It is, of course, even more than that; 50 percent of our imports are duty free and many are absolutely essential to our economy as we know it. On the export side, many industries, including agriculture, send over 20 percent of their production to foreign markets. Loss or contraction of these markets is instantly reflected in production slowup and unemployment, with consequences reaching far beyond the industries immediately concerned. In recent months our exports have declined from the high levels of 1957. We have felt the effect in the New York area, and I am sure it is one of the factors contributing to the general business downturn throughout the country. I wonder how much of this decline is due simply to uncertainty on the part of other countries about the future course of United States trade policy? Surely foreign buyers will be cautious until it becomes clearer whether the United States will continue its long-term program of gradual and reciprocal reduction of tariff and other trade barriers, or whether it will reverse the process and make exports to the United States more difficult. This attitude would be only prudent. The difference is obviously the difference between a high-level and expanding international trade and a low-level and limited trade. It seems to me that this committee could give our present economy no better shot in the arm, and, may I add, at less cost to all of us, than to pass this legislation in unamended form. I think the confidence this action would instill in our foreign customers would have an almost immediate effect on our export orders, which would be reflected, in turn, throughout our economy. History teaches me that we made a mistake in 1930 when, in the midst of a growing depression, we adopted the highest tariff schedule ever. Certainly it is true that immediately after that, retaliatory action was taken against us by other countries and we had a most serious decline in foreign trade, increasing greatly the problem of recovery. In fact, I would think that, since the bottom of the depression was not reached until 1932, this decline in trade deepened and widened its effect and probably helped spread it abroad, too. Now I am certainly not suggesting that the economic situation today is even remotely comparable to 1930, but I do suggest that it would be shortsighted for us to widen and deepen the current decline in our foreign trade if, by passing this legislation, we can in fact give it impetus. Now, entirely aside from the economic effect on the country, many witnesses infinitely more expert than I have already testified before the committee, I am sure, as to the grave effects such a failure will have on our foreign policy and on our security policy. We are all aware of Mr. Khrushchev's ominous statement of a few months ago—we heard it a little while ago "We declare war on you in the peaceful field of trade." But are we aware of the extent to which many countries of the world are dependent upon trade with us and with each other? If foreign trade comprises 7 percent of our gross national product, do we realize that for countries like France, Germany, and the United Kingdom, it is 3 or 4 times as great; that for the Netherlands, Belgium, Switzerland, it is 5 to 9 times? In the case of many of the underdeveloped countries, exports and imports are a larger segment of the economy than internal trade. For these countries foreign trade is not only important but absolutely indispensable, and the major task for government and business in those countries is to insure that sources and markets for their foreign trade continue to be available. Moreover, these sources and markets must be expanding if the economic development their populations demand is to become reality. Look at the tremendous effort Israel is making to become a major trading nation. The Russians are everywhere offering long-term contracts, capital financing, technical assistance. If, through expanding multilateral trade with the West, made possible by gradual reduction of trade barriers, and by a consistent, liberal trade policy, particularly by the United States, these countries can be confident their goals can be achieved in reasonable time, we then can believe that Khrushchev will fail. On the other hand, without this action of the United States we would face the serious danger that many of these countries would feel it politically and economically necessary to entertain the Russian propositions. About three-quarters of the world is at stake, to one degree or another. It is the world of our friends, of our military allies, of the political neutrals. We need them all for our economic health and for our security, and it would seem unthinkable that we would knowingly adopt any policy which would force them into the arms of our antagonists. Yet, to turn back the block in our trade legislation may well have that effect, whether or not we intended it. During my tenure as president of the Young President's Organization I not only traveled to all of our States but also traveled extensively abroad, meeting our businessmen and Government counterparts in the European business communities of the West. I mention this in the hope that the remarks I have made will perhaps carry a little more weight with you gentlemen, being based on at least some actual personal experience. In any event, it is my deep conviction, then, that renewal of the