Investment Act of 1973 as it is formally known-represent a serious threat to the very foundation of the economies of the nation's port regions where a great many people depend on the ebb and flow of exports and imports for their jobs and income.

The magnitude of import restrictions on the scale contemplated in this legislative proposal and their impacts on foreign exports to the U.S. simply preclude acceptance by other nations without retaliation against U.Š. produced goods. Burke-Hartke backers may scoff at this danger of retaliation on the basis that foreign countries would fear additional export losses from escalating U.S. import barriers in successive rounds of counter-retaliation. However, when comparable protectionist legislation was last enacted in 1930, retaliatory trade barriers were soon mounted abroad and the drop in U.S. exports was calamitous. Thus, the passage of the Burke-Hartke bill or similar protectionist legislation could well trigger an international trade war, and as competitive retaliatory actions by governments provoke a chainreaction of mounting trade restrictions, world trade would contract convulsively. Such a contraction of U.S. foreign trade would have a devastating effect on the nation's port communities.

ECONOMIC IMPACT OF SEVERE TRADE RESTRICTIONS ON U.S. PORT COMMU

NITIES

In servicing U.S. waterborne commerce, ports generate significant employment and direct dollar income to the local and regional economies they serve.

For example: At the Port of New York the movement of exportimport cargoes through the port has been estimated to provide the economic basis for the livelihood of one out of every four persons residing in the New York-New Jersey metropolitan area;

At a smaller city a Port of Galveston study has shown that more than 58 percent, or nearly 3 out of every 5 workers in the city of Galveston are employed in activities resulting from port operations:

Wage and salary payments from direct and secondary employment attributable to port activities in the Port of Houston equal 11.2 percent of total wages and salaries in the area;

The Tampa Port Authority has reported that one wage-earner in seven in the eight-county surrounding area is employed in port-related business:

In Virginia, one out of every eight jobs has been either directly or indirectly related to activities associated with that State's ports:

And in Seattle, where one out of every twelve jobs was related to water-borne trade in 1971, by 1980, it is projected that 20 percent of the Seattle area residents may derive their livelihood from maritime

commerce.

To put it more concretely, protectionist trade restrictions would have direct adverse effects on the employment of:

Approximately 96,000 longshoremen handling waterborne exportimport cargoes at the nation's ports;

Another 15,000 employees of stevedoring firms engaged in arranging for the physical loading and unloading of ships;

About 95,000 over-the-road truckmen and railroad workers transporting ocean-borne freight to and from ports;

Another 33,000 employees of local motor carriers who deliver or pick up freight from marine terminals;

Some 95,000 persons employed by export-import wholesaling organizations, export management companies, combination export managers and the like;

At least 40,000 persons employed by institutions financing international transactions and marine insurance firms;

Another 43,000 persons employed by ocean freight forwarders, customs broker, warehousers, and export packing firms;

Some 66,000 persons who work for steamship and towboat companies as headquarters staff, crews, ship brokers and agents;

Over 29,000 workers who earn their livelihood by providing maritime equipment supplies and services;

At least another 130,000 other workers who provide a wide range of essential services to shippers and traders, including occupations as divergent as those to harbor pilots, freight consolidators, government inspectors, port administrators, international trade consultants and many more.

In addition, there are nearly 111,000 ship construction and repair workers and approximately 400,000 employees of port-related or tidewater industries such as sugar refineries using imported sugar, coffee roasters, and smelters of imported metals whose jobs also depend on the general level of U.S. foreign trade.

In all, nearly 1.2 million persons in the United States owe their jobs directly to the handling, documentation, promotion and financing of foreign trade. And, while the enactment of trade restrictions, which would lead to a constriction of international commerce, would result in fewer jobs and smaller paychecks for these workers, the implications of reduced U.S. foreign trade are even more dangerous in the long run. Economists view every dollar of incremental income as capable of generating $2 of additional income. Thus, activities attributable to international trade and waterborne transportation in U.S. port regions can be viewed as ultimately responsible for providing employment opportunities for at least 2.5 million persons. On the basis of 2.5 dependents per job (the employee and 1.5 family members), a total of 6,253,000 port area residents throughout the United States-men, women and children-ultimately rely upon the waterborne commerce of the nation for their livelihood.

