8

Civil Aeronautics Board. Promotes and regulates the civil air transport industry within the United States and between the U.S. and foreign countries. It has a major role in developing economic policies related to international air transport.

The Cost of Living Council. Recommends to the President policies, mechanisms, and procedures to achieve and maintain the stability of prices and costs in the economy. Foreign economic policies are a part of the broad anti-inflation objectives which are established by the Council.

Export-Import Bank of the United States. Aids in financing exports and imports of the U.S. Policies relating to foreign trade and finance are of major concern.

Federal Maritime Commission. Regulates waterborne shipping in the foreign and domestic offshore commerce of the U.S. Foreign economic policies concerning transport and shipping are recommended and reviewed by the Commission.

Overseas Private Investment Corporation. Provides incentives to U.S. private investors to encourage investments overseas by reducing risks and providing financing. OPIC will have recommendations on overseas financial policies and risk insurance.

U.S. Tariff Commission. Advises and determines facts relating to tariffs, commercial policy, and foreign trade. It is involved in foreign economic and trade policies both in determining factors for setting tariffs or providing adjustment assistance and in special policy studies for both the Congress and the executive branch.

Federal Trade Commission. Under Section 5 of the Federal Trade Commission Act, the FTC has authority to proceed against restrictive business practices in international trade insofar as they affect the domestic or foreign commerce of the United States. Under the terms of S. 1774, FTC would be given additional remedies to deal with anticompetitive practices in the import trade. FTC also administers the Export Trade Act of 1918, which permits a limited exemption from anti-trust laws for export cartels (Webb-Pomerene exemption).

B. MISCELLANEOUS INTERAGENCY COORDINATING MECHANISMS In addition, there is a miscellany of interagency mechanisms for coordinating specialized aspects of U.S. foreign economic policy, including:

The Adjustment Assistance Advisory Board, with membership composed of the Secretaries of Commerce (Chairman); Treasury; Agriculture; Labor; Interior; Health, Education, and Welfare; and the Administrator of the Small Business Administration, advises the President and agencies on the development of coordinated programs for adjustment assistance, giving full consideration to ways of preserving and restoring the employment relationship of firms and workers where possible.

The Committee for Implementation of Textile Agreements, composed of representatives of the Departments of Commerce (Chairman), State, Treasury, Commerce, and Labor, supervises the implementation of all textile trade agreements and takes appropriate actions concerning textiles and textile products under Section 204 of the Agricultural

9

Act of 1956 and Articles 3 and 6 of the Long-Term Agreement Regarding International Trade in Cotton Textiles.

The Development Loan Committee, chaired by the Administrator of the Agency for International Development and composed of the Assistant Secretary of State for Economic and Business Affairs, President of the Export-Import Bank, Assistant Secretary of the Treasury for International Affairs, Assistant Secretary of Commerce for Domestic and International Business, and Assistant Administrator of AID for Program and Policy Coordination, establishes standards and criteria for AID's lending operations.

The Economic Defense Advisory Committee, in accordance with the National Defense Assistance Control Act, gives complete and full consideration to agency views on which items should be embargoed in trade with Communist countries. It consists of officials of the Departments of State, Commerce, Treasury, and Defense, and the Central Intelligence Agency, the National Aeronautics and Space Agency, and the Atomic Energy Commission.

The Export Administration Review Board is composed of the Secretary of Commerce (Chairman), the Secretary of State, and the Secretary of Defense. It makes recommendations to the Secretary of Commerce on particular export license matters, giving due consideration to the foreign policy of the U.S., the national security, and the domestic

economy.

The Export Expansion Advisory Committee guides the ExportImport Bank on allocations for export expansion and makes recommendations on proposals for loans, guarantees, and insurances charged to such allocations. The Commerce Department chairs the committee, and other members are representatives of the Departments of Treasury and State and the Export-Import Bank.