Trade Agreements Act for a reasonably long period of time-certainly not less than 5 years— with a grant of authority to reduce tariffs by at least 25 percent, as provided in the bill before you, is essential to the welfare of the United States. There is no substitute which can fill the gap if this legislation is allowed to lapse. Thank you, Mr. Mills. The CHAIRMAN. Are there any questions of Mr. Dalzell? Mr. Dalzell, we thank you, sir, for coming to the committee and giving us the benefit of your views. Thank you, sir, very much. Mr. DALZELL. Thank you, sir. Hon. HARRY F. BYRD, Chairman, Committee on Finance, AMSTERDAM TRADING CORP., United States Senate, Washington, D. C. DEAR MR. BYRD: With reference to the hearings being held at this time on the Trade Agreements Extension Act of 1958, H. R. 12591, our organization, which is devoted entirely to international trade, would like to affirm its wholehearted support of the 5-year extension of the above act. Our company, with its office staff in many cities of the United States, sales agents, customs brokers, truckers, and a farflung clientele which extends to all parts of the Atlantic and gulf coasts, as well as the Midwest, is only a relatively small part of the more than 42 million Americans whose livelihood is dependent upon foreign trade. At this crucial stage in our political and economic condition, we feel that it is most essential that we try to maintain and increase the interchange of raw materials and manufactured products between our country and those of foreign lands. Only by enabling our friends abroad to ship us the goods we want and in many cases need for our existence, can we expect to open up our trade to those areas which can become a tremendous market for merchandise produced by the American workers. If this attempt to expand our international trade is defeated by shortsighted restrictive duties, the only result will be self-defeating in the long run, and harmful to all nations of the free world. We therefore urge the extension of the Trade Agreements Act as a step which is of such importance at this time to the general welfare of the United States. Respectfully yours, JACK A. VEERMAN. STATEMENT OF COSMO S. ANTISTA, EXPORT TRAFFIC MANAGER, CONSOLIDATED FOODS CORP., INTERNATIONAL DIVISION, SAN FRANCISCO, Calif. As soon as there is an economic dip or a recession, Americans become alarmed because they envision an economic upheaval. They never stop to think that such alarm contributed greatly to the panic of 1929, which resulted in a major depression. Instead of keeping the situation from getting worse some manufacturers and producers immediately clamor for restrictions and high tariffs against foreign competitive imports. Whether their action is motivated by sheer ignorance or selfishness, they are disrupting world economics and contradicting our American free enterprise and fair play system. Americans should be enlightened on these matters and should be made aware that they all play a part in world economy and therefore greatly depend on international trade. Our economy has grown tremendously in the last decade, and a major part of this growth is attributed to our international trade. In 1957 our exports and imports reached the highest in our history, our exports approximated $20 billion and our imports $13.5 billion. From all indications 1958 will also be a record year. Today 5 million Americans are dependent on foreign trade for their livelihood. These figures are not to be taken lightly, nor are they to be over looked as far as our economy is concerned. The fate of $33.5 million and 5 million Americans is being jeopardized. Protectionist forces are bringing pressure on Congress with the intention of blocking the extension of the Reciprocal Trade Agreements Act or amending it beyond recognition to a point where it will be meaningless. The renewal of the Reciprocal Trade Agreements Act in June is essential not only to our national progress, welfare and security, but to the development of the free world. Through the act's escape clause the President is authorized to raise or lower the rates when the situation warrants it-when industries prove they are being injured. National income is more important than the comparatively few industries that clamor for restrictions. If the national economy goes down as a result of retaliatory measures from foreign countries, what will happen to those same industries? To whom will they sell their products? Not to our unemployed. The high tariff lobbyists ignore the fact that, if it were not for our Reciprocal Trade Agreements Act, our surplus products would remain in our warehouses instead of being exported abroad. It must be borne in mind that every dollar spent on imports must return to the United States in payment for new purchases of American goods. By stopping the dollar from going outside the country the sale of American products will be halted. By blocking the sale of American products the production is cut. When this happens the national economy will suffer. This means economic troubles for every American. Reciprocal trade means agreement to trade among free nations of the world. Restrictions and high tariffs mean retaliations from the nations of the world. Since our high standard of living depends on imports of many essential materials, it is imperative that we renew our Reciprocal Trade Agreements Act for an additional 