Strauss, Simon D., American Smelting & Refining Co., statement.. Talcott, Hon. Burt L., a Representative in Congress from the State of Teague, Frank A., Hastings (Fla.) Potato Growers Association, letter to Page 2989 3942 3709 5147 4314 3298 4908 Thoré, Eugene M., Metropolitan Life Insurance Co., letter to Chairman Trade Relations Council of the United States, Eugene L. Stewart, response to Administration's "Overall Critique" of his testimony.. (See also Treasury Department comments on Mr. Stewart's testimony at page 2228.) 4666 2256 Trifa, Valerian D., Romanian Orthodox Episcopate of America, letter to Dr. Louis Rosenblum, statement__ 3674 3692 United States Catholic Conference, statement.. 1522 United States Chamber of Commerce: "Economic Adjustment to Liberal 894 Universal Oil Products Co., Wolverine Tube Division, W. D. Schelbe, letter to John M. Martin, Jr., chief counsel, Committee on Ways and Means.. 3498 Vanco, Inc., Gary Dietrich, statement. Vegetable Growers Association of America, A. E. Mercker, statement.. von Meyern-Hohenberg, Gottfried, Adams & Peck, letter to John M. Wallace, Mrs. Russell, American Association of University Women, statement. - Ward, John E., Meat Importers Council of America, Inc., letter to Chairman Mills.. Ward's Nursery, Inc., Charles R. Collins, letter to John M. Martin, Jr., chief counsel, Committee on Ways and Means 4314 Wimer, Chas. R., letter forwarded by Congressman Don Edwards. 4910 4693 Zilis, Milton C., Globe-Union, Inc., Globe Battery Division, letter to the 2995 TRADE REFORM MONDAY, MAY 14, 1973 HOUSE OF REPRESENTATIVES, Washington, D.C. The committee met at 10 a.m., pursuant to notice, in the committee room, Longworth House Office Building, Hon. Wilbur D. Mills (chairman of the committee) presiding. The CHAIRMAN. The committee will please be in order. Our first witness this morning is the former Secretary of Agriculture, who appeared before the committee on many occasions as Secretary of Agriculture. We welcome you back, the Honorable Orville Freeman. You are recognized. STATEMENT OF HON. ORVILLE L. FREEMAN, PRESIDENT, BUSINESS INTERNATIONAL CORP., ACCOMPANIED BY RICHARD P. CONLON Mr. FREEMAN. Thank you very much, Mr. Chairman. I am delighted to have the privilege to appear once again before this distinguished committee. If you will pardon a play on words, it gives me something of a warm feeling to walk into this committee room. I only hope it won't be unduly hot before the morning is over. Mr. Chairman, I appear before this distinguished committee to support the Trade Reform Act of 1973. The post-World War II economic era has come to a close. From the negotiations scheduled to open this September in Tokyo between the countries of the free world, will come a new set of economic relationships and institutions. Since World War II, until very recently, the United States has dominated the economy of the free world. U.S. policy during that 25-year period was a brilliant success. It contained communism. It made possible the rebuilding of wardevastated Europe and Japan into democratic countries with vigorous, expanding, competitive economies. World trade, international investment, and economic growth reached historic levels benefiting from an open policy which encouraged a maximum of economic intercourse of all kinds worldwide. The people of the United States prospered under such an open policy, with most Americans reaching an unprecedented standard of material well-being as the decade of the 1970's opened. In the new economic age now dawning, the United States is no longer dominant. The very success of the open world policy between 1945 and 1970 has brought new problems and difficulties. Large and rapid move ments of goods and capital require more flexible international institutions. A rebuilt Europe and Japan have become strong economic competitors, rekindling national sensitivities and jealousies, and spreading friction and antagonism. The single most important imponderable on the world horizon today is whether Japan, the EEC, and the United States can reach an accommodation as relative economic equals, and agree on workable trade, investment, and monetary ground rules. If new international institutions and arrangements can be worked out by the three "economic superpowers," the world's great problems of ecology, population, employment, food, the less developed countries, relations with the Communist world, and energy can be managed. But if the "Big Three” are unable to agree and the chasm currently widening between them becomes impossible to close, prospects for the future are grim. It is essential, then, that the President of the United States be empowered to bargain in the critical negotiations that lie ahead from a position of strength. Title I of the Trade Reform Act of 1973 gives him the power he needs, while at the same time it establishes guidelines which make it possible for Congress to check the President's offers— beyond tariff reductions-before they become commitments. Title I of the Trade Reform Act of 1973 will permit President Nixon to enter trade negotiations in 1973 in a substantially stronger position than the Trade Expansion Act of 1962 permitted