of strip coal, which, as you know, is that coal lying near the surface and easy to recover. However, this easy coal is gone and the reserves of strip coal no longer exist.

It is interesting to observe a statement made during World War II by the late Secretary of Interior Ickes, when he said that the production of bituminous coal was a vital factor in winning the war.

Mr. Chairman, there is truth in Secretary Ickes' statement, because coal has always played an important role in our national defense. With the permanent closing of coal mines that is taking place today and the decline in the available easily recoverable strip coal, I doubt very much whether we would be able, should we get into war, to produce a sufficient quantity of coal to satisfy the national needs.

In making this statement, I am assuming that, should we get into an all-out world war III, that enemy submarine action will again interrupt our lines of communications as it did in World War I and World War II, with the result that great quantities of residual oil now being imported into our country would be suddenly cut off and those industries presently using residual oil would have to turn to coal.

The same thing would apply to crude oil, and I say to you, what would factories, churches, schools, apartment houses, and places of business now using imported oil do for heat and power in the event of a national emergency?

Mr. Chairman, shipments of foreign oil could be stopped overnight in the event of an international crisis, but the coal industry cannot accelerate its production to meet the Nation's increased fuel requirements in a national emergency if its operations continue to be impaired as they are under present conditions. Summarizing my presentation, let me emphasize that the plight of the coal industry is not solely a question of free trade; nor is it a question alone of finding an economic savior for the coal and related industries; but rather it is a question as to whether our Nation can retain its sovereignty as the leader of free nations and at the same time maintain an adequate national defense without the aid of a healthy coal industry.

Mr. Chairman, the unwarranted flood of foreign residual oil must be stopped and it can be stopped if this committee and the Congress of the United States will look the facts squarely in the face and establish a 5 percent limitation on imports of foreign residual oil as provided for in subparagraph 2, page 14, of the Simpson bill, H. R. 4294.

Thank you very much for your attention and I sincerely hope that your committee will take favorable action on my request to curb the unrestricted flow of foreign residual oil.

The CHAIRMAN. The next witness will be Hon. Cleveland M. Bailey, of West Virginia.

Will you give your name for the record, please?

STATEMENT OF HON. C. M. BAILEY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WEST VIRGINIA

Mr. BAILEY. Mr. Chairman and gentlemen of the committee, for the purpose of the record I am Congressman Cleveland M. Bailey, of the Third West Virginia District. The major purpose of my appearance is to endorse H. R. 4294, the Simpson bill. A letter from your committee, granting me the privilege of this appearance, advised that I was to discuss section 13 of this bill, which has to do with placing import quotas on foreign produced residual fuel oil.

The Simpson bill calls for a 1-year extension of the Trade Agreements Act, strengthens the safeguards for domestic producing groups, and provides for important changes in the trade agreements machinery.

It enlarges the present membership of the United States Tariff Commission from 6 to 7, thereby reducing the possibility of 3-3 tie vote which in past investigations worked against the domestic producer; (2) makes the peril-point and escape-clause findings of the

Tariff Commission mandatory on the President instead of discretionary as under present law; (3) establishes new escape-clause and peril-point criteria, and adds national security as a factor in injury determinations: (4) restores section 336 of the Tariff Act of 1930 and requires the President to proclaim the Tariff Commission's comparative cost-of-production findings thereunder; and (5) makes the Tariff Commission, instead of the President, the final determinant of violations under the unfair practices procedures of section 337 of the 1930

statute.

It provides that multiple exchange rate manipulation by foreign countries is to be considered as evidence of a subsidy or bounty under the countervailing duty provisions of section 303 of the 1930 Tariff Act. It also removes the injury provision before remedial action for a domestic industry can be invoked under the Antidumping Act of 1921, and makes the Secretary of the Treasury's role in imposing antidumping duties mandatory rather than discretionary.

It strengthens emergency relief action for perishable agricultural commodities. Section 22 of the AAA (Agricultural Adjustment Act) is amended to make Tariff Commission investigations and findings thereunder mandatory on the President.

Major amending changes which apply both to the preventive or peril-point and remedial or escape-clause safeguards now operative under the current trade-extension statute.

"Serious injury to the domestic industry," hitherto a basic criterion of relief used by the Tariff Commission in both its peril-point and escape findings would be replaced by the new standard of "unemployment of or injury to American workers, miners, farmers, or producers, producing like or competitive articles, or impairment of the national security." The new language would provide broader coverage to include individual groups within a particular industry hit by low-cost imports.

