February, 1953, was $15.92 per day, not including fringe benefits which average from $1 to $1.25 per day in terms of cost to employers.

It has been estimated that foreign lead-zinc can be produced at some 5 cents per pound less than domestic mining costs because of the low foreign wage scales. For this reason, at 11 cents for zinc and 132 cents for lead the market is profitable to the foreign producer, but unprofitable to most American producers. If the market remains at that level for any protracted period, most of our domestic production will be discontinued. As the foreign producer can continue to sell profitably at those prices, no rise in price can be expected until many domestic producers have been forced out of business. The foreign producer may then, and by past history can be expected to raise prices to whatever level our increased dependency permits.

The need for stabilization import tax legislation is therefore directly related to the basic issue of survival of domestic lead-zinc mining and the prevention of dangerous dependency on foreign production.

UNITED STATES TARIFFS AND INTERNATIONAL TRADE BARRIERS

Free trade logically assumes bilateral removal of tariff barriers, import and export restrictions, currency manipulations and government or private cartels. Even after removal of such devices international free trade, to be successful, must be conducted in an environment of freely convertible currency. For the United States to unilaterally remove its tariffs or to fail to provide proper protection for vital raw material and manufacturing industries under present conditions of international trade would be but a short cut to crippling of our domestic economy and suicidal invitation to disaster in war emergencies.

Let's look briefly at present conditions affecting international trade, to better understand the inconsistency of the pleas of "internationalists" for free trade and unilateral removal of trade restrictions by the United States.

The United States Tariff Commission report for the period April 1949 June 1950 states:

"In most foreign countries embargoes, quotas, licensing, and exchange-control regulations have become more important than tariffs as a means of restricting imports. At present most foreign countries restrict both the quantities of goods to be imported and the sale of foreign exchange."

An editorial in the Wall Street Journal, January 27, 1953, states, regarding the post-World War II period: "Most governments built shelters around their economics-shelters of currency controls, import and export controls, investment controls and other devices which masked supply and demand and kept economics outdated."

A Mr, O. R. Strackbein of the National Labor-Management Council on Foreign Trade was quoted in the January 13 issue of the Wall Street Journal on this matter:

"Slowly the facts are beginning to emerge that the United States is now distinctly a low-tariff country and that our trade restrictions * * * are much less onerous than those maintained by most of the countries that so readily protest our 'high trade barriers' *** the overall result (of tariff reductions since 1934) is that today our tariffs are down 75 percent from their high point so far as actual protection effect goes."

France recently reimposed import duties "to protect domestic producers of nonferrous metals" according to the American Metals Market, March 5, 1953, issue. This was done because "France is self-sufficient in lead and any further decline in prices would force shutdowns in some French mines" (and in French overseas territories).

The United Kingdom and many other countries license imports and exports; South American countries have freely used different exchange rates to favor or exclude varieties of imports; Mexico has export taxes on many of its products; and devaluation of currency by many countries following World War II seriously disrupted world trade.

In spite of all these barriers so restrictively effective in international trade, we are urged by those same countries to lay our economy completely open to their exploitation. The United Nations goes even further; it implies a threat to the United States when, in discussing international trade in a pamphlet titled "Measures for International Economic Stability," its "economic experts" state: "That country [United States] might well take a liberal view * * * as a means *** of reducing the need for other countries to take new discriminatory measures against its exports."

The domestic mining industry of the United States simply asks for protection against dumping of foreign metals in excess of our needs through enactment of legislation now presented and designed to stabilize metal prices at a level consistent with production costs in our domestic economy. It is in the interest of our domestic economy and security to do so.

H. R. 4294 (SIMPSON BILL)-TRADE AGREEMENTS EXTENSION ACT OF 1953 The lead and zinc section of the bill recognizes the need to maintain a sound and active lead and zinc industry within the United States in order to supply the industrial, military, and naval needs of the country. Dependence upon foreign sources for these metals is costly and dangerous to national security. The domestic mining industry has experienced serious curtailment through dumping of lead and zinc from low-wage foreign countries on the American market. The miners have suffered from the effects of currency devaluation and the monopolistic and socialistic practices of foreign governments in the purchase and sale of metals.

