Third. With the currency for bargaining reciprocal trade advantage on behalf of the United States substantially wasted or dissipated by the kind of unilateral tariff negotiations we have conducted in the past and especially in the Kennedy round, we are now in a difficult position to protect our commercial interests in the seventies because there is little left in the way of bargaining power. Unless we put all of our manufactured products on the free list the duty rates are so low following the Kennedy round that there is not much left to put on the table as currency for bargaining.

Fourth. The syndrome that the United States has a duty to exercise leadership by always going first and the syndrome that our export industries are invincible to competition from like industries around the world which have dominated the judgment of our trade negotiators throughout the postwar era is now contrary to the facts of international commercial life. The sooner that concept of the use of our trade agreements authority is outlawed the sooner we will begin to get down to cases in straightening out our foreign trade position and its problems.

Fifth. Contrary to the philosophy of the foreign-aid-oriented trade agreement negotiating experts of the past two decades, many of whom, Mr. Chairman, are still occupying key positions in the administration's foreign trade apparatus, the realities of international commercial life are that the U.S. industry does not possess any signficant technological advantage translatable into competitive cost advantages in comparison with its foreign counterparts.

What is the outlook for the seventies? As we see it, the outlook is that technologically dynamic, large-scale manufacturing enterprises located in foreign countries, many substantially financed and enriched by technological know-how by U.S. corporations, will reap the economic advantage of the cost bias of the lower standard of living of foreign countries and dominate world trade in manufactured products. This dominance will extend to the progressive diminution of U.S. share of world trade in manufactured products and the continued and more rapid invasion of the U.S. markets by foreign industries. This process is already well-advanced and it will certainly continue.

Sixth. There has been no coherent and consistent policy for the support of domestic manufacturing industries in this kind of contest comparable to the close liaison and effective support which Japan and the developed nations of Europe give their industries in competing for export markets.

The efficient, comprehensive, and realistic way that the Japanese Government subsidizes research and development and the expansion of plant capacity, and its limitation of imports of competitive products, is really an example of what a government can do to apply the forced draft to the expansion of her industries and increase her position in world trade.

While Japan and the countries of Europe are subsidizing their industries, what has our Government done? It has compensated the measures taken by foreign governments in behalf of the foreign industries by major reductions in our import duties to make our domestic market even more available to the products of those industries.

We present our recommendations beginning on page 25. These recom

mendations, Mr. Chairman, and members of the committee, we believe to be politically realistic within the framework of the world of what is possible. If adopted, we think they will make possible a major turnaround in these trends that we have talked about, so that American industries can remain alive.

First, as to the trade agreement negotiating procedure, at the bottom of page 25. One of the fundamental defects in the past has been that the people who in fact make the policy decisions as to what will be negotiated and how it will be negotiated are not the persons who hear the representatives of domestic industry who come to present their case. With some limited exceptions, the hearing is conducted by an interagency panel of middle-level civil servants who are not policymakers and who summarize what they hear and that summary may or may not even be considered by the policymakers.

Therefore, my first recommendation as to the trade agreement negotiating procedure is that those who make policy and those who negotiate the trade agreements also take the trouble directly to hear and listen to domestic interests in advance of the negotiations.

This committee has tried earnestly to bring about that state of affairs. You have failed. Not because your intent was not accurate and proper but because the executive branch simply has not complied with your intent.

Secondly, the U.S. Government must at long last reject the curiously ambivalent view that it has of domestic industry that forces it to hold industry representatives at arm's length throughout the course of the negotiations. We are the only major developed country in the world that does not have available to its negotiators accredited to the negotiated team industry advisers who are present during the course of the negotiations and that is a reform that is long overdue.

Second, as to the antidumping and countervailing duty remedies. We refer to these because for the long pull if realistic efforts were made to purge our foreign trade of unfair practices, many of the problems that develop and go unchecked and lead to insistent demands for quotas and other extreme actions, would never come into being. Neither the antidumping or countervailing duties remedies work. As presently administered and as they have been administered in the past 10 or 15 years, they are a snare and a delusion and wholly unsuccessful. They waste the time and effort that industries devote to the occasional attempts to invoke their provisions.

