The Reciprocal Trade Agreements Act recognized the changed role of the United States as a creditor nation. The policy of gradual and selective reductions in tariff's followed in the reciprocal trade agreements program has definitely encouraged trade. At the same time, the high level of employment and prosperity in the United States indicates that this policy has neither created serious maiadjustments nor resulted in serious injury to our domestic economy.

Continuation of the policy of trade liberalization and maintenance of a high level of international trade is vital to cotton producers and to agriculture E general. Since the war, 1 out of every 3 bales produced has been exported Another 5 to 10 percent of the cotton farmer's crop has moved into foreign mar kets in the form of cloth and other manufactured goods. About one-fourth d the country's output of fats and oils also finds an outlet in the export market; and while only a relatively small quantity of cottonseed oil is actually exported, this foreign movement creates a domestic market opportunity for that mei cottonseed oil.

Cotton exports have declined drastically in the present season, along wit exports of most agricultural products.

Unless foreign purchasing power is maintained at a high level, agricult exports will continue to lag. If foreign countries are hard pressed for dolas they will be forced to adopt self-sufficiency policies which will further encourag the production of synthetic fibers and the production of cotton in their owne onies and possessions, even though the production is uneconomic and ineffic Most of the foreign production of synthetic fibers, which is now equivalent te over 4 million bales, has been forced by this pressure for self-sufficiency whe dollars were short; and it can be taken much further. Though syntheti many of the basic textile end uses are very unsatisfactory from a quality sa point and are often uneconomic from the point of view of price, Hitler used the for 95 percent of his textiles during the height of the war.

A more restrictive trade policy would certainly reduce imports and for dollar earnings. More aid would then be required to maintain our export the present level. Of course, we believe the United States must decrease ta not increase direct foreign aid. However, if foreign aid is cut back wither corresponding increase in foreign earnings through increased sales of goods 2 services to this country, then our exports must suffer.

The repercussions from a permanent loss of cotton exports will be great. Th are more than 10 million people who get a large share of their livelihood fr growing and marketing cotton. These 10 million people depend on the e* market for a third of their income. The loss of any substantial part of 2 market would cause serious economic hardship throughout the Cotton Beitf| Virginia to California, and the repercussions would certainly be felt by all manufacturing centers of the North and the East.

To the Ways and Means Committee:

The adjustments that would be forced in agriculture as a result of the of these markets would be difficult, and the repercussions from these adj ments would be very great. The South and the Southwest, for that ma could shift into the production of corn, peanuts, rice, soybeans, dairying, or be cattle and would if forced to do so-but this would simply aggravate the plus problem. The problem would be even more acute if agricultural exp ̄` generally were cut back as they obviously would be if foreign purchasing p is reduced. The equivalent of 60 million acres is involved in the exportatio agricultural production. This is equivalent to the total cultivated acre the States of Virginia, North and South Carolina, Georgia, Florida, Alster Mississippi, Louisiana, Tennessee, and Kentucky. The export crops, cotton a. tobacco, are labor intensive crops. The employment in these enterprises is 2 stantial and labor costs represent a higher proportion of total production than for most manufactured products. Therefore, the loss of employment t would accrue from a reduction of most agricultural exports would be gre than that displaced by imports of many manufactured goods of the same viWe urge that the Reciprocal Trade Agreements Act be extended with crippling amendments. We also recommend that a comprehensive study made for the purpose of developing a broad, clear, consistent, and inters foreign economic policy. This broad policy should determine tariff policy, in and of itself, but in the light of policy with respect to other transacti across the United States borders-including domestic preferences, transp tion and the purchase of other services, and foreign investments. The should relate our import policy to our policy with respect to technical assista and economic development around the world and, of course, to foreign aid.

tariff adjustments should certainly be conditioned on economic adjustments and improvements in economic and trade policy made in foreign countries.

We strongly oppose the amendments of the Simpson bill (H. R. 4294) which we believe will cause a reversal in the trade-liberalization policy which the Nation has been following for the past 19 years.

H. R. 4294 requires changes in the procedure and in the criteria for determining injury as a result of imports and for increasing import restrictions which make any consideration of the broader national interest practically impossible. Furthermore, the amendments of H. R. 4294 would establish the Tariff Commission as a partisan political body with complete and final authority, subject to no review, for increasing tariff, changing trade agreements, and thus actually forming trade policy. This is entirely opposed to the bipartisan concept of the Tariff Commission and to the long-established procedure in which the Commission was a fact-finding body making recommendations to the President. Such autonomous authority and such narrow criteria are not in the public interest and would certainly be highly detrimental to a prosperous world trade. The unilateral action of the Simpson bill, proposing specific restrictions on ertain commodities, also departs from the reciprocal principles that the Nation has followed since 1934. This procedure not only disregards our own interest in the freedom and security of the rest of the world, but it also denies the United States the bargaining power it must have to effect necessary changes in the economic and trade policies of other countries. A stable and consistent import policy can never be achieved if the United States is continuously changing the ules. In the face of such uncertainty, foreigners can never be expected to levote the time and capital necessary to developing needed markets in this country.

