Western Europe,' where the factors that have played a major role as determinants of the postwar expansion of agricultural output in Europe are briefly referred to. "It is clear that economic policies and general economic development have exerted a great influence. Yet it is also clear that the progress of technology has been a separate and powerful force. It was not only favorable price-cost relationships or the availability of capital that brought about the application of better farming techniques; interest in technology as such has become a factor, and has tended to raise output per unit of input, thus itself improving price-cost relationships and reducing the capital-output ratio." It is probable, in any case, that at least a certain "momentum" of expansion is likely to operate in Europe for some time to come. It would be all to the good if OEEC's efforts to emphasize specialization in accordance with productivity, and productivity per man rather than per acre, helped to channel these increases into a pattern which would more nearly accord with the principles of a reasonable international division of labor— not only within Europe but throughout the world.

C. Increased competition

In the past few years European markets have become more competitive. And if the agricultural policies of increasing productivity and better coordination make headway, non-European suppliers will face further sharpening of competion. Therefore, the purely commercial factors of price, quality, and "commercial convenience" will play ever-increasing roles in determining the chances for American agricultural products in European markets. The greater the advantages of buying in America, the less will importing countries be inclined to burden their economies with unnecessary costs in buying elsewhere.

D. The wider framework

The basic and hard-core character of most agricultural and trade problems limits the prospect of any substantial modification of agricultural policies in favor of freer international trade, unless there is modification of the underlying determinants of these policies. Here American agricultural export interests must look to general foreign and economic policies. General United States trade policies, our policy for economic assistance and for economic development abroad, and our influence for international tranquillity have an important bearing upon the size of American agriculture's overseas markets.

TOBACCO ASSOCIATES, INC., Washington, D. C. October 15, 1956. CHAIRMAN, SUBCOMMITTEE ON CUSTOMS, TARIFFS, AND RECIPROCAL TRADE AGREEMENTS,

House Ways and Means Committee,

House of Representatives, Washington, D. C.

DEAR SIR: Enclosed you will find a statement which we would like to submit relative to the investigation your subcommittee is conducting on customs, tariffs, and reciprocal-trade agreements.

Sincerely yours,

J. B. HUTSON.

STATEMENT SUBMITTED BY TOBACCO ASSOCIATES, INC., WASHINGTON, D. C.

Approximately 400,000 farm families in the States of Virginia, North and South Carolina, Georgia, Florida, and Alabama produce flue-cured tobacco. Most of these families depend almost entirely on the income from tobacco production for their livelihood.

Approximately one-third of the flue-cured tobacco produced in the United States is exported. This means that the flue-cured-tobacco farmers have a large stake in international trade. Any action taken by the United States which affects adversely United States foreign trade also affects adversely the flue-curedtobacco producers. Conversely, any action on the part of the United States which affects favorably our foreign trade benefits flue-cured growers.

At the last annual meeting of the membership of Tobacco Associates which was held in Raleigh, N. C., on March 6, 1956, the following two resolutions regarding foreign trade were adopted:

1 U. S. Department of Agriculture, Foreign Agricultural Service, FAS-M-7, June 1956.

83979-56-pt. 3- -23

I. INTERNATIONAL TRADE ORGANIZATION

"Whereas more than one-third of the total flue-cured tobacco produced in the United States is exported; and

"Whereas the value of flue-cured tobacco exported annually amounts to $250 million to $300 million; and

"Whereas the level of flue-cured tobacco exported from the United States is affected by the level of international trade between free countries; and

"Whereas the General Agreement on Tariffs and Trade is an international instrument which has been used effectively for several years in promoting and increasing international trade; and

"Whereas there is a definite need for the establishment of a permanent international organization to handle the administrative affairs connected with the General Agreement on Tariffs and Trade; and

"Whereas such an organization has been proposed and recommended to the United States Congress by the present administration: Now, therefore, be it "Resolved, That we, as the membership of Tobacco Associates, Inc., representing the producers, warehousemen, and leaf exporters of flue-cured tobacco and the bankers, merchants, and fertilizer manufacturers in the flue-cured producing area, recommend and urge that the United States Congress enact legislation that will permit the United States to accept membership in such an organization. Such legislation is now before the Congress in the form of H. R. 5550.”

II. CUSTOMS SIMPLIFICATION LEGISLATION

"Whereas more than one-third of the total flue-cured tobacco produced in the United States is exported; and

"Whereas the value of flue-cured tobacco exported annually amounts to 250 to 300 million dollars; and

"Whereas the ability of foregin manufacturers to buy our tobacco is often limited by the ability of manufacturers of commodities in their countries to sell their commodities in the United States; and

"Whereas customs simplification legislation now before Congress would in some cases facilitate the sale of foreign commodities in the United States: Now, therefore, be it

"Resolved, That we, as the membership of Tobacco Associates, Inc., representing the producers, warehousemen, and leaf exporters of flue-cured tobacco and the bankers, merchants, and fertilizer manufacturers in the flue-cured producing area, recommend and urge that the United States Congress enact legislation that will simplify and modernize our outdated and antiquated customs procedures such as is provided for in H. R. 5040 which has already passed the United States House of Representatives."