5-year period with the hope that someday the request for an extension will not be necessary. [Written for World Trade Week, May 18 to 24, 1958] PEACE THROUGH WORLD TRADE By Cosmo S. Antista, Export Traffic Manager, Consolidated Foods Corp., International Division World trade and world peace go hand in hand. Interchange of goods begets interchange of ideas, which in turn begets understanding. Through understanding comes peace. In order to preserve our civilization it is essential to carry on a healthy international trade. No nation is sufficient unto itself, not even our own. Smugness and self-sufficiency should have gone out with the horse and buggy. An unselfish approach to the cause of peace for the world requires a lively exchange of goods and ideas, which will raise the standard of living for the entire family of nations and bring about a stable economy and peaceful existence for the whole world. There cannot be economic stability and peace until the world at large fully understands the meaning of international trade—freedom to buy and sell everywhere on the globe. What can be done to accomplish economic stability and peace? There must be cooperation between consumers and producers both here and abroad. A consumer naturally follows the pattern of buying where he can get most for his money. He purchases a commodity first if it meets his desire, second if it can be used, and third if it meets his income. Normally, if these three points are met, he will purchase the commodity not primarily because it is imported, but because he likes it, he can use it, and he can afford it. This is simple economics. To quote Adam Smith, the great 18th century economist: "In every country it always is the interest of the great body of people to buy whatever they want of those who sell it cheapest." According to his fundamental basic principle, the consumer is generally doing his share in maintaining economie stability. The American producer must be farsighted enough to see that he stands more to lose than to gain if he puts up opposition to foreign competition. If imports are restricted, our exports will suffer and in turn unemployment will result. Some businessmen are so blinded by the immediate profits that they disregard sound international economics. If manufacturers, farmers, and laborers form blocs to influence Congress to raise tariffs, it is natural that the governments of foreign producers will retaliate by similar measures. At this point economic 27629-58-pt. 1-33 warfare begins. The protectionist manufacturers should, before they clamor for protection from foreign competition, consider that the Nation is apt to be hurt if imports are restricted. It is true that some industries may feel the impact of certain imports. But is fair competition from abroad different from domestic competition? If we Americans believe in a free enterprise system for ourselves, we should believe in it for other people as well. Mutual trust must be created to bring about peace and stability to every nation. Two-way trade means the preservation of our high standard of living and the expansion of it to other countries. We can isolate ourselves if we want to do without the telephone, radio, television, coffee, cocoa, bananas, natural rubber, tin, tungsten, nickel, industrial diamonds, silk, etc., etc. We can set up barriers in the form of tariffs and trade restrictions if we wish to protect some of our industries which operate without imports. We can call ourselves self-sufficient only if we want to lower our standard of living. On the other hand, if we adjust or eliminate our tariffs and simplify our burdensome trade formalities, we will find that as water seeks its own level so will international trade. To achieve complete freedom in world trade, there must be agreement among nations as to controls, restrictions, fees, and taxes. The less Government interference the better for world trade. Since exchange of goods brings about exchange of ideas among nations, that is still more reason for a free interchange of the world's resources. Protective tariffs have never brought about any amicable feelings. It should be self-evident that United States dollars cannot be spent in any other place but here they must come back to the United States in the form of new purchases. There is a natural law that guides the workings of division of labor. What is lost in one industry will be absorbed into another. For example: If a producer or a manufacturer cannot compete on the basis of fair competition with the foreign producer, he, rightfully speaking, should not be producing his commodity. Because the consumer who is the principal character on this stage is the loser, since he has to pay more for the product, due to high tariffs on the imported commodity. This producer should either get into some other business or find a way to put out his commodity more economically. This may sound harsh. On the face of it it is. But let us go into it further. If the American manufacturer insists on restrictions and higher tariffs for imported goods, he is disrupting the free flow of world trade, upsetting world economic stability, and contradicting our American free enterprise and fair competitive way of life. If higher duties are placed on the imported items, the exporting country will retaliate. As a result of retaliations on any one commodity our exports will suffer and unemployment