You know, I am sure, as well as all of us know, that there are no imitators like the Japs. Once they have come through the plant and they have observed the machinery, when they go back to their homeland, in a short time they will be making the identical machinery, to the very last degree.

I heard only last week, while I was in Connecticut, of an occurrence which had happened before the war. The Japanese had been in the plant and observed the machinery. One of the painters in the factory was painting over the name of the company which had made this machine; there had been a slight mistake with the brush, and he had gone over it. Three years later the same gentleman went to Japan, to the company from which the representatives had come to his manufacturing company in the United States, and he saw some machines there identical in every respect, including this little slur made with the brush.

I say that gives great concern to the people of my State, which is a great manufacturing State, as you well know.

Mr. STASSEN. I would say that the future of Pennsylvania industry and Connecticut industry, and the workers and job opportunities, in my judgment will be improved by H. R. 1.

Mr. SADLAK. I can only join in that hope, Governor.

The CHAIRMAN. Are there any other questions? Mr. Harrison, of Virginia, will inquire.

Mr. HARRISON. Governor, I am still concerned about the proposed trade treaties with the Soviet nations. Do I understand that, in answer to Mr. Boggs' question, you draw a distinction in malevolence between Red China and Red Russia?

Mr. STASSEN. I said the United Nations had in two respects. One is that there is a United Nations special embargo on Red China which arose out of the Korean war. Secondly, Red China is not a member of the United Nations, and the Soviet Union is.

Mr. HARRISON. Would any trade treaties with any of these nations be designed for their benefit?

Mr. STASSEN. Usually the only sound basis for a trade agreement is a mutual benefit.

Mr. HARRISON. A mutual benefit?

Mr. STASSEN. Yes.

Mr. HARRISON. So, then, there would be an advantage to Red Russia of any trade agreement, or she would not come in. They are not simple, and they are going to get their quid pro quo, is that not true?

Mr. STASSEN. That is right, and we have to try to trade for our net advantage in that mutual situation. That is why, when you asked me about butter and manganese, I said "Yes."

Mr. HARRISON. The theory in that trading is that we will outsmart them, is that right?

Mr. STASSEN. No. Just that-I think perhaps I should not say "Yankee traders"-I should say United States traders are, I think, pretty good traders.

Mr. HARRISON. In the case of any difficulty with Red Russia and the trading came to an end, they could get along without our butter; but are we going to be in a position where we are going to be relying on them for manganese?

Mr. STASSEN. No. We have built up a manganese stockpile and we have built up other sources for manganese, so that we do not need to rely solely on the Soviet sources for manganese.

Mr. HARRISON. You say we have built up a manganese stockpile. Now, have we, Governor?

Mr. STASSEN. Yes, we have.

Mr. HARRISON. Is it a substantial stockpile?

Mr. STASSEN. It is.

Mr. HARRISON. It has become so recently, then, has it not?

Mr. STASSEN. Quite a bit of it since President Eisenhower was inaugurated.

Mr. HARRISON. In the last year, is that true?

Mr. STASSEN. Yes.

Mr. HARRISON. Would you say that any manganese we get from such a trade should be put in stockpile, or should it be used for day-today requirements?

Mr. STASSEN. Stockpile, added stockpile, I would say.

Mr. HARRISON. Would it be proper to add an amendment to this bill to require that?

Mr. STASSEN. No, I would think not, because that transaction would already be covered in other legislation of the Congress, including particularly Public Law 480, which does require that it go into stockpile. In other words, I think if you refer back to Public Law 480, you will find that in effect.

Mr. HARRISON. Is that the Stockpile Act enacted in 1946?

Mr. STASSEN. No. That is the Agricultural Surplus Trade Act of 1954. I think H. R. 1 is complete as it now sets before the committee.

Mr. HARRISON. Do I understand that that act requires that any strategic material obtained from behind the Iron Curtain must be stockpiled? Is that the existing law?

Mr. STASSEN. That is right, in the existing law, that the barter of butter for manganese would put the manganese into the stockpile. Mr. HARRISON. Anything that we would put in this act to the same effect would be mere repetition, and it could not do any harm. Mr. STASSEN. Yes, it might lead to confusion. It is difficult to try to enact twice the same provision of law.

Mr. HARRISON. That is your only objection, that it would be a duplication?

Mr. STASSEN. That, plus the fact that you have a very excellent bill here in H. R. 1, and if you begin to put unnecessary amendments in it, it usually leads, I think, to bad legislative practice.

Mr. HARRISON. It would be unnecessary, if it were clearly written into the law. But it might not be unnecessary if it is not: is that true? Mr. STASSEN. I think if you read Public Law 480, you will be quite satisfied that your point is covered.

Mr. HARRISON. But you are not answering my question.
Mr. STASSEN. I am sorry.

Mr. HARRISON. It is necessary to have it clearly written in the law, but it would not be necessary to have it written into this one? Mr. STASSEN. I do not understand your question.

