be concluded even after other forms of relief had been proclaimed. Such an agreement could also have replaced, in whole or in part, any earlier actions. Section 203 contains amendments similar to those in the Trade Act of 1970. For example, the President could proclaim across-the-board quotas or tariff increases and then negotiate agreements with the principal supplying countries. Once these agreements were implemented, he could terminate the prior actions, in whole or in part. For example, he could terminate tariff increases but continue the suspension of items 806.30 and 807.00. However, import relief in the form of tariff increases or the imposition of duties must always be applied on a mostfavored-nation (MFN) basis.

Section 352 of the 1962 Trade Expansion Act provides that if the President has concluded a multilateral agreeemnt among countries accounting for a significant part of world trade in the article covered by the agreement, he can apply the terms to countries which are not parties to the agreement. Similar authority is contained in section 204 of the Agricultural Act of 1956, as amended. The proposed Trade Reform Act contains this type of authority with some important modifications.

Section 203 (c) provides that the President may apply restrictions to nonsignatories in order to carry out "one or more agreements . . . among countries accounting for a significant part of United States imports of the article covered by such agreements." In order to exercise this authority with respect to nonsignatory countries, there must be at least two foreign countries which have entered into agreements with the United States, either in the form of one multilateral agreement or a series of bilateral agreements. One agreement with one country could not serve as the sole basis for imposing restraints on non-signatories.

Another change from existing law is that the quantitative tests is in terms of a significant part of United States imports of the article covered by the agreement, rather than a significant part of "world trade" in the article. "World trade" is an ambiguous term which can be defined in various ways, and is not directly relevant to the United States action. The term "significant" is not defined and it is intended that it not be restricted by a specific percentile amount. Section 203 provides new authority to suspend the application of items 806.30 and 807.00 as an import relief measure. Item 807.00 provides that on imports of articles assembled abroad in whole or in part of components fabricated in the United States, duty is assessed on the value of the articles excluding the value of these components. Item 806.30 provides similar customs treatment for metal articles exported for processing and returned to the United States for further processing.

The Administration has devoted a great deal of study to the economic factors affecting the use of these tariff provisions. It has concluded, as did the Tariff Commission, that elimination of these items would, on balance, have an adverse effect on the United States merchandise trade balance and would result in a net loss of jobs for American workers. However, cases may arise in which it would be appropriate to suspend the benefits of these tariff items to imports of articles which are causing serious injury to a domestic industry. This authority would be exercised on an MFN basis even though in most cases the action would only affect one or two countries. The authority to suspend "in part" could be used to impose a limitation on imports entered under these tariff items, or to withdraw the benefits of these items only on imports of certain articles which the Tariff Commission has found cause serious injury.

Section 203 enables more effective import relief in the form of tariff increases by eliminating the statutory ceilings on such increases. Under the Trade Expansion Act, tariff increases cannot result in a rate of duty more than 50 percent above the 1934 rates, or 50 percent ad valorem in the case of a duty-free article. Any limitations tied to the 1934 rates are not uniform in effect. In some cases, these rates are low and the tariff increases permitted cannot provide effective relief. The President should have authority to set tariffs at any level in cases where a tariff increase is the most effective form of relief.

Under the Trade Expansion Act, relief may be applied for an initial term of four years. It can be extended for additional periods, each not to exceed four years, following an investigation and report by the Tariff Commission. Under the new provisions, import relief could be applied for an initial term of up to five years, with one possible two-year extension following an investigation by the Tariff Commission. When the relief has expired, after five or seven years, the same industry cannot petition for import relief under section 201 until at least two years have expired. This waiting period is designed to emphasize the tem

porary nature of import relief and to emphasize the adjustment purpose of that relief.

The import relief would be phased out during its initial term. In the case of a five-year term, the first reduction in relief would commence after the first three years. The President could provide import relief for a shorter term than five years. In this case the first reduction of relief presumably would begin at some point earlier than three years although this is not explicitly required by the statute. If the President decides to continue import relief beyond the initial period, he can provide the degree of relief which applied at any time during the initial term. For example, if a tarffff of 10 percent is increased to 20 percent and then reduced to 15 percent in the fourth year and to 12 percent in the fifth year, the extension of relief for two years could be at a tariff level of 12, 15, or 20 percent, or any other rate between 10 and 20 percent.

