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TO ESTABLISH A COUNCIL ON INTERNATIONAL

ECONOMIC POLICY

WEDNESDAY, MAY 31, 1972

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON INTERNATIONAL TRADE OF THE

COMMITTEE ON BANKING AND CURRENCY,

Washington, D.C.

The subcommittee met, pursuant to call, at 10:15 a.m., in room 2128, Rayburn Office Building, Hon. Thomas L. Ashley (chairman of the subcommittee) presiding.

Present: Representatives Ashley, Gettys, Rees, Koch, Mitchell, Curlin, Blackburn, Brown, Johnson, Rousselot, and Lent.

Mr. ASHLEY. The subcommittee will come to order.

Gentlemen, today we have hearings on H.R. 14412, a bill to establish a Council of International Economic Policy, and for other purposes. Before I read a brief statement I would ask unanimous consent that a letter from the Board of Governors of the Federal Reserve System, bearing the signature of Hon. J. L. Robertson, be included in the record following the statements of our two witnesses this morning. Mr. BLACKBURN. I have no objection. I am wondering what the subject of the letter

Mr. ASHLEY. The subject of the letter is with respect to H. R. 14412, the measure that is before us at this time. The letter indicates the approval and support of the Federal Reserve for this legislation and also indicates that the Federal Reserve should be represented on the Council that is provided for in the legislation before us.

Mr. BLACKBURN. What is the position relative to the Chairman being a statutory member of the Council?

Mr. ASHLEY. They appear to be in favor of that.

Without objection so ordered.

(The letter referred to above may be found on page 11.)

Mr. ASHLEY. I also have a statement by Dr. N. R. Danielian, president of the International Economic Policy Association, in support of this legislation. As most of us know, Dr. Danielian and his organization have pioneered in urging the establishment of a Council on International Economic Policy by statutory authorization. With unanimous consent, I would like to put his statement in the record following the testimony this morning. Without objection, so ordered. (The statement referred to may be found on page 12.)

Now I will make the same request for such additional statements as may be forthcoming from individuals or recognized parties of interest.

The legislative proposal under consideration stems from the fact that there are a great many activities undertaken by various depart

(1)

ments, agencies, and instrumentalities of the Federal Government which, overall, constitute the domestic and international economic policy of the United States and which have remained uncoordinated to the detriment of the national interest and welfare of the people of this country. The legislation before us seeks to establish a mechanism which can provide for close coordination of domestic and foreign economic activity and of the several components of international economic policy. The Council on International Economic Policy to be established would provide for a clear top level focus for the full range of international economic policies, including trade, investment, balance of payments, and finance as a coherent whole. The Council would have the opportunity to investigate problems with respect to the coordination, implementation, and long-range development of international economic policy, and to make appropriate findings and recommendations toward the development of a more rational and orderly international economic policy.

The membership and duties of the Council are delineated in sections. 4 and 5 of the bill. Section 6 provides that the President shall submit to Congress an annual International Economic Report, and specifies certain reporting requirements.

H.R. 14412 further provides for creation of a Council staff to be headed by an Executive Director assisted by a Deputy Director and two Assistant Directors and outlines the duties of the Executive Director.

Finally, the bill authorizes appropriations of $1.4 million for fiscal year 1973.

H.R. 14412 was introduced on April 17 of this year. It deals with problems which have been of growing concern to me in recent years. This concern was first expressed as a legislative proposal as title IV of H.R. 8180, which I introduced on May 6 of last year. Subsequently the administration sent a request for legislative establishment of a Council in July of 1971 in the form of a joint resolution, and which was subsequently introduced by Congressman Widnall on September 22, 1971, as House Joint Resolution 884.

Since that time, I met on a number of occasions with both Hon. Peter G. Peterson, Secretary of Commerce, who was at the time the first Director of the informal International Economic Policy Council established by the President in 1971, and with Mr. Peter Flanigan, the Council's current Director. These meetings took place to iron out the differences with respect to what I believe would be acceptable legislation to the members of this committee and to the Members of the House on one hand, and the desires of the administration on the other.

H.R. 14412 constitutes modification of my initial proposal embodying no less than six amendments described by the administration as "essential" and incorporating 23 amendments also sent up and described as "perfecting." At the same time the bill is consistent with the recommendations of the President's Commission on International Trade and Investment, which stated that-

The Council should be given permanent status and sufficient funding through legislative action.

The Commission report went on to say that

Good working relationships between the administration and the **

* Congress

*

are * * essential. It is important that the intent or position of the administra

tion on international economic policy legislation be clearly communicated to the Congress. In the past, Congress often obtained different "administration views" on international economic policy matters by asking different agencies.

I believe H.R. 14412 provides an appropriate mechanism for clear communication which would be acceptable to Congress. Without objection, H.R. 14412 will be included at this point in the record. (The text of H.R. 14412 follows:)

[H. R. 14412, 92d Cong., second sess.]

A BILL To establish a Council on International Economic Policy, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SHORT TITLE

SECTION 1. This Act may be cited as the "International Economic Policy Act of 1972".

