- Mr. THORP. On the manufacturing side we also have very important exports. We have endeavored to estimate on the basis of the statistics available the amount of jobs in the United States, in the manufacturing and service fields which relate to export trade.

I would not want to say that this figure is exact, but the chart gives a notion of the range, probably somewhere between 2 million and 2.5 million jobs in the manufacturing and service trades depending upon exports.

Mr. JUDD. Do you have there the approximate amount or value of the agricultural exports on the preceding chart, and also of the man

ufactured products that are exported? Is more than half of our total exports in agricultural products, primary products, or roughly what is the percentage?

Mr. THORP. We will have to get the figures. I would rather answer that exactly.

Mr. EATON. Do you have any figures on the number of jobs that the imports make unnecessary among our people?

Mr. THORP. That would be very difficult to calculate. For example, if we tried to resort to raising our own bananas in the United States or our own coffee it would have to be done in greenhouses and the estimate of jobs would be tremendous.

Mr. EATON. Our imports go beyond those two items.

Mr. THORP. We import many manufactured goods but I do not know how one could make that estimate as satisfactorily as you can on the export side.

Mrs. BOLTON. Do you have any figures at all on how much we import of those things which we produce better ourselves?

Mr. THORP. I don't quite know why we would import things that we produce better.

Mrs. BOLTON. We are doing it. We are importing machine tools. Mr. THORP. These I suspect are specialties.

Mrs. BOLTON. No, they are basic.

Mr. LODGE. I might mention watches.

Mr. THORP. If they come in, they must be items in demand here. Mrs. BOLTON. The reason for my question is this, Mr. Thorp: If the ITO is to increase the problem which has been presented to us by the ECA, then one would have to do a great deal of hard thinking before one could go wholeheartedly into this. I think we should have some figures presented clearly to us, the inroads that have been made and what is anticipated in this machine tool matter, for instance, and some of the others.

Mr. THORP. Yes. I will point out, however, that there is no commitment in connection with the ITO, with respect to tariff policy, for example, other than to negotiate. I will develop that in some detail because it is an important part of the problem.

Mr. SMITH. In view of the dollar shortage situation, we are not going to do much exporting, are we?

Mr. THORP. We are exporting now, on the basis of dollars which are earned abroad, a substantial amount. There will be under present trends a reduction in exports from the present levels.

Mr. SMITH. That is what disturbs some of us.

Mr. LODGE. Mr. Secretary, as you probably know, since you come from Connecticut, in Danbury, Conn., and in Norwalk there is at the moment substantial unemployment and considerable distress due to the importation of hats, slave-labor-produced hats and hat bodies from Czechoslovakia. In the Naugatuck Valley in Connecticut there is a great deal of distress and substantial unemployment due to the import from Czechoslovakia of rubber goods, rubber-soled shoes, and so on. I am wondering if you would care to comment on what you think can be a useful solution to a situation of that kind because obviously one cannot just say to people who are out of work, "Well, this is part

of an established, United States foreign policy." That is not going to fill their bread baskets for them. That is not going to provide them with the wherewithal to live. Certainly we have to come up with something more than theory, because just as there may be a great many jobs which depend upon our exports, there are also a great_many jobs which are being lost because of certain of these imports. I shall appreciate it if you could comment on that, Mr. Secretary.

Mr. FULTON. May I ask a question before you do that: Could we hold the questions, with the chairman's permission, on individual products and local areas until we hear the general thesis?

Mr. CARNAHAN (presiding). I was going to suggest that if there are particular questions you wish to ask on each chart regarding the details of each chart, let us proceed through and return for further questioning.

Mr. LODGE. I believe it did concern this matter. Since many jobs are dependent on exports, it is also fair to point out that there are certain jobs being lost because of imports and therefore it seems to me to be entirely relevant. I shall appreciate it if, having stated the question, the Secretary might be allowed to answer it.

Mr. THORP. I will be glad to answer it. The purpose of the charts is merely to show the dimension in general and that this whole matter is important in terms of American economy, and I intended to add that it is important also because we have not only the export side, but the import side to consider.