In order to save the industry from destruction, the bill provides for a sliding scale stabilization import tax on lead and zinc. The base price of lead and zinc upon which the tax is to be determined is 15% cents, but adjusted periodically with the Bureau of Labor Statistics index of primary market prices for commodities other than farm and food. In the case of lead and zinc metal the proposed tax is 1 cent plus 1 cent per pound for each 1 cent the market price is below the base price. For ores and concentrates the tax would apply in a similar manner but in an amount of seven-tenths cent per pound for lead content and six-tenths cent for zinc content.

It is recognized that some imports are needed to supplement domestic production. For this reason no taxes apply when the domestic market price equals or exceeds the adjusted base price of 15% cents per pound. That means there will be no restriction of opportunity for foreign lead and zinc to find a market in this country to the extent that domestic mines cannot take care of the demand. And for the consumer, it means protection against shortages and high foreign prices in times of emergency as well as relief from the market instability difficulties of recent years.

During the emergency period of 1951 and 1952, when lead and zinc prices were under Government control, the ceiling price of lead reached 19 cents per pound and zinc 191⁄2 cents. Foreign prices were much higher, ranging upwards to some 221⁄2 cents or more for lead and 314 cents for zinc. Duties on imports were suspended under a law which provides that the duties should be restored whenever the domestic market price dropped below 18 cents for 30 days. Under the Simpson bill the import tax is removed whenever the price of zinc and lead equals or exceeds 151⁄2 cents in the domestic market.

That the provisions of the Simpson bill are fair and reasonable is evident by comparing the base price of 151⁄2 cents in the bill with the Government ceiling prices of 19 and 191⁄2 cents per pound for lead and zinc. There has been no reduction in the cost of mining lead and zinc since the controls were dropped. In fact, costs have increased considerably since the time when the Government ceiling prices were set at 19 cents for lead and 191⁄2 cents for zinc.

NATIONAL LEAD AND ZINC COMMITTEE,
OTTO HERRES, Chairman.

The CHAIRMAN. At this point, I wish to insert a statement for the American Mining Congress, by Mr. William I. Powell.

(The statement of Mr. William I. Powell, the American Mining Congress, Ring Building, Washington, D. C., follows:)

STATEMENT OF WILLIAM I. POWELL, AMERICAN MINING CONGRESS, WASHINGTON, D. C., IN RE H. R. 4294, TRADE AGREEMENTS EXTENSION ACT OF 1953

Mr. Chairman and members of the committee, my name is William I. Powell. I am appearing before you today in behalf of the American Mining Congress, a national organization representing the various branches of the metal and nonmetallic mining industry, including bituminous and anthracite coal, throughout the United States. At the outset we would like to submit for your consideration the following statement of our general position as to tariffs and foreign-trade agreements:

"Experience has shown that our people should not be left dependent on foreign ore reserves as a source of supply in an emergency, however important it may be to import some metals and minerals to supplement domestic production and fill our stockpiles with materials in which we are deficient. World political conditions as well as the hazards of possible air and submarine warfare support this conclusion.

"We recommend, therefore, that Congress exercise its authority over tariffs to be administered for the welfare of the American people and provide reasonable protection when needed against competition from low foreign wages and depreciated currencies.

"We endorse the principle of a flexible tariff.

"We oppose intergovernmental commodity agreements that call for state controy over industry, or involve international regulation of production, distribution and production, distribution and prices."

This statement was adopted at a convention of the American Mining Congress held last September in Denver, Colo., attended by 6,700 mining leaders from all parts of our Nation and was given final approval by our board of directors on December 2, 1952.

The bill before your committee contains many worthwhile and important provisions, the enactment of which are long overdue. The mining industry of the United States is deeply concerned in this legislation. It is our view that any extension of the Trade Agreements Act must include certain strengthening provisions in order to minimize injury to domestic producers and labor. Accordingly, we wish to submit for your consideration the following:

1. ESCAPE CLAUSE

We recommend retention of the escape-clause rules calling for investigation by the Tariff Commission of applications for relief-together with remedial measures, including the establishment of import quotas-in cases where trade agreement concessions cause or threaten serious injury to domestic industry. We believe it should be made mandatory that the President invoke the escape clause upon a finding by the Tariff Commission that domestic workers or producers are being damaged or threatened with damage through the operation of a trade agreement. The mining industry knows all to well how totally inadequate the escape clause has been in the past. Experience under previous trade agreements has proven that no relief was forthcoming under this clause even when a conclusive showing of direct injury to the domestic industry was present.

Throughout the existence of the trade agreements program, one of its major weaknesses has been the failure by the Government to recognize and take appropriate action where reductions in tariff duties have injured domestic workers and producers, and have caused curtailment of production, shutdowns, and unemployment.

