Mr. HARRISON. I want to thank you so very much for your appearance here and the fact that you have obviously acquainted yourself with the record and the problems that are confronting the committee, and for giving us the benefit of your study.

Have you any other recommendations of a legislative character that you can make to this committee on this subject?

Mr. ARNOW. As I have said, sir, the Department has not at this point attempted to formulate legislative recommendations. It is the intention of our officials to study the entire record and the entire experience. I am not in a position to make any at this point.

Mr. HARRISON. I would particularly ask that the Department give us the benefit of any recommendations it can make as to the improvement of the present language in the escape clause, and I would particularly ask you to study an exchange of letters that is in the record, between Professor Kravis of the University of Pennsylvania and myself.

Mr. ARNOW. I would be glad to, sir, particularly since Professor Kravis at one point was a member of our staff and got some experience in the trade agreements program by working with us. I would be very much delighted to look at that personally.

Mr. HARRISON. I will certainly thank you on behalf of the committee.

(The following material was later received in response to questions asked of Mr. Arnow:)

Hon. HALE BOGGS,

DEPARTMENT OF LABOR,
OFFICE OF THE SECRETARY,
Washington, October 18, 1956.

Chairman, Subcommittee on Customs, Tariffs, and Reciprocal Trade Agreements, Committee on Ways and Means, House of Representatives, Washington, D. C.

DEAR CONGRESSMAN BOGGS: This is in response to certain questions directed to Mr. Philip Arnow of this Department during the course of his testimony before the subcommittee on October 2, with regard to which the subcommittee indicated it would appreciate further information.

1. Mr. Martin asked whether the Department of Labor believes that changes in present escape-clause provisions are necessary to take account of situations in which production of the domestic product involved depends upon foreign labor imported for that purpose, and where raising the tariff may encourage increased domestic production and thus an increase in the number of imported foreign workers.

This is one of the many factors which the Department of Labor examines in developing information with regard to the impact of particular escape-clause proceedings. This particular factor, of course, is only one of many interrelated factors which are important and have a bearing upon such proceedings. To date, the number of instances in which this particular factor has been involved is so small that I do not believe it would be appropriate to formulate any definitive conclusion.

2. Mr. Martin asked for the Department of Labor's views on the desirability of a formal complaint procedure for foreign trade matters.

Here the question is not so much whether procedures should be established but, rather, how formalized they should be. Channels of communication within the Government already exist, not only through the Committee for Reciprocity Information, but also through the services of those Government agencies with a particular know-how in the foreign trade field. The channels of communication could, perhaps, be improved or made more explicit. Such procedures must be flexible, however. Good administration does not always call for formalized procedures; indeed, formalized procedures are sometimes against the interests of the party seeking assistance or relief. Such procedures are, I believe, essentially a matter of good Government operation and administration and should be developed at the administrative level. Whether in certain respects some of these administrative procedures should be made more formal is a matter on which this Department has not at this time formulated a view.

3. Representative Harrison asked the Department for the benefit of any recommendation it could make as to the improvement of the present language of the escape clause, particularly in light of an exchange of letters between Professor Kravis of the University of Pennsylvania and himself.

Professor Kravis is advocating the use of so-called tariff quotas to restrict protection to the existing level of domestic production. Before commenting on his proposal, it is necessary to differentiate clearly between a "tariff quota” and an absolute quota. A “tariff quota” could more accurately be called a "sliding-scale tariff" rather than a quota, for that is what it is in reality. Under a tariff quota there is no limit on the volume of imports, but the greater the volume, the higher the rate of duty on the additional imports. A tariff quota is therefore basically a form of tariff rather than a form of quota. Although presently existing tariff quotas are established at two levels of duty-a specified amount is permitted entry at one duty level and then all additional amounts enter at a higher level— there is no theoretical reason why it would not be possible to establish more than two levels of duty.

Under an absolute quota imports are completely banned, not by a tariff but by administrative action, after a specified amount of the product has entered the country. The United States currently has several absolute quotas in effect in connection with the operations of the agricultural stabilization program (Sec. 22 actions).

Professor Kravis is not proposing a new idea in the use of tariff quotas. Such quotas are already in use by the United States. One such quota went into effect, for woolen textiles, on October 1 of this year. The Textile Workers Union formally requested the Government to adjust our tariff on woolen textiles so that duties could be increased for imports in excess of 5 percent of domestic production. The Interdepartmental Committee on Trade Agreements carefully considered this request in light of the basic data on imports and domestic production and hearings were held by the Committee on Reciprocity Information at which American producers, the union, importers, and foreign producer interests were heard. After careful consideration of the facts developed at these hearings, the Committee on Trade Agreements recommended that the tariff quota system be put into effect. The President issued a proclamation to this effect as of October 1.

The tariff quota has, on occasion, proved to be a useful device. Because of the administrative and other problems involved in its application, determinations as to its use should be made on a case-by-case basis. No new legislation is necessary for its continuing use in appropriate circumstances.

For your information we are attaching a copy of a report prepared by the Tariff Commission showing all cases in which the United States has either an absolute or tariff quota in effect. It should be noted that the wool textile tariff quota went into effect subsequent to the issuance of this report and therefore is not included therein.

4. Mr. Martin asked the Department to comment on the relationship between the Department of Labor and the Tariff Commission, particularly with respect to escape-clause reports.

Mr. Arnow expressed the general position of the Department of Labor on this topic during the course of his testimony. I should like, however, to clarify and expand some of his remarks.