Gentlemen, as you formulate your recommendations for the future course of U.S. foreign economic policy, the ports of the United States urge you to be mindful of these millions of workers and their families. We are aware that import barriers are usually advocated to "save American jobs." However, overwhelming evidence from government as well as private sector analyses indicates that trade restrictions on par with those contained in the Burke-Hartke proposal would surely cost American jobs, not save them. From coast to coast there are millions of jobs in export industries which would be susceptible to foreign countermeasures. Even considering jobs which might be gained in our import-competing industries as production is increased to replace blocked imports, economists have concluded that the U.S. economy

would suffer a net loss in employment and wage-earner income. Thus, while the ports of the United States oppose trade restrictions in their own economic interest, it is our conviction that this interest coincides with the national interest.

COMMENTS ON SPECIFIC PROVISIONS OF THE TRADE REFORM ACT OF 1973

The ports of the United States endorse the proposed Trade Reform Act of 1973, as a bold new initiative in the continuation of the bipartisan tradition of American leadership for cooperative, international trade expansion. If enacted substantially in the form presented to the Congress, it would enable the President to conduct far-reaching international negotiations which can make major advances in improving the equitability of the international trading system and give rise to substantial growth in world commerce. The United States would benefit greatly from such expanded trade as would the rest of the world.

However, while the American ports support the expressed purposes of H.R. 6767, we urge that the committee give careful consideration to those provisions of the proposed legislation which, by virtue of conveying unprecedented latitude and authority upon the President, may invite undue pressures for the protection of special interests or jeopardize U.S. adherence to its international commitments. In addition, we recommend that the committee evaluate whether adequate opportunity will be available for those affected by prospective Presidential exercise of authority under the provisions of H.R. 6767 to officially present their views concerning the impact of such actions.

NEGOTIATING AUTHORITIES

While we recognize the desirability of granting the President maximum flexibility to negotiate reciprocally advantageous trade agreements, we are concerned about the lack of limitation on Presidential authority to raise duties in the context of such negotiations. This unprecedented power could conceivably result in the increase in some duty rates to levels that would severely restrict imports with consequent serious impacts on firms and workers dependent on that trade. We would suggest some congressional limitation on this power to raise tariffs perhaps along the traditional lines of limiting increases to no more than 50 percent of the 1930 statutory rates.

The ports of the United States support particularly the President's request for a congressional mandate to negotiate the elimination of nontariff barriers. Reductions in tariffs no longer suffice to assure the equitable expansion of international trade; agreements among trading nations to dismantle nontariff distortions of trade are essential.

SAFEGUARDS AND ADJUSTMENT ASSISTANCE

In granting the President negotiating authority for the purpose of expanding trade for the benefit of the many, we need not sacrifice the welfare of the few who might be injured by a greater flow of imports to our shores. The U.S. ports accordingly support liberalization of the escape clause to provide relief more readily to industries and workers seriously injured by competitive imports. However, we urge

the committee to carefully evaluate the desirability of incorporating the proposed special "market disruption" provision in the law. Statistical correlation between imports and domestic production might well become the substiute for the need to demonstrate serious injury from causal import competition.

We also support reform of the adjustment assistance programs available to aid workers displaced by imports. Action in the national interest to expand foreign trade entails a responsibility to assist those who might be adversely affected as a consequence. And for this reason we recommended that consideration be given to retaining the concept of adjustment assistance for firms, as an alternative remedy (besides increased import restrictions) available to the President for helping firms beset by foreign competition.

RETALIATORY AUTHORITIES

The ports of the United States are cognizant of the fact that it may at times be necessary for the United States to deal with situations where other nations fail to live up to their international trade obligations and forge unjustifiable restrictions against U.S. exports. Thus, it is proper for the President to be armed with the powers to cope with unfair competitive practices which burden or restrict U.S. commerce. We would, however, recommend three modifications in the proposed procedures governing such retaliatory action.

