industry jobs as a result of such imports, and will create 1 production and 4 service jobs by reason of exports. Thus, in sum, it will mean the relocation of 1 production worker and 8 new service industry jobs. It is obvious that having arrived at a balance-of-payments point we should bend every effort to increase our imports and exports, with an accent on import promotion, because it automatically generates corresponding exports, whereas the reverse is not the case. In this connection, we feel that the recommendations of the research and policy committee of the Committee for Economic Development, contained in its statement on United States Tariff Policy, are likely to achieve the above desirable results if enacted into law without emasculating deletions and amendments. This would at long last set a definite course for our economic foreign policy and would redound to the great benefit of the civilized world and particularly benefit the United States. MICHAEL M. MORA, General Manager. FOR YOUR INFORMATION FROM THE NORFOLK PORT AUTHORITY, NORFOLK, Va. COMMITTEE FOR ECONOMIC DEVELOPMENT STATEMENT The research and policy committee of the very important and influential Committee for Economic Development (widely known as CED) will shortly publish for distribution a statement on United States tariff policy. The research and policy committee of CED is a group of leading industrialists, economists, and educators and the conclusions reached in this recent study are most significant. The recommendations made in this report are from an advance release of the statement, and the full text follows: RECOMMENDATIONS The committee believes that the first requirement of tariff policy is to minimize uncertainty about the future course of the American tariff. We are convinced of the advantages of expanding world trade. If tariff liberalization is to make a positive contribution to this objective, we must first give as clear assurance as we can that the direction of future tariff changes will be downward. The act of assurance is as important as actual tariff reduction. The best way to create greater certainty about American tariff policy would be to extend the President's trade agreements authority for a period of years. We favor extension for at least 5 years; consideration should be given to extension for a longer period. Business at home and abroad should not be subject to the uncertainties which have resulted in recent years from annual debate over the renewal of this authority. Further, the President's authority to reduce tariffs should be enlarged in four ways: First, the President should be authorized, as part of his trade-agreements authority, to reduce tariff rates by not more than 5 percent per year for the period of extension of the Trade Agreements Act. Unused authority should not expire but should carry over to following years. This new authority should replace the authority to reduce tariff rates remaining under the present act, except with respect to trade with Japan. Second, the President's request for authority to reduce to 50 percent ad valorem, or its equivalent, any tariff rate now above that level should be granted. Such reductions should ordinarily be made over a period of years. Third, the President should be authorized to suspend the tariff duty on any product which is not produced in substantial quantities in the United States. Fourth, the President should be authorized to exchange tariff reductions for other kinds of benefits to the United States than tariff reductions abroad. The present law requires that tariff concessions by other countries on American products be received in exchange for any reductions of American tariffs. In the committee's opinion, it is questionable whether tariff concessions from other countries are always the best return we can get in exchange for liberalizing our own tariff. Among other things, American exports are frequently more limited by other countries; import quotas than by their tariffs. Reductions in our tariff, for example, might be exchanged for liberalization or elimination of other countries' import quotas on American goods, or on the goods of third countries. American tariff reductions might also be exchanged for concessions to American investors abroad-effective guaranties that American firms and investors would enjoy the same rights and privileges as local firms and investors; effective assurance against nationalization without compensation; or permission to withdraw profits and capital. Agreements of this kind could be helpful in increasing American private investment abroad. We recognize that practical difficulties will be encountered in carrying out this broadened concept of reciprocity. Some countries may resist extending the scope of negotiations about tariffs to include nontariff questions. Nevertheless, we feel that the advantages to the United States of being able to use tariff negotiation as a broader and more flexible tool of policy warrant a careful search for ways around these practical difficulties. Classification and valuation The Commission on Foreign Economic Policy (the Randall Commission) made several proposals concerning the classification and valuation of imports in assessing tariff duties. These proposals may be summarized as follows: (1) The President should be empowered, on the basis of recommendations by the Tariff Commission, to make changes in commodity definitions and rates for the purpose of consolidating schedules and simplifying classifications, provided such changes do not materially alter the average rate of duty for any class of goods. (2) The present standards of procedures for valuation of dutiable merchandise should be revised. In particular export value should be made the preferred, initial standard of valuation. (3) In addition, a study should be made of the feasibility of making greater use of the actual invoice price of imported goods for valuation purposes. We believe these three proposals are sound and should be adopted. The President has requested ligislation embodying the second of these three recommendations. The whole question of simplification of customs classification is now under study by the Tariff Commission pursuant to the Customs SimplifiIcation Act of 1954. The Anti-Dumping Act American producers are entitled to effective protection against serious injury resulting from foreign dumping in the American market-that is, from the sale of foreign merchandise here at a price substantially below the price charged in the exporting country, with allowance for normal transfer costs. At the same time, the administration of protection against dumping should not create unnecessary delays and