4. What was sought to be accomplished by placing it on the published list: (a) A binding of the duty-free status?

(b) Imposition of a tariff?

(c) Agreement upon a quota?

(d) Any combination of the foregoing?

5. After hearings, what criteria will be used in the decision of the Committee on Reciprocity Information to negotiate or not to negotiate this particular item in a trade agreement with Japan?

6. (a) Can a negotiation of a trade agrement with Japan result in a tariff or duty rate being placed on fresh or frozen tuna?

(b) Can a quota be agreed upon, and implemented by, this trade-agreement negotiation?

(c) If the free-duty status is bound in the trade agreement will it place the subject beyond the scope of congressional inquiry or action?

7. If the free-duty status is bound in the trade agreement, by what means can it be subsequently removed from the trade agreement?

(a) If Japan is a member of GATT?

(b) If Japan is not a member of GATT?

8. If the duty-free status is bound in a trade agreement what benefits did you consider would accrue to the Japanese?

9. If the duty-free status is bound in a trade agreement, what benefits did you consider would accrue to producers in competing countries?

10. If the duty-free status is bound in a trade agreement, what benefit did you consider would accrue to the United States producer?

11. If the negotiations bind the present duty-free status, what did you estimate to be the effect upon the volume of imports of fresh and frozen tuna from Japan (this can be given in terms of percentage or pounds of increased imports)?

12. If the negotiations bind the present duty-free status, what did you estimate will be the increase or decrease in the volume of fresh or frozen tuna imports from other competing countries (this can be given in terms of percentage or pounds of increased or decreased imports)?

13. If the negotiations bind the present duty-free status, what did you estimate would be the effect upon the American producer in his permitted ability to provide production for the United States market?

14. Is there any particular concession which the committee has in mind to obtain from Japan in binding the duty rate on fresh and frozen tuna at its present zero rate?

15. What is the volume and value of such products?

16. As a part of the proceedings growing out of the decision to negotiate a trade agreement with Japan the Tariff Commission will hold hearings in respect to the establishment of peril points. Can you advise us what procedure will be used to establish a peril point in respect to an item which is presently duty free?

You will see from the foregoing list of questions that we consider this entire matter of what is done with fresh and frozen tuna to be a matter of vital interest in the fullest sense of the term used. We are positive that a great deal of exact consideration was given to this matter and therefore consider you should be in a position to enlighten us fully as to the considerations which you wish us to take into account in the formation of our position.

It would appear that the assumption we should make is that the action of placing fresh and frozen tuna on the list for possible negotiation is that the action was taken with the thought in mind that the present duty-free status be bound. Again, we repeat our wish to operate our business by facts rather than suppositions and therefore do not wish to be in error on this. Hence, we do send you the foregoing list of questions in order that our background information may be complete, that we may be fully advised as to the action which is contemplated by the committee, and in order that we cannot possibly misunderstand the direction which these procedures may possibly take.

This segment of the tuna industry has prided itself on taking a realistic position in regard to trade matters which affect it. We are able to do this because we understand our problems reasonably clearly. We are able to do this to a far greater degree if we understand the problems which our Government faces in regard to any of these commodities. With particular reference to frozen tuna, our thinking can be sharpened considerably and our approach conceivably be made broader if we are advised by you as fully as possible in

regard to all the considerations which you have made in deciding to include this item on the list for possible negotiation with Japan.

Time is of the essence in this matter, and a reply by return mail will be of inestimable value to us, in order that we may meet the time limitation imposed by your committee in the submission of our position.

Yours very truly,

HAROLD F. CARY, General Manager.

DECEMBER 2, 1954.

Mr. HAROLD F. CARY,
General Manager,

American Tunaboat Association,

San Diego, Calif.

DEAR MR. CARY: Reference is made to your letter of November 19, 1954, addressed to the Secretary of State and to the chairman of the Interdepartmental Committee on Trade Agreements. You request information regarding the tariff negotiations to take place in February including the procedures followed by the above-mentioned committee in listing items for possible concession in such negotiations particularly the listing of fresh and frozen tuna.

I am sorry that pressure of other urgent business has not permitted an earlier reply to your letter. However, you may be assured that any supplementary material that you may wish to submit will be accepted by the trade-agreements organization. I also am willing to give you as much time as you may wish at your convenience if you should come to Washington in connection with the hearings.

Before commenting on your questions, I want to emphasize that the listing of any product does not mean that a concession will be offered. Such a decision is made only after all the information, including peril points by the Tariff Commission, is collected and analyzed. Even then if it were decided to offer a concession, the actual granting of a concession depends on the results of the negotiations. It has been our experience that concessions have not been granted on various products either because it was decided that no concession should be offered or because it was found during the negotiations that sufficient reciprocal advantages could not be obtained for the United States in exchange for the concession.