What is even more important, unilateral action of this kind without notice or eference cuts across long standing agreements with foreign countries that have he force and effect of treaties, and therefore violates the most sacred obligation of the Nation.

"o the Ways and Means Committee:

If the international integrity and the reputation of the United States are to e preserved, and if the broad national interest of the country is to be served, hen our trade policy must be clear and consistent, it must be orderly, and it aust be considerate of all interests affected. Respectfully submitted.

DELTA COUNCIL.

The CHAIRMAN. Without objection, you may be allowed to revise nd extend your remarks.

Mr. SIMPSON. Mr. Smith, apparently you do not like the present eciprocal trade agreement program.

Mr. SMITH. I do not like the program with the restrictions which ere written into it 2 years ago, which I think have had a material ffect upon reduction of a lot of our normal export markets.

Mr. SIMPSON. I do not understand. There has been practically othing done by way of relief actions under that program.

Mr. SMITH. A great deal has not been done in proving various relief ctions, but the knowledge is there that, virtually, if any type of indusy or manufacturer in some other country with which we do business as an opportunity to develop a market over here, the market can be nocked out by domestic producers making use of the so-called periloint or escape-clause provisions of that. Because of that, they have een able to build up that threat, and it has been used just enough to now that it would work.

Mr. SIMPSON. And you think that is wrong?

Mr. SMITH. I think it is wrong.

Mr. SIMPSON. You think there should be no relief whatever for an merican manufacturer against import competition?

Mr. SMITH. I do not say that there should be no relief whatever. We have tariffs and things like that. I do not think that one individual anufacturer

Mr. SIMPSON. What was that?

Mr. SMITH. I say we already have tariffs; the tariffs have not been wiped out. There is a provision under the present law under which. after a tariff has been agreed on and the manufacturer gets into a situ ation where he is running into competition due to, it might develo any number of things, he can prove, or rather, it is very easy for him to make a case which, in his idea, will prove that his trouble is not due to his inability to measure up in the regular system of competition. but that his trouble is due entirely to the fact that somebody from abroad is competing with him, and he can claim that they are dumping, Any time anybody who produces abroad gets in competition with to many American producers, the idea develops that they are dumping products on them.

Because of that, intelligent business operators in other countrie who have a possibility of developing the American market naturaly are not going to attempt to, in any great degree, when there is within the hands of their competition in the United States the methods a just shut off that American market through the present provisions of the Reciprocal Trade Act.

Mr. SIMPSON. I did not quite get the answer. The situation & where there is a tariff, and a reciprocal trade agreement is made cutting the tariff, and thereafter the American industry proves to the sa faction of the Tariff Commission that it is being ruined as a result of the cutting of the tariff by the trade agreement, do you or do you ne agree that that American industry is entitled to relief?

Mr. SMITH. Under the type of action that has been taken by t Tariff Commission, and even under the present action in regard to t so-called national interest phases of it, I do not believe that the Ame? ican industry, unless-it is not a question of ruined; they just have prove injury, and not ruin-in some cases of injury, I do not think it necessarily in the national interest to increase the tariff again.

Mr. SIMPSON. In other words, you do not care if the industry > saved to the country or not?

Mr. SMITH. I attach far more importance to saving the country than to saving the industry, and to saving our economic system. Mr. SIMPSON. Of course you do. So what you say, then, is th so far as the individual industry is concerned, under the circumstar you stated, you would let that industry go?

Mr. SMITH. That oversimplifies the matter, but I think that is bas cally what your bill would virtually do. It would give more imp tance to the welfare of an individual industry than to the over welfare of the country and of our national economy.

Mr. SIMPSON. Well, I do not know. Do you believe in quotas? Mr. SMITH. Certain types of quotas have to be used.

Mr. SIMPSON. What kind? On cotton?

Mr. SMITH. The quotas have to be used in connection with the ove all agricultural program, when you have a support price for y product.

Mr. SIMPSON. Do you believe in them on cotton?

