Tariff ratemaking in Congress is an atrocity. It lacks any element of economic science or validity. I suspect the 10 Members of the Senate, including myself who struggled through the 11 months it took to write the last congressional tariff act in 1930 would join me in resigning before they would be willing to tackle another general congressional tariff revision.

Because of the complexity of the subject of foreign tariffs and import duties, and because of the complicated series of laws pertaining to this subject, it is my belief that in the short time remaining before the expiration of the present act, the Congress cannot do the comprehensive job which is required in reexamining tariff policies. Unfortunately, predecessor administrations did not see fit to conduct such a comprehensive reexamination and reevaluation of the tariff laws after the passage of the original Reciprocal Trade Agreements Act in 1934. It behooves us in this Congress to do so, but it will be a lengthy process.

When we recall that the hearings incident to the passage of the Smoot-Hawley Tariff Act required 11 months, I think that we would be deluding ourselves to think that we can, in the short time available before the expiration of the act, do an independent or comprehensive job. Therefore, I have introduced H. R. 4594 which is not to be confused with H. R. 4294, and which did not have any design in that number, I can assure you.

The CHAIRMAN. Have you a copy of your bill? Would you like to make it part of the record?

Mr. KEATING. Yes, I would like to make it a part of the record at this point.

The CHAIRMAN. Without objection it is so ordered. (The bill referred to follows:)

[H. R. 4594, 83d Cong., 1st sess.]

A BILL To extend the authority of the President to enter into trade agreements under section 350 of the Tariff Act of 1930, as amended

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this act may be cited as the "Trade Agreements Extension Act of 1953."

SEC. 2. The period during which the President is authorized to enter into foreign-trade agreements under section 350 of the Tariff Act of 1930, as amended and extended, is hereby extended for a further period of 1 year from June 12, 1953.

Mr. KEATING. It is 1 sentence long and it simply extends the existing law for 1 year. As the members of the committee know, this is the action requested by the President.

The bill introduced by the distinguished gentleman from Pennsylvania (H. R. 4294) would deprive the President of the discretionary powers which he now has with regard to recommendations of the Tariff Commission and would, in effect, make the recommendations of the Tariff Commission mandatory. Also, this bill would introduce exceptions for certain products imported from abroad, such as residual fuel oil, lead, and zinc.

Anyone familiar with tariff legislation will know that when exceptions are made for any one product the floodgates are open for exceptions for other products. I am sure that every member of the committee and most Members of the Congress can make a strong case for some product which is produced in his district. But if we undertake to do this at this time, we will be in the middle of a logrolling operation which inevitably will result in emasculating the entire reciprocal trade agreements program.

Perhaps a majority of the Members of Congress may wish to reassert the right of the Congress to write tariff legislation. Perhaps a majority of the Members of Congress will feel as was suggested by the Senator from Nevada: That no action should be taken, so that the matter will revert to its status before the act of 1934 was passed, but I do not think that such a basic and far-reaching decision should be undertaken without the most thorough, comprehensive study and debate. As I have said, this cannot be done in the time remaining.

The United States, since the time of the First World War, ha consistently exported more than it has purchased from abroad. This trade imbalance has amounted to more than $100 billion. This makes us a creditor Nation. We insist that we shall be paid for our exports In order to do this, other nations must have dollar balances from. which they can pay our exporters. This presents a most complex problem. The renewal of the present Reciprocal Trade Agreements Act is not a final answer to the problem, but I believe that it is the inevitable step required to keep the situation from deteriorating until we can have the thorough study which the President has recommended of our overall foreign-trade economic policy.

Under the present Reciprocal Trade Agreements Act, the Tarif Commission sets peril points which reflect its judgment of the extert to which tariff reductions may not be made in future trade-agreement negotiations without causing or threatening serious injury to a de mestic industry. Under the provisions of H. R. 4294, a tariff redu tion would be "perilous" if it resulted in any injury to any domesti producers-as distinguished from a domestic industry as a whole-T in any unemployment. This would seem to me to penalize efficient producers in a given industry in favor of less efficient producers whos production costs would be materially higher. It revises the premi now incorporated in the law which looks at an industry as a whole rather than taking into account individual producers within that industry.

Also, under the provisions of H. R. 4294, any increase in imperts which might be anticipated from a tariff reduction would have to be regarded as evidence of injury. The President would be deprived of all discretion in these matters.