The specific procedure used in deciding whether an item should be listed for the forthcoming negotiations is to obtain preliminary information and trade data available from governmental sources on all relatively important items where there is remaining authority to make concessions under the Trade Agreements Act. This material is reviewed by a subcommittee of the Interdepartmental Committee on Trade Agreements (TAC). The subcommittee then compiles the list of items to be considered for possible negotiation based upon statistical data available to this Government of trade in the item, giving consideration to any requests by foreign governments.

The proposals of this subcommittee are examined, on a product-by-product basis, by the TAC which approves, disapproves, or modifies them. In this examination the full committee specifically considers not only the products proposed for listing but also those which the subcommittee decided not to propose for listing. Among the consideratins which are taken into account are (1) whether the country with which negotiations are to take place is a significant and normal supplier of the product to the United States; (2) what are the other suppliers and how important are they; (3) whether the amount of remaining authority to make a concession is important enough to make it worthwhile to consider a concession; and (4) what is the present relationship of the duty on this product to duties on other products which may be similar or competitive.

On the basis of these and any other considerations which may be pertinent with regard to individual products, the TAC then makes its recommendations to the President. In deciding on these recommendations, the members from the Departments of Commerce, Treasury, Agriculture, Defense, Labor, Interior, and State, and from the Foreign Operations Administration vote for their respective agencies. In other words they, so to speak, "clear" their positions in their agencies. If any agency dissents from the recommendation of the TAC on any product, it files a separate report giving its reasons for the dissent. The recommendations together with any dissents are then transmitted to the President, who reviews them, makes decisions regarding the dissent products, and approves for publication the list of items to be included in a public announcement 57600-55-pt. 1-80

for possible negotiation. In order to secure objectivity and because the President's decision is controlling for the entire executive branch, the separate views of agencies are, of course, classified information.

I can assure you that the process of deciding whether any item should be listed is a lengthy one. It involves extensive interagency consideration. However, this is only the initial part of the preparation for the negotiations. Before a decision will be made as to whether or not any item will be included among those on which concessions might be offered, the testimony and briefs submitted in connection with the public hearings to be held shortly as well as the peril-point findings of the Tariff Commission will be taken into account by the TAC. Every effort will be made to bring together all the technical information available from Government sources. Government officials with commodity knowledge will be asked to make this knowledge available. The TAC will then consider what offers should be made and the President approves the final negotiating position of the United States, again with any agency making separate reports in the event of a dissent from the recommendations of the committee.

I think it would be inappropriate for me to try to describe in detail the considerations that lead to the decision to list any specific product. Apart from other considerations, obviously fresh or frozen tuna is such an important product in the trade with Japan that it would be difficult to explain why the United States was not prepared even to consider the possibility of a concession. As you know, such consideration cannot be given unless a product is listed.

In view of the fact that no decision regarding a concession on fresh or frozen tuna has been made or should be made until all available information has been considered, I cannot completely answer questions 4 and 6 of your second set of questions. However, as you may know, the Trade Agreements Act specifically prohibits the transfer of items between the dutiable and free lists. If tuna should be the subject of a concession, this would not, of course, preclude congressional inquiry or action, but it might be expected that the Congress would give careful consideration to the international obligations of the United States before taking any action which might impinge upon them.

Trade-agreement concessions may, of course, be modified in accordance with the provisions of the agreements. One possible basis for modifying the concession would be a determination by the President under established escape-clause procedure that such modification is necessary to prevent or remedy serious injury being threatened or caused the American industry producing like or competitive products.

It is not possible to furnish definitive replies to the questions 8 through 15 on pages 2 and 3 of your letter if for no other reason than that no decision has as yet been reached even to offer a concession on fresh or frozen tuna. If it should finally be decided to grant a concession, individual opinions would probably differ as to the precise effects to be expected from it. The trade-agreement procedure however provides a mechanism for obtaining a consensus of the best judgment available, taking into account all of the interests involved. Should it ultimately be decided that a concession on tuna is advisable, it will be granted only on the basis of existing legal requirements which include taking into account the peril-point findings of the Tariff Commission, the requirement to avoid concessions which threaten domestic production needed for national defense needs and in the light of all pertinent data. In any event reciprocal concessions must be obtained for concessions granted by the United States, thus serving to reduce trade barriers and to expand United States exports.

So far as question 16 is concerned, any comments could appropriately be made only by the Tariff Commission, which has the responsibility for making such determinations.

Sincerely yours,

CARL D. CORSE, Chief, Commercial Policy Staff.

The CHAIRMAN. Mr. Reed of New York will inquire. Mr. REED. I was interested in this shift from packing tunafish in oil to packing it in brine. Was that a subterfuge? Were they just evading any relief you got with respect to those packed in oil? What were the circumstances?

