Mr. PAUTZKE. This is correct. And we are speaking of products of oriental type such as dried squid and of these different fish sauces and things that have been interchanged there which we do not participate in.

Mr. LEVIN. Have we lost markets because of this?

Mr. McKERNAN. Yes, we have. We have lost markets for inexpensive canned fish because of the development in Asia of cheap canned fish products. This is especially true of some of the markets in southeast Asia which have been taken over by Japanese products. Mr. LEVIN. Are there any inhibitions or prohibitions toward trade aside from the fact that a competitor may produce the goods cheaper? Let me go a little further on that. Are there tariffs directed against American fisheries or quotas directed against American fisheries whereas for other fisheries in the area there are not such prohibitions? Senator ENGLE. Mr. Pautzke referred to that on page 2 of his

statement

Mr. PAUTZKE. Yes.

Senator ENGLE (continuing). In which he said that the principal reasons for diminishing U.S. trade were competition from fishery products of other countries and restrictions which have at times been placed on imports by some of the Pacific countries.

I think what Mr. Levin is asking you is, What are those? What type are they? Where are they?

Mr. McKERNAN. There are some import restrictions in some countries of southeast Asia such as the Philippines. These occur when some of these countries have dollar problems. They apparently find it a little easier to trade among themselves in similar currencies rather than expend what they consider to be short dollar exchange in their own countries.

Does this get at the problem you asked?

Mr. LEVIN. This is a start at it.

Mr. McKERNAN. These are in the form usually of restrictions on licensing rather than direct tariff restrictions.

Mr. LEVIN. The result is the same?

Mr. McKERNAN. The result is the same. It tends to inhibit the export of American fisheries products to these countries. I don't think that it is done to a large extent. But we do know that it is done, and we know that, for example, it has been done in the Philippines.

Mr. LEVIN. Well, using the Philippines, for example, would this assumption be correct? The Philippines are producing a great deal of raw material which they sell to Japan, and the Japanese in turn are taking advantage of the trade in that direction by selling more of their products to the Philippines. The Philippines welcome this, welcome the Japanese fishery products, for example, and ours are effectively shut out of the market?

Mr. McKERNAN. This sounds quite logical to me. I must confess that I don't know specifically about this problem. But I would think this was very likely the case.

I do know that there has been an increase in trade between Japan and these countries and that Japan has taken some of the markets. which formerly we had in this area.

Mr. LEVIN. Do you think it is possible that Japan is using an economic pressure, that, "We are buying from you, and you must buy from us, or otherwise we will do our purchasing elsewhere"?

Mr. McKERNAN. I do not know that. I would not care to comment on it, because I just simply do not know.

Mr. LEVIN. Yesterday we heard that most of our former canned milk sales to the Philippines had dissipated in the last few years and were going down to nothing. Now we hear that our fishery sales to the Philippines are suffering from the same problem.

Mr. McKERNAN. We have had in the past some actual preferential trade arrangements with the Philippines. We used to sell quite a lot of California pilchards to the Philippines, for example, and we have pretty well lost that market entirely and lost the preferences which we were granted in previous years.

Senator ENGLE. That was California milk too that lost out to the Philippines.

Of course, we have to realize that trade is a two-way street. I don't know of any way to make it possible for those people to trade with us unless they have the dollars, or some other way such as just goods for goods to trade. And it is a matter, it seems to me, of adjustment.

I assume that these people in the Pacific areas got into the fishing business because it was one that they could work at and where their people could get into it rather easily, and where they have low-priced labor.

There may be some ways we could devise of being efficient in finding where the fish are and get more efficient ways of getting them out of the water. I think perhaps our technology there could be improved. I have urged that that be done, because we are certainly not going to pay the same wages as they pay in some of these other countries. You can just bet on that. That means that we have to be more efficient.

What are we doing in that area?

Mr. MCKERNAN. We are doing quite a lot in that area too, Senator. We have gear research programs on the Pacific, as well as the Atlantic and gulf, coasts with our various fisheries, and we are quite certain that what you say is correct-that this country in order to maintain its high-seas fishery is going to have to learn to catch fish in some new and unique and more efficient ways, and in this way increase our competitive position.

Because when the Japanese fisherman makes $100 a month he makes pretty well. Our fisherman obviously must make a great deal more money than this in order to feed his family and provide the very essentials of life.

Although the wages are increasing rapidly in some of these countries like Japan-I am using her as an example, not by any means singling her out-they are not increasing fast enough to help us much in the next couple of decades in my opinion.

So if we are going to continue our domestic fisheries at a profitable size, profitable rate, then we must be more efficient.

Incidentally, I think we are more proficient in any fishery where we have made a strict comparison. Our fishermen catch more fish per man than do the fishermen of any other country in the world.

So that we are efficient, but, even so, it is a difficult struggle to keep ahead where the costs in some of these countries are so very low.

Senator ENGLE. Well, I would hope that we could concentrate on methods of finding and locating the fish so that when a boat goes out it does not spend days looking.

