employment in all manufacturing industries, and for 56% of the value of shipments. Imports of products like or competitive with the output of these industries accounted for only 34% of total imports of manufactured articles in 1967, whereas these industries supplied 73% of total U.S. exports of manufactures in that year.

Foreign trade in the product categories of these industries resulted in a foreign trade surplus of $10.4 billion in 1967. Because the 185 industries are, in general, less labor intensive than the separate group of 128 industries previously described, the job equivalent of the foreign trade surplus in the product categories of the 185 industries was equivalent in 1966 to 201,532 jobs, considerably smaller than the job loss represented by the foreign trade deficit of the 128 industries.

Since that report was published, employment and output data for that year 1967 have become available, as well as foreign trade data for the years 1968 and 1969. Our data bank will be updated with these additional statistics. As is well-known, imports of manufactures continued to increase more rapidly than exports during the years 1967 through 1969. These trends will increase the job loss in labor-intensive industries and erase the balance of trade surplus in favor of the capital-intensive manufacturing industries. We expect to release our updated study in the near future.

I have selected a group of basic manufacturing industries adversely affected by foreign trade developments in recent years and have updated the employment, output, and foreign trade data for these industries. These cases illustrate the basic fact that the United States favorable balance of trade in manufactured products, which exceeded $5 billion as the decade of the 1960s opened, has been sharply eroded by an average annual rate of growth of imports of manufactures nearly twice that of our exports. Some of our basic manufacturing industries are suffering such a serious degree of import penetration that rising unemployment and financial instalibility for many firms in these industries are the consequences.

U.S. imports of manufactures are growing at an average annual rate of 15% nearly two and one-half times that of the growth of manufactured products in the Nation's GNP at 6%. The import penetration of manufactured products has doubled during the decade of the 1960s.

When U.S. imports are valued in accordance with the practice of virtually all other developed countries, on their c.i.f. value, it will be seen that the value of imports in 1969 exceeded that of U.S. exports by $551 million. When U.S. exports under the Foreign Assistance Act and Public Law 480 are subtracted from our export statistics, the commercial trade deficit becomes $2.2 billion. So far as U.S. manufactures are concerned, therefore, the rising tide of foreign trade has not lifted all of the boats. Those of the U.S. have been left behind.

The dominant characteristic of U.S. foreign economic policy as shown by this experience is that it is underbalanced and operates unfairly on U.S. manufacturing industries by exposing them disproportionately to rising import competition while retarding them disproportionately in their access to world markets. Allow me to illustrate the effect of this inequity by sketching briefly the situation of selected basic U.S. manufacturing industries.

THE STEEL INDUSTRY

U.S. imports of steel rose to 13.62 million tons in 1969, a 71% increase from the period 1964-1965. Total growth of imports averaged 18% per year, exceeding the average rise in imports of all manufactures. In 1969, we had an unfavorable balance of trade in steel of $843.5 million.

For the steel industry, the average ad valorem equivalent of the post-Kennedy Round U.S. tariff is 6.9%, compared to 7.2% for the EEC and 9.6% for Japan.

U.S. exports entering the EEC are subject to a border tax. When the double effect of the imposition of the duty rate to the c.i.f. value and the imposition of the border tax to the c.i.f. duty-paid value of U.S. exports is taken into account, the ad valorem equivalent of these aggregate border fees is found to be 19.4%, in comparison with the total entry fees on German steel coming into the United States of 6.9%.

In 1969, U.S. imports of steel accounted for 13.3% of U.S. consumption, up

from 8.5% in the base period, 1964-1965. Under the impact of the import rise, employment in the steel industry declined from an average of 657.3 thousand workers in 1965, to 643.4 thousand in 1969, and to 636.1 thousand workers in March 1970.

THE TEXTILE INDUSTRY

U.S. imports of textile articles rose to 3.6 billion equivalent square yards in 1969, a 102% increase from the period 1964-1965. Total growth of imports averaged 26% per year, far exceeding the average rise in imports of all manufactures. In 1969, the United States had an unfavorable trade balance in textile articles of $1.3 billion.

The average ad valorem equivalent of the post-Kennedy Round U.S. tariff on textile products is 18.8%, compared to 10.6% for the EEC and 11.4% for Japan. When the double effect of the application of the duty rate to the c.i.f. value and of the application of the border tax to the c.i.f. duty-paid value of U.S. exports into the Common Market is taken into account, the ad valorem equivalent of these aggregate border fees is found to be 23.3%.

There is little point in making a similar calculation in respect to Japan because U.S. textile products are virtually excluded from importation into that country.

