There are some other people who wanted to be heard, and we are coming back again, and those who didn't get heard this time will be given an opportunity at a subsequent date. I may say that we have some commitments in San Francisco we have to meet, plus some commitments here yet.

I will call the meeting adjourned. We will come back at a later date. Thank you all very much.

(Whereupon, at 3:05 p.m., Monday, May 20, 1963, the committee hearing was adjourned.)

PACIFIC TRADE PATTERNS

THURSDAY, MAY 23, 1963

U.S. SENATE,

COMMITTEE ON COMMERCE,
San Francisco, Calif.

The committee met, pursuant to notice, at 9:30 a.m., in room 428, New Mint Building, San Francisco, Hon. Clair Engle (chairman of the committee) presiding.

Senator ENGLE. The committee will be in order for the continuation of the hearings on trade patterns in the Pacific Ocean area.

The Senate Committee on Commerce has heretofore held 4 days of hearings on this subject in Washington, D.C., where we heard from officials of the State Department, Department of Commerce, Foreign Agricultural Service, and the Bureau of Fish and Wildlife. We also held a hearing last Monday in Los Angeles, where we were privileged to have Governor Brown as a witness, together with a representative of the Governor of Hawaii and also representatives of the League of Women Voters and other associations interested in foreign trade.

Today's hearing is a most auspicious one, not only because of our distinguished witnesses, but also due to the fact that this is National World Trade Week and Golden Gate World Trade Week.

I must admit that I was pleasantly surprised to see the vast list of activities scheduled here this week in order to promote increased trade. But on further reflection I recalled San Francisco's long and active history as a major center of trade-particularly trade with the Pacific Ocean communities.

The importance of our trade in the Pacific has unfortunately been overshadowed by the attention given to the European community. I say that this is unfortunate in that the great potential for future export expansion is in the densely populated countries of the Pacific. That is why we are pursuing these hearings to see what we can do now to increase trade in the Pacific and to determine if new legislation is required.

I want to say that I am most grateful that Senator Bartlett could be with me here today. His great State of Alaska is also extremely interested in increasing trade in the Pacific, and he has been a constant worker in promoting and increasing American trade. I would like to thank him very much for coming here to participate in this hearing, and I would like to recognize him at this time for whatever remarks he cares to make.

Senator BARTLETT. Thank you, Chairman Engle.

I am very glad to be here. I am happy to speak on the Pacific coast trade and am particularly glad to do so right in your home

State of California. Not only I but many others believe that you are working constructively in behalf of the entire American community in inquiring into this situation and in soliciting opinions from those versed in this trade situation and in aiming at its improvements.

Your work has been constructive and I know it will be even more so as time goes on and the pieces of cloth in the pattern are put together.

Mr. Chairman, one of the factors influencing the competitive position of American exports in the Pacific area and the United States is the cost of ocean transportation. This involves primarily freight rates from the port from which the goods or commodities are exported to the receiving port in the importing country. On more than one occasion it has been pointed out that generally the ocean freight rates are lower on items shipped to the United States than on identical items exported from this country. This problem was first raised by the House Judiciary Committee several years ago and more recently was raised by Senator Douglas, of Illinois, in regard to our relative position in the exportation of iron and steel.

I would like, with your permission, Mr. Chairman, to add to the record at this point a table indicating ocean freight rates on the movement of selected goods and commodities from west coast ports to ports in Japan.

(Herewith follows the table indicating the ocean freight rates in question :)

Comparison of export and import commodity rates, U.S. Pacific coast and Japan

Senator BARTLETT. This table certainly suggests that we have in the Pacific the same situation that has been found in our trade with European nations across the Atlantic; namely, there is a pattern of higher export ocean freight rates than import rates. Some explana

tions have been offered and certainly in some instances import rates are justified when imports heavily outweigh exports of a given item. But as the table indicates, we have higher export rates on many items which we export to Japan. Here I refer specifically to new automobiles, electric motors, and iron and steel scrap. I think in addition it is interesting that even on general cargo not otherwise specified the rate outbound is $73.50 and the rate inbound is $52.75.

I hope that during the hearings witnesses will express themselves as to whether they believe there is a general tendency toward higher export ocean rates than import rates in the Pacific and will suggest why this condition exists, if it does, and finally will comment on the effect of this high rate pattern on our exports.