Moreover, the provisions of the bill which impose rigid and absolute quotas on imports of crude petroleum and which would increase exist ing tariffs on imports of lead and zinc would actually violate existing trade agreements on these commodities which have been negotiated pursuant to the provisions of the present law.

I believe it is the wish of a vast majority of the Members of this Congress that we should, as soon as possible, substantially decrease our foreign-aid program. If at the same time that this were done. we made it increasingly difficult for the free nations of the world to find domestic markets for their products, their economy would be doubly affected in an adverse manner. This would inevitably be manifested in vastly reduced appropriations for national defense. You can readily imagine the effect this would have upon the whole NATO defense program and the will of other governments around the world to resist threatened Communist aggression. Moreover, it would lend credence to the Communist charge that we are not concerned with the economic welfare of those countries which have shown a disposition to resist Communist aggression.

I want to say right here and now, of course, that we are-and all of us are, including all the members of this committee. Such a result would, of course, be reflected in the necessity for a vast increase of our own armaments. Such a necessity would be utterly inconsistent with the desire to reduce defense appropriations.

In a letter to the Convention of the National Council of the League of Women Voters, President Eisenhower on April 21 said:

The economic strength of the free world is the indispensable basis of our joint defense efforts and hence of our very survival.

In that letter the President again recommended the extension of the existing law for 1 year and promised that in the interim

an intensive study will be made of our whole foreign economic policy. We cannot afford to overlook the fact that there is not a nook or cranny in the United States that is not affected by our international trade. Our cotton farmers, our wheat farmers, our tobacco growers, our rice producers last year marketed approximately 40 percent of heir crops overseas. Our apple, orange, raisin, and prune producers also rely heavily on foreign markets. I myself was surprised to learn that exports of just these agricultural products require the use of about 60 million acres of American farmland, an area larger than he cultivated acreage of all our Southeastern States. The producion of these 60 million acres meant export sales valued at $3.4 billion for the American farmer in 1952.

Members of this committee might be interested to know what a vital take the various States have in expanded foreign trade. New York, ny home State and the State of the distinguished chairman of this committee, send abroad approximately $400 million worth of ndustrial exports each year, and that is not just from New York ity. The larger part of that production is located in upper New York State. Over a million New York workers, or 65 percent of the otal industrial workers in the State, are employed in those prosperus, high-paying industries which have an important stake in the xport market. Approximately $40 million worth of agriculural exports are shipped abroad from New York farms.

Or take Ohio, where annually approximately $420 million worth of industrial exports are produced. That exceeds New York State. Over 800,000 workers, or 69 percent of the labor force of Ohio, are engaged in those industries which produce products in which the United States has a vital export interest. Ohio farmers produce approximately $100 million worth of agricultural products, such is corn, wheat, oats, soybeans, tobacco, and hogs, which we ship to friendly countries of the world.

There follows in my prepared statement, Mr. Chairman, figures from Pennsylvania, Nebraska, and Illinois, and I ask leave to revise and extend my remarks.

I could go on to cite the importance of international trade to Iowa, to Washington, to Mississippi, to Massachusetts, to Connecticut, to Tennessee, to Missouri, to California, or Wisconsin, but time does not permit. The statistics, however, are readily available. The point I want to make is that we cannot sell abroad if we do not let our customers earn dollars to pay for our goods.

I am happy to note that recently important groups of businessmen have urged an increase in balanced United States trade with the

countries of the free world. In addition, the American Farm Bureau Federation, the Grange and other farm groups, have urged the continuation of the reciprocal trade policy. The CIO and various unions of the A. F. of L. have also taken a similar position.

Repeatedly, we have requested the free countries of Europe and Asia to limit their trade with the Iron Curtain countries. Considerable progress has been made in this regard, not enough, however, in my book. As a result of our overtures, the Red Chinese Government has been deprived of much of the strategic material necessary to continue the waging of war. They should be deprived of all. However, we must remember that in withholding such trade from the Communist countries, the friendly governments of Europe and Asia are losing & valuable market. This loss must be made up somehow, either through increased grants or increased trade, if they are to maintain a solven economy. I think that we here are all agreed that we do not wish to increase our foreign aid. Therefore, we must make available, con sistent with a sound protection for our own industries, American mar kets, so that those commodities which would ordinarily be marketed in the Communist countries may find consumers who are willing and able to pay for the products.