Mr. SMITH. I do not believe that quotas should be a normal par the operation of the cotton market. The cotton market, traditional depends for close to one-third and sometimes more, 40 percent of market, on exports abroad. Under the Agricultural Adjustment A the so-called support program, which implied not only cotton b

all sorts of products, there is a provision under which the import quotas can be invoked if they are having the effect of being brought in at the same time other commodities are being put into loan-in other words, in which the Government is paying for the domestic product, and if the Government is buying up the domestic product. That sort of situation should apply in any type of support program, whether it be for agricultural commodities or any type of manufactured product, because if you did not have it you would have the question or the case of the Government paying the difference there. That is the only reason you should have the quotas.

Mr. SIMPSON. Then you do favor quotas when they benefit cotton? Mr. SMITH. I should say I favor quotas when they benefit the naional position of the American Government, not to benefit any product. You see, right now the Department of Agriculture has invoked ertain types of quotas with regard to butter. That is not a question of what you should do in regard to foreign trade policy. Virtually 11 domestic butter is being sold to the Department of Agriculture inder the Commodity Credit operation. If butter from abroad could e brought in here and sold at a lower price, that would be the equivaent of the Government paying the difference there.

These quotas are invoked, not to protect the butter market, but to rotect the financial stability of the American Government.

Mr. SIMPSON. Then you do favor quotas for butter, and you do avor quotas for cotton?

Mr. SMITH. Under the present circumstances, that is right.

Mr. SIMPSON. There are circumstances when you do believe in a uota?

Mr. SMITH. That is right.

Mr. SIMPSON. But you do not agree to it with respect to importng oil?

Mr. SMITH. It might be possible to establish some type of situation ike that, but I do not believe it should be written into the law by Congress, at the time when you try to invoke that quota or invoke hat reduction in imports, that you do not try to get some benefits, 1 return, from it.

Mr. SIMPSON. I see. Thank you, Mr. Smith.

The CHAIRMAN. Mr. Kean will inquire.

Mr. KEAN. Do you believe that support prices on agricultural roducts should be so high that you have to put in such quotas? Is ot the answer to reduce the support price on your cotton?

Mr. SMITH. We do not have to put any quotas on cotton.

Mr. KEAN. On agricultural products.

Mr. SMITH. Well, I think that there is a situation where that should e brought to mind, that support prices can be too high. But the upport prices are not based on the theory of how they operate with xports, although that factor should be considered.

Now, in relation to cotton, the support prices are not too high, if we ad the normal export market which would normally be available. It is a very complicated procedure, of course, as all of this is. But, aturally, when you have a support price in the case of butter, on a product where there is no normal export market or anything like that, ou run into a far more difficult situation proportionately than you could on one of the major export crops.

Mr. KEAN. I agree with you, of course, that we have to impose [uotas if we have a support price, or else we also support the whole

world. But it does seem to me that the logical thing to do, in carrying out your general theory of trade, would be to reduce the support price on your farm commodities, and then you would not have to have a quota.

Mr. SMITH. There are a lot of commodities of that type where production is not controlled, and there is no possibility to control produetion, where I think you could take some action like that.

The CHAIRMAN. Thank you for your presentation.

Congressman Javits, I think a large number of us want to get on the floor when it convenes. Could you come back at 1 o'clock! Mr. JAVITS. I will be glad to, or I can finish in 10 minutes. The CHAIRMAN. I do not believe you can, because of the questions. We will adjourn now until 1 o'clock.

(Whereupon, at 11:45 a. m., a recess was taken until 1 p. m., of the same day.)

AFTERNOON SESSION

The CHAIRMAN. The committee will come to order.

The next witness is the Honorable Jacob Javits, of New York. We are very happy to have you here, sir. We are more than pleased to hear what you have to say on this subject.

Will you give your name and the capacity in which you appear, sir!

STATEMENT OF HON. JACOB K. JAVITS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK

Mr. JAVITS. Thank you.

My name is Jacob K. Javits. I am a Representative in New York from the 21st Congressional District of the State of New York. Mr. Chairman, I appear today in favor of a 1-year extension of the Reciprocal Trade Agreements Act and as one of the sponsors of i bill for that purpose, H. R. 4724, which has been referred to this committee.

The CHAIRMAN. Mr. Congressman, would you like to put a copy of your bill into the record preceding your remarks?

Mr. JAVITS. If I may. It is exactly in the same form as the others Perhaps we can save printing by stating it is for a straight 1-year extension.

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

[H. R. 4724, 83d Cong., 1st sess.].

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

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

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

Mr. JAVITS. Mr. Chairman, I propose to make two major points this testimony, first that such an extension as I recommend is in the interest of the security of the United States and, second, that sh an extension is in the interest of American consumers. I testify as a Member of Congress-I am a member of the Committee