MR. STEWART

While an argument can be made for the fact that workers who

have been displaced by Governmental action should receive special assistance
from the Government, the argument proves too much because it accepts as
inevitable the proposition that authority delegated to the President for
the purpose of benefiting "all American workers" must somehow be used
so as to destroy the means of livelihood of substantial numbers of workers.
The very existence of this authority acts as a soporific upon the conscience
of those members of the Executive Branch of the Government who exercise
the authority to negotiate trade agreements and to apply a variety of
remedies which are designed to enforce U. S. rights under trade agreements.
The sad fact is that the manner in which the trade agreements
authority has been used, particularly since World War II, is most unfortunate
because it has seriously invaded the capability of a broad cross section
of industry to maintain investment and employment for the production of
manufactured goods in the United States. In this testimony, the Trade
Relations Council is recommending revisions in the Administration's trade

GOVERNMENT

23(B)

23(C)

MR. STEWART

bill which by their nature would safeguard against the excesses in trade
agreement negotiations committed by past Administrations, while requiring
a more forthright and zealous enforcement of U. S. rights under existing
trade agreements.

A period of time will be required under the authority of the
bill as amended pursuant to the Council's recommendations for the United
States to move from its present position of peril resulting from the unwise
tariff concessions granted in the past to a position of strength in which
it exacts fully reciprocal trading opportunities from the nations that are
the beneficiaries of U. S. tariff concessions and the vigorous enforce-
ment of such U. S. rights through the use of the variety of remedies
which have been provided to the President to counteract discrimination
and the impairment of U. S. trade agreement rights. During this period
of transition it will be the unfortunate fact that many workers will
continue to be injured by increased imports. Accordingly, the adjustment
assistance program for workers needs to be continued in operation during
the transition period from the type of trade agreements program we have
experienced in the past to the more meaningful type of program which
would result from the adoption of the amendments offered by the Council
to the Administration's bill.

GOVERNMENT

Section 301 of the bill evidently is intended to consolidate
the type of authority now provided to the President under section 338 of
the Tariff Act of 1930, as amended, and section 252 of the Trade Expansion
Act of 1962.

In point of fact, the President has been in the possession of
extensive authority to act against foreign countries who maintain unjusti-
fiable or unreasonable tariff or other import restrictions which impair
the value of trade concessions secured by the United States in past trade
agreements, or who engage in discriminatory or other acts which are unjusti-
fiable or unreasonable and which burden or restrict United States commerce.

Section 338 specifically authorizes the President to declare

new and additional duties on articles produced by foreign countries
that discriminate against the commerce of the United States, either
directly or indirectly, in such manner as to place the commerce of the
United States at a disadvantage compared with that of any foreign country.

GOVERNMENT

Section 301 of the proposed Trade Reform Act of
1973 is not a new provision.

It is a consolidation
and revision of existing section 252 of the Trade
Expansion Act of 1962. There are several differences
between section 301 and section 252 of the TEA.

Section

301 does not distinguish between foreign unfair practices
which burden our agricultural trade and those practices
which burden our industrial trade. Section 252 distinguished
between these foreign practices and provided different
degrees of reactions to them. If agricultural exports
were restricted the United States could react by imposing
duties or other import restrictions on imports from the
country involved. The duties which could be imposed had
no statutory limit. However, if industrial exports of
the United States were restricted, the United States
action was limited to increasing duties up to the Column 2
rate. There is no justification for providing differing

24(B)

MR. STEWART
That provision of law also authorizes the President, whenever
he finds as a fact that any foreign country places any burden or disadvan-
tage on the commerce of the United States by any unequal impositions or
discriminations, by proclamation to declare new or additional rates of
duty to offset such burden or disadvantage not to exceed 50% ad valorem
or its equivalent on any articles imported from such country.

Section 338 also has a unique remedy that enables a President
whenever he finds as a fact that any foreign country discriminates against
the commerce of the United States in such manner that an industry in any
third foreign country is benefited, or whenever the President determines
that new or additional duties within the 50% ad valorem limit previously
mentioned do not effectively enable him to remove such discrimination, he
may by proclamation declare new or additional rates of duty equal to 50%
ad valorem on the importation from any foreign country of such articles,
not merely from the offending foreign country, thus shortstopping third

GOVERNMENT

reactions to foreign restrictions against our exports
depending upon whether they are agricultural or industrial.
This unnecessary distinction is therefore deleted by
section 301 of the bill.

Section 252 also distinguished between foreign acts
which were unjustifiable and those which were legal hut
unreasonable. If the foreign restriction were legal but
unreasonable the President would have to have due regard
for the international obligations of the United States
with respect to his actions against the foreign trade
barrier.

This requirement of due regard is changed to a
requirement on the President to consider the relationship
of his action under this section to the international
obligations of the United States. The purpose of this
change is to make clear that the President is not required
to in all cases act in complete consistency with the
international obligations of the United States. The

24(C)

MR. STEWART

countries from receiving the benefits indirectly of discrimination against
U. S. commerce.

The Tariff Commission is directed to ascertain and remain
informed concerning any discriminations against the commerce of the United
States so as to facilitate the President's use of this authority.

He has never used it, nor attempted to use it, notwithstanding
its plenary scope in dealing with actions of other countries which burden
or discriminate against the commerce of the United States.

Furthermore, section 252 of the Trade Expansion Act of 1962
now empowers the President to suspend, withdraw, or prevent the application
of trade agreement concessions to products of any country which maintains
nontariff trade restrictions which burden United States commerce in a
manner inconsistent with trade agreements, or which engages in discrimi-
natory or other acts which unjustifiably restrict U. S. commerce. This
authority has never been invoked by the United States.

GOVERNMENT

change in this requirement reflects the need for reform
of the international trade rules which may not in all
cases clearly authorize those actions which must be
taken in the overall national interest of the United
However, it is intended that the President

States.

depart from international obligations only in very rare
cases where adequate international procedures for dealing
with unjustifiable or unreasonable actions are not

available.

Another change from existing law is that the authority
of the President is extended to cases where a foreign
country provides subsidies or equivalent incentives on
its exports to third country markets and these subsidized
exports cause a reduction in sales of competitive United
States exports in those third country markets. This new
authority was adopted by the House in the 1970 trade bill.

Section 338 of the Tariff Act of 1930 does provide
useful authority against foreign countries which discriminate