Mr. CARY. It was simply taking advantage of an opportunity that presented itself in a shift of duty rates. As I described, tuna in brine was not an article in commerce as we knew it in 1943, nor was it in the

several years following 1943. But at the time of the reversion of the duty rate on canned tuna in oil, following the denunciation by Mexico of the trade agreement with us, the reversion of that duty, then preliminary shipments were made of tuna in brine. As I understand, those were classified as dutiable under that basket category negotiated 5 years previously, and therefore that was the manner, and the rather logical one, under which tuna could be shipped to this country, and that has been pursued since. It has led to just a shift from tuna in oil at 45 percent to tuna in brine at 122 percent.

Mr. REED. That is what I thought.

Mr. CARY. Yes.

Mr. REED. And it was most injurious to our domestic industry? Mr. CARY. Yes.

Mr. REED. Thank you.

The CHAIRMAN. We thank you for your appearance and the information given the committee.

Mr. CARY. Thank you.

The CHAIRMAN. Our next witness is Mr. John F. Linehan, general manager, Seafood Producers Association.

Please give your name, address, and the capacity in which you appear, for the record.

STATEMENT OF JOHN F. LINEHAN, GENERAL MANAGER, SEAFOOD PRODUCERS ASSOCIATION OF NEW BEDFORD, MASS., INC., NEW BEDFORD, MASS.

Mr. LINEHAN. Mr. Chairman and members of the committee, my name is John F. Linehan, general manager of the Seafood Producers Association of New Bedford, Mass. I represents the fishing vessel owners and the allied and supporting industries which go to make up the fishing industry in our port. All of our vessels in New Bedford, which number about 170 and represent an estimated $12 million in capital investment, are owned by individuals or partnerships. Eighty percent of our captains are owners or part-owners, and the boats represent their entire savings and investments, in most cases. Our marine railways, boatyards, machine shops, and other service companies each have a history of private and personal enterprise. Ours is a collective industry of individual enterprises, and the New Bedford fishing fleet is the fourth most important in the Nation in value of landings. It is for this industry that I am appearing before you today.

I shall not bore you with reiteration of import statistics, for that information has come before you many times already. Rather, I want you to know how the people of New Bedford feel about foreign trade in general, and about H. R. 1 in particular.

Secretary of State Dulles scared us to death last week when he told us that he would sacrifice American jobs and industries to help the foreigners, most of whom, by the way, are apparently too lazy to help themselves. If you recall, he stated:

I do not hesitate to say that even if ** the pending bill would primarily serve the economic interest of others ** * I would still advocate the bill as needed to preserve the unity and vigor of the free world. * *

Secretary of Commerce Weeks, however, served to lessen our fears. somewhat when he assured us that the administration has no intent to ignore the legitimate safeguards we have normally relied on to protect American industry and labor standards in this country. We pray that not many Members of Congress think as little of our own domestic economy as Secretary Dulles apparently does.

We feel that continuation of the past and present policy of foreign trade, as embodied in the Reciprocal Trade Agreements Act, is pure folly. Under the system of control of foreign commerce and tariffs by the executive department only grief has come to our own domestic economy. The "escape clause" and "peril point" provisions of the act have proven to be a sham. We sincerely believe that Congress alone can best serve the interests of the American people in this matter. It is the Congress that ascertains the pulse of our citizenry, and Congress, we are certain, would be less apt to ignore the legitimate claims of injury to our own citizens. It is high time that we put a halt to the sacrifice of domestic industries upon the altar of foreign imports. The imports of fresh and frozen groundfish to this country have risen from 9 million pounds in 1939 to 136 million pounds in 1954, with no hope for a slackening in the continuing increase. A healthy industry prospers and expands with age and in the presence of increased population. Our industry has decreased in the past 5 years because some of our boatowners could not afford to operate vessels on the income received from the sale of their catches. Some of our processors could not pay American workers and compete with products processed by foreign labor. The difference in the initial prices paid for fish is relatively small, but by the time the product reaches the retailer the difference is startling. The major cost factor in the processing of any commodity, be it fish or any other, is labor. By law the American producers and processors must bargain collectively with unions. In such a manner are wages and hours established. Social and other taxes, freight rates, and other conditions are established by law. The domestic producers and processors are unable under existing laws to decrease costs of operation. Hence, they cannot compete with foreign counterparts who have no such restrictions, and unfair and unequalized foreign competition forces the domestic companies to either liquidate or curtail their production to where they can survive on the crumbs of the domestic market.

The fishing industry in New Bedford represents an income of $20 million per year to New Bedford fishermen, boatowners, handlers, processors, and supporting services. It is the second largest industry in the area. A continuation of present trade policies foretells nothing but ignominy to the industry. Our fishermen and workers are as good as any in the world, and better than most. Our methods and equipment are modern and efficient. All we ask is to be protected against unfair competition from goods produced by cheap foreign labor. We can meet fair competition, but we cannot meet competition from countries where the wages of the workers reflect their miserably low standards of living.

We feel that H. R. 1 will serve only to perpetuate the inequitable conditions which exist today and will only encourage further exploitation of labor abroad, meanwhile creating unemployment and economic disaster in this Nation. H. R. 1 must be defeated and the responsi