between the United States and Yugoslavia has traditionally been based on most-favored-nation treatment of the two trading parties. Most-favored-nation benefits were mutually accorded each other by the United States and the Kingdom of Serbia in a Treaty of Commerce and Navigation of 1881 and this treaty has remained in effect ever since between the United States and the government at Belgrade whatever the form of the latter.

In 1962 the United States was a leading exporter to Yugoslavia and Yugoslavia's third largest market. The following table indicates the recent pattern of United StatesYugoslav trade:

United States-Yugoslav trade
[In millions of dollars]

sequently influence Yugoslavia's ability to pay off her debts to the United States. Yugoslav payments to this country in 1963 will amount to an estimated $10 million. Annual payments to the United States during the period 1964-67 are expected to be between $10 and $11 million on the basis of the amount of Yugoslavia's outstanding indebtedness as of December 31, 1962. Any increase in total indebtedness since that date would naturally increase the amount of Yugoslav payments.

Also noteworthy in this connection are the claims of U.S. nationals against Yugoslavia for the nationalization and other taking of property which have arisen subsequent to July 19, 1948, the date of the last claims settlement. Approximately 400 claims are involved, and the amount claimed by the

Nails....

Description

Aluminum sheets and plates.. Aluminum rods and bars.

Furniture

Hops...

Lead pigs and bars.

Sheep and lamb leather

Brass rods and bars..........

Tobacco...

Willow bags and baskets.. Zinc pigs and blocks.. Barytes ore...

claimants is about $25 million. Denial of most-favored-nation to Yugoslavia is very likely to affect adversely Yugoslavia's disposition to reach a satisfactory settlement with the United States in regard to these claims since Yugoslavia's ability to earn dollars in trade with the United States will be most seriously jeopardized.

Yugoslavia has developed a substantial trade in products which enjoy the same reduced tariffs as those of other friendly countries. Denial of most-favored-nation now means that rates on these products return to the high tariffs established in the restrictive Tariff Act of 1930. Of the total Yugoslav exports to the United States, more than 90 percent would be subject to an increase in duty. Some of the principal products on which the rates of duty will increase are:

Effect on United States of denial of mostfavored-nation treatment: The effects of withdrawing most-favored-nation treatment will hurt both Yugoslavia and ourselves. First, our own sales to Yugoslavia will undoubtedly be substantially cut, since Yugoslavia's ability to earn dollars to pay for them would be drastically reduced. A fourfold increase over present rates of duty would price Yugoslav goods completely out of the American market, particularly since the same products from other countries would continue to pay the lower rates of duty. Indirectly, the American worker, producer, and consumer would all suffer in some degree as a result of this action. And, as previously noted, Yugoslavia's ability to repay its financial obligations to the U.S. Government and to U.S. citizens would be impaired.

Effect on U.S. policy toward Eastern Europe: The withdrawal of most-favored-nation treatment from Yugoslavia would do serious damage to our relations with that country. It would require the denunciation and abrogation of the treaty of 1881 which has been of fundamental significance in the character of our relations with the governments at Belgrade since the treaty was concluded. It would lead the Yugoslavs to reexamine and revise their policy toward the United States and turn a more responsive ear to Moscow. It would discourage the proWestern elements in Yugoslav society and injure ties with many of the Yugoslavs that have been built up over the years. It would diminish the opportunities to maintain and increase the American presence and influence in that country.

The denial of most-favored-nation treatment to Yugoslavia and Poland would have a larger effect than in each of these countries alone. The impact would extend to Eastern Europe generally, affecting our relations with the whole area and prejudicing the security interests of the United States. To deny most-favored-nation treatment to these two countries now would threaten the U.S. policy of more than a decade which has sought to keep alive active relations with the peoples of Eastern Europe in economic, political, and cultural fields. It would cripple our objective to decrease the dependence of these countries on the U.S.S.R. and to make it possible for a nation under a Communist government to achieve independence from

Soviet domination. It would weaken those measures which can contribute ultimately to the freedom of these people from the Communist yoke.

By taking discretion away from the President to grant most-favored-nation treatment section 231 deprives the U.S. Government of a tool in carrying out a positive policy toward Eastern Europe. Retention of section 231 works for the abandonment of the existing constructive policy of contact with the countries of Eastern Europe and for its replacement by a policy of withdrawal from the area. The effect of section 231 is to suggest that we are no longer interested in offering the countries of Eastern Europe an alternative to dependence on the Soviets. Such a retreat from our previous objectives would occur at the very time when diversity and assertions of independence and national interest are increasing in Eastern Europe. When new opportunities for a policy of engagement in Eastern Europe are opening up we would opt for a negative and defeatist course. Our quarrel after all is not with the peoples of Yugoslavia and Poland but with communism-an alien political system which presently controls their governments. Cutting off the President's authority to extend most-favored-nation treatment only reduces our capacity to deal with Eastern European governments in ways that can benefit the people and serve free world interests.