A specific case in point is the bitterly disappointing experinece of the zinc industry, which sought relief through the escape clause of the Canadian Trade Agreement which became effective January 1, 1939. As a result of this agreement the zinc mining and smelting industry suffered serious injury, with curtailment and closing of plants and mines, and continued operation of others only through voluntary acceptance of wages reductions by the employees. The major benefits of the concessions were received not by Canada, the country to which they were granted, but by other countries from which imports were greatly increased. All the requirements for granting of relief under the escape clause were fulfilled and were thoroughly and painstakingly explained, supported by careful studies by the United States Bureau of Mines and by the zinc expert of the Army-Navy Munitions Board, but the State Department took no action to remedy the situation, and only the outbreak of World War II prevented serious demoralization of the industry. As a matter of fact, any possibility of relief under the escape clause was effectively barred when a subsequent trade agreement was concluded with Mexico, thus freezing the reduced rates of zinc duty and making further reductions. In addition, the Mexican agreement made similar duty cuts on lead, which is a coproduct of most zinc mines, thus further aggravating the situation. The escape-clause procedure, in spite of the convincing demonstration of injury which had been made, proved of no avail.

A more recent example was the petition of the emergency lead committee, in May 1950, for relief from the Mexican Trade Agreement, which cut the 1930 lead rates in half. A strong showing of injury to the domestic industry was made early in 1951 but action on this petition was long delayed and it was finally dismissed by the Tariff Commission after the Mexican Trade Agreement had been

canceled. Shortly thereafter the Torquay Conference again reduced the duty to the 50-percent level, ignoring the facts previously presented.

A requirement that the Tariff Commision act promptly under petitions for relief under the escape clause and that the President be governed by the Commission's recommendations would not wholly remove the burdens placed on domestic industry by foreign trade agreements, but it would help in alleviating such burdens.

II. PERIL POINT

The Trade Agreement Extension Act of 1951 contains a provision for determining the point below which any tariff duty could not be cut without peril to the affected industry. Under this provision the President, prior to negotiating a trade agreement, is required to ask the Tariff Commission to determine, in the case of each commodity subject to negotiation, the point below which the tariff may not be reduced without serious injury or threat of serious injury to the domestic industry producing like or directly competitive articles. The Commission may also set a point to which tariffs should be increased to prevent such injury. The present law permits the President to accept or reject the recommendations of the Tariff Commission and unfortunately the peril-point recommendations in repeated instances have been ignored.

We believe that this provision should be reenacted and strengthened to clarify and make more specific the nature and type of injury to be considered by the Tariff Commission in making its peril-point findings. The standard for establishing a peril point should be such as would recognize the unemployment, injury to domestic producers or impairment of the national security that might be caused by lowering of import duties.

We further believe that in order to afford reasonable protection from injurious imports the President should be required to follow the recommendations of the Tariff Commission.

III. FOREIGN RESIDUAL FUEL OIL

The bill now under consideration would establish an overall quota of 5 percent of domestic consumption on imports of residual fuel oil. Others have testified in detail as to how this provision would operate. We should like to outline briefly some of the reasons why it should be enacted.

Last year over 128 million barrels of this waste product were dumped into this Nation and displaced 31 million tons of coal, this being equivalent to throwing over 32,000 miners out of work for a full year. At the current rate of imports it is estimated that foreign residual oil in 1953 will displace approximately 39 million tons of coal with a resultant increase in unemployment and further depression of this important industry.

The impact of dumped oil is being felt not only in the coal industry, but also by the domestic oil industry and by the Nation's railroads as well. Unrestricted flow of this residual oil has and will continue to literally drown a large segment of our essential domestic industry.

Like other mines, coal mines cannot be opened overnight, nor displaced miners recruited at will and set to work extracting the coal. Under normal conditions, assuming equipment, steel, etc., are available, from 1 to 2 years are required for the opening of a new underground mining operation. Under present conditions, experience and know-how are being dissipated at the direct expense of our national defense. In its place we are placing our Nation's welfare in the hands of a foreign-produced commodity which cannot be supplied in time of critical need due to enemy interference with overseas imports.

Fair competition is always welcome in a free enterprise system-but what is fair about this dumped residual oil? Thomas Kennedy, vice president of the UMWA, has stated, "If miners worked for nothing we still could not compete❞ with the cheap waste product of foreign refineries.