Mr. HARRISON. If it is already clearly written into law that any such manganese which comes into this country as a result of any such trade agreement as contemplated must be put in the stockpile, and it

cannot be used for day-to-day requirements, then it would be an unnecessary amendment to this statute and to this bill. But if that is not clearly written into law, then it would be a necessary amendment.

Mr. STASSEN. No. I think if you are not satisfied with that clause in Public Law 480, the wise thing to do is amend Public Law 480, and not try to amend it indirectly in a bill of this kind, which is a comprehensive bill.

Mr. HARRISON. An authority to the President to negotiate trade treaties. Why is it not a proper vehicle to place limitations upon that authority?

Mr. STASSEN. Certainly not that kind of a limitation which, as you see, would properly fit into Public Law 480.

Mr. HARRISON. That is your interpretation of it. Thank you.
The CHAIRMAN. Mr. Curtis of Missouri will inquire.

Mr. CURTIS. Governor, does your Administration give assistance to American business in overcoming trade barriers established in these other countries?

Mr. STASSEN. Yes, we do.

Mr. CURTIS. And is that responsibility charged to your Administration? Is that responsibility charged to you by an Executive

order?

Mr. STASSEN. It is a combination of our law and the Executive order under the law; and, of course, you have certain other responsibilities in the Department of State and the Department of Commerce. We administer, for example, the so-called investment guaranty provisions where, if private business invests under certain circumstances, we can protect it on the convertibility of the currency that it earns. That is in our mutual security law; and under the Executive order, I have to administer it.

Also, through the fact that we are working with all of these governments when we have missions there, we have an opportunity to work with them on the United States private opportunities that arise in the country. For example, when Turkey wanted to set up a private investment law, it turned to our mission for assistance in advising it on the kind of a law which would encourage United States private investment and other private investment, and we furnished technical assistance in that process.

Mr. CURTIS. The thing I am primarily concerned with at this point, at any rate, is how American industry would present their case to you, for example, so that you understood their point of view. I presume that in your Administration you have certain procedures set up whereby, supposing an American industry were to write to me, I could advise them that they could take it up with you.

Mr. STASSEN. I would refer it to the office of which Mr. E. B. Hall is the director, in my organization. He is here with me.

Mr. CURTIS. I wonder if you could supply for the record a rather comprehensive statement of just what the procedures are in your Administration for American business, and labor also, to present their point of view on some of these matters.

Mr. STASSEN. It is a very good question, and I will be glad to supply a memorandum for the record.

(The information referred to follows:)

PROCEDURES IN THE FOREIGN OPERATIONS ADMINISTRATION TO ASSIST AMERICAN BUSINESS AND LABOR IN NECESSARY BUSINESS ABROAD

The point of view of American labor: The Foreign Operation Administration's Labor Committee is organized for just such a purpose among others, and appendix A deals fully with the committee's purpose and functions, membership, meetings and staff organization. Sample agenda are attached.

Points of view of American business are obtained by means of the liaison between FOA and the National Association of Manufacturers and the Chamber of Commerce of the United States. The presidents of both of these organizations previously served on FOA's Public Advisory Board and are now serving with representatives from other prominent national organizations (agriculture, veterans' groups, education, civic groups, etc.) in the capacity of special consultants to the Director of FOA. These consultants meet as a group regularly to advise on various aspects of FOA programs and policies and to present the points of view of their respective organizations.

Operating units within FOA specially geared to help American business are the Office of Trade, Investment and Monetary Affairs, which services American business seeking investment abroad by means of the investment guaranty program and guidance to investors abroad; and the Office of Small Business, which has established a contact clearing house service.

Among the steps taken by FOĂ to remove some of the barriers to contributions by United States enterprise toward the economic strength of other free nations through investment abroad are those concerned with assisting foreign governments to create and improve conditions under which such investment will be encouraged to enter and remain in those countries.

Collateral to the efforts of the State Department to arrange for treaties for commerce, trade, and taxes, and those of FOA to make a broader use of its investment guaranty program, FOA has made friendly and constructive suggestions for and provided guidance and other assistance in improving, basically, the psychological climate for foreign private investment in other free nations. The improvement of that climate has generally been followed by a foreign government's formal expression, through legislation and executive actions, of a recognition of the need for foreign private capital and the desire of the foreign country to have such capital augment and participate on equal terms with native capital. Through an interagency group of experts on needs of private investment, recommendations are made on this type of foreign investment laws which will encourage flow of new capital into the country. Officers of State, Treasury, Commerce, Export-Import Bank, and the Federal Reserve Board combine with FOA to make these comments and recommendations. FOA coordinates the review. Through the continuous daily contact this group of officers has with business firms, the obstacles and difficulties facing business are reflected in the final product.

