The Tariff Commission, as you know, has authority in cases where there is a threat of injury to a domestic industry, to recommend to the President that whatever reductions in tariffs may have taken place should be reestablished and even has authority to go beyond that with respect to recommending an increase in protection, if necessary. The problem therefore has been very largely one of trying to avoid the situation which you describe taking place.

Mrs. BOLTON. However, that is not going to solve these world problems-just avoiding things. Can we not face up to facts and then work them out in a truly intelligent, cooperative manner?

Mr. BROWN. I think, Mrs. Bolton, there are still a considerable number of cases where we could make modifications of our tariff laws without running into a dangerous situation for the particular industry involved.

Mrs. BOLTON. It would depend upon what it is that we are bringing in?

Mr. BROWN. Yes. And the circumstances in a particular case and the level of the rates. So there are positive things which can be done in that field to make a contribution to the problem and we are doing that now. As you may recall, we have just announced a tariff negotiation to be held with a large number of countries in Torquay this September. We have published the list of products which may be considered. We have asked for the views of the industries that will be affected and of any other groups that want to express their opinion. Those hearings will be at the end of next month.

Mrs. BOLTON. Will the Congress have anything to say about it at all before it is all finished and done with?

Mr. BROWN. The Congress has authorized the President to make reductions of the tariff within certain limits in the Trade Agreements Act, which we have had now for 15 years. It has expressed its views very clearly, although it has not made it mandatory, and the President has made the statement that he would not use that authority to-I think the way he expressed it was to "trade out" any segment of American agriculture, industry, or labor. That is the reason why the administration goes through this careful procedure of public hearings and study and consultation and why we have provided in all our agreements since 1942, and in the charter, the escape clause, where if we make a decision which has results we do not expect, the means for correcting it on the basis of a careful factual study, are made available. In some cases it is very clear that a change or reduction in the tariff could be made and it would not cause any harm. In other cases it is quite clear if you did anything significant it would be detrimental and you do not do it. Lots of the items we have on the public list, for example, do not appear in the agreement at all because after study we decide those are too sensitive to deal with.

Then in quite a number of cases you have close decisions. Those decisions are made by representatives of eight agencies and on the basis of studies made by the Tariff Commission, which is the most expert body we have, and on the basis of the briefs and presentations made by the public at our hearings.

Obviously we will make mistakes from time to time but we have searched our minds and have not been able to find any way in which we could get more factual information and a more considered judgment than the procedure we do follow.

Mrs. BOLTON. That is good, but I am still wanting something over and beyond that which would enter into the world problem of interchange of goods without the detrimental effect to the present set-up of employment.

Now, Mr. Secretary, what if we find that a very serious result has occurred in bringing something into this country? Am I to understand that is stopped?

Mr. THORP. That is right.

Mrs. BOLTON. That the easy importation is stopped?
Mr. THORP. That is right.

Mrs. BOLTON. I want to be very clear about this.

Mr. THORP. Then the procedures beyond that are no different from existing procedures whenever any particular enterprise or particular industry runs into some situation. It may be a technological change, some competing product which takes over the market, and this is a problem of shift within American industry which goes on all the time. There is no special treatment with respect to the kind of cause which creates that difficulty that I know of.

Mrs. BOLTON. Am I right in understanding that the charter has as an ultimate goal a multilateral method of trade?

Mr. THORP. That is correct.

Mrs. BOLTON. Has there been any increase of multilateral trade that would cause one to suppose that it was really happening in the world and that other nations were going to help? We have the British-Argentine agreement on the other side of it. If we could sell our products in such fashion that eventually, with the multilateral method, we got back mica, manganese, rubber, and a few things that we need, is that not the real solution of world trade?

