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underestimated in any way the depth and nature or the acuteness of our shortage, at least in terms of product that is available to be refined and that we can count on over the short term.

As a matter of fact, I think one of the major concerns in terms of our economic growth is that the satellite industries that depend on feed stock have begun to tell their product managers not to base any new estimates for chemicals or pharmaceuticals or any feed stock industries that depend on oil to extend business if it means additional feed stocks.

If they could estimate and get feed stocks they would be willing to do so to keep their plants running and get new ones running and on stream.

My survey is that those who depend on petroleum are not counting on any new supplies, and indeed find the situation extremely tight. So I don't think we are underestimating what we have available. We are in tough shape until we get new exploration or imports or some access to coal or something of that kind.

I think, Mr. Chairman, that new study which will be ready by September will be a guide to us, but in the meantime we'd better figure on the low side as far as what is available is concerned.

Is that your information as well?

Mr. WAKEFIELD. Yes, that is correct, Mr. Carey, except that the completion date for the report is December. In fact, I chair that study and I think it will show the situation for the short term much worse than we projected.

Mr. VANIK. Mr. Malloy and Mr. Wakefield, we appreciate very much your coming. I would like to reserve the right to submit some further questions to you in letter form that we could make a part of our record.

Mr. WAKEFIELD. Surely.

[The following was supplied for the record:]

Hon. Ambassador WILLIAM D. EBERLE,
Special Representative for Trade Negotiations,
Washington, D.C.

HOUSE OF REPRESENTATIVES,
Washington, D.C., May 22, 1973.

DEAR MR. EBERLE: In the House Ways and Means Committee print released in May of 1973 entitled, "Briefing Materials Prepared for use of the Committee on Ways and Means in Connection with Hearings on the Subject of Foreign Trade and Tariffs," there is a brief description of alleged U.S. non-tariff barriers. With respect to the item on page 149 of this Committee print, which reads: Mark of origin-The Tariff Act of 1930 requires that imported articles be conspicuously, legibly and permanently marked so as to indicate the country of origin to the U.S. consumer.

Is it the intention of the Administration that this provision be subject to negotiation and removal in the event that H.R. 6767 is enacted?

Further, if this provision were negotiated away, would there be anything in the law to prevent American manufacturers to stamp products made in the United States as having been made in the United States of America?

Thank you for your assistance in answering these questions prior to the beginning of Executive Session in Ways and Means on H.R. 6767.

Sincerely yours,

CHARLES A. VANIK,
Member of Congress.

OFFICE OF THE SPECIAL REPRESENTATIVE FOR TRADE NEGOTIATIONS,
EXECUTIVE OFFICE OF THE PRESIDENT,
Washington, D.C., June 6, 1973.

Hon. CHARLES A. VANIK,
House of Representatives,
Washington, D.C.

DEAR CONGRESSMAN VANIK: Thank you for your letter of May 22, 1973, in which you inquire whether it is the intention of the Administration that the mark of origin requirement under the Tariff Act of 1930 be subject to negotiation and removal if the Trade Reform Act of 1973 is enacted, and whether American manufacturers would be prevented from stamping products as of domestic origin.

The inventory of nontariff barriers compiled in the GATT, consisting of about 500 notifications by member countries covering about 27 different categories of nontariff measures, includes a complaint against the United States by several countries which regard our mark of origin requirements and penalties as "excessive and burdensome." To date our marking requirements and those of foreign countries, such as those maintained by certain member states of the European Community, have not received attention in the GATT work program as a priority matter for solution.

The Administration view is that no form of trade-restricting or trade-distorting measure should be precluded from the outset as a possible subject of negotiation. It is not anticipated, however, that mark of origin requirements would be removed as a result of negotiations. The notifying countries did not propose their elimination. Rather, the prevailing view was to review, possibly strengthen, and ensure compliance with a recommendation on marks of origin adopted by the GATT in November, 1958, a copy of which I am enclosing. The resolution basically recommends the simplification or harmonization of these requirements, and reduction of their application to cases which provide information necessary for the final consumer rather than on all imported products. The view of foreign countries is that United States requirements have become an excessive burden upon exporters as a matter of general rather than exceptional application.

The marking of origin provision requires that upon importation into the United States the foreign exporter have marked the country of origin of the product. There is nothing in the law to prevent American manufacturers from stamping domestically-produced articles as having been made in the United States, whether or not the mark of origin provision in the Tariff Act of 1930 were removed.

I will be happy to answer any further questions you may have on this subject. Sincerely,

HARALD B. MALMGREN, Deputy Special Representative.

Mr. VANIK. I am sorry to keep you here so late, but I wanted to hear from you before we closed the public part of the hearing. We are very grateful to you.