WILMINGTON, DEL.,

November 4, 1963.

Hon. J. WILLIAM FULBRIGHT,
U.S. Senator,
Washington, D.C.:

We urge your full support of proposed legislation to assure the President discretionary power to grant most-favored-nation tariff treatment to Poland. We are four American mayors of Polish descent who have just recently returned from extensive 3-week tour of Poland. We went to Poland to see how the country is progressing, to compare administration of cities, to meet with the Polish people, and to visit the homes our parents left when they came to the United States. We were impressed with the fact that the spirit

of Polish unity and the great tradition of language, art, and the church, that held the Polish people together for over 1,000 years still lives and flourishes despite great handi

caps imposed by the Government. There is no doubt that the Polish people who know are grateful for the aid the United States has extended to them. We suggest that American representatives in Poland be permitted to apprise the people of Poland of the extent of U.S. aid in return for most-favored-nation treatment. We were most impressed with the tremendous amount of good will and good feeling that the people of Poland harbor for the people and the Government of the United States.

We feel that every effort should be made to enhance United States-Polish relations and to help the Polish people move toward greater freedom and independence. favored-nation tariff treatment for Poland is essential ingredient in such an effort. Mayor JOHN E. BABIARZ,

Wilmington, Del.

Mayor VICTOR C. WARYASZ,

Poughkeepsie, N.Y.

Mayor ALEX P. SMEKTA,

Rochester, Minn.

Mayor CHESTER KOWAL,

Buffalo, N.Y.

Mr. DOUGLAS. Mr. President, will the Senator from Arkansas yield further?

The PRESIDING OFFICER (Mr. BREWSTER in the chair). Does the Senator from Arkansas yield to the Senator from Illinois?

Mr. FULBRIGHT. I yield.

Mr. DOUGLAS. Is it not true that there is a rigid embargo on the exportation to the Communist-bloc countries of machinery and materials which might be, potentially, war materials?

Mr. FULBRIGHT. Yes. I am sure the Senator from Illinois is referring to the Battle Act.

Mr. DOUGLAS. Yes. act still apply?

Would that

Mr. FULBRIGHT. Yes. Yes. This amendment would not affect any of the applications of the Battle Act or the Export Control Act.

There is nothing new about this amendment; it would only restore the status quo; and any requirements for export licenses or any prohibitions would still apply; the amendment would not disturb them.

Mr. MANSFIELD. Mr. President, will the Senator from Arkansas yield to me?

Mr. FULBRIGHT. I yield.

Mr. MANSFIELD. I point out that industrial goods of the type mentioned by the Senator from Illinois do not go to these countries, but go from the United States to Western Europe, and from there, many of such goods go to the satellite countries and to the Soviet Union. Furthermore, the trade between those countries of Western Europe and the satellite countries and the Soviet Union is in excess of $3 billion; but, so far as the United States is concerned, its export trade in such goods is less than one-tenth of that amount.

Mr. FULBRIGHT. Yes. In short, we have been "holding the sack." In my opinion, we really have been stupid in preventing American concerns from participating in this trade while all of our allies, particularly West Germany-and this is one of the reasons why West Germany is so prosperous-and the other nations of Western Europe have been participating in this trade. So it seems to me it is time for us to stop that policy.

Mr. JAVITS. Mr. President, will the Senator from Arkansas yield to me?

Mr. FULBRIGHT. I yield.

Mr. JAVITS. I was appointed by the committee to make a special inquiry into this matter. I did so, and at the end of 1961, I wrote a report on this subject. Western Europe has both export trade and import trade in excess of $5 billion with the Soviet bloc countries, whereas, according to the present figures, U.S. firms do approximately $200 million $200 million worth of such business.

Furthermore, in connection with that research, consideration was also given to the trade with Poland; and this brings up an interesting psychological point. As my colleague [Mr. KEATING] pointed out, they consider themselves written off, insofar as Gomulko is concerned and insofar as Yugoslavia's alleged independence is concerned. What an awful price

to pay.

The Senate has felt free to adopt various amendments to the foreign aid authorization bill, and those amendments are supported by many reasons which have accumulated over the years. However, this item has nothing to do with foreign aid; it merely happens to be before the Senate because this loose end

needs to be tied up.

Our action in this connection is most important, because we could make a fatal mistake-one which the President is striving to avoid, and one which could greatly damage us irretrievably, because then Khrushchev would realize that we were so stupid as to deny ourselves any chance of dislodging the Communist control of these countries.

avoided it-I submitted the amendment to the chairman of the Finance Committee; and the Senator from Virginia [Mr. BYRD] submitted it to the Finance Committee, because of the origin of this matter, and he did consider it.