Thank you.

Senator ENGLE. Thank you, Senator, for your comments. I may add that this is a matter on which we do want to get something eventually in the record, because we are going to have some more discussions, I take it, on the dual rate legislation which authorized the conference system. I am sure that when this matter comes up again-Senator Douglas brought this up on the floor of the Senate the other day and Senator Kefauver complained about this situation at the time the dual rate bill went through-they will probably be back at us to find out why it costs more to send an article going out than it does to bring a similar article back in.

Now, our first witness this morning is Adolph Schuman, chairman of the San Francisco World Trade Center Authority, Ferry Building, San Francisco. He is also chairman of the San Francisco Regional Export Expansion Council; he will be accompanied by J. Monroe Sullivan, executive director of the World Trade Center, San Francisco, Calif.

Mr. Schuman appeared before our Select Committee on Small Business when we held hearings here a couple of years ago. The suggestions which he made at that time, because of his broad experience and his great interest in this whole problem of foreign trade, constituted the most constructive testimony that we received in the record. One of the suggestions he made relating to the credit problems faced by American exporters was given vigorous and active attention in the Congress of the United States, and subsequently was implemented by legislation; and today our exporters, with the help of the Export-Import Bank, are very much better off than they were when that testimony was given and prior to the time the Congress took the action necessary. So it is a great pleasure to welcome you before us again, Mr. Schuman. I understand that you do not have a prepared text to work from at this time.

Mr. SCHUMAN. Thank you very much, Mr. Chairman.

STATEMENT OF ADOLPH P. SCHUMAN, CHAIRMAN, SAN FRANCISCO WORLD TRADE CENTER AUTHORITY; ALSO CHAIRMAN OF THE SAN FRANCISCO REGIONAL EXPORT EXPANSION COUNCIL; ACCOMPANIED BY J. MONROE SULLIVAN, EXECUTIVE DIRECTOR OF THE SAN FRANCISCO WORLD TRADE CENTER, SAN FRANCISCO, CALIF.

Mr. SCHUMAN. Mr. Chairman, Senator Bartlett, I would like to talk at this time on a subject which I know we have all given a lot of thought and which I refer to specifically as a complementary

common market.

I mean by a complementary common market, a trading arrangement between two or more countries which affect those products that are primarily complementary and therefore not competitive. For historical, political, or other reasons, there exist tariffs and other trade restrictions that hinder the movement of these complementary goods. As I see it, the complementary common market would attempt to reduce or eliminate the tariffs on these particular items no matter how few they may be at the beginning. As each of these countries that border the Pacific have specialties of those particular countries which all other countries import but do not themselves produce, this would make an ideal beginning for an elimination of unnecessary tariff's between these countries. Once a beginning is made it can lead, as we have seen in the European Common Market, to many unbelievable factors.

Labor tends to level itself, and when I went to Europe in 1947 and 1948, for the first time, on a textile project for Governor Stassen, at that time I found there was a situation where in France labor rates were 24 times the Italian rates. Today they are 21 percent higher than the Italian rates, which is quite a difference. In France today the labor rates are some 19 percent higher than the German rates but the cost of manufacturing steel in France is 16 percent less than in Germany; it is the cheapest in the world. Incidentally, cheaper than Japan. So it is not all labor rates.

As we create a commercial middle class a market for American massproduced products will increase and increase and increase. I am sure the Senators have observed that in all countries in which there is a middle class which is a prosperous commercial class that the American way of life and a democratic way of life wins out. It is also unfortunately apparent that in those countries where there is no middle class and where there exists the extremes of riches and poverty, it has been extremely difficult to combat communism however much money and effort has been used.

That, gentlemen, is my testimony.

(Herewith follows the prepared statement :)

TESTIMONY OF ADOLPH P. SCHUMAN, CHAIRMAN, SAN FRANCISCO WORLD TRADE CENTER AUTHORITY, AT U.S. SENATE COMMERCE HEARINGS, SAN FRANCISCO, MAY 23, 1963

My name is Adolph P. Schuman. I am president of the Lilli Ann Corp., manufacturer of coats and suits, and I appear before this committee today as chairman of the San Francisco World Trade Center Authority, a California State agency. I am accompanied by J. Monroe Sullivan, executive director of the World Trade Center Authority.