I noticed when we were coming around South America, I cannot remember what country it was, but they had a little airplane up circling around, and this airplane would locate these schools of fish and talk by radio, and then they would string out their nets and get into these schools and haul them in.

So there are other people working on that too. Now, I am not so sure that having a flying machine out there is the best method. It may be that some type of radar could be developed that would reveal the presence of fish and we could get at them real fast. Then we would have to have an efficient boat, the type of ship the Soviets have developed, where practically the thing is a cannery as I understand it. It seems to me we ought to look at that and see if we can not only get the fish faster, get them on the boat more efficiently, but then have a more efficient boat.

If we can do those three things, we are going to start to be able to produce a pound of fish at a lower cost notwithstanding some of our higher labor costs and other things.

Mr. McKERNAN. I agree with you, Senator, and we are looking into all of these areas. We have ideas such as using modern electronic means for both locating and capturing fish. One recognizes that modern electronic technology has developed to the point where we can perhaps find these fish and even concentrate them by electronic means in a sense learn to herd them-and can even use such types of apparatus as great centrifugal pumps and so forth to bring these fish efficiently on board.

We are giving this a lot of thought. We are also thinking about the matter of processing fish. That brings up an interesting point, a rather exciting one to me, Senator.

That is that one of the processes of producing fish-protein concentrate envisages grinding these fish on board the boat as they come aboard the boat and putting this ground fish in great clean tanks on the boat, inoculating this tankage on the vessel with mold, and then as the boat steams back to port the digestion process takes place, and the product is in a sense practically complete by the time you reach port.

Then the concentrated protein is pumped off the boat and put on spray driers and put right into bags and is ready for the market at

that time.

This is the kind of thing we are thinking about with respect to all of our fisheries, and we are doing the best we can, the most we can, with the facilities at our control.

I think you are aware of our efforts in the field of oceanography where we feel if we understand the boundaries, in a sense, the ocean weather, that we can predict where fish are going to be at certain times of the year, and we are trying to learn why they concentrate and where they concentrate so that we can direct our fishermen right to these areas, and then, with new types of methods, catch the fish efficiently and cheaply and process them to the maximum extent and put these products that are very highly nutritious by high-quality methods and manner before the American public.

Senator ENGLE. We can certainly get the fishing industry back in business if we could get this high-protein concentrate going, because we would not have to be selective. In other words, nearly any fish that swims would be pretty good for that kind of an operation. Whereas at present they fish for particular types.

Mr. McKERNAN. Yes. And even worse than that, even though they are selective in their fishing types, it has been estimated by some scientists that we only bring into port about half the fish we catch on our vessels and of the half that we do keep we only use about 50 or 60 percent.

In other words, the remainder of it is thrown away.

Now, this is just a small example of exactly what you are saying. If we had some means of utilizing this very valuable protein in some manner, putting it into an acceptable edible form, this would be of tremendous value to our Nation as well as to the specific industry involved.

Senator ENGLE. Any further questions, Senator Cannon?

Senator CANNON. No questions.

Senator ENGLE. We thank you gentlemen for your attendance here. Thank you, Mr. Pautzke, and each of your associates, for very fine testimony.

The committee will stand recessed.

(Whereupon, at 11:19 a.m., the committee recessed subject to the call of the chairman.)

PACIFIC TRADE PATTERNS

MONDAY, MAY 20, 1963

U.S. SENATE,

COMMITTEE ON COMMERCE,

Los Angeles, Calif.

The committee met, pursuant to notice, at 9:30 a.m., in assembly hall, room 115, California State Building, 217 West First Street, Los Angeles, Calif.

Appearances: Senator Clair Engle (presiding) and Senator Howard Cannon.

Also present: Morris J. Levin, staff counsel.

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

I would like to say in the beginning that it is a distinct honor and pleasure to serve as chairman of this committee on the Pacific trade patterns here in my home State of California.

The subject of Pacific trade is not a new one to those of us on the west coast of the United States because we have dealt with these problems over a great many years, trying to improve the historical relationships that we have with people in what I call the Pacific lake, those countries bordering the Pacific generally.

In prior hearings on this subject, representatives of the Departments of State, Commerce, Agriculture, and Interior have all recognized the vast potential for growth in our trade in the Pacific. My only complaint with these witnesses was that they have not done enough in the past to promote Pacific trade.

During the hearings here today, and in San Francisco on Thursday, we will hear from witnesses representing States bordering the Pacific as well as from public and private organizations vitally interested in increasing this trade. We are seeking to determine what is being done today to promote Pacific trade, what we can do now to increase this trade, and what new legislation, if any, it requires.

I want to say that I am very proud and happy and grateful to have with me today my colleague from Nevada, Senator Howard Cannon, representing as he does our neighboring State. He has also a vital interest in this subject.

I regret that Senator Magnuson, the chairman of the Senate Committee on Commerce, could not be here today, but he has sent a statement which he asks to have presented for the record.

At this time I want to recognize my good friend and colleague, the Senator from Nevada, Howard Cannon, to make such remarks as he desires to make, and also to present for the record the statement by the distinguished chairman of the Senate Committee on Commerce, Senator Magnuson.