The phenomenon of trade takes place because it is more expensive for a country to produce some goods domestically than it is to buy them elsewhere. Such imports provide higher real incomes to consumers, provide the ability to foreign countries to purchase our exports, and thereby, generally expand the employment opportunities of workers in this country. If this were not the case, trade would not even be a factor in our economy. And, until coffee can be grown in Minnesota as efficiently as it can be grown in Brazil, this will continue to be the case. We believe that many of the provisions of the administration's proposed Trade Reform Act, deal with basic substantive issues. Many of the provisions could move our trade policy in directions recommended in the CWA proposal for foreign trade policy. Unfortunately, I use the word "could" advisedly, inasmuch as the substance of many of the provisions of the proposed Trade Reform Act are replete with such vague and discretionary language as to allow any kind of action whatsoever. For the sake of clarity, we have outlined our major concerns in the following six points: One, we do not feel that the President should have the authority to enter into new trade agreements and be able to adjust tariffs accordingly. Two, we do feel that there should be relief available for disruption to domestic operations from inordinate increases in imports. However, we do not feel that the determination to take whatever action is necessary should be consigned to Presidential discretion alone. Three, we agree that there should be a fairer and less stringent test for labor to qualify for temporary import relief than now is available. Four, we agree that retaliatory action should be undertaken whenever foreign countries impose unnecessary restrictions on U.S. trade but, that determination should be made by a Foreign Trade Board subject to statutory limitations and not left to the discretion of the President. Five. While we agree that a persistent balance of payments deficit or surplus can be a source of concern, we do not believe that this should result in quota or tariff adjustments at the discretion of the President. It is far preferable that adjustment to such conditions be undertaken through currency revaluations studied by an impartial committee. Six. While we can agree that many import barriers can be suspended in a period of inflation, we cannot agree with a blanket application of such a policy against inflation any more than we would agree to restrictive trade policies as a response to unemployment. Reduction of barriers on imports will no more solve the problem of serious inflation than the raising of such barriers will solve the problems of serious unemployment. And, again, we deny that such complete authority should be delegated to the President. While, in our trade proposal, approved by our executive board in January of this year, CWA favored many of the provisions later suggested by the Trade Reform Act, it also proposed that such controls be given to a Foreign Trade Board. This Board would be charged with the development of a balanced foreign trade policy which would consider export and import industries on a case by case basis, including their importance to the economy, their place in the economy, and their effect upon other sectors of the economy. Imports of shoes, for example, could be allowed at a rate corresponding to attrition in the shoe manufacturing industry. Imports of beef, following the current crisis, could be regulated with consideration to the interests of consumers as well as those of the ranchers. We propose that such a Board be representative of consumer and labor interests as well as those of business and the government. We propose that the Board's controls be just as broad as the controls proposed here, but that the proposed controls are to be authorized only after the Board's determination of the existence of specified facts. Its authority to vary tariffs would be conditional on meeting statutory limitations. We propose a system of flexible tariffs subject to bounds established by the Congress. Its goal would always be to secure a stable transition from, and adjustment to, trade fluctuations and to avoid actions which would destabilize domestic operations. While the President has authority to take remedial action in many circumstances, he is restrained only in cases where it is required that he seek the advice of the Tariff Commission. The Tariff Commission's finding of disruption of industry from imports enables the Secretary of Labor to grant displaced workers supplemental unemployment compensation and other monetary benefits. We can subscribe to the desirability of this type of adjustment. But, at the same time, under the authority granted him by the act, the President can enter into a trade agreement permitting an increase of that same import. In other words, the President would possess virtually unlimited authority to alter the terms of trade as he alone saw fit. We do not see how a comprehensive trade policy can emerge from such arrangements. We can only see the continuance of the lobbying of one industry or another for special considerations. Labor and/or consumer interests appear to be an afterthought in the bill. Industry would remain the primary consultant as it always has. We note in particular, the bill's extension of Presidential authority to cover not only revisions of tariffs but expansion or contraction of quotas. The cutting off of, or the expansion of, import