First, we recommend that public hearings precede any Presidential retaliatory action so as to better enable the development of a consensus as to the likely consequences of such measures on all sectors of the U.S. economy-domestic producers, exporters, importers, and consumers. Second, all interested parties, not just complainants against foreign restrictions, should be given the opportunity to be heard.

Third, we are concerned that this section of the Trade Reform Act of 1973, as well as subsequent sections of the bill, require the President to merely "consider" U.S. international obligations prior to taking action. It has been generally recognized that many of the problems inherent in the current framework of the international trading system stem not from the system itself, but from failures by member nations to abide by established rules. For example, better compliance with GATT provisions is certainly needed. It is essential, therefore, that the United States as the world's leading trading nation set an example by acting in accordance with our commitments to established international ground rules. To do otherwise would signal to the rest of the world that we no longer sustain faith in the rules so painstakingly fashioned in the post-World War II era.

TRADE POLICY MANAGEMENT AUTHORITIES

While we are not in a position to evaluate the appropriateness of the proposed criteria for defining serious U.S. balance of payments situations, we applaud the President's statement that the authority requested in this section of the Trade Reform Act of 1973 is not intended. to be used to protect domestic producers from import competition. In addition, we support Presidential tariff reduction authority for the purpose of countering domestic inflation.

However, we urge that the President again act in accord with our international obligations and that such action be combined with the forum of public hearings to gage the impact on the various sectors of the U.S. economy.

NEW TRADE PROSPECTS

The U.S. ports support liberalization and normalization of commerce with Communist countries and extension of most-favored-nation treatment consistent with the national interests to these countries. In addition, we endorse the President's request for authority to extend generalized preferences to less-developed countries.

CONCLUSION

It has not been my purpose here to delve deeply into the provisions of the Trade Reform Act of 1973 or to discuss those aspects of the proposed legislation which are mainly procedural in nature.

In the considered opinion of the U.S. port industry, the administration's trade proposals represent a realistic approach to attaining world-wide, cooperative trade expansion on a fair and equitable basis. Expanding trade accelerates the exchange of goods, fosters better allocation of resources, reduces costs to consumers and helps raise living standards. Surely this Nation should not deny itself the benefits of participating in this process to the fullest extent possible.

The CHAIRMAN. Are there any questions of Mr. O'Hara.
Mr. CLANCY. I have no questions, Mr. Chairman.

The CHAIRMAN. Mr. Burke.

Mr. BURKE. I know you mentioned the Burke-Hartke bill, and, of course, that is a tender subject with me. I was wondering if you could tell me what is the percentage of people in New York City on welfare? Mr. O'HARA. I didn't hear you, sir.

Mr. BURKE. What is the percentage of the population of the people of the city of New York on welfare?

Mr. O'HARA. I actually don't know the figure, sir.

Mr. BURKE. I understand it is around 12 percent.

I also wonder if you realize that since 1965 over 150,000 people living in teeming tenement districts of Harlem and Brooklyn, N.Y., have lost their jobs in the garment industry and the shoe industry and the handbag industry and several other.

Mr. O'HARA. I am certainly aware of the fact that there have been some dislocations, yes, sir.

Mr. BURKE. Thank you.

The CHAIRMAN. Any further questions?

Mr. GIBBONS. Mr. O'Hara, you mentioned a number of ports and I wonder if there are any ports up in Mr. Burke's district. I know there used to be a navy yard up there.

Mr. BURKE. We have Boston, Fall River, and Bedford-Providence. Indeed, the administration just administered the coup de grace. They just announced the closing of the Boston Navy Yard, the Kelsey Naval Hospital and all the installations across the Narragansett Bay into the shore of Massachusetts, so I don't think we are going to have too much activity up there in the port.

The CHAIRMAN. Thank you again, Mr. O'Hara.