TABLE 26.—Value of United States exports to Cuba, by groups of commodities, Vegetable products, inedible, except fibers and wood: Tires and tubes---. Other rubber and manufactures_. Naval stores, gums and resins_ 1, 517, 087 2,787, 397 2,933, 799 1, 165, 490 1, 226, 144 4,390, 201 3, 403, 872 1,358, 145 1, 497, 911 3, 317, 349 1,711, 485 100, 365, 155 1,815, 907 3,388, 671 978, 397 1, 150, 116 1, 396, 006 2,066, 574 1, 270, 522 1,618, 920 13, 685, 113 4,375, 383 30, 439, 231 1,919,496 1, 790, 786 21, 373, 030 3,640, 739 63, 538, 665 7,391, 137 19,406, 214 26, 797, 351 TABLE 26.-Value of United States exports to Cuba, by groups of commodities, 1 Exclusive of commodities in "special category" for which data are withheld by the Government for security reasons. Source: U. S. Department of Commerce. The CHAIRMAN. The next witness is Mr. Peter Franck on behalf of the Friends Committee on National Legislation, Washington, D. C. Mr. Franck, if you will give your name to the reporter and the capacity in which you appear, we would be glad to hear you. STATEMENT OF PETER G. FRANCK, ON BEHALF OF THE FRIENDS COMMITTEE ON NATIONAL LEGISLATION, WASHINGTON, D. C. Mr. FRANCK. Thank you, Mr. Chairman. My name is Peter G. Franck, and I am a resident of Washington, D. C. For the last 2 years I was director of research in social and technical assistance at Haverford College, outside Philadelphia, a college closely affiliated with the Religious Society of Friends. I speialize in international economics, and I am now at the evening school of the American University here in Washington. Mr. Chairman, this is an abbreviated version of my statement which I prepared for the committee and which I would like to have inserted n the record. The CHAIRMAN. Without objection, it will be inserted in the record. (The statement referred to follows:) STATEMENT OF PETER G. FRANCK FOR FRIENDS COMMITTEE ON NATIONAL LEGISLATION My name is Peter G. Franck and I am a resident of Washington, D. C. For he last 2 years I was director of research in social and technical assistance at Haverford College, outside Philadelphia, a college closely affiliated with the Reigious Society of Friends. I am now a teacher at American University here in Vashington, D. C., and have specialized in international economics. I appear before you to oppose the enactment of H. R. 4294 for several reasons: irst, the bill would undo the efforts of our Government since 1934 to lead the amily of trading nations toward a freer exchange of goods and services. Secnd, it would hamstring the present administration in working out singly or in oncerted action with the governments of other free nations a new departure a trade policy. Third, it fails to offer any constructive policy which would ontribute to the solidarity and economic stability of the independent peoples of hese nations, an immensely practical contribution. As long as financial aid has ot yet solved the problems of international imbalance, United States leaderhip, combined with a patient, consistent, and continuous worldwide effort, would elp to bring about that balance by a liberalized trade policy. Fourth, the bill isregards completely the interests of our export industry, which with an output f $15.5 billion last year is the most widespread industry of the Nation and acounted for over 10 percent of production of all movable agricultural and manuactured industrial products. The bill ignores the fact that serious declines in xports would force far-reaching changes on American agriculture, far more evere than the admission of competitive imports.1 Congress would indeed be remiss if it failed to take action for stability of exorts. Fifth, the bill strips the President of the United States of his constitutional ole in safeguarding the national interest, both in the matter of overall domestic conomy and in the conduct of international affairs. Though he has exclusive onstiutional responsibility for determining foreign-trade policy and is the inernational spokesman for the Nation, his function is demoted to that of an tomatic rubber stamp. In substitution for the Simpson bill which is before you I would wish we had e power and ability of persuasion to make you see that the 1934 Trade Agreeents Act stripped of all crippling amendments is the right point of departure. ut under the circumstances, with the choice between the 1951 legislation and e Simpson bill, the former is preferable. In the following paragraphs I would like to take up first, the role of a liberal ade policy in international economic cooperation, second, the probable effect the Simpson bill on United States trade policy and, third, the case of specific ommodities which are being given a special privilege in the Simpson bill. 1In many industries exports in the years 1949-51 exceeded 10 percent of the