FOA has directly assisted Austria, Turkey, Iran, Italy, Paraguay, China, Korea, the Philippines, and Ethiopia in the development of legislative and executive policies, and complementary measures, designed to give practical expression by those countries to their intentions to remove the impediments to and provide positive encouragement and protection for foreign private investment.

Many of the barriers in Austria have been removed and it appears that consideration is being given to improving the investment climate further. As a direct consequence of the assistance requested and obtained from FOA, Turkey and China promulgated vastly improved legislation in 1954 for the encouragement and protection of foreign private investment. Detailed recommendations were made by FOA to Iran and Paraguay, as a result of studies of draft proposals by those countries for legislative and executive action directed to foreign capital, and the recommendations are under active consideration by those countries. Certain restrictive features of an Italian legislative proposal were abandoned after study and recommendations by FOA.

FOA has just completed a thorough study of a proposal to revise the present foreign investment policy statement by Ethiopia and has made concrete recommendations for more positive assurances to foreign investors by the Ethiopian Government to attract them to the possibilities offered in that country. Comprehensive comments and recommendations have been made to the mission to Korea as a result of a review by FOA Washington of a proposal of foreign investment legislation prepared by an official of the Korean Government. A proposal by a Philippine legislation has been under study by FOA. When this study is completed and a report made to the Mission in Manila it is believed action on a revised proposal will be requested in the Philippine Congress.

[Less formal and measurable, but possibly of equal importance, has been the guidance and other assistance of FOA in urging affirmative action by delegates of many countries to the U. N. on the adoption by that organization's General Assembly of a resolution on the international flow of private capital for economic development of underdeveloped countries. Significant informal and indirect assistance has also been provided numerous other foreign countries by FOA representatives. In late 1953 Greece promulgated a new decree for the encouragement and protection of foreign capital. Substantial revisions, designed to remove many remaining barriers, were made in Egypt's foreign investment law in October 1954. Thailand and Afghanistan enacted legislation in the past year to attract foreign capital. Substantial liberalization measures were also adopted by Germany, the Netherlands, and the United Kingdom.]

The investment guaranty program is designed to encourage increased investment of private United States capital in friendly foreign countries. Its objective is to enlist for other free nations of the world, not only American capital, but also the technical and managerial skills and the progressive spirit of American private enterprise.

The instrument of the program is an insurance mechanism which offers protection against two of the noncommercial risks which accompany foreign investment. These risks are: (1) Inability to convert foreign currency receipts into dollars, and (2) loss of investment through expropriation or confiscation. The program does not offer insurance against failure to make a profit or against the other usual business risks that attend any investment.

Insurance protection is available to new, American-owned investments which have been approved as furthering any of the purposes of the Mutual Security Act and which have also been approved by the host government.

The program becomes operative in a foreign country on the basis of an agreement between the United States Government and the government of the foreign country. This agreement establishes the willingness of the foreign government to participate in the program and the rights of the United States Government with respect to currency, property, or claims which it may acquire through the operation of the program. At present, 20 countries are participating and negotiations are in progress with a number of others.

American firms discuss all aspects of this service with FOA's Office of Trade, Investment, and Monetary Affairs. To assist this procedure, a manual of instruction and explanatory attachments are provided for the use of business. See appendix C. The most important phase of this work, however, is the day-to-day contact of our staff with representatives of business. Here we discuss the problems of actual investment in a particular country, the solutions business can effect on its own behalf, and the guaranties the Government can provide. Here specific barriers to investment-fear of inconvertibility and expropriation—are dealt with. Not only do we work with business firms in the Washington office but a special effort has been made to secure the problem of business by meeting scores of businessmen in Department of Commerce field offices in the larger cities. Thus the procedure for business to make its needs known is no periodic occurrence, rather it is a continuous impact felt every working day. We need it and we seek it. Actually by mail, telephone, and personal interview we are in contact with the executives of hundreds of firms every month.

FOA's Office of Small Business was established in 1949, following the enactment of the so-called small-business amendment to the ECA Act of 1948. Its functions have been practically unchanged from that time to its operation under the present section 504 of the MSA Act of 1954.

Its primary responsibility is to furnish American business, particularly small, independent enterprises, information, as far in advance as possible, with respect to purchases proposed to be made with FOA funds. With this primary responsibility in mind, our Office of Small Business has been successful in having set up in nearly all FOA missions abroad libraries of American manufacturers' catalogs, and has instructed American firms regarding the type of information desired and the shipping addresses. But this also helps the participation of small business in commercial trade.

As another help to American business, particularly small firms, the Office of Small Business compiled and had printed with counterpart funds, in 1950, a Directory of United States Companies. The directory, printed in 4 languages and given wide distribution abroad, contained the names and products of some 15.000 American firms interested in export trade. Subsequently, in 1953, a Directory of Combination Export Managers was distributed widely abroad and in the United States, containing the name of some 500 combination export 57600-55-pt. 1-18