Coal looks to Congress. Constructive action by Congress is needed in order to answer a serious threat to a vital industry.

IV. SLIDING SCALE IMPORT TAX ON LEAD AND ZINC

Today this very moment-our domestic lead-zinc industry is in a critically depressed state. To point up the sore straits of this basic industry, we need only refer to the market drop in the prices of lead and zine in the past year from 19 cents to 12 cents for lead and from 19% cents to 11 cents for zinc. And these price drops have occurred while the wheels of industry have continued to turn out military and civilian goods at record high rates. They have also occurred

while costs of mine labor and equipment have remained at their highest levels. The cause? Excessive supplies accumulated abroad through manipulative and monopolistic practices of foreign governments were dumped at distress prices on to our lead and zinc market.

The year 1952 saw 637,000 tons of lead imported into the United States-the greatest in history. Compare this to prewar annual imports of 75,000 tons. The 1952 imports more than doubled the 1951 total of 265,886 tons. Zinc imports increased in the same manner, from 397,679 tons in 1951 to a 1952 total of 568,476 tons. Records disclose that from 1930 to 1952 foreign imports of these metals, when compared to United States mine production, have been steadily increasing, to the extremely high levels noted.

The domestic producer is constantly competing with lead and zinc produced in foreign countries by employees who receive wages that would be unthinkable in the United States today. For example, in Peru, Morocco, and Guatemala, wages average $1.50 to $2 per day. In Mexico, small independent mines_pay about 85 cents per day and wages at large operations are about $4 per day. Compare these wages to those of an American miner, whose daily average wages are $16 plus $1 to $2 for various fringe benefits. Canada and Australia are the only two countries from which we receive large imports of lead and zinc that have wage scales comparable to those in the mining industry of the United States. However, it must be noted that in both Canada and Australia a much more favorable tax climate is provided for the mining industry.

Production costs for domestic mines have also been increased-causing a heavy burden on domestic industry-as a result of the social gains adopted by our Government. Low wages and the lack of social gains in many of the foreign countries producing lead and zinc, coupled with the attractive tax structure in others-in addition to mechanization which is bringing productivity per employee close to that of the United States mine employee-have all combined to place the American producer in an extremely difficult competitive position. These are some of the reasons why our lead-zinc industry finds itself struggling for its existence.

The result?-Scores of our mines are closed down, and many others are operating at a loss. You gentlemen need not be told that, as in the case of coal mines, you cannot turn a lead-zinc mine off and on as you would the switch of a factory lathe or a water spigot. When operations cease, mines flood, timbers rot, and costly cave-ins occur. It requires years for reopening a mine, and it is often impossible to do so. Recently I was told by an engineer, while visiting a western mine, that operating a lead-zinc mine was similar to holding a tiger by the tail. That is, even though it is difficult to hold on, you must frequently do so or lose out entirely. Lead and zinc producers of the United States are presently considering whether it is better to operate at a loss or close down completely. In visiting a lead-zinc mine in operation, as I have recently done, you would see the openings supported by massive timbers, heavy pumping equipment to keep the mine dewatered, extensive fan installations to maintain proper ventilation, together with all the other specialized equipment needed to sustain operations. Much of this type of work must go on even if the mine is not producing; if discontinued, important ore reserves could be lost forever.

Closing down of our lead-zinc mines causes unemployment running into the thousands. Whole communities are stranded when wage earners are deprived of a livlihood. There is an inevitable uprooting and dispersal of skilled miners with the resultant weakening of our national defense. We can hardly overemphasize the damage done to our Nation's welfare by causing skilled workers to seek employment in other pursuits. It requires up to 2 years to train an underground miner. Experience garnered in World War II should be sufficient to prove that drafting a worker and calling him a miner will not make him one.

The damage to lead-zinc miners and mine owners is only part of the story. Our Nation cannot do without these metals in times of emergency. Do we wish to place our national defense and welfare entirely in the hands of unpredictable foreign sources which may or may not come through when needed? We must also remember that during periods of emergency, price controls are ineffective on foreign imports even if such imports are available.

I am sure your committee and the Congress recognize the need for maintaining a strong, active, and healthy domestic mining industry engaged in the production of lead, zinc, and other vital metals and minerals within our own borders. We all know that the real and fundamental backbone of our national defense has always been and will continue to be a healthy going mining industry, possessed of the facilities, manpower, and know-how that can respond promptly to a demand for these essential minerals.