The Foreign Trade Zones Board was created by law to grant to qualified public or private corporations the privilege of establishing and operating foreign-trade zones in U.S. port of entry to expedite and encourage foreign commerce, each zone to be operated as a public utility.

The Interagency Staff Committee on Public Law 480 consists of the specialized staff of the Departments of Agriculture, State, Treasury, Commerce, and Defense, and the Agency for International Development and the Office of Management and Budget; it reviews proposed international agreements and transactions under Public Law 480, the Agricultural Trade Development and Assistance Act, to assure coordination of all aspects of U.S. Government interests and policy.

The Interagency Trade Fairs Committee recommends what international trade fairs the U.S. Government will engage in and the magnitude and control of participation in each fair; it is composed of officials of the Department of Commerce (Chairman), the Department of State, and the U.S. Information Agency.

The United Nations Economic Committee (UNEC) prepares and recommends U.S. positions on economic and social agenda items before the United Nations and affiliated agencies. It is chaired by the State Department and includes representatives of agencies with interests in agenda items.

Senator PELL. Thank you very much indeed.

REASON FOR SEEKING PERMANENT CIEP AUTHORIZATION

Touching on a couple of the points you covered and having had a chance to go through your excellent statement, I wondered why a permanent authorization is now being sought for the Council of International Economic Policy, CIEP. Until now, it has been on an annual basis.

Mr. CASEY. Why we are seeking permanent authorization?

Senator PELL. Yes.

Mr. CASEY. I think it is because we think it has established its usefulness as a coordinating mechanism, and think it should be made a permanent part of the Government structure.

Senator PELL. Do you not think this is a personal designation of a particular President? Different Presidents have different methods of coordinating. An argument can be made that CIEP itself should be lodged in the State Department. Another President might have that view. And once you give a permanent authorization to a structure in Government, it is even harder to knock it off than it is with an annual authorization. It puts it more in concrete.

I was wondering why you felt so strongly that it should be permanently established in law.

Mr. CASEY. Well, Senator, I agree if you look back historically that different Presidents do have different styles. We have had the National Security Council established in law since 1948, and we recognize at that time there was a permanent need for a coordinating body in political security, national security affairs, foreign policy and it was established as such. Its structure is made sufficiently flexible so different Presidents are able to use it in different ways, depending on their style of activity. My personal view is that international economic affairs have become so clearly important, of such major importance, that there is just as much reason to have a permanent coordinating mechanism in international economic matters as there is in national security matters. And it adds to the symmetry of the structure, the relationship between the major departments and the responsibilities of the President, and in my view it is time to recognize this and to create a permanent body.

ACHIEVING AGREEMENT IN MAKING ECONOMIC POLICY

Senator PELL. In connection with the position of the State Department in making economic policy, would you outline to us what difficulties you have had in achieving an agreement?

Do you feel the prestructure is reasonably smooth?

Do you have any suggestions for improvement in reaching a united administration position on economic questions?

In other words, what organization changes, as you are about to leave the State Department for the Export-Import Bank, would in your view be an improvement?

Mr. CASEY. Well, as I said in my statement, I think that the structure, the structural system is about the way it should be.

You have to have a central mechanism in which difficulties can be thrashed out and positions can be made and issues can be shaped up so that agreement can be made and, in case of disagreement, go to the President for decision.

I do not think this structure can be substantially modified. In the past one person has performed a coordinating role, and now we have a committee in which different departments are represented, and I think that is preferable to having kind of a one-man liaison arrangement. I think that the problem of making the system work better is a matter of people and effort.

I think that while I have been there for the last 14 months, the system has worked quite well in the sense that all the viewpoints get thrashed out, get brought to the surface. Everybody gets a hearing. The viewpoints are thrashed out and policy arrived at so that everybody understands it, and then somebody is tagged, either because of his institutional situation or by conscious decision, to implement the policy, and I think it has worked out as well as it has because of the leadership. The leadership has been good.