domestic oduction Rice, 39 percent; cotton, 38 percent; tobacco, 26 percent: textile machinery, -percent; tractors, 21 percent. The average commercial farm would lose $1,100 annual venue if the $4 billion worth of exports were to disappear. I. A LIBERAL TRADE POLICY IS ESSENTIAL IN INTERNATIONAL ECONOMIC COOPERATION WITH PEACEFUL NATIONS The struggle, on the floor of this committee, for a reformulation of the trade policy of the United States cannot be neatly isolated from our global positi£ While the representatives of a score of industries can legitimately claim from you the protection of their localized interests-you being their only direct Et with the National Government-they have not given, and perhaps cannot be expected to give, you a balanced picture of the national economy in its global setting. Our country has urged other governments to work constructively to ward integration of national markets, to get rid of obsolete trade barrier especially in Western Europe. This endeavor, it is felt, is in support of generi American efforts to strengthen the ties holding together the nations still willing to work with our Government for a peaceful world. A stream of money, tertnicians, and goods has been financed by Congress in the last decade in ord: to share the burden of other nations in reconstructing their economies, and their trade, and in rebuilding their faith in the productive use of the work resources. The Congress has given its consent to the sacrifice of the taxpayers money or his savings because it had become true that the prosperity of other-of our trading partners particularly-was a requisite of further economic progress here. But beyond the economic objective Congress had recognized that finaba aid and technical assistance and a gradual freeing of trade from the shacke of depression-born controls and barriers were part and parcel of a policy t pacify anxiety, fear, and despair caused by the economic and political pressure of war and rearmament. In the final instance it was not the dollar and cent in foreign aid or the 3 or 40 percent in reduction of tariff rates which helped substantially to re the sense of frustration among the peoples of the free nations in the prew depression years and in the postwar reconstruction period. It was the spir in which unilateral, arbitrary, and isolationist economic policies were replied by a concerted bargaining between the free nations. In the course of this p bargaining process, new international bodies serving practical ends in the fe of economic cooperation were created that had never existed before. Thes institutions demonstrated to a war-torn world that nations of diverse econo interests, of varied cultures and religions could be true to their domestic polite. ideals and yet make economic internationalism work. ACHIEVEMENTS OF THE UNITED STATES GOVERNMENT The United States has prevented a trade war, dictated by the law of the już which would have grown in scope and intensity in the postwar years, by effect i a trade policy truce through the Trade Agreements Act. This policy has b maintained since 1947. It is frequently stated that the United States merely swapped reduction in 2tariffs for erection of import quotas, exchange controls, and multiple-exchatz) rates by other countries. It is true that much of the restrictionism and re mentation of world trade that had cropped up during the war and after has survived the 7 years efforts to whittle it down. But the real question is ? should be: What would have been the state of affairs in the absence of these efforts? Surely, nobody can say with certainty what would have happened be there been no general agreement on tariffs and trade for 36 nations, ha there been no international monetary fund or no organization for Europes economic organization—all fostered, if not fathered, by the United States Got ernment. But there is persuasive evidence that the free world might have b** thrown back to the primitivism of barter, just as the nations behind the Int Curtain have been. Instead, there has at last been a firm commitment of near all great trading nations-and adherence to the commitment-that fixing tarifs introducing exchange controls, import quotas, and exchange depreciation, 27 no longer be a matter of discretionary decision by one government. Our prese policy relies on multilateral negotiations, agreement, and cooperation in abiici by common rules where conflict of interest requires mutual adjustment compromise. This achievement, for which the past administration has found bipartisi. support from the Congress, was based on a simple and healthy principle, name, that the continued economic growth of the United States depends in part on vigorous exchange of goods with other countries, i. e., on international divis of labor. American exports cannot