The Tariff Commission would furnish to the President at his request reports on developments in an industry which is benefitting from import relief. Under existing law, the Commission makes reports to the President on an annual basis. The annual report is a burden on the Commission and, in many cases, the data base has not changed sufficiently in one year to justify this kind of investigation. Under existing law, a domestic industry can request the Tariff Commission to undertake an investigation with respect to any proposed modification in import relief. For example, if the President has provided for staged tariff reductions, the industry in question can request an investigation with respect to the implementation of any of these reductions. Under section 203 of the proposed Act an industry can petition the Tariff Commission only at that point when the initial term of import relief is to be fully terminated.

All of these proposals are consistent with the overall purpose of import relief, namely to enable an orderly adjustment by an industry to new competitive conditions. The time limits on the duration of import relief and the phasing out of the relief, in particular, are intended as an incentive to accomplish this objective.

ADJUSTMENT ASSISTANCE FOR WORKERS

The eligibility criteria for assistance under the Trade Expansion Act were designed to limit the scope and prevent the misapplication of compensation by making certain that workers were, in fact, displaced and firms seriously injured as a result of increased imports due to concessions under trade agreements. Consequently the eligibility criteria have been too restrictive, and the administrative procedures too time-consuming and inefficient to deliver benefits when they are most needed.

The program of adjustment assistance for workers proposed under Title II of the proposed Act departs significantly from and replaces the current program. The stress is placed on adjustment through comprehensive programs. Changes in the criteria for eligibility and in administrative procedures are designed to ensure more liberal and expeditious access to benefits.

Workers displaced from employment by import competition are only one of many categories of workers adversely affectde by government policies, technological change, or market forces. The Government has a responsibility to the national economy to ensure that any worker involuntarily unemployed for whatever reason receives assistance which can help him to obtain alternative employment quickly. Problems of adjustment faced by workers displaced by import competition resulting from trade liberalization policies are essentially no different from those faced, for example, by workers employed on a military base closed down by the Government or workers in a firm which goes out of business because of poor management policies in meeting domestic competition. In each case the individual worker may suffer severe hardship for these policies of which he has been the victim rather than the cause.

Consequently the proposals are designed to phase the special income-maintenance program for workers affected by imports into an improved program under which workers displaced for whatever reason receive benefits according to a uniform standard. Separate legislation submitted to the Congress to amend the Internal Revenue Code will provide for the establishment of Federal minimum standards for weekly benefit levels under State unemployment insurance program to ensure that all workers covered by these programs receive comparable benefits whatever the cause of their involuntary unemployment. These minimum standards would become generally effective on or after July 1, 1975, if proposed legislation is passed as presented. Federal supplements would make them available to trade-impacted workers immediately under the terms of this Act.

Under Title II of the Trade Reform Act cash benefits for workers would consist of the unemployment insurance benefits which the workers would normally receive under existing State standards. In addition, the Federal Government would make available supplemental payments wherever necessary to bring the amount the worker receives under existing State unemployment insurance laws up to the level to which the worker would be entitled under the new minimum Federal standards. When all State benefit programs provide amounts equal to or in excess of the new standard, the Federal Government would no longer pay supplements to State unemployment insurance. The Trade Adjustment weekly benefits under this trade Act would simply "fade away" because of non-use. It is important to note, however, there is no termination date. Unless and until the general Federal standards program is enacted and becomes effective (or all State benefit amounts are independently brought up to the same standard), weekly benefits under the trade adjustment assistance program will continue.

Under the Trade Expansion Act trade-impacted workers receive cash readjustment allowances in place of unemployment insurance. This allowance is equal to 65 percent of the workers average weekly wage or 65 precent of the national average weekly wage in manufacturing, whichever is less. The total of any earned income plus the adjustment allowance cannot exceed 75 percent of the worker's average weekly wage. The maximum possible readjustment allowance is presently $101.00 a week.

Until the Federal standards are achieved, eligible trade-displaced workers would be entitled to receive supplementary unemployment insurance payments from Federal funds wherever necessary to bring their weekly cash payments up to 50 percent of their average weekly wages or to the maximum level of twothirds of the appropriate State average weekly wage, whichever is lower. The weekly payments available to a worker who qualifies under this Act may be lower or higher than those available now to workers who meet the more stringent eligibility tests of the Trade Expansion Act. If a worker had wages higher than the State average weekly wage (in employment covered by the unemployment insurance system), and that State average weekly wage was the same as or higher than the national average weekly manufacturing wage, the worker's weekly payments under this Act would be as high as or higher than under the Trade Expansion Act. In most other cases, they would be the same or lower. Apart from the level of weekly benefits, the new proposals would liberalize the eligibility requirements for assistance and expedite the process of deter mination and delivery of benefits and other services to facilitate the adjustment process. The Secretary of Labor will conduct the entire process of investigating and determining whether a group of workers meets the eligibility requirements, in addition to issuing certification. The entire process will be completed within 60 days of the filing of the petition with the Secretary by a group of workers. The Tariff Commission will be involved only if requested by the Secretary.