Imports in 1969 accounted for 10.6% of domestic consumption of textile articles, compared with 7.1% for the first years of the application of the International Cotton Textile Arrangements. Under the impact of the heightened import rise, employment in textile mills and apparel plants declined from 2,419 thousand workers in March 1969 to 2,371 thousand workers in March 1970.

THE FOOTWEAR INDUSTRY

The U.S. imports of footwear rose to 283.5 million pairs in 1969, a 72% increase from the period 1964-1965. Total growth of imports averaged 18% per year, exceeding the growth rate for imports of all manufacturers. In 1969, we had an unfavorable balance of trade in footwear of $480.6 million.

The average ad valorem equivalent of the post-Kennedy Round U.S. tariff on footwear is 11.1%, compared to 8.4% for the EEC and 10% for Japan. Exports to Japan are impracticable for the reason previously stated. When the combined effect of the use of the c.i.f. value and the imposition of border taxes to the c.i.f. duty-paid value of U.S. exports to the EEC is taken into account, the ad valorem equivalent of the EEC border charges is found to be 20.2%.

In 1969, U.S. imports of footwear accounted for 28% of U.S. consumption, up from 16.9% in the base period. Under the impact of the import rise, employment in the footwear industry declined from an average of 260.5 thousand workers during the base period to 252.5 thousand workers in 1969, and to 243.8 thousand in March 1970.

President Nixon has indicated he intends to pursue a preferential tariff system for the benefit of less-developed countries. The U.S. position paper in that matter indicated that the United States was prepared to enter into a system of tariff preferences for developing countries which would set preferential duties at zero but exclude from that preferential system textiles, shoes, petroleum, and petroleum products.

THE CONSUMER ELECTRONIC PRODUCTS AND COMPONENTS INDUSTRIES

U.S. imports of radios rose to 38.1 million sets in 1969, a 128.4% increase from the period 1964-1965. U.S. imports of TV receiving sets increased to 4.0 million sets in 1969, a 358% increase. In 1969, 49% of the radios and 77% of the TV sets imported into the United States were received from Japan. The value of imports of electronic components increased by 216% in 1969, compared with 1964-1965.

The increase in imports of radio sets averaged 32% per year, of TV sets 89% per year, of components 54% per year-all vastly in excess of the average rise in imports of all manufacturers. In 1969, we had an unfavorable balance of trade in radio and TV receiving sets and in electronic components of $741 million.

The average ad valorem equivalent of the post-Kennedy Round U.S. tariff is 7.6%, compared to 14% for the EEC and 12.4% for Japan, before any adjustment is made in the foreign rates for the fact that they are applied to the

c.i.f. value and that U.S. exports to the EEC are subject to the border tax, and to Japan, to a commodity tax.

In 1969, U.S. imports of radios accounted for 73% of U.S. consumption, up from 44% in the base period. U.S. imports of TV sets in 1969 accounted for 31% of U.S. consumption, up from 8% in the base period.

Under the impact of the import rise, employment in the industry producing radio and television receiving sets fell from an average of 161.7 thousand workers in 1966 to 153.2 thousand workers in 1969. Further, as the import rise has intensified steadily through 1969, employment dropped in January 1970 to 137.7 thousand workers, compared with the peak January employment in recent years of 175.2 thousand workers in January 1967. This intensification of the recent trend in imports has also affected employment in the components industry. In contrast to the consideration shown by the Executive Branch to the steel, textile, and footwear industries, the electronic products industry has not been the recipient of similar consideration. Its application for a partial withdrawal of past tariff concessions so as to restore the tariff level to 25% ad valorem in connection with the "open season" permitting such action in the latter half of 1969 under the provisions of Article XXVIII of GATT, was rejected by the Special Representative for Trade Negotiations.

Antidumping complaints covering TV receiving sets and the major classes of electronic components were filed in late 1967 and early 1968. In each of these cases, one or more of the Japanese manufacturers have been found at the staff level of the Bureau of Customs to have dumped electronic products exported to the United States. The Bureau of Customs accepted written assurances from the Japanese manufacturers that dumping would not be practiced in the future. Should these assurances be validated by the Treasury Department, and they have in two cases-resistors and transformers, the Japanese manufacturers will have been exonerated from long-continued dumping practices and relieved of the obligation to pay antidumping duties.

The Treasury Department seems not to understand the realities of the Japanese marketing strategy for the U.S. market. This strategy encompasses the following facts:

(a) Japan uses its financial resources to support expanded production on an incremental pricing basis with the objective of buying increased shares of the export market;

(b) This use of Japan's financial resources accepts low export prices, even below cost, as a justification for enhancing future profit margins as increased export market penetration supports ever-larger economies of scale in manufacture; and

(c) Japan's debt-levered pricing for exports constitutes "dumping" which is exonerated by Treasury Department practices.