As to the particular points which you have raised, there is nothing in the proposal which we are laying before the committee, the ITŎ charter, which changes or requires us to change our available means and methods of protecting industries from injury or threat of injury, with respect to foreign trade.

Mr. LODGE. In other words, the Committee on Reciprocity Information in the State Department and the Tariff Commission will continue to operate in accordance with law?

Mr. THORP. The only requirement in the ITO Charter that bears on the problem we are discussing here is a commitment to be prepared to negotiate with other countries concerning tariff reductions. There is no commitment that that negotiation will be successful. It represents a willingness.

Mr. LODGE. Can we not do that now without belonging to the ITO? Mr. THORP. That is correct. The ITO does not add to nor detract from our own authority, but it does put an obligation on other countries to be willing to negotiate with us if they wish to do so.

Now as to the way in which that negotiation is carried out; it can be done under the Reciprocal Trade Agreements Act, or it can be done under a modification of the Reciprocal Trade Agreements Act. In fact, there is nothing in the charter that would prevent it being done by the Executive Department by agreement which would be submitted to the Congress for approval.

Just in passing, I would like to put in the record the fact that there are certain critical materials coming from abroad which are impor

tant to us.

Mr. THORP. Now there are certain difficulties which have developed in connection with foreign trade which have grown up for various reasons and which tend to restrict the volume of trade. The kinds of barriers which are particularly important are, in the first place, the barriers set up by tariffs and quotas. The tariff arrangement as you well know, is an arrangement involving a payment with respect to bringing a particular item across a boundary. The quota arrange

(A chart was referred to entitled "Barriers Discourage Trade.")

ment is much more restrictive because it fixes an exact amount of goods which may be imported from abroad.

Ours is the country which has depended in the past almost entirely on tariffs as our method of controlling, or influencing the flow of trade, but the use of quotas has become increasingly important in other countries.

There is a second type of barrier which is found particularly in other countries, rather than the United States and that is what may be called "domestic preferences." It often takes the form of a tax on imported goods. There also are certain requirements which are known as mixing requirements in many countries. In Holland, for instance, it was the practice that you could not sell imported flour without mixing it with domestically made flour.

Then there is another type of barrier in the actual operations of customs procedures. This is a red-tape process from the point of view of the person who is engaged in foreign trade, where one of the important elements is the matter of speed. When one has invested money in goods and is shipping them into another country, if there is uncertainty as to the customs treatment and if there is a long period of time used in determining that, his profit may be wiped out in the particular transaction. Customs procedures have been one of the things discouraging people with respect to trade.

Mr. JUDD. Will you state for the record something more on the third principle that Secretary Acheson spoke about, the internal barriers and internal taxes and regulations which discriminate against imported goods after they have passed the customs barrier at the border. What kind of operation is that?

Mr. THORP. That is what I intended to include in these "domestic preferences." It is not a process which in general we indulge in, in the United States. It is a practice, however, which has developed in a number of other countries.

Mr. EATON. Mr. Secretary, how are we going to get rid of those? We have no power of legislation under the ITO, have we? For instance, if you have a set of barriers in a European country which affects our exports to that country, under the Charter of the ITO we have no legislative power to remove those, have we?

Mr. THORP. Membership in the ITO will invoke commitments from the other countries to follow certain principles.

Mr. EATON. We expect them to live up to their commitments? Mr. THORP. We expect them to live up to their commitments. If they do not there are certain sanctions which I will describe later which come to bear. It is not an absolute authority. That is certainly true. It is more in the manner of an agreement to follow principles and then certain types of pressure that can come into effect to maintain observance of those principles.

(The chart was referred to entitled "Discrimination Blocks Trade.")

Mr. THORP. There is another situation in this barrier matter which is particularly important in the world today and that is the development of discriminations, or preferences. It is indicated here [referring to chart]. The discrimination might relate to some particular commodity which is wanted in a given country and which might come