tions with the EC. The Administration will seek to maintain the benefits obtained in past GATT negotiations and where they cannot be maintained unimpaired, we will seek compensation.

The Administration is also concerned about the EC-EFTA free trade area, that is, an area made up of the EC and individual EFTA countries that have not joined the EC. Again the Administration believes that the best approach is to seek adjustment or compensation where its exports are impaired, and will reserve its GATT rights, if this is not forthcoming.

Finally, mention should be made of EC special/reverse preferences. The EC has preferential trade agreements which may ultimately extend to nearly 80 countries and dependent territories. Through discussions with the Community, the Administration is endeavoring to eliminate the discriminatory features of these arrangements.

11. Would you please give this committee a progress report and prognosis for the 24:6 negotiations currently in progress in Geneva?

Answer. Negotiations on EC enlargement began, on a bilateral basis, in midMarch in Geneva. Since that time considerable progress has been made in establishing an agreed data base for the negotiations and in examining U.S. claims. On May 11, the EC proposed that the U.S. and the EC examine all U.S. juridical rights in the present GATT schedules of the EC (of Six), Denmark, Ireland, and the U.K., and compare them with the rights the U.S. would have in a new schedule of concessions offered for the enlarged EC (of Nine). The latter schedule, as offered, would find each item now bound in the schedule of the Six at the duty level most recently bound therein. Our negotiators consider that the extensive examination of all U.S. rights in the schedules being withdrawn, whether or not duty increases are proposed unnecessarily creates technical obstacles to an early completion of the negotiations. GATT Article XXIV:6 provides that if in forming a GATT-consistent customs union any contracting party proposes to increase any rate of duty inconsistently with its GATT commitment, it shall follow the procedures of Article XXVIII-that is, it shall negotiate and consult with interested contracting parties for their agreement. Thus we seek compensation for disadvantages resulting from proposed tariff increases above rates bound in GATT. We consider that the negotiations should now focus on these increases and on any offers of compensation the EC may make in the form of direct bindings to the United States in the new GATT schedule of the EC of Nine. Although these recent procedural disagreements are slowing progress, the negotiations are being actively and optimistically pursued with a view to their conclusion in July.

15. Would you please advise the Committee as to the status of the three cases filed under Sec. 252 of the Trade Expansion Act of 1962? (The first case was filed in 1970 by the California-Arizona Citrus League on the EEC preferences. The second case was filed by the National Canners Association on a sugar-added tax of the EEC. The third case was filed by the California-Arizona Citrus League in 1973 as the result of the extension of the EEC preferences to three new countries.)

Answer. The following is a summary of the status of cases filed under Section 252 of the Trade Expansion Act of 1962:

(a) Case filed in 1970 by California-Arizona Citrus League on EC preferences: The United States took action under Article XXIII:1; the EC granted temporary reduction on citrus duties.

(b) Case filed November 12, 1970 by National Canners Association on sugaradded tax of EC: The United States has taken action under Article XXIII:1, however, the problem is still pending.

(c) Case filed in 1973 by California-Arizona Citrus League on extension of EC preferences to three new countries: Hearings were held by the Trade Information Committee on February 9; transcript, briefs, and other relevant materials have been forwarded to the Trade Staff Committee for policy considerations.

Mr. PETTIS. I would now like to go to two general questions. One I would appreciate the Secretary of State answering. It has to do with the most-favored nation proposal. As most of us have read in the press, the immigration policies of Russia have come into question. My question has to do with what appears to be a saturation situation in Israel to absorb many of these immigrants.

We are seeing a reverse flow of these people to Russia. My real question is: Is this going to pose an international problem? I notice that some of these people are living in sort of ghetto-like situations in Vienna and elsewhere. They are not able to get back in. Has the Israeli Government or any other government said anything to you about this as a problem?

Secretary ROGERS. No, Mr. Pettis; they have not said anything to me and I rather doubt they said anything to our Government at any level. In answer to your question I don't believe it is going to be a problem. There obviously are some people who have trouble adjusting when they move to another nation. I guess that is true in the case of Israel, as with other nations. But on the whole, the immigrants, those who emigrate from the Soviet Union to Israel, make the adjustment very well. They are assimilated quite quickly. Israel, I think, does a remarkably fine job, an excellent job, in seeing that that happens. I would expect that Israel can continue to absorb about the number and maybe more than they are getting now, which is roughly 30,000 to 35,000 a year.

Mr. PETTIS. But more than that, it might pose a problem, do you think?

Secretary ROGERS. Well, I would not think so. I have trouble answering precisely at what point it would be difficult for Israel but I don't believe there is a problem at the moment.

Mr. PETTIS. The second question has to do with this general trade with Russia and the Chinese. Now, I think most of us have a fair idea of what the scope of that trade would be as far as Russia is concerned, but I haven't heard very much about the kind of trade you envision as far as China is concerned.