The Department can supply the Tariff Commission with factual data, interpretations of such data, and the Department's views with respect thereto. There are, however, certain limitations on what we can properly do. In some cases the views of the Department with respect to manpower and skills as they relate to the mobilization base can be formed only as part of a total review of the mobiliza

tion base by all agencies which make up the Defense Mobilization Board, under the leadership of the Office of Defense Mobilization. If such a review has not taken place, it might not be proper for us to supply comments to the Tariff Commission on the specific problem. In some cases the data are classified, which would prevent their use by the Tariff Commission in a published report. In these instances, we would not hesitate to supply the data, upon request, to the Tariff Commission on a classified basis for internal use in forming their recommendations. Finally, the supplying of data, interpretations of data, and views to the Tariff Commission in no way should restrict the responsibility and freedom of the Secretary of Labor as a Cabinet officer to furnish the President with comments upon the Tariff Commission's report and recommendations. The ultimate responsibility for escape-clause actions rests with the President. He necessarily must be free to request and receive informed comments from the members of his Cabinet which bring to bear upon the problem not only the facts relating to a specific case, but also any interrelated facts which may involve the national interest.

I trust that you will find the discussions in this letter helpful.
Sincerely yours,

J. ERNEST WILKINS, Acting Secretary of Labor.

UNITED STATES TARIFF COMMISSION
Washington, D. C.

UNITED STATES IMPORT QUOTAS OR EMBARGOES ON AGRICULTURAL AND RELATED PRODUCTS IN EFFECT MARCH 1, 1956

Listed below are the quotas and embargoes on United States imports of agricultural and related products in effect on March 1, 1956. Included in the list are products subject to tariff-rate quotas, absolute quotas, or embargoes. A tariffrate quota permits a specified quantity of merchandise to be entered at a reduced rate of duty, while imports in excess of that quantity are subject to a higher rate of duty. Absolute quotas limit the quantity of goods that may be imported into the United States in a specified period. Embargoes prohibit imports.

In section I are listed tariff-rate quotas, all of which are in effect pursuant to trade-agreement concessions. In section II are listed the quotas, both absolute and tariff-rate, imposed under the provisions of section 22 of the Agricultural Adjustment Act, as amended. In section III are listed the absolute quotas on

gugar under the Sugar Act of 1948, as amended. In section IV are listed the absolute and tariff-rate quotas imposed upon Philippine articles entered, or withdrawn from warehouse, for consumption. Section V covers certain embargoes imposed pursuant to section 5 of the Trade Agreements Extension Act of 1951. Section VI relates to an embargo in effect pursuant to section 307 of the Tariff Act of 1930.

United States import quotas or embargoes on agricultural and related products in effect Mar. 1, 1956

SECTION I.-UNDER TRADE AGREEMENTS

SEC. II.-UNDER SEC. 22, AGRICULTURAL ADJUSTMENT ACT, AS AMENDED

Blue-mold (except Stilton) cheese, and cheese
and substitutes for cheese containing, or
processed from, blue-mold cheese.
Italian-type cheeses, made from cow's milk, 710.
in original loaves (Romano made from cow's
milk, Reggiano, Parmesano, Provoloni,
Provolette, and Sbrinz).
Wheat (bushel, 60 pounds): Other than for grind-
ing in bond and export to countries other than
Cuba and ground into flour for export to Cuba,
and except wheat unfit for human consumption.
Wheat flour, semolina, crushed or cracked wheat, 729-
and similar wheat products.

Cotton having a staple of138 inches or more but less than 11116 inches in length.

For period beginning Aug. 1, 1955, recurrent quota for each 12-month
period beginning Aug. 1. 1,709,000 pounds (aggregate quantity).
Peanuts in the shell are charged against this quota on the basis of 75
pounds for each 100 pounds of peanuts in the shell.

For 12-month period beginning July 1, in any year, quota of 80,000,000
pounds permitted to be entered subject to duty of 4 cents per pound.
All in excess of 80,000,000 pounds is subject to an additional fee (duty)
of 25 percent ad valorem.

Quotas for each 12-month period beginning July 1, allocated among im-
porters and supplying countries by the Secretary of Agriculture:

Quantity dutiable at 21 cents per bushe! of 60 pounds limited,with cer-
tain exceptions based upon imports for special purposes, to an annual
quota of 800,000 bushels. The allocation of this quota to foreign coun-
tries is set forth in Treasury Decision 50504.

Quantity dutiable at 52 cents per 100 pounds limited, with certain excep-
tions based upon imports for special purposes, to annual quota of
4,000,000 pounds. The allocation of this quota to foreign countries is
set forth in Treasury Decision 50504.

Global quota of 45,656,420 pounds for each 12-month period beginning
Feb. 1. (Imports dutiable at 32 cents per pound.)

Country-of-origin quotas, totaling 14,516,882 pounds for each 12-month
period beginning Sept. 20. (Imports duty free.)

Global quota of 70,000,000 pounds for each 12-month period beginning
Sept. 20. (Imports duty free.)

3006.150, 3006.200. 3230.360 (in part).... Country-of-origin quotas, totaling 5,482,509 pounds for each 12-month
period beginning Sept. 20. Two-thirds of the quantity allocated each
specified European country is reserved for comber waste.
During each of the 12-month periods beginning July 1 in the years 1955
and 1956, quantity permitted to be entered or withdrawn from ware-
house for consumption may not exceed 186,000,000 pounds, of which
not more than 15,000 pounds aggregate quantity, may be in the form
of rye flour or rye meal. Certain exceptions from quota limitations
contained in proclamation of the President,

See footnotes at end of table.