Secretaries of State, Commerce, and Agriculture and the STR establish procedures for consulting industry associations and individual firms on the identity, operations, and trade impact of each NTB identified by various sources.

Such consultations should be pursued through formal committees consisting, in industry, of technical exports, export managers, and executives; and, in government, of commodity specialists from Commerce and Agriculture and trade policy officials and trade negotiators from Commerce, State, and STR. Government representatives should be from an appropriately high level to insure industry a visibly significant input.

We recognize that certain industry sectors and individual firms, because of their investments abroad, may not maintain an interest in exporting and, therefore, in NTB identifications and analysis. Thus, before forming the above-mentioned committees, we proposed that Commerce, in conjunction with the Office of Management and Budget, initiate a thorough analysis of the structure and specifically of the export interest of various firms and associations to identify those industry participants most likely to contribute meaningfully to the industry-Government dialogue.

As noted earlier, the upcoming trade negotiations have stimulated considerable thought and discussion on improving industry-Government contacts, and Commerce has developed proposals for a system of industry-Government consultative committees to obtain industry technical inputs, advice, and support. These proposals wisely recognize the need for early consultations with business executives, offering them a visible indication that their advice will reach the Government officials responsible for the actual bargaining. The proposals also recognize the diversity of expertise available in private industry and the instruments necessary to tap this expertise.

Within Washington agencies

The proposed committee system does not insure the quality of information required for a rational NTB decisionmaking system. Contacts with industry must be continuous, meetings must be scheduled, and industry data must be scrutinized. The role of the commodity specialists, with their technical expertise and industry contacts, is crucial and must be changed to allow them to concentrate on obtaining and verifying industry analysis of trade issues generally and of NTBS in particular. We proposed that the Secretary of Commerce consider assigning several commodity specialists representing all relevant product categories to purely international trade work within the Commerce Department's Office of International Trade Policy.

These specialists should be impressed with their broad responsibilities for soliciting information and analysis from all sources, to carefully validate industry data, and to develop negotiating priorities on the basis of the interests of all groups affected by NTBs.

The foregoing proposals are intended to create a decisionmaking system conducive to timely and thorough applications of all relevant and available expertise toward establishment of NTB priorities and the development of NTB solutions.

ENCLOSURE II

GAO ANALYSIS OF TRADE REFORM ACT OF 1973

In light of our NTB review, certain comments on the Trade Reform Act of 1973 seem appropriate. We have confined our comments to those sections which implicitly assume the existence of, or specifically provide for, certain organizational capabilities analyzed in our review. We preface these remarks with a general comment that the improvements suggested in enclosure I are relevant less for any specific section than for the general thrust of the bill. The delegation of broad powers to remove or erect import barriers, either in consonance with or in departure from U.S. international obligations, emphasizes the need for confidence in the executive branch's organizational capabilities. The broader the powers delegated, the greater is the need for the improvements recommended.

TITLE I. CHAPTER I.

Section 103-Nontariff barriers to trade

This section contains a statement of congressional support for Presidential efforts to reduce, eliminate, or harmonize NTBs. These negotiations could take the form of agreements on particular NTBs or general principles applicable to

all or a category of NTBs; the latter could also provide guidelines for specific agreements.

The section specifically requests only a limited grant of prior authority because of the heterogeneity of NTBs, their basis in domestic statute, and the impossibility of predicting the types of agreement or legal techniques required for immentation. Therefore, three alternate procedures are contemplated:

(1) Prior grant of authority, in cases involving methods of customs valuation; establishment of quantities on which assesments are made; and the marking of country of origin. Such authority is likely to result in eliminating, presumably in exchange for significant foreign concessions, the American Selling Price (ASP), the Final List, and the Wine Gallon method of assessment, NTBs about which our trading partners have protested. The Administration argues that these particular NTBS are closely associated with tariffs and that discretion to eliminate them would be necessary for the President to fully exercise his tariff authority contained in section 101. Probably more significant, however, is that congressional support for eliminating ASP, in particular, would signal to our trading partners our resolve in confronting NTBS and would provide considerable flexibility to the President in obtaining meaningful concessions in return. (2) Continuation of existing procedures, including Presidential authority to complete agreements when implementing legislation is not necessary; completion of an international agreement and its submission to the Senate as a treaty; or completion of an ad referendum agreement and its submission to the Congress. Such procedures may be appropriate in NTB cases involving flexibility in Presidential administration of the relevant statute or in cases in which consultation with foreign governments would permit minor adjustment to harmonize certain administrative regulations.

Although the Administration has informally assured the legislative branch that this authority is narrow in range and that it intends to submit the vast majority of NTB agreements to the Congress under the veto procedure (see following paragraph), Administration officials were unable to specify which U.S. NTBS would be susceptible to elimination through these procedures. This lack of specificity probably reflects the inherent difficulties of predicting the outcome of future bargaining; however, it may also reflect the lack of policy planning and NTB priority setting described in enclosure I.

Because of the breadth of authority the President is requesting; the Congress may wish to require prior notification on the modes of ratifying and/or implementing NTB agreements resulting from the negotiations. Such a commitment could be based on the preparatory discussions now taking place within the General Agreement on Tariffs and Trade, and could be subject to periodic revision as the final shape of NTB negotiations emerges.