Apparently on the basis of an informal accommodation made by our Government with Japan in trade agreement negotiations in the fifties and in the sixties and implemented by an informal commitment in the Kennedy round, our Nation displays special solicitude for dumping by Japan. The result is that the people who handle antidumping investigations are insensitive to the actual commercial realities of the problem.

All doubts in dumping investigations are resolved in favor of the Japanese. Should per chance a finding of dumping slip through this process, the Treasury Department has almost uniformly in the past promptly accepted written assurances from the Japanese manufacturers not to continue the dumping.

On the basis of those assurances, the dumping investigations have

been terminated. This practice has exonerated virtually all dumping by Japanese manufacturers in the past. It has provided no relief for the future. It is an abominable system. It has been strongly criticized by domestic industries.

Two weeks ago, on May 27, the Treasury Department published a revision of its procedures in regard to the discontinuance of dumping investigations. Henceforth, dumping investigations will be concluded on the basis of written assurances from foreign manufacturers only when the margin of dumping is considered minimal in relation to the total volume of sales involved.

Very significantly, in announcing the change in the policy, Assistant Secretary of the Treasury Rossides stated that the past practice, and I want to quote his exact words, "allowed foreign exporters to undercut the prices of their U.S. competition in American markets without undue concern for the possible consequences under the antidumping act."

Think about that for a minute, Mr. Chairman.

Here is an admission by the Treasury Department that the policy that they have pursued for the past two decades encouraged dumping practices by the foreign manufacturers, protected them in the doing of it and enabled them to undercut the prices of their American competitors in this market. A startling admission but an accurate one.

Domestic industries welcome this change in practice by the Treasury Department. However, in response to the Kennedy round antidumping code, the Treasury Department has changed the date from which appraisement of import entires is withheld in a dumping investigation.

Formerly under the Antidumping Act and the customs regulations the withholding of appraisment, that is, simply the action in which they stop to liquidate the import entries so that they have a chance to impose dumping duties on imports that have been found to have been dumped, formerly this withholding applied to all import entries entered during a period commencing 4 months prior to the date the dumping complaint was filed.

But when the United States signed the antidumping code, the Treasury changed its regulations and now the withholding of appraisement commences on the date when at the end of an investigation the Treasury Department publishes a notice of withholding. The nature of that change is that all of the dumping that has transpired prior to the filing of the complaint and during the period of investigation until a year or two later when a finding is made, all of that dumping is exonerated, is not subject and cannot be subject to dumping duties under this regulation by the Treasury Department.

Furthermore, under the customs practice, when the Bureau of Customs reaches a tentative conclusion that the merchandise investigated is being dumped they call in the foreign manufacturer and say in effect, "See here, we have come to the conclusion that you are dumping and we are going to publish a notice of withholding."

That gives the foreign manufacturer an opportunity to change his prices coincident with the date of the notice of withholding so that in fact none of his imports will be subject to dumping duties.

As a result of the U.S. acceptance of the Kennedy Round Anti

'dumping Code, which was not authorized for negotiation under the Trade Expansion Act of 1962, and as a result of Treasury's change of its dumping regulations pursuant to the Code, the antidumping remedy has been converted into a shield to protect foreign manufacturers who engage in dumping rather than a sword to strike down the practice.

In my opinion, the type of change which Treasury made in the dumping regulations in response to the Kennedy Round Antidumping Code is a clear violation of the intent of title II of Public Law 90634 which instructed the Secretary of the Treasury to take the provisions of the code into account, and now I quote directly from the law:

Only insofar as they are consistent with the Antidumping Act, 1921, as applied by the agency administering the Act.

Mr. Chairman, the Treasury Department had applied the Antidumping Act from 1921 down to 1968 in one manner. Then they change it. I believe that is a clear violation of your intent in passing that particular law.