The committee will now stand adjourned until tomorrow morning at 10 o'clock.

[Whereupon, at 5:56 p.m. the committee adjourned, to reconvene at 10 a.m. Friday, May 11, 1973.]

TRADE REFORM

FRIDAY, MAY 11, 1973

HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, Washington, D.C.

The committee met at 10 a.m., pursuant to notice, in the committee room, Longworth House Office Building, Hon. James A. Burke, presiding.

Mr. BURKE. The committee will be in order.

The list of administration witnesses appearing here today is Hon. Earl L. Butz, Secretary of Agriculture; Hon. Frederick B. Dent, Secretary of Commerce; Hon. Peter J. Brennan, Secretary of Labor; and Hon. Henry Kearns, President and Chairman of the Export-Import Bank; and Hon. Carroll G. Brunthaver, Assistant Secretary of Agriculture for International Affairs and Commodity programs.

On behalf of the committee, we welcome all you gentlemen to the hearing here this morning and, if you will each identify yourself for the record, you may proceed with your testimony. Secretray Butz is recognized first.

STATEMENTS OF HON. EARL L. BUTZ, SECRETARY OF AGRICULTURE, AND HON. CARROLL G. BRUNTHAVER, ASSISTANT SECRETARY OF AGRICULTURE FOR INTERNATIONAL AFFAIRS AND COMMODITY PROGRAMS; HON. FREDERICK B. DENT, SECRETARY OF COMMERCE, AND HON. LAWRENCE A. FOX, ACTING ASSISTANT SECRETARY OF COMMERCE FOR DOMESTIC AND INTERNATIONAL BUSINESS; AND HON. PETER J. BRENNAN, SECRETARY OF LABOR, HON. JOEL SEGALL, DEPUTY UNDER SECRETARY OF LABOR FOR INTERNATIONAL AFFAIRS, AND HON. HERBERT N. BLACKMAN, DEPUTY ASSISTANT SECRETARY OF LABOR FOR TRADE AND ADJUSTMENT POLICY

Secretary BUTZ. Thank you very much, Mr. Chairman.

I understand that I am scheduled first this morning here and I have a short statement. With your permission, I would like to read the

statement.

Mr. BURKE. Permission is granted.

STATEMENT OF HON. EARL L. BUTZ, SECRETARY OF AGRICULTURE

Secretary BUTZ. In my view, the Trade Reform Act of 1973 is one of the most important pieces of economic legislation to come before the Congress in recent years. We need this bill."

96-006-73-pt. 2- -12

1. We need it to take full advantage of the growth potential of this country's agricultural sector;

2. We need it to help generate the domestic and foreign economic expansion we must have to maintain a high level of employment at more stable price levels;

3. And we need it to reduce our increased trade deficit through expanded agricultural exports.

I firmly believe we cannot achieve any of these objectives unless we negotiate the reduction of barriers which distort the flow of agricultural trade among nations. And I am further convinced that negotiations leading to this result cannot be accomplished unless the President is granted the tools contained in the bill before this committee-tools which would give him broad negotiating authority, yet strengthen his ability to protect domestic industries threatened by unfair trade practices or injurious imports.

Why are liberalizing trade negotiations for agriculture so important at this juncture?

GROWING EXPORTS ARE VITAL TO THE HEALTH OF OUR

AGRICULTURAL SECTOR

Exports are responsible for about 15 percent of cash farm income. and it could be reasoned that exports provide about one-fifth to onequarter of net farm income. That is because land and other fixed costs are already in place for domestic production, and they continue whether we export or not. Exports add to farm returns and permit farmers to farm at nearer full capacity with lower per unit costs.

This year we are exporting the produce of more than 80 million acres, equivalent to nearly 30 percent of harvested cropland. This means that the production from one-fourth to one-third of the land being cropped by U.S. farmers today depends on export markets. These figures could be even higher as we bring more land into production to meet the upsurge in demand.

Until recently, this country has had costly programs to take land out of production-about 60 million acres just a year ago. This has resulted in less than full efficiency, and in higher unit costs.

This year, under the impact of stronger foreign and domestic demand, we are bringing former set-aside land back into production. Farmers can use more of their land, which costs the same whether idle or not, and make fuller use of their machinery and their know-how to produce more food and feedstuffs from virtually the same capital investment they have had before.

When farmers can lower average costs from what they would have been under restricted production, and at the same time increase supplies, the result can't help but benefit the farmer in terms of higher income and the consumer in terms of greater abundance of food.

The American farmer wants to produce at the fullest capacity practical, and exports permit him to do so to his own benefit, and to the benefit of the American public. Better access and stable access to overseas markets are essential if this country truly wants to release the full productive potential of its agriculture.

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