The eligibility criteria are considerably liberalized, compared to the Trade Expansion Act of 1962. The causal link between increased imports and previous tariff concessions is removed, as in import relief cases. Increased imports need only contribute "substantially" to worker unemployment or underemployment, rather than be the "major" cause. Under existing criteria, only about 34,000 workers have been certified eligible to apply for adjustment assistance; petitions of many more have been turned down. While some workers might receive somewhat lower cash benefits under the new system, easier access to assistance could increase the number of eligible workers, perhaps as much as five times. The new expeditious procedures will provide the benefits in time to be of real assistance. In addition to cash benefits, improved service programs will be a permanent feature of the adjustment assistance program. The Secretary of Labor will make every reasonable effort to obtain counseling, testing, placement, and other supportive services through State agencies to aid displaced workers in obtaining alternative employment. The Secretary shall also endeavor to assure the provision of appropriate training to trade-impacted workers under manpower and other service programs on a priority basis when alternative employment is not available. Supplemental assistance payments for subsistence and transportation expenses incurred while the worker is in training will be continued up to the same amounts now authorized under the Trade Expansion Act.

In addition to weekly benefits, there are several benefit allowances designed to help a worker adjust, which are a permanent part of the trade adjustment assistance program for workers even after general Federal standards for unemployment insurance come into force.

A worker may receive a job search allowance of up to $500.00 to cover 80 percent of his costs if he must search for suitable employment outside of the commuting area in which he lives. If the worker does secure employment outside of his commuting area, he may receive a relocation allowance consisting of 80 percent of the reasonable and necessary expenses of transporting himself, his family, and household effects to the new location. He will also receive a cash payment equal to three times his average weekly wage or a maximum of $500.00. Phase-out of the Federal role in providing special income maintenance recognizes that the assistance required by workers can be better administered at the State level to reflect local conditons. While the maximum duration of cash readjustment payments will be reduced under the new unemployment insurance system, the liberalized eligibility criteria together with the streamlined delivery of assistance should provide assistance when it is most needed and can be most effective.

TITLE III—RELIEF FROM UNFAIR TRADE PRACTICES

Title III contains revisions to the four principal statutes which provide the President authority to deal with unfair trade practices of foreign countries or sellers abroad. The first concerns authority under section 252 of the Trade Expansion Act to respond to unreasonable or unjustifiable foreign trade restrictions or other acts which discriminate against or otherwise burden United States trade. The remaining provisions concern responses to unfair competitive practices in the import trade contained in the Antidumping Act, 1921, the countervailing duty law (section 303 of the Tariff Act of 1930), and section 337 of the Tariff Act of 1939 with respect to patent infringement.

Section 301 expands the President's authority to deal with unfair foreign import restrictions, provides new authority to act against countries which limit United States exports through the use of export subsidies, and simplifies the conditions under which the authority may be used.

The proposed amendments of the Antidumping Act and the countervailing duty law will serve to strengthen materially these statutes as instruments which can nullify the impact on United States industry and labor of unfair foreign trade practices, while at the same time, making the investigations conducted under these laws more efficient and fair. As tariff levels have been reduced over the years in successive rounds of multilateral negotiations, unfair trade practices have become increasingly significant barriers to the unfettered flow of international trade. Accordingly, the legislative tools to cope with these practices need to be sharpened.

Amendments to the present law concerning patent infringement provide a more equitable system for dealing with imports which infringe United States patents. The Federal Trade Commission Act would also be amended by a companion bill which authorizes the FTC to investigate and regulate other unfair methods of competition such as monopoly practices in the importation of products into the United States.

UNFAIR FOREIGN IMPORT RESTRICTIONS AND EXPORT SUBSIDIES

Section 301 revises and extends the President's existing authority to restrict imports from countries which unreasonably or unjustifiably restrict our exports. Section 252 of the Trade Expansion Act provides such authority only under a complex array of conditions which vary according to the practicess or exports involved. As the President stated in his transmittal message on this Act, the United States must be in a position to respond effectively and even-handedly to practices which unfairly prejudice our export opportunities abroad.