(3) Provision at Presidential option, in cases he deems necessary or appropriate, for notifying and submitting NTB agreements and implementing orders to both Houses of Congress for possible veto within 180 days. Unless either House disapproved the agreement, it would automatically become effective. We might point out in this regard that the standard of "majority of the authorized membership of that House" could require a greater number of votes in either House than either of the phrases "a majority" or "a majority of those present and voting" which are frequently used in matters such as these. The veto procedure would also reverse the legislative process, with the proposed agreement becoming effective unless the Congress specifically disapproved. It should also be emphasized that this procedure is optional, and that the President would reserve the right to implement NTB concessions by executive agreement if such concessions did not, in his opinion, require new legislation. Litigation would then become the only method of challenging such an agreement should section 103 receive congressional endorsement. Here again prior notification to the Congress, indicating which U.S. NTBS the President believes could be eliminated through a purely executive process, would seem appropriate and feasible.

We raise this issue because many U.S. NTBS are entirely legal and legitimate internationally and result primarily from efforts mandated by the Congress to promote certain domestic objectives. The trade-inhibiting effects of such measures are purely incidental, and the Congress may wish to insure that such measures cannot be bargained away or compromised without adequate congressional scrutiny.

Assuming that this exercise of Presidential option is narrowly circumscribed, we do have some questions regarding the veto procedure, which apparently will become the principal vehicle for ratification of NTB agreements. Timing here is crucial; the 180-day period contemplated by the bill would appear adequate only

if the agreements are submitted as negotiated and at intervals which would permit close examination of agreements, the domestic implications of which may appear obscure at first. On the other hand, forwarding of NTB agreements separately might deprive the Congress of the perspective necessary to assess the degree of overall reciprocity ultimately achieved. The successful functioning of the proposed Joint Committee on Foreign Trade may ameliorate these problems, but some advance commitment from the President on the identity and the timing of NTB submissions to the Congress under the veto procedure would also be useful.

We make these suggestions not only to assist the Congress in examining the results of NTB negotiations but also to induce a closer scrutiny of NTB priorities by the executive branch. Enclosure I identifies a variety of weaknesses in this priority-setting process resulting from inadequate information collection and analysis; a more prominent congressional role might convince the executive branch to strengthen this process.

CHAPTER II-HEARINGS AND ADVICE CONCERNING NEGOTIATIONS PURSUANT TO TITLE I

Subchapter A-Title I, prenegotiation requirements

This entire subchapter is identical in substance to the parallel Trade Expansion Act provisions, except for section 112b. The prenegotiation provisions contemplated by section 111 apply only to actions under section 101 and therefore do not apply to the NTB authority embodied in section 103.

Section 111-Tariff Commission advice

This section requires that the resident publish, and furnish the Tariff Commission with, a list of articles being considered for concessions under section 101. The commission must, within 6 months, render its judgements on the probable economic effects of proposed concessions. The list would exclude articles already subject to import relief measures. Public hearings must be held during the Commission deliberations, but its advice to the President would be confidential. The advice is not binding but must be conveyed to the President before he commits the United States to any agreement.

The section does not apply to NTBS because Tariff Commission expertise does not extend to this area and because the economic effects of NTB concessions are notoriously difficult to estimate. We would note however, that various weaknesses identified in enclosure I prevent the Government from achieving the best possible estimated of NTB trade effects. Section 112 provides for departmental advice on this issue, and GAO's proposals would enhance the capacity of these departments to render such advice. The exactitude of the advice could not equal that available from the Tariff Commission on the effects of tariff reductions, but it would assist the Government in deciding which possible NTB concessions to withhold from negotiations and which might ultimately result in valid applications for import relief.

Section 112-Advice from departments

This section requires the President, before entering into the trade agreements under sections 101 and 103, to seek information and advice from the Department of Agriculture, Commerce, Defense, Labor, State, Treasury, and the Interior; STR; and other agencies as appropriate. The section also provides for exemption of Government-industry consultations from the Federal Advisory Committee Act requirements relating to open meetings and public participation, to protect confidential information from public disclosure with attendant advantages to our trading partners. Although such an exclusion from public meetings appears necessary and reasonable, the Congress might consider some action to insure full representation during such consultations from all domestic interests potentially affected by the changes in U.S. law which will result from the negotiations. This would appear particularly important for standards, which may both restrict trade and protect the public health and safety. Because various foreign governments believe that certain U.S. standards have impeded their trade and because of current GATT discussions in a Standards Code of Conduct, representation, particularly from consumer groups, would appear to be warranted.

Before approving this section, the Congress might also note the criticism of the government-industry dialogue on NTBS mentioned in enclosure I. This dialogue has been ineffective, and the Congress might consider legislating certain revisions as a prelude to the negotiations.

RV 3.7

TITLE III-CHAPTER ONE

Section 301-Responses to unfair foreign import restrictions and export subsidies This section, in addition to revising and expanding section 252 of the Trade Expansion Act, directs the President to gather data about foreign unfair trade practices, and in so doing to provide an opportunity for any interested party to inform the Government about such restrictions. This requirement, an obvious prerequisite to successfully applying retaliatory authority, should be scrutinized in light of our findings of significant weaknesses in the NTB information system. Mr. BURKE. This concludes our meeting.

The committee stands adjourned, to meet at 10 a.m. Monday morning.

[Whereupon, at 4:20 p.m., the committee adjourned, to reconvene at 10 a.m., Monday, May 14, 1973.]