Certainly, if we were to increase tariffs, which would be the effect if H. R. 4294 were to be passed by the Congress in its present form. the inevitable effect of the passage of such a bill would be to convine all of the free countries that thay had no alterantive except to shr to the Communist-bloc nations large quantities of goods, including strategic materials, which would in turn increase the potential warmaking ability of the Communist-bloc nations. That would interpose a greater threat for our nation and conceivably would result in, the necessity for very vastly increased defense expenditures ani would be thoroughly condemned by all of us and properly so.

Two years ago we wrote into the Reciprocal Trade Agreements Act stringent safeguards for United States industry which might be seriously threatened as a result of tariff concessions. We have been assured that no large new tariff negotiations will be initiated during this next year. It is apparent, therefore, that if the present law is extended, there will be no major alteration of tariffs for the next year.

Mr. Chairman, for the reasons that I have stated, I urge the members of this committee to support the recommendation of President Eiser hower and to renew for 1 year the present Reciprocal Trade Agre ments Act by reporting out H. R. 4594, or any one of the numerou bills which are similar which are now before the committee.

I might add that I am realistic enough to realize that in all pro ability neither H. R. 4294 nor H. R. 4594 are likely to be reported out by the committee in precisely their present form. I realize the committee has a large task before it, and the observations which! have made are simply designed to give the committee some of views on the subject and to impress upon them the feeling that H. R 4294 contains too many restrictions, and that in extending the la as few as possible of these restrictions should be inserted in orde that this committee and the present administration may have adequa time in order to study the entire problem.

The CHAIRMAN. Does that conclude your statement?
Mr. KEATING. That does.

The CHAIRMAN. We thank you very much for your appearance and the fine presentation you have made of your views with reference to the extension of the Reciprocal Trade Agreements Act.

Are there any questions?

Mr. SIMPSON. Mr. Keating, you have mentioned Pennsylvania and the value, dollarwise, of exports from my State, as you have mentioned New York and Ohio, and made reference to other States. I do not, certainly, object to the fact that we have exports from Pennsylvania, but I do object emphatically to having the place of those exports paid by miners who are on relief and unemployed; textile workers in the same category; oil workers; and dishware manufacturers; any numer of people in what have proved to be marginal areas. That is, those reas most susceptible to foreign competition.

I do object to them bearing the burden and paying the price for the xports. Don't you, in New York State?

Mr. KEATING. Yes, I do.

Mr. SIMPSON. You have in Rochester, you know, an industry of reat importance and prominence, and they have been down here arnestly, begging in behalf of national defense, that we do something o protect them from the importation of precision instruments. Dolrwise, it is not great.

Mr. KEATING. But to them it is very important and it is very imortant to our national defense.

Mr. SIMPSON. What would you do about that?

Mr. KEATING. In that particular industry, I think they are unique 1 that regard, although possibly there are others in the same line of 'ork. But it is essential that that industry be kept going successfully s a part of our domestic production because of the many products hich they make essential to our national defense. It would be isastrous if, in that industry, we became dependent in case of serious nergency upon production from foreign countries.

Mr. SIMPSON. I am sure you and I are in agreement on that. But o you think another year's delay will not materially affect the score? Mr. KEATING. I think any delay in affording such an industry relief very serious both from their own point of view and the overall ational interest. I think that certainly in the precision instrument dustry, the very strongest kind of a case can be made, and a most onvincing case, to the Tariff Commission, and that it should lead > relief for them. I would go further than that, in that case, and erhaps in other cases. One part of the bill of the gentleman from ennsylvania, I think, has considerable merit. In this precision inrument field, and there probably are others, an actual increase in e tariff, even to a hundred percent, would not meet their problem far as competition from Japan is concerned, and probably from aly.

Mr. SIMPSON. That is right.

Mr. KEATING. And perhaps from Germany.

It seems to me that there are industries where we must, as a ciprocal proposition, do precisely what some of our friendly nations road are doing and that is impose import quotas. I think I would e in difference with the exact phraseology of the gentleman's bill herein he makes mandatory the imposition of those import quotas nder certain circumstances. But I do think there should be a disetionary power in the Tariff Commission to make a recommendation