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into world markets in competition with the American-made product. Imports of special materials and parts may be the determining factor in the practicability of an investment.
Another suggestion which we would offer is that international trade be viewed, first and foremost, as a means of developing our own economic growth. By the example of one concern, we have attempted to show what export business can mean to the thousands of lives touched by its activities. Without exception,
we claim the results to have been good for all concerned-with harm to none. The processes by which these results were obtained should, accordingly, be carefully preserved and developed still further.
And when we stress our own country's economic growth as a major objective, we do so not in terms of harm to others. In international trade one country's gain is not another country's loss. As in ordinary domestic commerce, there is always an exchange of what each has for what each wants; and just as that has produced tremendous benefits by filling wants within one country, so also has it offered the prospect of progress toward the same constructive satisfaction on a broader world scale.
The greatest single aid to more and better international trade would, of course, be the free convertibility of currencies-and particularly of the so-called soft currencies-into United States dollars. Achievement of this, however, wouid seem to depend largely upon more favorable trade balances among those nations presently short of dollars. Attempts to ameliorate this situation are being made through both more sales into the United States and greater curtailment of purchases from the United States. But, taken as a whole, progress toward a solution is surely to be found in more trade--not less. The main direction of our effort should, accordingly, be to minimize restrictions and maximize the development of more opportunities. This is the direction advocated in President Eisenhower's program.
In offering these comments we have not attempted to prescribe a national foreign-trade policy, and we know of no panacea which would resolve all the problems. Rather, we have, for the most part, preferred to confine our testi. mony largely to what we ourselves do in practice, and to tell of it because it reflects what we believe. Appraised against that background of practice and experience, we find our thinking and our actions in general accord with the policies being advocated by President Eisenhower as reflected in his recent statements on the subject and in H. R. 1, the so-called reciprocal-trade bill.
Now we in America who are strong advocates of competition under free enterprise claim it to be a universal principle, and yet some would, at the same time, seek to limit its application to areas within lines on maps.
The inconsistency would seem to be obvious—and has been observed, of course, by those who look at us from abroad. We in our company view true competition as a universally constructive force which operates not only to the benefit of the customer but also to the benefit of the producer. On our part, it forces us not only to meet competitive prices but also to race against the others of our industry in research and engineering design, in manufacturing processes and techniques, in distribution methods, and in managerial competence. The competition of ideas as expressed commercially in products should not be kept out of the market place. Competition to us is a creative force, not a destructive one; and if it truly is a principle, then it surely should be worldwide in its application.
Let us not, therefore, defeat the good work of American precept by advocating our way of life as an example of what others should do and then restrict their freedom to do it. What we need in this world are more friendly countries like the United States, and the least we in business can do is refrain from retarding the great progress which we ourselves have been wise or fortunate enough to foster and enjoy.
It should, accordingly, be our general national policy to try to let the peoples of friendly foreign countries help themselves by not denying them proper opportunity to earn dollars by selling to us and competing with us under our laws. In general, the principal use to which dollars so earned can be used is to buy the products of American labor and investment. Favor toward one industry will usually create discrimination against another-but the injured may well be companies like ours who are not direct parties in the action. This means that our duly constituted authorities should be most farseeing in contemplating any action which would restrict or shut out foreign products from coming into the United States. How circumspect they need be is, we believe, a matter which can best be examined in the light of each particular case.
In conclusion, if we were to try to leave any one guiding thought, it would be that rather than devote our time to seeking and creating new plans, new rules,
new laws, we set about wiping out the artificial restrictions which throughout the world are presently impeding trade. What is needed more than any one other single ingredient is more freedom-and this country is in good position to set an effective example. This cannot be achieved quickly—and change should be made only by orderly process permitting reasonable adaptation to the change. But the time is here now when we should determine a clear course of action, make the direction of it known to the rest of the world, and then proceed to move firmly in that direction. We should not wait for others; rather, we should show them how, and then, with clean hands, be in better position than we hold today to demonstrate why the American pattern points the way to international cooperation and prosperity.
STATEMENT OF TYPEWRITER MANUFACTURERS EXPORT ASSOCIATION ON RECIPROCITY
The members of this association, the four leading manufacturers of typewriters, invite your attention to the rapid evolution, or perhaps revolution, in world trade of typewriters. They appeal to you to take such steps as are possible to arrest the present trend which threatens to eliminate American-made typewriters from world markets.
Typewriters were first commercially developed in this country back in the 1880's. They began to figure in our exports at the turn of the century. The world regarded them as an American product; they were almost exclusively so until after World War I.
When the Underwood tariff was written in 1914, there was very little, if any, overseas competition. No import tariff was needed. As a result, typewriters were placed on the tariff-free list where they have been ever since-one of the very few completely manufactured products on the free list. They were “bound" on the free list at Torquay in 1951, following “negotiation" with Canada. We do not know why this was done, because we are certain the typewriter industry in Canada did not seek it. The 1920's witnessed the beginning of the foreign competition, but our share of the world's typewriter trade continued at between 80 and 90 percent.
