TRADE REFORM TUESDAY, MAY 15, 1973 HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, Washington, D.C. The committee met at 10 a.m., pursuant to notice, in the committee room, Longworth House Office Building, Hon. Wilbur D. Mills (chairman of the committee) presiding. The CHAIRMAN. The committee will please be in order. Our first witness this morning is the president of the United Automobile, Aerospace & Agricultural Implement Workers of America. We appreciate very much having you with us, Mr. Woodcock. Mr. LEONARD WOODCOCK. You are recognized, sir. STATEMENT OF LEONARD WOODCOCK, PRESIDENT, INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE & AGRICULTURAL IMPLEMENT WORKERS OF AMERICA (UAW), ACCOMPANIED BY JACK BEIDLER, LEGISLATIVE DIRECTOR Mr. WOODCOCK. Thank you, Mr. Chairman. With your permission, I would like to file the rather lengthy statement that we submitted to the committee. The CHAIRMAN. Do you want it printed as if you delivered it? The CHAIRMAN. Without objection, it will appear in the record at the conclusion of your oral statement. Mr. WOODCOCK. I would like to urge the committee largely to ignore the administration trade proposals and to fashion new trade legislation in the interest of the Nation. The UAW still supports liberal international trade policies. We are still able to convince delegates elected by the rank and file in convention of the wisdom of that course, but trade liberalization must be accompanied by measures that will protect workers and their families against victimization if we are to continue in that posture. We need, above all, an adequate program of adjustment assistance. When a worker is displaced in the United States by imports from other countries, he loses far more than his job. He loses health care protection. He loses insurance protection and loses his private pension protection. Even if he gets a job, in the absence of a full employment policy in this country, he lives for years near the bottom of a new seniority list, subject to constant layoffs. The administration says that unemployment protection should be the same for all, evenhanded, regardless of the reason for loss of job. Our history, of course, is full of exceptions. When such an exception for income maintenance was made in the Trade Expansion Act, the then administration said, "This simply continues a distinction which is as old as the tariff itself." Income maintenance up to 100 percent is a well established principle in the European Common Market. Amtrak is another exception. When Amtrak was created to take over railroad passenger operations and the railroads and the unions could not agree, a Secretary of Labor of this administration promulgated provisions providing full wage and fringe benefits applicable to a worker's former job, and any subsequent increases in those wage rates or improvement in fringe benefits for the length of time equal to the length of his previous railroad employment-for a period of time equal to the length of that employment up to a maximum of 6 years. In addition, at his option, lump sum severance was available to him instead of income maintenance; also provisions for retraining and generous allowances for relocation to new jobs. UAW supports this principle of being kept whole when a worker is displaced from his job as a result of trade policy which is in the national good. The Trade Expansion Act presently provides 65 percent of the individual's wage limited by 65 percent of the previous year's national average in manufacturing. This now yields a maximum of $101 per week. For an auto worker, it is approximately 42 percent of his present wage, including overtime. It is 34 percent of his 40-hour wage, plus the value of this fringe benefits. For a tool and diemaker, it is 28 percent on that 40-hour week plus the value of the fringe benefits. The administration's adjustment assistance proposals, of course, come in under these woefully inadequate figures. On duration, the TEA calls for 52 weeks over a period of two years for intermittent unemployment, plus an additional 26 weeks for training and for those who are over the age of 60 an additional 13 weeks. The administration, in its evenhandedness, ties into the States, and except for seven States, there is a maximum of 26 weeks available. The UAW has long supported realistic Federal standards for unemployment compensation. But on balance, what is proposed by this administration in its unemployment compensation proposals, as is usual where workers are concerned, is a downward leveling, and the proposal on private pension plans preserves the pattern of inadequacy. To propose nothing on pension reinsurance, pension plan terminal insurance, is indeed inexcusable. This committee, I think, should take note that a majority of the board of directors of the U.S. Chamber of Commerce recently supported a proposal going far beyond the administration proposals for adjustment assistance. I might say it has been my personal experience, speaking to business audiences everywhere in this country, what they are most receptive to the proposition of adequate adjustment assistance. The chamber appointed a task force to examine this question, headed by Dr. C. Fred Bergsten of the Brookings Institution. That task force unanimously agreed on what it reported to the chamber. That agreement was unanimously endorsed by a special panel of the chamber headed by former Congressman Thomas B. Curtis, and it was also unanimously endorsed by the chamber's International Committee, headed by Kenneth W. Spang, vice president and international adviser to the First National City Corp. of New York. The chamber's board of directors received and discussed this program at length on the 22nd of February of this year, and then voted 35 to 10 in favor of the proposal, but unfortunately, there is a requirement that such proposals must get two-thirds of the full membership of the