I ask unanimous consent to have printed in the RECORD the letter I received from the Senator from Virginia [Mr. BYRD], the chairman of the Finance Committee. The letter is dated August 15, 1963.

There being no objection, the letter was ordered to be printed in the RECORD, as follows:

U.S. SENATE COMMITTEE ON FINANCE, August 15, 1963. Hon. J. W. FULBRIGHT, Chairman, Committee on Foreign Relations, U.S. Senate, Washington, D.C.

DEAR MR. CHAIRMAN: On June 20, 1963, at mittee on Finance, I wrote you concerning

the request of several members of the Com

section 402 of the Foreign Assistance Act of 1963, S. 1276, which would amend section 231 of the Trade Expansion Act of 1962, by permitting the President, if he so determines, to extend most-favored-nation treatment to Yugoslavia and Poland. I pointed out that legislation amending the Trade Expansion Act of 1962 is under the jurisdiction of the Committee on Finance, and, therefore, requested that the Committee on Foreign Relations refrain from taking any action with respect to this particular section of S. 1276.

On June 26, 1963, you replied by suggesting that "as in the case of matters which may involve the jurisdiction of both our committees, the Finance Committee consider the matter from the standpoint of its jurisdiction and advise the Committee on Foreign Relations its views."

In executive session today, I called this question up for consideration. After a thor

posed amendment was not inconsistent with the action taken by the Senate Committee on Finance on section 231 of the Trade Ex

pansion Act of 1962, as described in the following excerpt from the Senate Report No. 2059:

"CHAPTER 4-NATIONAL SECURITY "Section 231. Products of Communist countries or areas:

"Section 231 provides that, as an exception to the most-favored-nation principle, the President shall, as soon as practicable, refrain from applying any reduction, elimination, or continuance of any existing duty or other import restrictions, or the continuance of any existing duty-free or excise treatment, proclaimed in carrying out any trade agreement under title II of the bill or under section 350 of the Tariff Act of 1930 to products, whether imported directly or indirectly, of the Soviet Union, Communist China, and any other country or area dominated or controlled by the foreign government or foreign organization controlling the world Communist movement. It is contemplated that this provision will permit the President, if he so determines, to continue most-favored-nation treatment to Yugoslavia and Poland."

Therefore, the amendment to section 231 of the Trade Expansion Act of 1962, as proposed in section 402 of the Foreign Assistance Act of 1963, S. 1276, was approved by the members of the Senate Committee on Finance and the chairman directed to so advise your committee.

With kindest regards, I am,
Faithfully yours,

HARRY F. BYRD, Chairman.

Mr. FULBRIGHT. Mr. President, I shall read only the last sentence of this

2-page letter; the summary there set forth is as follows:

Therefore, the amendment to section 231 of the Trade Expansion Act of 1962, as proposed in section 402 of the Foreign Assistance Act of 1963, S. 1276, was approved by the members of the Senate Committee on Finance and the Chairman directed to so advise your committee.

With kindest regards, I am,
Faithfully yours,

HARRY F. BYRD, Chairman.

I believe that takes care of that point. Mr. MORSE. Mr. President, I shall be brief.

I shall support the committee language here, as I did in the committee. One of the chief reasons why I supported it in the committee was the action taken

by the Finance Committee and the letter from the chairman of the committee,

the Senator from Virginia [Mr. BYRD].

As I recall, we were then told that that action by the committee was unanimous.

Mr. FULBRIGHT. The letter does not so state, but I was present. I sent letters to the Senator from Virginia, and he invited me there; and, as I recall, all were unanimous. At those present least, I heard no objection-although I did not hear any poll taken of the members.

Mr. HARTKE. Mr. President, will the Senator from Oregon yield?

Mr. MORSE. I yield.

Mr. HARTKE. I thank the distinguished Senator from Oregon for yielding.

Mr. President, I am a member of the Finance Committee. For the record, I state that I did not support the committee on this proposal, and I do not support it now.

I am opposed to giving these countries any special consideration. At the time, I was told there was a favorable balance of trade with them. There is, when we consider the public programs, such as those under Public Law 480 and the development loan funds. But if we take the Government-sponsored funds from the trade balance, there is no favorable balance of trade; in fact, in that event we run about $15 million short.

There is no question that this country is Communist controlled and is competing with our labor, by reason of the absence of controls upon its prices or its labor scales. It sets the price, and then ships the goods to the United States, where they compete against goods produced by Americans.

I would not mind that in the case of a country which was one of our allies; but I do not know whether these people are allies of ours or not. I have seen them take foreign trade from us in the African nations, and at the same time spread their philosophy and the notion that their system is the best, and use their technical people to try to teach the people of Africa to go the Communist way of life, when we are supposed to be giving them special consideration.

I have no sympathy for them. I have supported the foreign aid bills through the years, and I intend to do so this time; but in all good conscience I can see no connection or similarity between the sit