It also provides for important changes in the escape-clause procedures prescribed under the the current trade-extension law. The present 1-year limitation in which the Commission is required to complete its escape-clause investigations and submit its findings and recommendations thereon is reduced to 6 months. Under the mandatory provisions of the Simpson bill, the President must proclaim the Commission's escape recommendations within a 30-day period. Present law permits the President to ignore the Commission's findings of injury but requires him to explain his rejection thereof to the Congress.

H. R. 4294 considerably widens the scope of remedial action which can be invoked under the escape-clause machinery. The Tariff Commission, in submitting its escape findings of injury to the President. could recommend (1) a permanent withdrawal, modification, or suspension in whole or in part of the offending concession; (2) import quotas for specified periods; or (3) a combination of any of the foregoing kinds of relief. Furthermore, the Commission, either under the escape-clause procedures, or under the cost-of-production provisions of the reactivated section 336, could increase rates of duty beyond their preagreement levels.

The Simpson extension measure also provides for import quotas and additional duties on petroleum products, lead, and zinc, under special circumstances.

As author and sponsor of the so-called escape clause, now section 7 of Public Law 50 of the 82d Congress, I would like to ask the indulgence of the committee for the privilege of presenting the necessary background having to do with our tariff policies so as to provide a sensible approach to the wisdom of imposing quotas in order to protect certain basic domestic industries, including soft coal and independent oil, from excessive imports.

Mr. Chairman, after months of extended and intensive research and with a liberal application of my imagination, I am in a position to inform the committee that we do have a basic tariff law. I hasten, however, to add that any reference to or comparison of our present hodgepodge trade policies with the basic provisions of the SmootHawley Act of 1930 would be purely coincidental and would lead one to confusion and frustration.

Should one plan a trip into the morass of State Department finesse or lack of finesse in connection with the development of our present trade policies, it would lead to such way stations as Geneva and Torquay. At Geneva, if your stopover privileges permitted, you would add to your vocabulary a new word GAATT, pronounced Gat, which in ordinary parlance means General Articles of Agreements on Tariffs and Treaties. You would also learn that in 1945 at this Geneva convention, our State Department arbitrarily allocated to itself the powers vested by the Constitution of the Congress, the right to make and approve treaties. If there is any doubt in the minds of the members of this committee that such international agreement was entered into, may I recall that one short year ago when the 82d Congress desired to revoke the Reciprocal Agreement with Czechoslovakia, it was necessary to assemble all the signatory nations to this international agreement on GAATT at Geneva and get their unanimous consent to set aside the agreement with Czechoslovakia. I doubt seriously that many Members of Congress ever dreamed the original Reciprocal Trade Agreements Act or subsequent extensions of the agreement intended that the State Department have such authority, through the device of implementing the rather broadened authority granted the President in 1934 to negotiate trade agreements. When the distinguished Tennessee Statesman Cordell Hull, then Secretary of State, conceived the idea of reciprocal agreements, he found it necessary in order to get congressional approval, to work out a combination of legislative blocs. He succeeded in making free traders out of former high-tariff advocates of the industrial areas of the North and East, and protectionists out of erstwhile free traders in the cotton- and tobacco-growing areas of the South, and the woolgrowers of the Midwest and Far West. Under the act the farm groups are protected against imports, and a select list of industry selling abroad are reaping the benefits.

In doing this, a vast segment of American small business was left outside the area of agreement, and it is this segment of our economy that is today bearing the brunt of excessive competition of imports from abroad. It is these groups that employ millions of American workers for whom I have been fighting since coming to the United States Congress in 1945. The Simpson bill is intended to accord equal treatment with other groups receiving more favorable consideration under the Reciprocal Trade Agreements Act.

The situation affecting residual oil and soft coal, which under the escape clause, is a like competitive fuel in the same field, is indeed acute, and this I shall undertake to prove. I think the record should also show that other sections of the Simpson bill have to do with other domestic products that are today being threatened with extinction because of the lack of favorable consideration accorded other domestic producers in the Trade Agreements Act.

It is worthwhile to note that the Smoot-Hawley Act of 1930 did not provide import duties on crude oil or its byproducts. At that time the so-called "big oil" companies are busily engaged in developing their domestic resources. They had not yet acquired oil conces sions in Saudi Arabia, Iraq, and Venezuela.

They were protectionists, not freetraders, and they were the prime movers, Mr. Chairman, back of the action taken by Congress in 1932. to place a tax of 21 cents a barrel on shipments of crude oil as an amendment to section 3422 of the Revenue Code so as to safeguard their domestic market.