board, which is 63, and, therefore, 35 affirmative votes fell short of the 42 required for technical full endorsement. That program was to provide 75 percent of wages up to a maximum of $12,000; Government payment of insurance premiums to enable all dislocated workers to maintain in full their membership in all their insurance plans; a duration of 52 weeks, plus an additional 52 weeks for training purposes; and workers 55 or older to either get those income benefits or, at their option, early retirement under the age of 60 but over 55, with immediate benefits that would otherwise be available at age 62, and over 60 with immediate benefits otherwise available at age 65, and those benefits to be full benefits of private pension plans, social security and medicare. The program also called for relocation assistance, retraining programs and Government assistance to communities adversely affected by international trade. The UAW most urgently recommends that this committee provide for revival of the special eligibility provisions included in the Automotive Products Trade Act of 1965, which expired on June 30, 1968, and which this committee and its chairman were most instrumental in bringing into being in the first instance. We also propose close examination of those tax loopholes that provide strong financial incentive to U.S.-based international corporations to establish foreign factories at the expense of American jobs. There must also be a provision, we believe, requiring fair labor standards in international trade. This was recently endorsed by the President's own Commission on International Trade and Investment Policy, a Commission, I note, composed mainly of bankers and industrialists. We are also concerned with the breathtaking range of powers to be given to the President at the further expense of the Congress. Finally, Mr. Chairman, in this vital area of trade policy, I urge this committee to give capitalism a human face. The CHAIRMAN. Thank you very much, Mr. Woodcock, for your statement, which we will consider along with your fuller statement, that will be in the record. [Mr. Woodcock's prepared statement follows:] STATEMENT OF LEONARD WOODCOCK, PRESIDENT, UNITED AUTO WORKERS I welcome the opportunity to present the UAW's position on international trade legislation in these hearings. I deeply regret, however, the necessity to call upon your Committee to reject the proposals for such legislation submitted to you by the Administration. On behalf of the UAW, I urge you to scrap those proposals and to start afresh to develop wholly new trade legislation free from the grave defects and dangers of the Administration's bills. The UAW is one of the few American unions-and by far the largest-that remains committed to support of liberal international trade policies. Our position cin best be summarized by quoting the opening paragraphs of the resolution on "International Corporations and Foreign Trade" adopted by the delegates to our last Constitutional Convention held in April 1972 which state: "Workers everywhere have much to gain from a rational international division of labor in which each national group of workers shares equitably in the fruits of its contribution to the world's wealth. Under those conditions, the free movement of goods among countries provides major benefits to workers, who are employed to produce goods for export, and to consumers, who enjoy lower prices based upon a sound international division of labor. "Substantial numbers of UAW members-in the aerospace and agricultural implement industries, for example-owe their jobs to a high volume of exports of their industries' products. UAW members, together with other consumers, are able to improve their living standards when they can buy imported goods that offer price or quality advantages over domestic products. When such imports are available, domestic producers are under pressure to reduce prices, improve quality or manufacture competitive products. The Vega, Pinto, and Gremlin are being produced in the U.S. today only because of high demand for small imported cars." The UAW's concern is not with free trade as an abstract doctrine but rather with the practical human purposes and effects of international trade. I cannot stress too strongly the relationship between our support for trade liberalization and our insistence that it be accompanied by measures that will protect workers against hardship and exploitation, contribute to improvements in their employment opportunities and living standards and maximize benefits for consumers. In the light of those considerations, the Administration's proposals are sorely wanting. SUMMARY OF MAJOR DEFECTS The Administration has submitted a wide-ranging package of trade and traderelated legislation which requires examination in its entirety. Among the major reasons we find the package totally unacceptable are the following: 1. Instead of meeting the moral imperative and the urgent need for a drastic increase in income maintenance benefits for workers injured by international trade, the Administration proposes to slash the benefits that would be payable to most such workers under existing law. The majority of workers in manufacturing-those earning less than the average wage-would suffer cuts of nearly one-fourth in the benefits presently available to them if they should be displaced by imports and the benefits payable to most higher-paid workers would also be substantially lower. 2. The period during which such benefits would be available to trade-displaced workers would be radically reduced-cut, in most cases, by at least one-half and, in many cases, by far more below the duration provided under present law. 3. No provision is made to assure continuance of valuable fringe benefits essential to the welfare and security of the families of trade-displaced workers-for example, hospital-surgical-medical-drug insurance and hitherto accumulated pension credits. 