will result. On the other hand, if we take the laissez faire attitude and disregard the protectionists, we will be importing and paying for those imports with United States dollars, which dollars will be used to purchase more of other American goods. At this point the law governing the division of labor comes into play by shifting labor and other personnel to other lucrative industries. Thus, economic instability is nipped in the bud, because the loss in one industry is a gain in many industries. If the protectionist wins by obtaining higher tariffs his industry as well as that of others will suffer a loss. Must our international trade be jeopardized or sacrificed because we fail to recognize the close interrelationship between exports and imports? Must the producer abroad be antagonized? Must our consumer be exploited by having to pay higher prices for commodities because of high traiffs and trade barriers? Must our unemployment be increased? Fair competition has always been the lifeblood of our free economic system. It has made America what it is today. By sharing its know-how and its vast resources with the rest of the world, America raises the standard of living, the purchasing power, and the good will of all people in lands near and far. But America must also be willing to accept the fact that the rest of the world has also much to offer toward economic stability and peace. Hon. HARRY F. BYRD, ST. LOUIS, Mo., June 27, 1958. Chairman, Senate Finance Committee, Washington, D. C.: Realizing the importance to this country as well as our friendly neighbors we felt this need to wire you concerning the Reciprocal Trade Act now before Congress for final action. We urge and request all possible aid from you for favor able action on House-passed bill H. R. 12591 without crippling amendments, as if major changes are made it would be difficult to obtain agreement as understand hearings will not extend beyond July 3, therefore prompt action without crippling amendments is vitally needed to avoid possible Presidential veto. Being closely associated with American Chamber of Commerce of Cuba and knowing of American investments in Cuba of approximately $800 million again ask your aid for favorable action on this bill. WALTER A. GANTNER, President, Fulton Iron Works Co. GENERAL STEAMSHIP CORP., LTD., Hon. HARRY F. BYRD, Chairman, Senate Finance Committee, Washington, D. C. MY DEAR MR. BYRD: The matter of extension of the Reciprocal Trade Agreements Act which is before the Senate Finance Committee at the present time, we feel is of tremendous importance to the United States and that unless the present reciprocal trade agreements are extended for a period of at least 5 years in its present form, irreparable damage will be done to both our domestic and foreign economy. Experience gained over many years has clearly demonstrated that we cannot expect to maintain a healthy level of exports without reasonable and intelligent imports. In other words, we must export our commodities to foreign nations if we are to avoid injurious surpluses and we cannot expect foreign nations to purchase these exportable commodities unless this nation purchases products of the foreign countries to enable them to purchase from us. Domestic trade as well as foreign trade is a mutual undertaking requiring a buyer and seller. If there are no buyers, the seller must curtail his production thereby reducing the level of prosperity. What applies domestically also applies in international trade and this Nation, in order to maintain its present position, must make it possible for our industries to sell abroad and also make it possible for our people to purchase foreign products in order to complete the cycle of trade. More than any one thing before the Nation today, in our estimation, the extension of the reciprocal trade agreements is the most important. Any other course would be to return to isolationism. We regret it is impossible for us to appear at the hearings in person but we would appreciate your making this statement a part of the records of the hearing. Very truly yours, GENERAL STEAMSHIP CORP., LTD., AS AGENTS, Vice President in Charge, Northern District. INTERNATIONAL TELEPHONE & TELEGRAPH CORP., Hon. HARRY F. BYRD, United States Senate, Washington, D. C. DEAR SENATOR BYRD: I write in support of H. R. 12591. In my considered opinion a 5-year extension of the Reciprocal Trade Agreements Act, without further watering down, is of vital importance to the economic and political well-being of the United States. I am familiar with the provisions of the bill and with the arguments of those who oppose the bill. It seems to me that ample consideration has been given in the bill's present version to safeguard against dislocations in the labor force which may result in specific areas following the lowering of tariffs, affecting specific industries. It appears to me to be clear from the preponderance of the evidence adduced at the hearings in the House that the stimulation to world trade which an extension of the Reciprocal Trade Agreements Act would provide and the stability which a 5-year program would offer far outweigh the localized and temporary disadvantages which might result from abandonment or curtailment of the principles embodied in H. R. 12591. In view of the emergence of the European Common Market over the next few years, I consider it of particular |