Mr. THORP. That is the multilaterialism we are after. In terms of how one could evaluate recent trends, of course, you have to start with the fact that during the war everything was completely controlled. There was very little trade in the sense of which we speak. Then there was a continued period in which there were controls. Some countries which tried after the war to allow their trade to proceed without these controls, such as Sweden, for example, or Canada, found that their citizens were buying so busily in the American market that their reserves were disappearing and they could not maintain an exchangeability of currency and they had to put on quotas. So that the condition which was in the first instance a condition in a world of disturbed countries became generalized. In the last year there have been a number of cases of moving away from these extreme barriers. That is most true in western Europe in which as a result of the work of the OEEC a number of restrictions have been lowered, quotas have been broadened, and right now they are discussing whether or not they can take a very substantial step in terms of multilateralism within their own area. However, it is quite true that one of the great differences is the one that you pointed out. If you have a multilateral situation you are not limited to just what you can exchange on a bilateral basis. You have then the possibilities of triangular and quadrilateral arrangements of payments. It is because of the importance of that that Mr. Hoffman has so stressed the payments plan in Europe.

Mrs. BOLTON, But that is building a wall around that particular area from which the United States is excluded.

Mr. THORP. The great danger, of course, is that while it eases the situation within the area, it might build a higher wall around it. Of course, the actual fact is that the devaluation process is a process of lowering the wall around it. If you take the last year there is a decided lowering in the wall.

Mrs. BOLTON. Mr. Chairman, I am grateful indeed for the time allotted me. However, I do have some rather basic questions I would like to ask before we get through with our witnesses, and trust apportunity may be given me.

Chairman KEE. Mr. Carnahan

Mr. CARNAHAN. No questions, Mr. Chairman.
Chairman KEE. Mr. Javits-

Mr. JAVITS. Mr. Thorp, does the State Department want us to accept the ITO charter on the basis of international idealism contributing to the maintenance of peace and security in the world, or does it want us to consider it in terms of hard headed business thinking? That is, more trade, more employment, more business for the United States?

Mr. THORP. I think we would want you to consider it on both bases.

Mr. JAVITS. Is it valid, in your view, on both bases?

Mr. THORP. Yes.

Mr. JAVITS. Now, you spoke about the iron curtain countries. As I understand it Czechoslovakia is a signatory to the ITO charter, is it not?

Mr. THORP. That is correct.

Mr. JAVITS. Have you any idea as to the intentions of Czechoslovakia?

Mr. THORP. No, we have not. But it is significant. I think, that within the last year various iron curtain countries which have been members of international organizations-the International Bank and the Monetary Fund and the World Health Organization and so forth, have been withdrawing. There is every evidence that if there is such a thing as a basic policy there, it is to reduce to an absolute minimum the contacts that there are between those countries and the free nations of the world.

Mr. JAVITS. Poland attended the conference and did not sign at that time.

Mrs. BOLTON. I saw just last week figures of the hundreds of thousands of pairs of shoes that are coming into this country from Czechoslovakia.

Mr. JACKSON. At 95 cents a pair in some instances.

Mrs. BOLTON. Certainly this cannot be to the best interests of our workers.

Mr. THORP. At the present moment they are not coming freely into the country. The Treasury is investigating and they are held up with respect to their entrance into the United States.

(The following information has been supplied concerning this question.)

CUSTOMS TREATMENT OF CZECHOSLOVAKIAN SHOES

(a) Dumping.-An association of shoe manufacturers has complained that Czechoslovakian shoes are being dumped in this country. The Treasury Department has instituted an investigation, which will necessitate determining the home market price or the cost of production of the shoes in Czechoslovakia.

Pending a determination of these facts, the appraisement of the merchandise cannot be completed. If the facts warrant a finding that dumping is taking place, there will be an assessment of special antidumping duties, as provided by law. These special duties would be applicable with respect to all importations of shoes to and including the first shipment which allegedly were sold at prices which invoked the initial complaint.

(b) Inadequate marking.-Another manufacturers' association has complained that the shoes were not marked to show the country of origin in a clear and distinct manner as required by United States customs laws. Shipments are not being released from customs custody unless they are legibly and conspicuously marked. Some shoes already imported are being remarked at the importer's expense to show the country of origin in a more distinct manner. The importer has directed the manufacturer to mark future shipments more legibly. Samples taken by customs from earlier shipments appeared to be properly marked, but other samples purchased by complainant in retail stores raised a question whether more legible and conspicuous marking was not necessary. The Treasury Department would not have authority under law to bar the shoes by reason of either of the above complaints, since a dumping complaint, if sustained, results only in the assessment of special antidumping duties, while inadequate marking can be corrected by proper marking under customs custody before release.