FINDINGS AND PURPOSE

SEC. 2. The Congress finds that there are many activities undertaken by various departments, agencies, and instrumentalities of the Federal Government which, in the aggregate, constitute the domestic and international economic policy of the United States. The Congress further finds that the objectives of the United States with respect to a sound and purposeful international economic policy can be better accomplished through the closer coordination of (A) domestic and foreign economic activity, and (B) in particular, that economic behavior which, taken together, constitutes United States international economic policy. It is therefore the purpose of this Act to establish a Council on International Economic Policy which will provide for—

(A) a clear top level focus for the full range of international economic policies including trade, investment, balance of payments, and finance as a coherent whole;

(B) consistency between domestic and foreign economic policy;

(C) close coordination of international economic policy with other basic foreign policy components;

(D) strengthening the United States competitive position in world trade; (E) achieving equilibrium in international payment accounts of the United States;

(F) protecting and improving the earnings of foreign investments;

(G) achieving freedom of movement of people, goods, capital, information, and technology on a reciprocal and world wide basis; and

(H) increasing the employment and real income of workers and consumers on the basis of international economic activity.

It is the further purpose of Congress to provide the Council with the opportunity to (A) investigate problems with respect to the coordination, implementation, and long-range development of international economic policy, and (B) make appropriate findings and recommendations for the purpose of assisting in the development of a rational and orderly international economic policy for the United States.

CREATION OF COUNCIL ON INTERNATIONAL ECONOMIC POLICY

SEC. 3. There is created in the Executive Office of the President a Council on International Economic Policy (hereinafter referred to in this title as the "Council').

MEMBERSHIP

SEC. 4. The Council shall be composed of the following members and such additional members as the President may designate.

(1) The President.

(2) The Secretary of State.

(3) The Secretary of the Treasury.
(4) The Secretary of Agriculture.

(5) The Secretary of Commerce.

(6) The Secretary of Labor.

(7) The Director of the Office of Management and Budget.
(8) The Chairman of the Council of Economic Advisers.

(9) The Special Representative for Trade Negotiations.
(10) The Chairman of the Federal Reserve Board.

The President shall be the Chairman of the Council and shall preside over the meetings of the Council; in his absence he may designate a member of the Council to preside in his place.

DUTIES OF THE COUNCIL

SEC. 5. Subject to the direction of the President, and in addition to performing such other functions as he may direct, it shall be the duty of the Council to(1) assist and advise the President in the preparation of the International Economic Report;

(2) review the activities and the policies of the United States Government which indirectly or directly relate to international economics and, for the purpose of making recommendations to the President in connection therewith, consider with some degree of specificity the substance and scope of the international economic policy of the United States, which consideration shall include examination of the economic activities of (A) the various agencies, departments, and instrumentalities of the Federal Government, (B) the several States, and (C) private industry;

(3) consider policies and programs for coordinating the activities of all the departments and agencies of the United States with one another for the purpose of accomplishing a more consistent international economic policy, and make recommendations to the President in connection therewith;

(4) continually assess the progress and effectiveness of Federal efforts to carry out a consistent international economic policy; and

(5) make recommendations to the President for domestic and foreign programs which will promote a more consistent international economic policy on the part of the United States, the several States, and private industry. Recommendations under this paragraph shall include, but shall not be limited to, policy proposals relating to monetary mechanisms, foreign investment, trade, the balance of payments, foreign aid, taxes, international tourism and transportation, and international treaties and agreements relating to all such matters. In addition to other appropriate objectives, such policy proposals should be developed with a view toward fulfilling the purposes set forth in section 2.

REPORT

SEC. 6. (a) The President shall transmit to Congress within sixty days after the beginning of each regular session (commencing with the year 1973) a report on the international economic position of the United States (hereinafter called the International Economic Report) which shall include:

(1) information and statistics describing characteristics of international economic activity and identifying significant current and foreseeable trends and developments;

(2) a review of the international economic program of the Federal Government and a review of domestic and foreign economic conditions and other significant matters affecting the balance of international payments of the United States and of their effect on the international trade, investment, financial, and monetary position of the United States; and

(3) a program for carrying out the policy declared in section 2, together with such recommendations for legislation as he may deem necessary or desirable.

(b) The President may transmit from time to time to the Congress reports supplementary to the International Economic Report, each of which may include such supplementary or revised recommendations as he may deem necessary or desirable to achieve the purposes and policy objectives set forth in section 2.

EXECUTIVE DIRECTOR AND STAFF OF THE COUNCIL

SEC. 7. (a) The staff of the Council shall be headed by an Executive Director who shall be appointed by the President with the consent of the Senate, and he shall be compensated at the rate now or hereafter provided for level II of the Executive Schedule (5 U.S.C. 5313). It shall be the duty of the Executive Director to(1) direct the activities of the Council staff,

(2) develop the agenda and supporting materials for Council meetings and review all matters before the Council,

(3) establish a work program, including topics and the selection of individuals to carry out particular assignments.

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