In more recent years, these same "big oil companies," that have suddenly become internationalists in their thinking and policies have acquired vast concessions of oil reserves abroad which they are now operating and from which they are now importing at an alarming rate of increase that threatens the very existence of the independent oil industry and the soft coal industry in America. It was 129 million barrels in 1952, equivalent to 31 million tons of soft coal.

While the 21-cent per barrel tax fixed by the Congress in 1932, would not be a deterrent to increased shipments at present, it is well to note that the original 21 cents remained fixed for more than 20 years except for 1 slight concession. The idea of a quota is not new. Congress employed this device back in 1939 on imports equal to 5 percent of domestic production of residual oil the Mexican trade treaty, agreed to in 1943, had a rate of 102 cents import duty on this type of oil and under the "favored nation" clause it affected the Venezuela and Far East imports until it expired in 1950.

The matter remained in status quo until 2 years ago when former Secretary of State Dean Acheson, at the requests of two large American companies, the Standard Oil Co. of New Jersey and the SoconyVacuum, with mounting production in Venezuela, conceived the idea of writing a new reciprocal trade agreement with the Republic of Venezuela. It is largely this new reciprocal agreement and the "favored nations" clause in the act that has created the acute situation that the Congress faces today.

Members of the committee will recall that I have been appearing before this committee regularly since coming to Congress in 1945, pointing out many of the inconsistencies of our Trade Agreement Act. protested the new Venezuela reciprocal trade agreement both before the Tariff Commission and the White House. It will be recalled that the Tariff Commission, a bipartisan Board of six members, divided equally on the wisdom of a new treaty with Venezuela and certified their disagreement on the proposed new trade agreement to the President for final decision.

My pleadings at the White House as to what would happen to the independent oil industry and the soft coal industry fell on deaf ears. I charged then and I repeat the charges now, that the President ex

ceeded his authority under section 2B of the Reciprocal Trade Agreements Act of 1934, which reads:

Provided, That the duties payable on such an article shall in no case be increased or decreased by more than 50 percent of the duties now payable thereon.

I call the committee's attention to the words "now payable thereon." The rates in August 1952 when the President proclaimed the new treaty, were 21 cents per barrel on all imports of residual oil except for a limited quota that was admissible at 1012 cents per barrel. He erred in using the 10 cents per barrel in effect in 1945 under the Mexican treaty as a basis for applying the 50-percent cut to fix the rate in the new treaty at 514 cents per barrel. Had he used the rates now payable, the 1952 rate, the present import duty would be 101⁄2 cents.

I am advised this question was raised at hearings before the Tariff Commission. I think it is a question of such import that it be raised before this committee and if need be on the House floor.

May I add there, Mr. Chairman, that I know a change was made in the reenactment of the Reciprocal Trade Act of 1945 in which they even tightened up his authority more than they liberalized it. The new Venezuelan Trade Agreements Act, through Presidential misapplication of congressional intent, became a part of our reciprocal trade policy, and the imports of residual fuel oil have been at or near flood tide since the day the agreement became effective. This goes beyond the "lack of finesse" and borders on deliberate evasion, even of the Antidumping Act of 1921.

The United States Tariff Commission, a bipartisan board composed of 6 members, was set up as an adjunct to the Congress and has a quasi-legislative-judicial function. It was never intended by the Congress that it should be a tail on the kite of the State Department's foreign policy.

The findings of the Tariff Commission on the proposed new reciprocal agreement with Venezuela are interesting. Commissioners Ryder, Edminster, and Durand voted to approve the new agreement. Commissioners Brossard, McGill, and Gregg voted in the negative. They were in agreement that any reduction in the import duty of 21 cents per barrel, approved by the Congress in 1932, below 102 cents, would violate the "peril point" and "escape clause" provisions written into the act in 1951.

The Tariff Commission, as provided by law, certified its findings to the President and filed copies with the House Committee on Ways and Means and the Senate Finance Committee, also as provided by law. Former President Truman disregarded the warning about violations of "peril point" and "escape clause" and sided with Commissioners Ryder, Edminster, and Durand to make the treaty effective upon filing his findings, during a recess of Congress, with the clerk of the Senate and the Clerk of the House.

Mr. Chairman, since your committee has on file the Tariff Commission's report in this instance, I shall not request that it be included in its entirety in the record of this hearing. However, I feel that the conclusions reached by both the Ryder, Edminster, Durand and the Brossard, McGill, and Gregg groups, merit the attention of this committee. I have included the findings of both groups in my formal presentation. I desire to comment only on the points in disagreement between the two groups.