In the thirties, with the world trying to dig its way out of universal depression, the manufacturers of typewriters in Europe began to export more widely. This movement, in the case of Germany particularly, was aided by direct Government subsidy. Europe began to export more widely. This movement, in the case of Germany particularly, was aided by direct Government subsidy. Europe remained our largest customer, taking almost one-half of our typewriter exports, and our total exports amounted to from 25 to 40 percent of our total production. Typewriters began to enter the United States in commercial quantities from Switzerland, Germany, and even from Italy. The quantities, however, represented an insignificant fraction of our domestic sales. Our share of the entire movement of typewriters in international trade in the thirties varied from 80 percent to a low of 47 percent in 1938, a peak year of Germany's subsidized drive.
Thon came World War II. The Swiss and Swedish industries were left untouched and they prospered. All of the others were injured or destroyed. Much of Germany's typewriter industry disappeared behind the Iron ('urtain at the close of the war. The American industry was cut off from typewriter production during the war, but reactivated very rapidly at the close of hostilities and supplied large quantities of machines for export to starved markets abroad duriny 1947 and 1948.
Following this came the Marshall plan and ECA. Our generosity went far beyond the mere restoration of Europe's prewar status, and brought about gains in both production and export of typewriters greatly exceeding the level attained prewar in these countries. For example, Germany exported in 1954 over 30 percent more typewriters than did the United States, and in 1955 almost twice as many.
The attached table, to which we invite your attention, illustrates the shrinkage of United States participation in the world's export trade over the past 26 years. The rapid decrease of United States participation is shown in the final column. It has been, of course, during the past 5 years, offset in a small degree by the desperate efforts of our members to protect their business in several areas by assembly, partial manufacture, or even complete manufacture abroad. Although such a program gives some immediate relief to the American typewriter manufacturer, we feel it is not a wise long-term program, because it will eventually eliminate the export business of the United States factory and thereby increase the cost of machines produced for the United States market.
During the past 20 years, there has been a great deal of lipservice paid to "reciprocal trade," but the results in the typewriter field are that the United States market is wide open whereas practically every other typewriter-producing country has maintained duties high enough to discourage imports and in 1 or 2 cases has actually prohibited importation of American typewriters.
Particular examples of high tariffs are provided by Germany, Switzerland, and Italy and, in addition to high tariffs, imports of American typewriters are practically prohibited by Italy.
In Switzerland, duties were reduced by reciprocal-trade agreement with the United States in 1936 from 500 francs per 100 gross kilos to 400 francs per 100 gross kilos. At present prices, this duty with other import charges amounts to about 35 percent of the c. i. f. value. American manufacturers customarily ship in wooden export cases, whereas European manufacturers can ship in cartons. Since freight and duty are paid on gross weight, this gives European manufacturers a considerable duty advantage over the United States.
In Germany and Italy slight duty modifications were negotiated under GATT, but the total import charges currently amount to 21 percent and 28 percent, respectively, of the c. i. f. value. In addition, importation of typewriters is practically prohibited by exchange and other regulations. Also, in the case of these two countries, their import duties agreed to under GATT are arbitrarily increased by marking up invoice values as a basis for assessment. This practice is also employed by France.
Illustrating the “reciprocal” movement of machines in 1954, and the first 6 months of 1955, the following figures on typewriter shipments are eloquent: Germany to United States : 1954
27, 804 1955_--
50, 538 United States to Germany: 1954.
1, 764 Switzerland to United States : 1954.
12, 432 1955..
15, 324 United States to Switzerland: 1954.
3, 875 1955_
2, 686 Italy to United States : 1954_
8, 197 1955_
18, 852 United States to Italy : 1954.
413 Of the 5,063 typewriters shipped to these 3 markets in 1955, 2,155 were electric typewriters, not yet manufactured very widely in Italy or Germany.
Our European competitors pay wage rates 50 percent or more below ours. Unlike most products in international trade, close to 85 percent of the cost of an American typewriter is labor. This, together with the high duties and import restrictions, permits our competitors to sell at much lower prices for export, maintaining relatively high levels at home, and underselling us in third markets.
Imports of typewriters into the United States, free of tariff, have grown tremendously. Before World War II they had numbered, for example, 98 machines in 1934 and 1,372 in 1939. Since World War II they have grown from 4,123 in 1946 to 149,118 in 1955.
One of the bitterest experiences we have faced in recent years has been the refusal of our own Armed Forces in Europe to entertain bids for United States-made typewriters. Thousands and thousands of machines have been pure chased from foreign producers at times at more than United States Government prices. The offshore purchase program, as set up by law and defined therein, may have been justified when first enacted. It provides an unnecessary advan. take now to our European competitors, and should be ended or at least modified in such manner as to permit competition on even terms. The present system contributes to the widespread impression that Uncle Sam is not interested in his own producing companies. Such a policy, too, is destructive of morale on the part of our established distributors in Europe. European producers have taken unfair and cruel advantage of this policy in their advertising.