uncertainties for American importers and foreign exporters. The Anti-Dumping Act of 1921 is designed to give protection by imposing special antidumping duties in cases where it is found that a domestic industry is being, or is likely to be, injured by importation of goods of a kind or class which is being dumpted. There is considerable criticism of the effectiveness of the present act as now administered. The task of determining actual or threatened injuries under the Anti-Dumping Act has recently been transferred from the Treasury Department to the Tariff Commission. While it is important to avoid interruption of imports while alleged cases of dumping are under investigation, the administration of the act should be speeded up in order to give American industry more effective protection against dumping. Peril-point and escape-clause provisions The peril-point and escape-clause provisions of the Trade Agreements Act in their present form are serious limitations on the President's ability to lower tariff rates. The peril-point provision requires the Tariff Commission to survey all commodities on which the President proposes to negotiate agreements and to specify rates of duty below which, in the Commission's judgment, tariffs cannot be lowered without serious injury to domestic producers. The act also requires that an escape clause be inserted into all trade agreements. Under the escape clause, the Tariff Commission may recommend to the President, on its own motion or on complaint of an interested party, that a tariff concession be withdrawn because it is causing or threatening to cause serious injury to domestic producers. These provisions have been interpreted by the Tariff Commission to forbid tariff concessions which will result in any reduction of domestic output, except in the case of multiproduct industries where displaced labor and plant can easily be shifted to other products made by the same firms. Some shifting of resources into more efficient uses is, as we have noted, a necessary part of the economic process by which the national interest in expanded trade is realized. Although the escape-clause and peril-point provisions have not been frequently applied, this interpretation has greatly limited the area of effective use of the trade agreements authority (with the single exception of the trade agreement with Venezuela, no major reductions in United States tariffs have been made while the peril-point provision has been in effect). If there is to be effective liberalization of the tariff, the peril-point and escape-clause provisions of the Trade Agreements Act need to be modified. In their present form they are inconsistent with effective tariff liberalization. The President has asked that these provisions be retained. He has, however, stated his intention to base his decision on Tariff Commission recommendations on grounds broader than the Commission is empowered to consider. We agree that the President should be free to set aside Tariff Commission recommendations when he finds that the national interest requires it. In our view, however, more than this is needed. We believe that the peril-point and escape-clause provisions of the Trade Agreements Act should be changed in two ways. First, it should be made clear that the purpose of these provisions is to prevent serious hardship rather than to prevent any reduction of domestic output by imports. "Serious hardship" might be defined as reduction in output and employment on a substantial scale, where a major part of the labor and facilities released would be unable to find suitable alternative employment or use within a reasonable time. Second, the withholding of a tariff rate reduction under the peril-point provision, or its withdrawal as a result of escape-clause proceedings, should ordinarily be temporary, not permanent. Business firms, employees and communities should be given sufficient time to readjust to the effects of tariff reductions. Where appropriate, they should be given assistance in doing so. But they cannot reasonably claim the permanent right to avoid adjustments where the national interest clearly calls for a tariff reduction. A STATEMENT OF THE PORT OF DETROIT COMMISSION IN SUPPORT OF H. R. 1, BEFORE THE WAYS AND MEANS COMMITTEE OF THE UNITED STATES HOUSE OF REPRESENTATIVES The Port of Detroit Commission, a municipal corporation of the State of Michigan, is the governing body for the Port of Detroit District. Two of our many responsibilities are to provide space and facilities needed for the handling of foreign trade at the port of Detroit and the promotion of foreign trade through the port, for the general benefit of the people of Wayne County and the State of Michigan. The passage of the Reciprocal Trade Agreement Extension Act would have a favorable reaction on the economic activities listed below and result in increased prosperity for the people of Michigan and other States. We would like to point out how important a high level of imports and exports is to the economy of our State. 1. The Michigan Customs District has consistently for the past year ranked second in the United States in value of foreign trade, by all means of transportation, with $2 billion worth of exports and imports annually. 2. Approximately 15 percent of total United States exports are produced in the Michigan area. 3. The port of Detroit is the main port of entry for Canadian imports and the principal port of exit for United States exports to Canada. Approximately 1 million tons of foreign commerce between Canada and the United States are routed via the port of Detroit. 4. Direct income from port activities created by exports and imports, to or from overseas, amounts to $750,000 annually for the State of Michigan. 5. Indirect income for Michigan created by foreign trade with overseas countries, routed via the port of Detroit, amounts to $1 million for the State of Michigan and $2 million for other States. 6. Direct income from port oriented industries, who use materials from Canada and/or the rest of the world, amounts to $200 million annually in form of payrolls, local purchases and supplies, services, power and utilities. 7. Indirect income for port oriented industries who use materials from Canada and/or other overseas countries amounts to $400 million annually. 8. Recognition should be given to the numerous jobs created because of the movement of foreign cargo through the port of Detroit. Listed below are a few of the service and sales organizations which provide employment: Port terminal personnel. Ship personnel. Customs brokers. Marine insurance brokers. Foreign freight forwar 'ers. Personnel working in foreign departments of various banks. Export crating concerns. Ship chandlers. Truck and rail transportation personnel who move cargo to and from the port. Government personnel who enforce United States regulations of imports and exports. Personnel of the many steamship agencies. Stevedores. 