directly is more likely to destabilize domestic production than almost any other type of control. Tariff increases can also decrease imports, but would clearly have a lesser effect than the imposition of quotas. In extreme cases, even this authority can be contemplated reasonably if the important economic interests involved are considered. Hearings, however, are not enough. The combined interests of consumers and labor must be represented on the policy determining bodies. All too often history has seen Congress create a control commission only to have the executive staff it with the very people it was designed to regulate. In summary, while many of the proposed controls contained the administration's foreign trade bill, coincide with proposals we have made, we feel that the mechanism designed to employ these controls is such, that they might easily be misdirected or ineptly applied. Because foreign trade involves special considerations and constitutes only a small part of our economy, we favor a policy that would treat those problems singularly. In the past, whenever the economy has experienced any substantial unemployment, a hue and cry has been raised for restrictions on imports, as if such efforts would excuse the absence of effective fiscal policy. There are no inherent provisions to help insure the stability of international commerce in this particular piece of foreign trade legislation. While the control of trade is properly within the legislative purview, the foreign trade bill would virtually consign the conduct of this entire area of economic activity to the executive branch of the Government. The varied economic interests involved require that the complicated matters of foreign trade by the special province of a technically competent, economically representative group responsible to the legislature. The other aspect of our foreign trade with which we are concerned is the expansion of American corporations overseas in the form of the multinational corporate octopus. We say "American corporations overseas" because most of the large multinational corporations are American. This very fact suggests considerable imbalance. The lack of foreign investment in the United States testified to the special consideration we give American firms overseas. CWA recognizes the fact that American investment overseas expands our export markets. But much of this overseas investment is subsidized by tax breaksparticularly a credit for foreign income taxes as a direct offset to U.S. corporate income taxes. The foreign tax credit is simply a mechanism for putting an American corporation in a foreign country on the same financial footing as one of that country's own corporations. Some of this investment might have been undertaken in the United States and provided additional employment here if it had had equal subsidization-perhaps in desirable social, or public investment projects. But beyond this, the foreign tax credit simply is another corporate tax loophole for the enrichment of corporations at the expense of the average individual taxpayer. Moreover, while everyone seems to be worrying about the deficit in our balance of payments, it should be noted that new undertakings of overseas investment in any given year aggravates our balance of payments problem. The foreign trade bill would provide for restrictions on exports from foreign countries which have subsidized those exports, by allowing the imposition by the Tariff Commission of higher duties. How, then, can we justify our subsidization of the export of capital for foreign investment? Many foreign countries resent the encroachment of American investment in their countries. American investment overseas can stimulate industrialization in underdeveloped countries. But, increasingly, the other nations of the world want control over their own investments. And when an underdeveloped nation requires aid in building an industrial base, this aid should be provided directly not through indirect subsidies. We think a country's tax policy should be even-handed in the treatment of all of its economic interests. We do not believe the current Treasury recommendations on changes in the taxation of foreign sources income go far enough. They propose that the tax credit be rescinded only when foreign corporate taxes are significantly lower than in the United States. We believe that all earnings of American firms overseas should be subject to taxation in the year in which they are incurred. In the final analysis we are concerned that additional unrestrained power will be placed in the hands of the administration. In addition to providing proper and sensible restraints on Presidential discretion, with regard to trade, we can sum up our position in four concise state ments. One. The United States should have a balanced trade policy which should remove trade from its role in fiscal policy, and consider the separate trade problems involved on their own merit. So a trade market would be developed by the Trade Board. Two. Persistent deficits in the balance of payments are a result of shifts in the terms of trade and should be dealt with as such, through international monetary negotiations. Three. Foreign investments by U.S. corporations should not be subsidized by our tax system. Four. Tax policy should be based on equity in taxation and the maintenance of a stable economy, and not on the basis of manipulating or subsidizing private interests. Thank you, Mr. Chairman. 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