President Kennedy 10 years ago. Mr. Chairman, my support of the Trade Reform Act of 1973 does not mean that it cannot be improved. It can; and I hope, as reported out of this committee, it will be improved. The major weakness of the Trade Reform Act of 1973, as now drafted, is that it fails to take into account the problems of the future. It is an imaginative set of proposals to respond to the international trade problems of the past. It would have been a good bill in 1963, but for 1973 it fails to recognize that the United States needs more than a foreign trade policy and a foreign monetary policy and a foreign investment policy and other narrowly directed policies. The United States needs a foreign economic policy covering all aspects of its actions in the economic field that affect foreign countries and all aspects of the actions of other countries in the economic field that affect the United States. It fails to recognize that the world, or at least the industrialized portion of the world composed of the United States, Japan, and Europe, has already integrated into a single market to a very great degreeand, barring suicidal national actions eroding economic well-being for all people, will integrate economically even more swiftly in the future. Major economic actions in any one of the countries will increasingly affect every other country. It fails to call for the building of improved international institutions capable of responding to the problems that world economic integration has already caused, problems certain to accelerate in the future. The act should have a preamble setting out the broad lines of U.S. economic policy, and how each aspect of that policy influences and relates to every other aspect. The various titles and sections of the act should then reflect and be tied into this overall guiding policy and philosophy. Such a preamble and statement of philosophy should look forward to tomorrow's international economic problems. It should make clear that trade issues are interrelated with monetary and direct investment policies. If they are handled separately, what is accomplished in one area may well be destroyed in the other. It should not only recognize but emphasize that actions by one country which may appear to have little direct relationship with international trade can, in fact, have a severe market-disrupting effect on another country's market. Market disruption occurs not only from imports into a country; a far worse market disruption takes place when a country exports inflation or deflation. The act should authorize the President to reach an agreement providing that any country taking domestic action that causes material market disruption in another country must enter into international consultation to measure the market-disrupting effects of its action and to seek ways to reduce or eliminate them. I clearly recognize that this is a far-reaching proposal that will be difficult to negotiate, but it is essential. It would make possible international procedures to meet problems we face in the real world of the 1970's, rather than restricting ourselves to meeting problems of the old world of the 1960's. Mr. Chairman, I wish to emphasize that my strong support of title I of the Trade Reform Act of 1973 does not extend to title II, chapter 1, calling for safeguards in the event market-disrupting imports take place. If an agreement can be reached between free world countries for international consultations to measure and ameliorate marketdisruptive actions by any country, the safeguards set forth in chapter 1 of title II will not be necessary. But even if it proves impossible to negotiate such an international arrangement, I believe chapter I of title II should be deleted from the act. Or, in the alternative, Congress might enact the safeguard section into law with the proviso that it would lapse when and if Japan and the EEC repealed the safeguard procedures they currently follow or when agreement has been reached for international consultations in the event of market-disrupting actions by any country. Mr. Chairman, I am critical of safeguards designed to protect domestic industries that prevent fair competition, because they are dangerous and expensive. They are dangerous because such power is easily abused. The nature of our political system makes it extremely difficult to resist the petitions of workers, communities and businesses who feel the sting of competition from imports. Safeguards are expensive because the entire Nation pays the cost: as consumers in higher prices, and as producers and workers whose market is cut back when Government action blocks imports, forcing prices up and diminishing national purchasing power. Ours is a competitive economy. This country has attained the highest standard of living of any nation in history following this principle. Title III, vigorously administered, provides adequate protection against unfair competition. Most American industry, I believe, is willing and able to meet fair competition. The safeguard section is unnecessary. If fair competition cannot be met, the recourse should be not protection, which penalizes our entire society to protect a minor |