lastingly stay at their present high leve unless either a corresponding increase in imports is achieved, or private and public funds flow out of the United States to make it possible for the borrowing countries to boost their export capacity. This principle helped to build the ecoomic foundation for this Nation in the 19th century because the United States vas given a fair opportunity in world markets. But this principle involves ontinuous adjustment in trade channels and in the commodity composition of rade, in response to the never-ceasing stream of new methods of production, of ew products and of new resources among the trading families. Similarly, in he United States, technology has never stood still; the volume of trade between he 48 States has increased with discoveries of new resources, new methods, and ew tastes. It has been the genius of this economy to teach those operating it and depending on it that the sooner an adjustment is made to new technology or new price relations, the greater the volume of interstate trade and the higher the ational income will be. In this process old economic opportunities give way to ew ones, flourishing hand-operated cottage-like industry yields to mechanized manufacture, and prosperous New England hilltop farms bow to the more prouctive flat loam in Indiana or Wisconsin. If private enterprise had not rapidly esponded to fairer opportunities and put its weight into those fields in which pomed the highest return, no other class or group, let alone the Nation, would ave shared in these higher returns. Basic objective of United States liberal trade policy The 1934 Trade Agreements Act translated this principle (and all the pain of djustment which adherence to it entails) into an effective international trade olicy. By giving the executive branch the power to bargain with other governents for a place for American exports, and to grant measured opportunities in he American market for foreign products, Congress made it possible at a given moment to alter rapidly and sometimes drastically the terms on which American oods were to be exchanged against foreign goods, to deal effectively with disriminations, dumping, etc. Since similar power had already been given to the xecutive branches of most other governments, the United States Government was thus enabled to negotiate effectively for reciprocal trade concessions. The egislators foresaw that some segments of some industries would suffer passing osses, others would have to shift to new products and diversify. But assurance was given that no "sound and important American interest" would, in the "light f public interest" be "injuriously disturbed." As a result, in part, of the gradual hittling down of United States and foreign-trade barriers, in several rounds of argaining, exports from the United States increased by over 75 percent before he war and by 50 percent since the war. Separate data for trade with tradegreement countries show that exports to them advanced 30 percent faster than o nonagreement countries. The act has been amended frequently and the consideration of the public nterest has gradually been forgotten. Serious injury or the threat thereof to ne industry, regardless of its importance and the soundness of its operations, as frequently enough of an excuse for refusing more concessions or for revoking oncessions. The existing legislation which, with its mandatory peril-point invesigation prior to negotiating of new concessions, has already slowed down the rocess of swapping fair opportunities for trade, and has already departed so far rom the sound and tested idea of 1934 that it can hardly deserve support. Mr. impson's bill, however, would leave little if anything at all of a Reciprocal Trade greements Act. Let me demonstrate that in some detail. II. THE EFFECT OF THE SIMPSON BILL ON UNITED STATES TRADE POLICY 'he equalization of cost-an obsolete doctrine For decades the principle of equalizing the cost of an important article with the ost of the same or a similar article made at home has dominated tariff making a the United States. In fact, since 1908 it has been the touchstone by which the ustification of every duty was to be tested. The principle has indeed an engaging ppearance of fairness. As the first Chairman of the Tariff Commission wrote: "It seems to say, no favors, no undue rates. Offset the higher expenses of the merican producer, put him in a position to meet the foreign competitor without eing under a disadvantage, and then let the best man win. Conditions being thus qualized, the competition will be a fair one.' Despite the complexities of making a valid investigation into a comparison of cost of production in different countries, respite indeed, the slippery character of F. W. Taussig, Free Trade, the Tariff, and Reciprocity, p. 134. |