STATEMENT OF ERNEST FALK, NORTHWEST HORTICULTURAL COUNCIL, ON FOREIGN TRADE AND TRADE POLICIES-RESTRICTIVE TRADE PRACTICES

The Northwest Horticultural Council, with offices at 1002 Larson Building, Yakima, Wash., represents more than 9,000 growers of apples, pears, and other deciduous fruits in Oregon and Washington and the packers, marketers, and shippers of these fruits. In addition to the growers, thousands of employees are engaged in producing and harvesting the crops. Additional thousands are employed in warehouses in sorting, packing, and preparing the fruit for shipment. The Northwest Horticultural Council has on many occasions supported the extension of the Trade Agreements Act by statements to and appearances before the Ways and Means Committee. A statement of Ernest Falk to the Ways and Means Committee on H. R. 1, dated January 28, 1955, sets forth the position of this industry in some detail. Our letter of March 23, 1956, to Hon. Jere Cooper, chairman of this committee, re H. R. 5550 also sets forth our position. Instead of repeating the text of those statements in detail, thereby increasing the record of this hearing, we respectfully refer to the committee and its staff to those statements which are included in the respective records of those hearings.

The apple and pear industry of the Northwest and of the entire United States is vitally interested in foreign trade. Prior to World War II, 29 percent of our Northwest apples and 44 percent of our winter pears were exported. During this same period, from 10 to 17 percent of all apples grown in the United States were exported. In recent years, only 2 or 3 percent of the United States apple production has been exported. This is shown on page 1 of the exhibit attached

hereto. Page 2 of the exhibit shows fresh apple exports from the United States, by destination. It shows that in the last 4 years our apple exports have averaged less than 25 percent of the 1934-38 average. Our exports to Europe during this period have averaged less than 10 percent of the 1934-38 average.

Exports

of pears, particularly to Europe, have similarily declined and are shown on page 3.

In our statement dated January 28, 1955, the importance of the European market which prefers small size apples and pears which are not in demand in the United States and, therefore, complements the domestic demand, was explained in detail. There is a demand and a market for our fruit in Europe. This demand is largely for sizes and for varieties not in favor in our domestic market; many of these were planted for the export market.

Prewar, United States fruit ranked third in importance amongst United States agricultural exports, being exceeded in value only by cotton and tobacco. Our industry for years supported the principles of multilateral trade. We note that the United States has generally complied with its obligations under the GATT, while foreign countries too frequently negatived the concessions in duty on fresh fruit by imposition of arbitrary barriers such as licensing, quotas, seasonal restrictions, and complete exclusion. Immediately following the end of World War II, there was some justification for restrictions because of currency problems. Since then, some foreign countries, at the behest of their protectionist-minded growers, under the guise of dollar shortages, have continued to impose arbitrary restrictions. As these countries approached convertibility and the excuse of dollar shortage became unavailable, they have continued to discriminate against United States fruitgrowers by unilateral action. They have imposed restrictions and placed the United States in the position of asking or begging them to live up to their obligations and to give United States fruitgrowers the right to compete, which we are legally entitled to. There are no such restrictions, other than very low tariff rates, on foreign-grown fruit entering the United States. The effect of these actions is shown by page 2 of the attached exhibit. Despite the fine work of the United States Department of Agriculture and the recently increased efforts of the State Department, we have been almost completely excluded in too many instances.

At the same time, while fruits were being shut out of many markets, the United States has generally complied with its GATT and other international trade obligations. When it became necessary to impose restrictions because of domestic programs, the United States voluntarily acknowledged the situation and made compensating allowances.

We submit for this committee's consideration that reciprocal trade should work both ways. We believe the United States should insist that these foreign countries acknowledge their obligations and bilaterally agree with the United States when they need and are entitled to an exemption, instead of initially making a unilateral determination and thereby placing on the United States the burden of proving a violation. Instead of conceding that the foreign countries have done us a favor when they grant limited access, we should insist that they acknowledge and meet their obligations and request permission from the United States to impose barriers when needed and justified under the terms of GATT. If the United States is to continue supporting the GATT and the principles of multilateral trade, we should insist that other countries recognize and live up to their obligations and that when they require exemption or release from their obligations, it should be multilaterally or bilaterally agreed to, instead of, as in the past, being established by their unilateral determination. If this position is adopted by, and insisted on by, the United States, some of the arbitrary barriers would be removed and the United States fruit industry given its rightful place to compete with other exporting countries. This would be reciprocal trade as conceived by the planners of our foreign-trade policy.

Apples: United States production, exports as percent of production, year beginning July 1

Source: U. S. Department of Agriculture. Foreign Agricultural Service.

Apples, fresh: Exports from the United States by country of desination, average 1925-38, annual 1951-55

Mostly Ireland.

Included in Republic of Panama prior to January 1938.

Source: U. S. Department of Agriculture, Foreign Agricultural Service. Compiled from official records

of the Bureau of the Census.