and reverses its present function of being merely a statistical and recommending body to which it has, at present, been reduced to by the Trade Agreements Act. It would be unthinkable and folly if the finality of any decision of the Interstate Commerce Commission or the Securities and Exchange Commission depended upon approval, based on political considerations, of the Chief Executive of our Government. Is it not safer, and does not every reason lend itself toward placing final determination of injury to, and relief of, large segments of our American economy in the responsible hands of an impartial quasi-judicial body of experts so that a true decision will not be the result of political expediency? Moreover, it seems essential that the United States Tariff Commission itself should be composed of an uneven number of Commissioners. The present membership composition of the Commission has resulted in more than a score of so-called tie decisions. Only through the enactment of the proposed legislation can American industries be assured of an impartial decision on the merits of applications for tariff relief and thereby prevent the ultimate destruction of our century-old industry. (Whereupon, at 3:50 p. m., the committee recessed until 10 a. m. Monday, May 4, 1953.) TRADE AGREEMENTS EXTENSION ACT OF 1953 MONDAY, MAY 4, 1953 HOUSE OF REPRESENTATIVES, Washington, D. C. The committee met, pursuant to recess, at 10 a. m., in room 1102, House Office Building, Hon. Daniel A. Reed, chairman, presiding. The CHAIRMAN. The committee will come to order. The committee will resume public hearings on H. R. 4294. Beginning today and continuing throughout Wednesday, the committee will receive testimony from representatives of the executive departments. The first witness today will be our esteemed Secretary of State, the Honorable John Foster Dulles. It is indeed a pleasure to have you here, Mr. Secretary. STATEMENT OF HON. JOHN FOSTER DULLES, SECRETARY OF STATE OF THE UNITED STATES Secretary DULLES. Thank you, Mr. Chairman. As I think you and the committee members know, the President has recommended that the Congress should extend the present Reciprocal Trade Agreements Act for a further period of 1 year. I would like to express some views in support of that recommendation. In making that recommendation, the President has a simple purpose. It is to avoid a committal or an appearance of committal to a changed tariff policy before that can be coordinated with other new and related policies. We want all of the parts to add up to a coherent whole and be sure that they do not cancel each other out. Only then will they truly serve the welfare of our people. The President proposes to use this year, or as much of it as is necessary, for a study which will have the full participation of the public and the Congress. He has recommended that for this purpose a Commission be established, consisting of 5 members appointed by him, 3 by the Speaker of the House, and 3 by the President of the Senate. Extension of the Reciprocal Trade Agreements Act, in its present form, for an interim period of 1 year, will give the time needed to make a fresh appraisal of what should be done. There are a number of bills which have been introduced and referred to this committee which would serve this purpose. I believe, however, that H. R. 4294 is not in accord with our present needs. It would not only enact special regulations on imports of petroleum, lead, and zine, but it would basically alter the operation of the present trade program. That would be to commit ourselves to future policy before we can be sure that such policy is that which, added up with others, will produce the best results. As we begin the task of reassessing our foreign economic policy, we are confronted by a number of basic facts. This Nation has become the center of the economic system of the free world. We in this country account for 50 percent of the total production of the nonCommunist world. We are the world's largest exporters and the world's largest importer. We are the greatest creditor Nation in the world, and the most important single source of the free world's capital needs. We lead in the development of new inventions and new skills. This strength of ours is something for which we are all devoutly thankful. In part it comes from the good fortune which spared us the physical destruction of two world wars. In part it comes from an abundance of natural resources. Even more, it comes from our own efforts and from the national policies which have guided these effortspolicies which by and large, over the 164 years of our national life, have served our Nation well. We shall not continue to have strength and to enjoy national health except as we continue to follow wise policies. And these policies will not be wise unless they recognize the basic truth that no nation can long survive as a citadel of self-indulging privilege surrounded by massed human misery and despair. The United States is today a paradise compared to most of the world. But it could be a fool's paradise if we thought we could, with impunity, so act as to impede the honest, substantial efforts of others to improve their lot. It is enlightened self-interest for the strong to be considerate of the weak. This timeless truth always operates. Sometimes it operates slowly. But today it operates quickly. There exists in the world a vast and powerful conspiracy directed against the United States. It seeks to prevail by bringing under its control those people who feel hopeless and who are despairing, and who thus readily lend themselves to a violent program of world revolution. Already one-third of all the people of the world have been made first the victims, and now the tools, of that conspiracy. A further reduction of the free world and an increase of the captive world cannot but have ominous consequences for the United States. The leaders of Soviet communism have consistently proceeded on the theory that economics was the Achilles heel of the West. They have argued that the industrialized West depended upon raw materials and markets of the undeveloped areas, and that if these areas could be subtracted from the economic domain of the West and brought under Communist control, the Western nations would not have left sufficient scope for the employment of their industrial machine. Then, it was reasoned, the Western nations would engage in violent competition among themselves, which would put them at loggerheads so that they would readily fall victim, one by one, to Communist conquest. That basic thesis was first announced by Stalin in 1924, and his last political publication, that of October 1952, asserted that so much of the world had now been alienated from the West that Britain, France, and the United States could not make place for the postwar commercial activities of Germany and Japan. Stalin concluded that the Soviet leaders could now reliably assume that Britain and France would gradually-and I quote his words "break from the embrace of the United States," and that Western Germany and Japan could be counted on to-and again I quote "try to smash United States domination." Then would come what Stalin foresaw in 1924 as the "moment for the decisive blow." Stalin reasoned that these developments were, as he put it, "inevitable." In that he was surely wrong. But we, too, would be wrong if we were blind to the fact that the Communist thesis has some valid elements. We could by our own mistakes make Stalin's predictions come true. Our political interests, our security interests, and our economic interests mesh together. The fact is that the ability of other free countries to resist Communist aggression and their willingness to unite with us on certain common security policies depend largely upon their economic well-being. That, in turn, is influenced by our own economic policies, including our tariff policy. The present administration is attempting to shape United States policies to what it believes are the overall needs of our Nation. That involves consideration of our own budgetary, monetary, and tax problems. It involves reviewing our policies of military and economic aid to other friendly countries. It involves reconsideration of our defense program. It involves study of measures, such as the Battle Act, designed to restrict trade between the free nations and the captive world; trade which, while commercially useful to the free world, might be militarily useful to the Soviet world. It will also involve consideration of our trade and economic problems in relation to the welfare of other free nations-a welfare to which we cannot be indifferent, save at our peril. The variety and difficulty of the problems we face emerge sharply as we consider specific areas of the world. Western Europe has, through its own efforts and with our help, made large gains since 1946. Production of these countries has increased by 40 percent, and exports have risen by 60 percent over the prewar period. Yet the Western European countries are unable to pay for all of the United States goods which they need, even though they are severely denying themselves many of the American goods their citizens want. Their gold and monetary reserves are very low in relation to current needs and the contingencies they face. They feel that this margin of safety is so slight that they dare not be venturesome. We have helped these countries to fill their current requirements for American products, including military defense items, by extraordinary aid. But this situation is unhealthy. It is not a basis on which a lasting alliance of mutually self-respecting nations can long continue. It can be corrected partly by measures taken by the countries of Western Europe themselves, and partly by action by the United States. The countries of Western Europe can do much for themselves by increasing their economic unity so that they more freely exchange their goods as between themselves. They need more and more to back their currencies with sound budgetary measures and productive efforts, so that their currencies will be a medium for expanding trade above the low level which always prevails when currencies fail to lift trade above what is virtually a barter basis. Sound United States foreign |