The gross inequity of U.S. tariff rates compared with those of Japan and the EEC and the total ineffectiveness of existing U.S. tariffs to regulate the rate of increase of imports of consumer electronic products and components have caused the majority of the principal U.S. producers of these products to shift their production overseas to low-wage nations in an effort to compete with Japan.

These offshore operations have been facilitated by the duty-free treatment accorded "American goods returned" in the form of products assembled abroad from U.S. manufactured components. At the request of labor unions who strangely feel that the tariff policy for "American goods returned" rather than the basic tariff inequity which I have described is chiefly accountable for the transfer of production and jobs to foreign shores, the President has requested the Tariff Commission to investigate the effect of the operation of this policy. The ranking members of the Committee on Ways and Means have introduced legislation to repeal these tariff provisions.

THE AUTOMOBILE INDUSTRY

U.S. imports of automobiles rose to 1,847 thousand automobiles in 1969, a 237% increase from the period 1964-1965. Total growth of imports averaged 59% per year, far exceeding the average rise in imports of all manufactures. In 1969, we had an unfavorable balance of trade in automobiles of $2.4 billion.

As a result of trade agreement negotiations, the average ad valorem equivalent of the post-Kennedy Round U.S. tariff on automobiles is 3%, compared with 11% for the EEC and 17.5% and 30% (depending on wheel base) for Japan.

Under the 1965 United States-Canadian Automotive Products Agreement, motor vehicles and parts move across the Canadian border free of duty. Imports from Canada are expected to stabilize at about 700,000 units per year. The principal growth in imports will come from Europe and Japan.

U.S. exports of automobiles to the EEC are further inhibited by the effect of the unfair road taxes as well as the application of the tariff rate to the c.i.f. value and of the addition of a border tax based upon the c.i.f. duty-paid value. Access for U.S. automobiles to Japan is effectively denied not only by the high tariffs but also by the imposition of a commodity tax, the application of the tariff rates to the c.i.f. value, and the strict control of the use of foreign exchange through the administrative guidance system.

In 1969, U.S. imports of automobiles accounted for 13% of U.S. consumption, up from 6% in the base period. As domestically produced new car sales declined in the latter half of 1969, influenced by the antiinflation program of the Administration, automobile imports continued to rise, contributing in major part to the loss of 150,000 jobs in the transportation equipment industry in February 1970.

THE CERAMIC TILE INDUSTRY

Ceramic tile is one of the comparatively rare industrial products to be spared reductions in duty in the Kennedy Round. The ad valorem equivalent of the U.S. tariff on ceramic tile is 23.5%, in comparison with an average rate of 8% in the EEC and 5% in Japan. Notwithstanding this, U.S. imports continue to rise. U.S. imports increased to 168.6 million square feet in 1969, a 24% rise from the period 1964-1965.

In 1969, the United States had an unfavorable balance of trade of $38.1 million in ceramic tile. In that year, imports accounted for 34.3% of U.S. consumption, up from 30.7% in the base period.

In the structural clay products industry, of which the ceramic tile industry is a part, employment fell from an average of 69.5 thousand workers in 19641965 to 64.6 thousand workers in 1969. By April 1970, employment had declined to 59.8 thousand workers.

THE INDUSTRY PRODUCING FLAT GLASS

U.S. imports of flat glass rose to 554.7 million square feet in 1969, a 19% increase from the period 1964-1965.

Glass manufacturing is labor intensive. Tariff concessions granted by the United States have reduced the average ad valorem equivalent of U.S. import duties on flat glass to 7%, compared with 5.6% in the EEC and rates ranging from 5% to 18% in Japan. Due to the c.i.f. basis for application of the foreign rates, and the addition of border taxes, the effective ad valorem equivalent of the EEC import charges is 20% of the f.o.b. origin value of U.S. exports, compared with the 7% f.o.b. origin border imposts levied by the U.S. on European glass.

In 1969, the United States had an unfavorable balance of trade of $60 million in flat glass products. Imports in that year accounted for 23.3% of domestic consumption. In the sheet glass sector, U.S. imports in 1969 accounted for 28.1% of domestic consumption, up from 24.4% in the base period.

Under the impact of the import rise, employment in the domestic industries producing flat glass dropped in 1969 to 26.8 thousand, down from an average of 31.6 thousand workers for the base period. By March 1970, employment had fallen to 24.1 thousand.