4. No provision is made to aid communities adversely affected by international trade. 5. No provision is made for revival of the special eligibility provisions for adjustment assistance, included in the Automotive Products Trade Act of 1965, for workers adversely affected by the operation of the agreement between Canada and the United States governing trade in automotive products. This Committee and the House of Representative has previously recognized the need for reinstatement of those provisions which expired June 30, 1968. 6. The tax loopholes that provide strong financial incentives to U.S.-based international corporations to establish foreign factories at the expense of jobs for American workers would be left almost wholly intact. 7. No provision is made to require fair labor standards in international trade in order to prevent unfair competition based upon exploitation of workers even though the need for such standards has long been recognized and the proposal was recently endorsed by the President's own Commission on International Trade and Investment Policy-a commission composed mainly of bankers and industrialists. 8. The breath-taking range of powers that would be placed in the President's hands would represent another major step in the dangerously anti-democratic process, already carried much too far, of transferring Congressional authority to the Executive. 9. Those powers could be used either to liberalize trade or to increase protectionism. Given the unpredictability of the present occupant of the White House and the even greater difficulty of predicting what future Presidents might do with the powers that they would inherit under the proposed legislation, Congress and the American people are being asked to buy a pig in a poke with respect to the nation's future trade policies. I will elaborate later in this statement on the points listed above and offer a number of suggestions concerning other trade matters. First, however, I believe it would be useful to outline briefly the background out of which the UAW's position grows. BACKGROUND We continue to support trade liberalization even though non-North American imports today account for 16 percent of all new passenger cars sold in the United States. We have tried to help our members recognize that the import invasion results not from trade policies, as such, but rather from the vacuum left in the market by prolonged refusal of the auto corporations to produce small cars in their U.S. plants, as we repeatedly urged them to do starting as long ago as 1949. The two major corporations delayed their responses until 1970 and the third largest, Chrysler, chose to join the foreign competition rather than attempt to lick it. Instead of manufacturing small cars here that would be competitive with the bulk of the imports, Chrysler decided to import such cars from a Japanese affiliate and an English subsidiary. The import invasion was further facilitated by the excessive prices that the American producers insisted upon charging in pursuit of maximum profits. By now the foreign producers are too deeply entrenched in the U.S. market to be easily uprooted. The refusal of the U.S. auto corporations to enter into timely competition in product and in price with foreign producers has dealt a double blow of major magnitude to the U.S. trade balance. The U.S. auto corporations abdicated their position in the export market, where demand for large cars is severely limitedpreferring, in total disregard of U.S. interests, to serve that market from their overseas plants. At the same time, their domestic product and price policies opened the door wide to a massive import invasion of the home market. All this, of course, has had its impact on employment opportunities for American workers, not only in the auto industry but in the vast array of other industries-steel, cooper, glass, rubber, electrical products, to name but a few-that supply the auto corporations. The Chrysler experience Recently, the UAW has had the sad duty of trying to minimize the severehardships inflicted upon a large group of Chrysler workers as a result of Chrysler's refusal to compete. The workers involved had been employed in Chrysler's Los Angeles plant which was shut down in July 1971. As late as October 1970, the plant had employed 2,308 workers in the UAW bargaining unit. By May 25, 1971, when the closing of the plant was announced, that number had shrunk to 1,188. The reason was a sharp reduction in Chrysler's West Coast sales resulting primarily from a huge invasion of the car market by imports consisting mainly of small cars. At the time the plant was shut, imports accounted for 40 percent of all new cars being sold in the Greater Los Angeles area. Presumably Chrysler felt that its small remaining volume of sales made continued operation of the plant uneconomical. The Chrysler Corporation, of course, could have kept the workers employed by producing a small car in the Los Angeles plant to compete with imported cars. By so doing it would have helped the U.S. balance of payments while simultaneously avoiding dislocation of its workers. Chrysler chose instead to meet the problem of imports not by competing with them but by joining them. Instead of following GM and Ford by producing a small car in the United States, it chose to import the Cricket from its British subsidiary and is investing $100 million in Mitsibishi in order, among other things, to import the Japanese-made Colt. The UAW was faced with the task of picking up the pieces on behalf of the workers, some with more than 30 years of seniority, who suddenly found themselves displaced. Among the older workers, 187 were eligible to retire under what we call "special early retirement" which provides for augmentation of their pensions until they reach age 65 and qualify for full Social Security pen96-006-73-pt. 3-18 |