Section 252 of the Trade Expansion Act authorizes the President generally to withdraw concessions and, in some cases, to impose duties or other import restrictions on the products from a foreign country which maintains unjustifiable or unreasonable import restrictions which burden or discriminate against United States trade. The principal authority is to impose or increase tariffs up to the statutory Column 2 rates of duty. In the case of unjustifiable import restrictions on our agricultural exports, the President may impose duties in excess of the statutory rates or impose other import restrictions, such as quotas, against the offending country.

The existing statute contains a number of defects. First, section 252 gives the President greater legal authority to deal with unfair restrictions on agricultural than on industrial exports. The Trade Act of 1970, as approved by the

House of Representatives and the Senate Finance Committee, would have removed this distinction. Similarly, section 301 of this Act would remove this arbitrary distinction, giving the President full authority to deal with unfair foreign restrictions on both agricultural and industrial exports.

Second, section 252 distinguishes "unjustifiable" from "unreasonable" import restrictions. Unjustifiable connotes illegality, for example, a violation of a country's obligations to the United States under the GATT or under a Treaty of Friendship, Commerce, and Navigation. The word "unreasonable" refers to acts which are not necessarily illegal or “unjustifiable."

Since the effects on United States economic interests may be the same whether a restriction is unjustifiable or merely unreasonable, the President's authority to deal with "unreasonable" import restrictions should be the same as his authority to deal with "unjustifiable" ones. The GATT does not regulate a great variety of administrative practices which can be used to discriminate against United States exports. The President should also have authority to respond to these types of unfair acts.

The President's authority under section 252 to deal with unreasonable import restrictions is qualified by the requirement that he have due regard for the international obligations of the United States. This requirement does not apply when the President is responding to unjustifiable import restrictions. The President should consider the international obligations of the United States in all cases, whether the acts complained of are unjustifiable or unreasonable. However, disputes concerning the extent of international obligations should not limit the President's domestic legal authority to act on behalf of United States interests.

The President would resort to action which is inconsistent with international obligations only after all other possible measures which are consistent were used and failed to remedy the problem. Even the action inconsistent with international obligations would only be taken on a matter of important principle and in the national interest. Existing provisions of the Trade Expansion Act authorize actions which could be breaches of United States international obligations. Section 252 is one example of such a provision. This authority has been used only in one case, however, and never in a way which was inconsistent with our international obligations.

The third major change under section 301 is to broaden the President's authority beyond the withdrawal of trade agreement concessions. Except in the case of restrictions on agricultural products, the President's retaliatory authority is limited under section 252 to the imposition of additional duties un to the Column 2 or statutory rates. In some cases these rates are very low. Whether the withdrawal of tariff concessions would be an effective remedy will varv iǹ each case, depending on the 1930 rates applied to those products of which the offending country is the principal supplier. Section 301 removes this ceiling because it is both awkward and unpredictable. There might be cases in which a quota would be a more effective remedy, for example, if a foreign country imposes an illegal quota on certain United States exports.

The fourth change provides a new authority which would deal with the situation in which a foreign country unfairly subsidizes its exports to thirdcountry markets, thereby displacing the sale of competitive United States exports. The House of Representatives and the Senate Finance Committee approved such an amendment in the Trade Act of 1970. The GATT prohibits export subsidies and sanctions the use of countervailing duties to offset the amount of the subsidy. Export subsidies to third countries may, in certain cases, be just as injurious to domestic industries as subsidies on products exported to the United States.

Finally, section 301 explicitly authorizes the President to take actions on a MFN basis or only against the offending country. In most cases, action would be taken only against the offending country, as contemplated by GATT Article XXIII. However, cases might arise which warrant retaliation on a MFN basis. for example, under GATT Article XXVIII. Section 252 could be used on a MFN or non-MFN basis but contained no explicit language on this point.

The range of practices against which section 301 could be used includes all the practices covered by section 252 of the Trade Expansion Act. For purposes of simplification, explicit reference was dropepd to tolerance of international cartels and use of variable levies. Section 301 authority is applicable to these practices, however.

ANTIDUMPING ACT

The proposed amendments to the Antidumping Act would make several technical and procedural changes. Recent administrative and procedural im