9. The economic activities mentioned above will be increased multifold with the completion of the St. Lawrence seaway. The Port of Detroit Commission is cognizant of the value of foreign trade to all other segments of our economy. We have restricted our written testimony to the role of international commerce as it affects our port itself for practical reasons and because other proponents have on record statements covering the other economic fields of endeavor that will be affected by whatever action is taken on H. R. 1. Our knowledge of the value of a more liberal foreign economic policy leads us to the conclusion that the passage of H. R. 1 is a sten in the right direction. We sincerely hope that the members of the Ways and Means Committee will concur in our opinion. FOREIGN TRADE ASSOCIATION OF SOUTHERN CALIFORNIA, Hon. JERE COOPER, Los Angeles 13, Calif., January 13, 1955. Chairman, House Committee on Ways and Means, House of Representatives, Washington 25, D. C. DEAR CONGRESSMAN COOPER: At a special meeting of our board of directors held at Los Angeles, Calif., on January 13, 1955, the board of directors received and considered the report submitted to it by Philip Stein, customs attorney, chairman of the legislation committee of the association, relating to the proposed extension of the Reciprocal Trade Agreements Act which expires on June 12, 1955, and particularly to H. R. 1, introduced by you on January 5, 1955, on which your committee is about to hold hearings. After careful consideration and study of the data presented, the board of directors of our association has passed the following resolution, which it is respectfully requested be considered by your committee and included in the official record of its hearings on said bill: "Resolved, that the Foreign Trade Association of Southern California, comprising in its membership exporters, importers, sea, rail, air and truck transportation interests, communication interests, banks, insurance underwriters, and many other firms in Southern California engaged in foreign trade pursuits and concerned in the promotion and expansion of world trade, approves of, endorses, and recommends, consistent with the request of the President contained in his message on foreign economic policy sent to the Congress on January 12, 1955, that the Reciprocal Trade Agreements Act, which is due to expire on June 12, 1955, be extended for a period of 3 years, until the close of June 30, 1958, and that the President be granted the authority requested by him in his message of January 12, 1955, subject to the present peril and escape clause provisions: (1) To reduce, through multilateral and reciprocal negotiations, tariff rates on selected commodities by not more than 5 percent per year for 3 years; (2) To reduce, through multilateral and reciprocal negotiations, any tariff rates in excess of 50 percent to that level over 2. 3-year period; and (3) To reduce, by not more than one-half over a 3-year period, tariff rates in effect on January 1, 1945, on articles which are not now being imported or which are being imported only in negligible quantities. "That this resolution, signed by the president and chairman of the board of directors of this association, and attested to by its manager, be sent to Hon. Jere Cooper, chairman of the Committee on Ways and Means, House of Pepresentatives, for consideration by the said committee, with the request that this communication be included in the official record of the hearings of said committee on H. P. 1." Respectfully submitted. FOREIGN TRADE ASSOCIATION OF SOUTHERN CALIFORNIA, By GEORGE H. MOHR, Preside: t. By CARL SCHAEFER, Chairman of the Board. Approved and adopted the 13th day of January 1955, by the board of directors of the Foreign Trade Association of Southern California. Attest: ROBERT O. VERNON, Ma cger. COMMERCE AND INDUSTRY ASSOCIATION OF NEW YORK, INC, Hon. JERE COOPER, Chairman, Ways and Means Committee, House Office Building, Washington, D. C. DEAR CONGRESSMAN COOPER: This association, which is the recognized service chamber of commerce for the New York metropolitan area and numbers in its membership over 2,000 New York firms directly engaged in overseas trade, wishes to place before you and the members of the Committee on Ways and Means our views in respect of H. R. 1, the Trade Agreements Extension Act of 1955. Since the beginning of our country's reciprocal trade program in 1934, our association has steadfastly supported a policy of bilateral and multilateral negotiations conducive to an increase in the exchange of goods and services among the world's trading nations. We have consistently supported such measures as would reduce or eliminate unnecessary barriers to this expanded trade. At the very core of such a tariff philosophy has been the trade agreements program with I residential authority to enter into foreign trade agreements under section 350 of the Tariff Act. Inasmuch as our national economy depends to a large extent upon the volume of materials imported and exported, and in light of the axiomatic benefits of a liberal and progressive foreign trade policy, we wish to go on record with your committee on this occasion in support of H. R. 1, insofar as it provides for a 3-year extension of tariff negotiating authority. In fact, we believe a longer period or even no expiry time is preferable to evidence the stability of our trade policy. Those provisions of the bill for specific duty reductions over a 3-year period in respect of certain high tariff goods and products being imported in negligi le quantities or not at all, represent means to an end and, as such, are of less significance than the basic continuing authority to work with other countries over the coming years for reciprocal concessions to stimulate an ever-increasing volume of international commerce and, concomitantly, a higher level of economic life for all countries. Our comments have been limited to this fundamental question in the belief that prompt favorable action by your committee, as well as the House and Senate, can be achieved by focusing attention on the basic policy involved. It is our conviction that your efforts toward expediting action on this measure are in the best national interests. Sincerely yours, GERALD LEVINO, Chairman, World Trade Committee. (Whereupon, at 4:37 p. m., the hearing was recessed, to reconvene Tuesday, January 25, 1955, at 10 a. m.) |