President Kennedy recognized that the U.S. tariff was too low. Following an escape clause finding of serious injury by the Tariff Commission in 1961, the President increased the tariff in 1962. In January 1967, President Johnson reduced the level of the escape clause rates. In December 1969, the Tariff Commission issued a report in which three Commissioners found that the industry was being seriously injured and found, further, that the tariff should be restored to the pre-trade agreement level which is equivalent to 29.5% ad valorem. The President rejected their finding that an increase in the tariff is required.

What the Executive Branch of the Government was willing to do by way of forbearance for the ceramic tile industry in maintaining an effective level of duties in excess of 20%, and what it has vigorously sought to do on behalf of the steel, textile, and footwear industries through the negotiation of restraints on imports, it declined to do on behalf of the sheet glass industry.

THE TEXTILE MACHINERY INDUSTRY

U.S. imports rose to $152.8 million in 1969, a 251% increase from the period 1964-1965. Total growth of imports averaged 63% per year, far in excess of the average rise in imports of all manufactures. In 1969, we had an unfavorable balance of trade in textile machinery of $29 million.

The average ad valorem equivalent of the post-Kennedy Round U.S. tariff on textile machinery is 7.3%, compared with 5.2% for the EEC and 7.5% for Japan. When the EEC tariff is adjusted to a c.i.f. value basis and the weight of the border tax is added, the average ad valorem equivalent of the import charges imposed on textile machinery exported from the United States to the EEC is found to be 16.3%.

In 1969, U.S. imports of textile machinery, on a value basis, accounted for 21.4% of U.S. consumption, up from 7.6% in the base period. Under the impact of the import rise, employment in the textile machinery industry declined from an average of 44.2 thousand workers in 1965 to 41.7 thousand workers in 1969. By March 1970, employment had declined to 38.7 thousand workers.

THE BICYCLE INDUSTRY

By 1969, the import volume had increased to 2.0 million bicycles, up nearly 100% from the period 1964-1965. Total growth of imports averaged nearly 25% per year. In 1969, the United States had an unfavorable balance of trade in bicycles of $36.5 million.

The average ad valorem equivalent of the post-Kennedy Round U.S. tariff on bicycles is 10.3%, compared to 17% for the EEC and 10% for Japan. U.S. exports of bicycles to Europe are subject to import charges averaging 30.9% ad valorem when the c.i.f. basis and the border tax are taken into account.

In 1969, U.S. imports of bicycles accounted for 27.7% of U.S. consumption, up from 19.1% in the base period.

THE HARDWOOD PLYWOOD INDUSTRY

U.S. imports of hardwood plywood increased to 4.3 billion square feet in 1969, a 110% increase from the period 1964-1965. Total growth of imports averaged 28% per year. In 1969, we had an unfavorable balance of trade in hardwood plywood of $245.9 million.

The average ad valorem equivalent of the post-Kennedy Round U.S. tariff on hardwood plywood is 12.9%, compared with 13% for the EEC and 15% for Japan. The ad valorem equivalent of import charges applicable to U.S. exports of hardwood plywood into the EEC is 29.2% of the f.o.b. origin value compared with the U.S. tariff of 12.9%.

In 1969, U.S. imports of hardwood plywood accounted for 72.2% of U.S. consumption, up from 53.4% in the base period. Under the impact of the very high and rising level of imports, employment in the veneer and plywood industry, of which the hardwood plywood industry is a part, declined from 75.5 thousand workers in 1965 to 73.6 thousand in 1969. From 75.3 thousand workers in December 1968, employment dropped to 70.7 thousand workers in December 1969 and to 68.5 thousand workers in March 1970.

The above industries have been selected for discussion to illustrate the dilemma of U.S. manufacturing industries which find that their domestic market has been opened up for unlimited access to foreign competitors while the markets of those competitors have been substantially denied to U.S. exports.

The foreign economic policy issues which have been exposed by the discussion and analysis presented in this statement are as follows:

1. The selective exchange of well-defined market opportunities in the U.S. and foreign countries, which was the essence of Cordell Hull's reciprocal trade agreements proposal, has not been realized.

2. Because the trade agreement authority conferred upon the President was used as a species of foreign economic aid rather than as a commercial instrument to benefit American industries pari passu with foreign industries, the U.S. share of world exports of manufactures has declined, while foreign industries' share of U.S. consumption of manufactured articles has increased. 3. With the currency for bargaining reciprocal trade advantage on behalf of the United States substantially dissipated by the essentially unilateral nature of past tariff negotiations, the United States is in a very difficult