I think George Shultz has done a first-class job in performing his chairmanship role in bringing everybody into the decisionmaking process and supporting those who are charged or assigned implementation of responsibility.

SUGGESTIONS FOR COMPROMISE ON TRADE REFORM ACT

Senator PELL. The Trade Reform Act was passed by the House with some amendments and is now before us. What in your view can be done to make this agreement acceptable to the President and still possible of passage in the Senate? Do you have any suggestions?

Mr. CASEY. I did not catch the question.

Senator PELL. The Trade Agreement Act.

Mr. CASEY. Title IV?

Senator PELL. Do you have any suggestions as to what we Senators, eight of whom co-sponsored the Jackson amendment, and yet most of us believe in détente at the same time, can do? Do you see any way out of this dilemma?

Mr. CASEY. Well, Secretary Kissinger addressed that subject in testifying before the Senate Finance Committee on the trade bill a couple of days ago. I share his view that it will not be productive or effective to seek to change the internal policy of the Soviet Union by either offering or withholding nondiscriminatory treatment in trade and export credits.

Senator PELL. Excuse me. I am familiar with the argument on both sides. My question to you was, Do you have any suggestion for compromise?

Mr. CASEY. I am familiar with the suggestions that have been put forward. I hesitate to come down on one because I feel it is essential that a compromise be worked out. I think any compromise which permits the experimental relationship to develop in economic relations with the Soviet Union is very much in the public interest and necessary to be achieved.

I do not have any specific compromise proposal to put forward.

EFFECT OF EAST-WEST TRADE CONTROLS

Senator PELL. Do you think East-West trade controls hinder unnecessarily the development of trade relations with the East or interfere with exports to the West?

Mr. CASEY. Well, this is a continuing problem. We are always going to have it with us. Certainly, as we develop trade and financing relationships, we will have to continue to scrutinize exports and financial transactions to see whether they are likely to impair our security interests. I think as we move forward and understand the economy and the technological structure of the Soviet economy better, we will be able to make better judgments and we will be able to proceed with perhaps less fear and caution and to liberalize the flow of exports that may have security implications. This has been under review for a period of a couple of years and I think it is something that we will have to continue to look at on a case-by-case, technology-by-technology basis. We will have to make judgments on the state of our technology and the relationship between a particular export and the next generation of that technology or product and where that stands in relationship to the Soviet, the state of the art in the Soviet Union, and I think this is a process that will continue to go on and I hope we will do it with greater confidence and be able to do it, grant export licenses more liberally without feeling we are impairing our security.

MOST-FAVORED-NATION TREATMENT

Senator PELL. Does not, from a layman's viewpoint, most-favorednation treatment [MFN] mean basically with MFN you are permitted a slightly lower tariff coming into the United States, and also the benefit of export-import credits? Is that not basically what it is?

Mr. CASEY. You are treated the same as other countries in terms of imports coming into the United States, and in terms of exports you also are treated the same as other countries.

The Soviet Union would get the same kind of export credits for the same purposes as export credits given to other countries.

Senator PELL. Excuse me, I am not talking clearly.

My question to you was, What else is there involved in not having MFN beyond having a higher tariff rate in coming in and not having the benefit of import-export loans, guarantees?

Mr. CASEY. I think there is a question of political sensitivity, the question of whether we can really build an enduring and usually satisfactory political and economic relationship.

If we maintain and insist upon putting the Soviet Union and other countries in a position where they are discriminated against, I think there is a great political symbolism there.

I do not think that the MFN in itself is terribly important. Of course, if we look at the trade with the Soviet Union most of the trade is, and is likely to be for some time, in raw materials and other products where the tariff treatment is not that important.

On the other hand, as they are trying to build up foreign currency earnings and buying power, export credits are important.

PRESIDENT'S WISHES CONCERNING EXTENSION OF MFN

Senator PELL. Under the President's wishes, would he be extending MFN to those countries he chooses or would all countries receive MFN?

30-856 74-8