As for the countervailing duty remedy, the Treasury Department has not had the fortitude in this or any other administration to administer the countervailing duties statute since the emergence of the practice in Europe on a widespread basis of remitting internal taxes on exports.

Under the decisions of our Supreme Court, the remission of taxes with respect to good exported is clearly a bounty or grant which should automatically be checked by the imposition of countervailing duties. The practice is so widespread that if the Treasury Department tried forthrightly to administer the statute in accordance with its intent, countervailing duties would be imposed on virtually all manufactured imports from Europe and from Japan.

The unwillingness of Treasury to face up to the scope of this task, viewed in connection with its mandatory duty under the statute, should not excuse the Department, which is, after all, concerned with our balance-of-payments deficit, from now making a beginning to act more realistically in the administration of that remedy.

Third, as to the escape clause. There comes a time in the flow of trade stimulated by tariff cuts where, quite apart from unfair practices such as dumping or subsidizing exports, the injury to the domestic industry is so manifest that some adjustment should be made in the tariff in order to smooth out the rate of increase of imports.

So, we have an escape clause and it is incorporated into GATT. Article XIX of GATT uses language that was patterned after the escape clause in use in this country prior to the Trade Expansion Act of 1962. The administration then in power, that is, in 1962, urged an amendment of the domestic escape clause which, as you know, imposed a much more severe test than in the GATT escape clause and by that very act, by imposing on our industries a much tougher test to meet than GATT would recognize as permissible, we gave away rights under GATT that we had paid for through the bargaining that preceded the negotiation of that document.

We are very good at giving away our rights, Mr. Chairman.

It is a commonplace fact that the 1962 tariff adjustment provisions will not work. The administration's bill, H.R. 14870, seems on its

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surface to reform those provisions but in actuality the administration's amendments would create a condition in which the burden of proof to be met by domestic industries is even heavier than that under the present impossible escape clause. Allow me to explain.

Under the present statute, a domestic injury must prove as a second burden of proof that increased imports are the major factor in causing serious injury. That means that an industry has to attempt to come up with quantitative proof showing that imports represented 51 percent or more of the causation of injury.

Now, the administration's bill would require that the domestic industry prove that increased imports have been the primary cause of serious injury. But, think for a moment. In order to demonstrate that one of a number of causes is the primary cause you have to be able to provide some quantitative measurement of all the causes, line them up in an array of magnitude and demonstrate that imports are the greatest of all of the identifiable and measured causes.

This is a much more severe and difficult method than the 1962 act and everyone agrees that that burden of proof is impossible to meet. A preferred approach is that set forth in title II of your bill, Mr. Chairman, H.R. 16920, which provides the same standard of economic morality for industries as it does for labor unions, namely, the burden of proof to be met for relief is that increased imports have been a substantial cause of serious injury.

The GATT escape clause is consistent with this so the enactment of your bill would in no way violate, if one wished to consider that possibility, the intent and meaning of the GATT escape clause. We would be back to where we were and what we purchased under the GATT escape clause. But these are technical matters.

The major flaw in our escape clause lies in another quarter, and it is this. Congress has provided an expert body, an independent agency, which, but for the 7-year term of its commissioners, is not directly subject to guidance by the political philosophy of a particular administration.

That agency, the Tariff Commission, is therefore for the long term more likely to be a consistent finder of facts than some brance of the executive department that must respond to the policy imperatives of the President in power.

The Tariff Commission, as an expert body, by statute is required to make a two-part finding in an escape clause case. First, it must find whether imports are causing serious injury and, if so, it must find the amount of tariff increase or the imposition of quotas necessary to remedy the injury. So far, so good.

The vice of the present system is that after that expert body carefully conducts an exhaustive investigation, including public hearings, and makes its finding, the finding goes to the executive branch where it is virtually ignored. During the public hearing, the domestic industry representatives are subject to cross-examination by anybody who chooses to enter the case and this usually includes representatives of at least five foreign countries.

The apparatus for trade policy within the executive branch, however, is such that every department in its foreign trade policy side feels absolutely free to consider and find the facts afresh as though