Today, while for 20 years we have championed reciprocal trade as outlined in the act bearing that title, we are weakening unless trade conditions can promptly be improved through GATT, of which Switzerland is not a member, however. Beyond that, we would like to see more realism and less generosity on the part of United States negotiators who, it would seem, especially at Annecy and Torquay, have gone far out of their way to make concessions in our tariff, in order to get trifling concessions from their vis-a-vis-concessions which in most cases have been nullified by exchange and other import controls and by additional taxes in one form or another on imported goods. Reciprocal trade, it appears to us, would be truly reciprocal if European producing countries put typewriters on their free lists, as in the United States, or if the United States should charge 21 percent duty on German typewriters, 28 percent on Italian, 35 percent on Swiss, etc., with other controls dropped on both sides. On a truly reciprocal basis, we would still be at a disadvantage in wage rates, but would not feel that the business we created was being deliberately sabotaged, and partly so by our own Government.
We feel that corrective measures should be taken immediately. We do not ask for special favors or trading advantages; we merely ask to be allowed to compete on even terms. We believe in reciprocal trade, but it must be reciprocal, We do not want to be discriminated against. To accomplish reciprocal trade, an ideal program, and one which might provide United States negotiators with a different slant on trade philosophy, could be:
1. Withdraw the concession made by the United States at Torquay in 1951 "binding" typewriters on the free list of the United States tariff.
2. Any foreign producing country admitting American typewriters duty free would enjoy continued duty-free importation of typewriters into the United States.
3. Any foreign producing country which prohibits importation of American typewriters would have its typewriters banned from importation into the United States.
4. If any foreign producing country places a duty of more than 10 percent on American typewriters, then typewriters from that country should not enjoy free entry into the United States.
5. The "offshore purchase program” should be modified so that United States products are not arbitrarily excluded, but are allowed to compete on a price basis.
Such a program would be truly reciprocal. Under existing policies and practice we find ourselves in a position where our products are excluded from some markets, penalized in others, and discriminated against by our own Armed Forces in Europe. We feel that the foregoing facts fully justify action by the Congress in forcing the unbinding of the typewriters on the free list of the United States tariff at the earliest possible date. We believe nothing would do more to strengthen the hands of our negotiators in seeking lower tariffs from foreign producing countries.
We urge that the Congress give careful consideration to the views herein set forth.
Exports of typewriters
United States typewriter trade with 3 high-tariff foreign producing countries
(standards and portables, new) (Figures are exports of the several countries named, except those of 1956 which are United States imports
STATEMENT OF CLOTHESPIN MANUFACTURERS OF AMERICA, RICHARD A. TILDEN,
On behalf of the Demeritt Co., Waterbury, Vt.; the Diamond Match Co., Dixfield,
Maine, and Cloquet, Minn.: Forster Manufacturing Co., Inc., Farmington, Maine; Munising Wood Products Co., Inc., Munising, Mich. ; National Clothes Pin Co., Montpelier, Vt.; Penley Bros., West Paris, Maine; Spencer Wood Products Co., Spencer, Ind.; the Wallace Corp., Richwood, W. Va.; members
The Clothespin Manufacturers of America, a trade association representing the manufacturers of 100 percent of all wooden clothespins produced in the United States, is pleased to have this opportunity of presenting to the subcommittee the views of its members on the effectiveness of the escape clause as a means of protecting domestic industry from injury resulting from concessions granted under the trade-agreement laws. In conjunction with this presentation, specific recommendations for changes in the escape-clause procedure will be made.
The association feels that it is particularly well qualified to express opinions on this subject since it has engaged in an 8-year struggle to obtain relief from the serious injury which it has incurred as a result of constantly increasing imports resulting from reductions in import duties on spring clothespins granted under the trade agreement program. This struggle has involved three public hearings before the Tariff Commission, three lengthy investigations by the Commission, several appearances before the Committee on Ways and Means of the House of Representatives and the Finance Committee of the Senate, and an appeal to the President of the United States. All this small industry received through these efforts was the consolation of having satisfied three Tariff Commissioners that increased imports resulting from trade-agreement concessions were seriously injuring it.
No relief has been granted and the injury to the industry becomes more and more serious as time goes by. During the 5-year period immediately preceding the last Tariff Commission investigation, imports of spring clothespins averaged 941.000 gross per year. On the basis of this volume of imports three of the Commissioners concluded that the industry was being seriously injured. Following this finding, imports continued to increase. In 1954 they totaled 1,173,000 gross. In 195.5 they rose to 1,528.000 gross and they are currently being imported at the rate of 1,614,000 gross per year. This rate compares with a rate of less than 20,000 gross per year prior to the concessions.
The clothespin "saga" has been told many times and no useful purpose could be accomplished by a reptition of it in this statement. The sole objective of this presentation is to demonstrate, on the basis of the clothespin industry's experience, that the present escape clause provisions are not being interpreted and applied as intended by Congress and that several changes are essential if any real protection is to be given domestic industries.