Mr. Chairman, I wish to emphasize that my strong support of Title I of the Trade Reform Act of 1973 does not extend to Title II, Chapter I, calling for safeguards in the event market-disrupting imports take place. If an agreement can be reached between free world countries for international consultations to measure and ameliorate market-disruptive actions by any country, the safeguards set forth in Chapter I of Title II will not be necessary. But even if it proves impossible to negotiate such an international arrangement, I believe Chapter I of Title II should be deleted from the Act. Or, in the alternative, Congress might enact the safeguard section into law with the proviso that it would lapse when and if Japan and the EEC repealed the safeguard procedures they currently follow or when agreement has been reached for international, consultations in the event of market-disrupting actions by any country. Mr. Chairman, I am critical of safeguards designed to protect domestic industries that prevent competition, because they are dangerous and expensive. They are dangerous because such power is easily abused. The nature of our political system makes it extremely difficult to resist the petitions of workers, communities and businesses who feel the sting of competition from imports. Safeguards are expensive because the entire nation pays the cost: as consumers in higher prices, and as producers and workers whose market is cut back when government action blocks imports, forcing prices up and diminishing national purchasing power. Ours is a competitive economy. This country has attained the highest standard of living of any nation in history following this principle. Title III, vigorously administered, provides adequate protection against unfair competition. Most American industry, I believe, is willing and able to meet fair competition. The safeguard section is unnecessary. If fair competition cannot be met, the recourse should be not protection, which penalized our entire society to protect a minority, but adjustment which gives real assistance to those who need and deserve help. The Trade Reform Act of 1973 falls far short where adjustment is concerned. Chapter II of Title II is totally inadequate in both concept and resources. Mr. Chairman, I do not claim any expertise in adjustment assistance. However, I do know that ours is a dynamic economy with a rate of change that is rapidly increasing. Substantially more unemployment results from industries that become non-competitive internally than is caused by imports from outside our borders. I have heard experts say that a young skilled workman of today will need to be trained in three skills to keep employed during his lifetime. Such dynamic change points up the need for a national manpower policy. Mechanisms must be developed to provide adequate training and re-training opportunities with the genuine promise of a job at the end for all workers. Some of the countries of Europe are doing much more along this line than we are in the U.S. Yet, for what appears to be budget reasons, the present Administration in the Trade Reform Act of 1973 falls far short of making meaningful adjustment recommendations. I suggest, Mr. Chairman, that this is a logical time to make a major move toward a national manpower policy. Extensive and thoughtful hearings have been held by the Subcommittee of Foreign Economic Policy and a Bill, HR 4917, introduced by Congressman John Culver and sponsored by 44 Congressmen of both parties, is pending before the House. Mr. Chairman, so far in this testimony I have talked in terms of trade. Permit me for the balance of my time to direct my testimony to the twin brother of trade direct investment. Trade and investment are two sides of the same coin. Only in the last few years has the magnitude and importance of foreign direct investment and how intimately it is related to trade come to wide attention. Estimates vary, but the level of worldwide direct investment by multinational companies is reaching $200 billion, 60% of it U.S. This investment sparks some $600 billion a year of production, increasing almost 10% a year, compared with less than 5% a year for purely national companies. The magnitude and speed with which multinational companies have expanded globally is unprecedented. As a result, all over the world, concern is growing about this economic phenomenon which suddenly looms so large on the world scene and appears to be on the way to greater power and importance. Because there has been so much conjecture and emotion and so little by way of objective facts about multinational companies and direct investment, Business International, the company I serve as president and chief executive officer, two years ago launched a study of U.S. multinational companies, designed to measure the effect on jobs in the U.S. and on U.S. balance of payments and balance of trade of direct investment outside the U.S. I want to emphasize at the outset that Business International does not represent any company, association or group. Rather it is a private company in the information business, reporting, publishing, researching, consulting and holding roundtable conferences between governments and the international business and labor community. The information it markets is used widely by business, labor, the professional and academic world and the public-at-large. The study in question was designed and supervised by Dr. William Persen, Business International senior vice president for research and editorial, and adhered to the highest standards of objectivity and scholarship that Business International has followed for 20 years. A thumbnail report on the findings of Business How Americans Benefit from US Business Investment Abroad FOREWORD When a US company establishes a plant overseas, does it take jobs away from Americans and siphon off funds that could be used for expansion at home? Does it hurt the general US economy? To put these arguments to an objective test, Business International Corporation undertook a study of 125 US corporations, most with sizeable foreign investments but some with little or none. The study, "The Effects of US Corporate Foreign Investment, 1960-1970,” was more than a year in the making and covers over 100 closely-filled pages of text, charts and tables. This brief booklet highlights some of the findings of a summary of this study. The BI study is one of the most comprehensive of a number of investigations of the subject undertaken in the last few years by various research teams including those of several US Government agencies. Foreign Investment by US Industry ... Creates Jobs at Home ... Accelerates Investment in the US All the findings clearly indicate that companies with investments abroad, and most particularly those with the largest proportion of foreign investment to total investment, show superior performance over non-investors in terms of creating new jobs at home, increasing the exports of their US factories, accelerating their investments within this country, and generally contributing to a strengthening of the American economy. The rapid growth in internationalization of the world economy, with the resulting removal of many traditional barriers to the free flow of trade, is an important fact of life for our generation and for generations to come. We feel that this new study and others to follow will make a valuable contribution toward a better understanding of the corporate world citizen and its role in the lives of all of us. |