Secretary ROGERS. Well, we are not quite sure, of course, because as you point out, we have not had much experience in the field. The People's Republic of China is largely an agricultural country. Eighty percent of their people work in agriculture, leaving a small percentage of their people producing other goods.

Secondly, in the discussion we had with the Chinese in Peking, they were very quick to point out that they were not going to be dependent on any other nation, that they were going to be as self-reliant as possible. They talk a good deal about self-reliance.

So we don't know for sure how much trade they are prepared to have. We know that there are potentials there for trade. They are anxious to trade with us and we with them, but it is very difficult to make any predictions about the extent of that trade at this time. Of Course, for obvious reasons the percentage increase in our trade with the Chinese has been quite large in the last year due to the insignificant volume of trade in the past.

Mr. PETTIS. You mentioned this morning that some nations are expanding their trade with China at a rather rapid rate. I think that was at least the thrust of your statement.

Secretary ROGERS. Yes.

Mr. PETTIS. Do you think that that might take place in the same areas as these other countries, raw materials such as metals?

Secretary ROGERS. I think the rate will be rapid but I don't think the amount will be so great.

Mr. PETTIS. Thank you, Mr. Chairman.

The CHAIRMAN. Mr. Vanik?

Mr. VANIK. I want to announce to the committee that I have addressed letters to Secretary Shultz and Secretary Rogers, and that I have the reply of Secretary Rogers with a supplemental reply to come. Mr. Chairman, I ask unanimous consent that my letter to Secretary Rogers and the reply might be made a part of the record at this point. The CHAIRMAN. Without objection, it will be included at this point. [The letters follow:]

Hon. WILLIAM P. ROGERS,

Secretary of State, U.S. Department of State,
Washington, D.C.

HOUSE OF REPRESENTATIVES,
Washington, D.C., May 2, 1973.

DEAR MR. SECRETARY: Prior to your testimony before the House Ways and Means Committee on the President's trade legislation, I would appreciate it if you could provide me with data and answers to the following questions, so that these issues may be explored more fully during the hearings:

(1) There are a number of Sections within Title 19 (The General Customs Duty Title of the United States Code) which provide special trade relationships with the Philppines (e.g., 19 U.S.C. 1202(c) (3)). Is it the intention of the Administration that "special relationships" expire on the presently scheduled date of July 3, 1974? Will all such "special relationships" expire at such time? If not, could you please provide to the Committee a list of all special trade relationships which the Administration hopes to continue with the Philippines?

(2) Throughout the Code, there are special provisions describing "special relationships" with Cuba (e.g. 19 U.S.C. 124, 125, etc.). Of course, these "special relationships" have been suspended as a result of the embargo and the actions taken in 1962. At such time as relationships with Cuba may be normalized, would it be that the Department's intention is to restore these "special relationships" or will Cuba be placed on a Most Favored Nation Status in which she will receive the same trading rights-but no special trading rights-that other nations receive?

(3) The Trade Reform Act of 1973 permits the President to lower, eliminate or increase tariffs and non-tariff barriers. Is it the intention of the Administration to respect the United Nations' embargo placed on Rhodesia? Will any of the provisions which provide the President with sweeping authority in a number of trade areas be used to establish or in any way increase trade with Rhodesia? Could the Department please provide information to the Committee as to our present trading and diplomatic status with Rhodesia including the estimated volume of trade which may have occurred with that country during each of the last six fiscal years?

(4) Section 310 of H.R. 6767 provides for amendments to antidumping provisions originally provided by the Trade Act of 1972, as amended.

Under the new language of the amendment, would the Department of State interpret the various value added taxes, presently employed by a large number of Western European countries, to be affected by the new language? Could the Department please provide the Committee with a list of all the nations in the world which use the value added tax system, with rebates for exports, which would fall under the new definitional language provided for 19 U.S.C. 162. In addition, could the Department provide the Committee with an estimate of the amount of "tax" or "price" relief provided by such VAT rebates on goods exported to the United States.

With respect to 19 U.S.C. 1307, prohibiting the importation of convict made goods or goods made through forced labor, does the Department of State support the continuation of this provision? To the Department's knowledge, are there any imports now entering the United States manufactured through such labor? In any of the recent announced barter agreements or future trade agreements with the Soviet Union, are there classes of goods made by those who would generally be considered to be working under forced labor conditions? Thank you for your assistance in this matter.

Sincerely yours,

CHARLES A. VANIK,
Member of Congress.

DEPARTMENT OF STATE,
Washington, D.C., May 9, 1973.

Hon. CHARLES A. VANIK,
House of Representatives,
Washington, D.C.

DEAR CONGRESSMAN VANIK: Thank you for your letter of May 2 to Secretary Rogers, in which you requested data and answers to several questions relating to the trade bill. The information follows in the same order as requested.