Mr. JAVITS. So you expect the ITO will be essentially a league for purposes of trade of the free world?

Mr. THORP. That is the expectation.

Mr. JAVITS. In response to the question with respect to the so-called dollar gap do you feel that the ITO is the framework within which we want to see the free world fit, and therefore we are using dollars— now talking only on the economic side-for the purpose of bringing the free world to that point, ITO giving us the point in principle to which we want to bring it.

Mr. THORP. That is the area it covers. That is the area of international trade.

Mr. JAVITS. It is said that the charter is extremely complex. Can you tell us whether this complexity is attributable to the fact that the evils which are sought to be dealt with have grown so enormously? What is your view as to why the charter is complex?

Mr. THORP. The charter is complex because we are talking about a situation that has so many different angles to it that if by chance you dealt with A, B, and C you might be in the condition of squeezing a balloon which at D came out from your hands. You either had to have a charter which was so general that it was an umbrella under which everything could hide and no one would quite know what was under the umbrella, or you had to have a charter which was relatively specific with respect to the various problems. That meant, necessarily, that it had to be a complicated document.

I would also say that anyone who has struggled with trying to get agreement between a series of nations-there were lawyers on various delegations-finds that the net result of this composite process of drafting is not always to yield the most clear and most simple document. I think if three of us sat down and tried to redraft this document we probably could make it somewhat simpler. However, this is part of the price that you pay in terms of the effort to get agreement by the various countries. This is simply not a United States document, this is an international document. We have, I think, succeeded in showing what can be done in drafting it simply in the summary which we have made available to you.

I do not feel that the fact that it is complex is anything but a real asset in this particular case.

Mr. JAVITS. Does the State Department, which has submitted the ITO, have any proposals which it is going to make to Congress, or that it knows will be made to Congress, with respect to relieving unemployment which may be incurred by a broadening of our policy with respect to imports?

Mr. THORP. In the first place, as far as the charter itself is concerned, the charter does not require us to take steps which will create the sort of result which you describe. It may well be that the conditions in the world about which Mrs. Bolton has been speaking will inevitably mean that either our exporters or our importers, or perhaps some of both, will be faced with the kind of problem about which you are talking.

While we have raised the problem and given it some thought, I cannot at the moment assure you as to whether the State Department will or will not come forward with a program. We recognize it as a problem.

Mr. JAVITS. Of course, the President has come forward with a program for Federal help with respect to unemployment insurance. That has something to do with this.

Mr. THORP. Oh, yes. All such problems would bear on this particular situation.

Mr. JAVITS. Would it be fair to say, Mr. Thorp, that the ITO represents an effort to have all the nations concerned accept the fundamental principles of our reciprocal trade agreements program before negotiations ensue with respect to specific commodities?

Mr. THORP. Yes, I think that is a fair statement.

Mr. JAVITS. So we are really not adventuring into a completely new territory, with untried ideas, as some people would have us believe? Mr. THORP. No. The element which I would regard as new here is the fact that we are trying to approach the problem internationally, rather than bilaterally.

Mr. JAVITS. And we are setting up an international organization? Mr. THORP. We are setting up an international organization creating a forum for international discussion of these problems.

Mr. JAVITS. The fundamentals are considered in every one of our reciprocal trade negotiations, and in our General Agreement on Tariffs and Trade (GATT) which it is stated will include some 27 nations? Mr. THORP. That is right. More nations than that.

Mr. JAVITS. Thank you, Mr. Chairman.

Chairman KEE. Mr. Ribicoff

Mr. RIBICOFF. From what you have said, we can assume that the communistic-controlled countries will be out of the ITO?

Mr. THORP. Yes, that I think is a thoroughly reasonable assumption. Mr. RIBICOFF. Instead of having a real international organization, basically it will be a regional one. It will be a bigger region, but it will be the so-called free world against the iron curtain countries, the Communist world?

Mr. THORP. This will be an organization in which the majority of the countries of the world agree to certain principles which they feel should be followed. There is clearly nothing in the organization or