(1) The Laurel-Langley agreement signed on September 6, 1955 by the United States and the Philippines contains the following special trade provisions: Reciprocal and periodically declining tariff perferences. U.S. exports presently pay 90 percent of the normal Philippine rate and Philippine exports pay 80 percent of the normal U.S. rate.

A guaranteed floor of 952,000 short tons of annual sugar sales in the U.S. market.

An absolute quota of 6,000 pounds of imports of cordage from the Philippines. Periodically declining tariff quotas on cigars, scrap and filler tobacco, coconut oil, and buttons of pearl or shell. Imports in excess of the tariff quota are subject to the so-called Cuban rate of duty.

The Administration does not intend to seek an extension of the Laurel-Langley agreement including the special trading provisions of the agreement, beyond its expiration on July 3, 1974.

(2) Given the current state of U.S.-Cuban relations and the fact that the U.S. Government has no intention of changing its policy toward Cuba I cannot speculate at this time on what trade relations between Cuba and the United States might be at some future date. No consideration, for example, has been given to the type of tariff treatment that would be extended to Cuba in the event of normalization. The form of such treatment would have to be considered in the light of all the conditions existing at the time that normalization was undertaken.

(3) With respect to economic sanctions against Rhodesia, the United States takes seriously its obligations under the United Nations charter and intends to adhere strictly to the UN embargo program, with the exception of small amounts of certain strategic materials authorized by the Congress. While the Trade Reform Act would provide the President with authority to remove tariff and non-tariff barriers to trade, this authority is not relevant to the imposition or removal of sanctions against Rhodesia. The sanctions we have taken against Rhodesia could be removed, in the event that it should ever become the policy of the United States to do so, without new legislative authority.

The United States was legally obligated to impose sanctions following passage of UN Security Council resolutions under the mandatory provisions of Chapter 7 of the UN Charter. The sanctions in the United States were imposed under Executive Orders 11322 of January 5, 1967 and 11419 of July 29, 1968, which were issued under the authority inter alia of the United Nations Participation Act of 1945 as amended. The exemption allowing imports of strategic materials from Rhodesia followed passage by the Congress of Title V, Section 503, Public Law 92-156, 85 Stat. 427 (November 17, 1971).

The United States has no diplomatic relations with the regime exercising power in Rhodesia and continues to regard the British Crown as the lawful sovereign in Rhodesia. We closed our consular office in Salisbury, the Rhodesian capital, on March 17, 1970. Virtually all trade with Rhodesia has been suspended under the UN sanctions program except for strategic materials as outlined above and licensed exports consisting essentially of medical and educational materials permitted under the UN Security Council Resolutions. U.S. exports to and imports from Rhodesia for the calendar years 1967-72 are shown below. Trade data is usually prepared on a calendar year basis. However, if you prefer to have the data on a fiscal year basis, I can have the data prepared on that basis and bmit it for the record.

(4) (a) The Department of the Treasury is responsible for administering the anti-dumping law. We have referred your question on the interpretation of the proposed amendments of this law to the Department of the Treasury.

After we have completed the tabulation, we will provide you with a list of the foreign countries which use the value added tax system and the rates that these countries use.

(b) The Department of State would continue to support 19 U.S.C. 1307 prohibiting the importation of convict-made goods or goods made with forced labor. In fact, many other countries have this type of legislation in order to protect their domestic industries against unfair competition. To our knowledge there are no imports now entering the United States manufactured with forced or convict labor. Any evidence of such imports should be brought to the attention of the Treasury Department which administers 19 U.S.C. 1307. With respect to the USSR, we have no reason to believe that any goods which the Soviet Union exports are the product of forced or indentured labor.

I hope this information will be of assistance.
Sincerely yours,

MARSHALL WRIGHT,

Acting Assistant Secretary for Congressional Relations. Mr. VANIK. I want to thank the Secretary for his reply. Secretary Shultz has just advised me that his office is working on replies to the two letters I have addressed to the Secretary. So he assures me they should be forthcoming in several days.

Secretary ROGERS. I would like to say I received your letter yesterday and answered it yesterday. I would like to say that is the quickest I have ever answered a letter.

Mr. VANIK. I appreciate your efforts.

I ask unanimous consent that my letters to Secretary Shultz and his replies be made a part of the record.

The CHAIRMAN. Without objection, it is granted. [The correspondence referred to follows:]

CONGRESS OF THE UNITED STATES,

Hon. GEORGE P. SHULTZ,

HOUSE OF REPRESENTATIVES, Washington, D.C., April 30, 1973.

Secretary of the Treasury, Department of the Treasury,
Washington, D.C.

DEAR MR. SECRETARY: Prior to your testimony before the House Ways and Means Committee on the President's trade legislation, I would appreciate it if you could provide me with data and answers to the following questions, so that these issues may be explored more fully during the hearings.

96-006-73-pt. 1-16