nt on selling commodities to us, will be unfavorably affected. Both f these developments will aid the cause of Communist aggression and nable the Communist propagandists to take advantage of condions which grow out of the inability of countries to sell their prodets on the world market. By increasing barriers to trade, the counries affected by these barriers, no longer able to sell to us, will no onger be able to buy from us. If they are unable to buy products hich we produce in America, our workers responsible for producing hese products, as well as the companies and plants, will also be afected.

On the other hand, if we approach the problem of workers, commuities, and plants affected by competition from imports directly, we ain a solution to the problem without involving the whole host of ther factors mentioned above.

We in CIO therefore feel very strongly that the time has come to ace the fundamental question-a fundamental question which has ot yet been adequately dealt with, which has been talked about, alked around, but not approached positively by the responsible conressional or executive authorities-that is the problem of how the nited States can continue to promote necessary trade with countries broad and still minimize the effect that such trade has upon Amerian workers, American plants, and American communities. To face his problem requires bold and forthright action.

The CIO, therefore, feels that during the coming year, while these roblems are once again studied, that we ought not to move backward n our trade policy, as H. R. 4294 would have us do, but we should emain at least where we are today. This is why we oppose H. R. 294 and support a simple 1-year extension of the reciprocal trade greements program without amendments.

As I have said before, we will move backward tradewise unless we ace up to the Government's responsibility in this whole area of giving id and assistance to plants, communities, and workers affected by ncreased imports.

We in CIO feel that the channels of trade throughout the free world must not only be kept open, but must extend much beyond just rade with the United States. The problems which such trade with he United States raises must be met head-on through such means s retraining, relocation, and transporting the workers affected by ncreased imports. In addition, during this period of retraining and elocation, supplemental unemployment compensation must be paid he workers to tide them over the period of dislocation. Also finanial assistance to communities ay be given to aid these communities n finding and attracting new plants and new industries to produce lew or different commodities. Aid to particular plants and particular companies either to enable them to convert to production of other products or to develop more efficient methods whereby they can better. compete with imports may well be necessary, also.

This is just, in brief, an outline of the areas to which any study of promoting international trade must look, if we are to be successful in keeping the channels of international trade open.

In addition to these areas of assistance to local workers, plants, and communities, some means must be developed whereby labor standards and living conditions abroad are improved. The International Labor Organization has been making efforts in this direction now

for 35 years. We must explore new ways and means of accomplishing this objective. The improved labor standards and living conditions in countries abroad would minimize competition from the low-wage areas, particularly where such competition cannot be counteracted by greater American efficiency of production.

The problems of reciprocal trade must be placed within the proper framework. RTA plays only a small part in the solution to the imbal ances of trade that exist throughout the world. I have already men tioned that as trade between the Continent and the Iron Curtain coul tries is curtailed, it becomes necessary for these countries to find markets for their products elsewhere. They can either find markets in the United States or markets elsewhere in the non-Iron Curtain countries.

The greatest potential area of markets is the underdeveloped and lesser-developed countries of the world. But to look to these areas for a solution to the trade problem is a long-run solution. These underdeveloped countries will not become immediate markets, bu potentially they do have the possibility of becoming extremely good customers for not only the products that Europe makes, but also many of the products which we produce in the United States. Simultaneously, of course, the underdeveloped countries become importan: suppliers of raw materials for the free world.

It is, therefore, essential that we promote more aggressively the whole question of the development of underdeveloped areas. Not only is the development of these areas important in terms of international trade and international stability, but it is important to develop these markets in these countries as a means of preventing them from falling prey to Communist propaganda, and becoming victims of Communist aggression. These underdeveloped countries must continue to receive not only technical assistance, which they are now receiving to a limited extent from both the United States and the United Nations, but it is necessary to expand investment opportunities for both Government and private interest.

In the interim period, we must continue to break down the barriers to trade that exist in Europe, including England.

In addition, as I have already pointed out, the development of national markets in these individual countries is also essential. However, while all of this goes on, continued economic aid, more extensive than that now contemplated, is essential to promote the economic stability of these countries.

No one of these suggestions is meant to be interpreted as an argument against the gradual reduction in the barriers to trade that exist in the United States. These suggestions should be taken only as indications of the areas that need to be handled properly if we are to make any serious contribution at all to the problem of international peace and international stability.

and

These are not easy problems to solve. We cannot look to easy simplified solutions. The Simpson bill, in our judgment, is an east but false way out of a very involved and complicated problem. We in the CIO believe in facing up to the serious and involved compli cations of the problem of international stability and finding sound. long-run solutions. It is to this end that we in CIO dedicate ourselves and hope that this administration and this Congress, as they study the problems during the next year, will also dedicate themselves.

The CHAIRMAN. Have you finished?

Mr. RUTTENBERG. I have, Mr. Chairman.

The CHAIRMAN. We thank you very much, sir.
Are there any questions?

The Chairman hears none. Thank you for the presentation of your

iews.

The next witness is Mr. James H. Stebbins, vice president of the V. R. Grace & Co., and president of the Peruvian American Associaon in New York City.

Mr. Stebbins, if you will give your name and capacity in which you ppear, we will be very glad to hear you.

STATEMENT OF JAMES H. STEBBINS, PRESIDENT, PERUVIAN AMERICAN ASSOCIATION, NEW YORK, N. Y.

Mr. STEBBINS. My name is James H. Stebbins, and I appear as resident of the Peruvian American Association.

Mr. Chairman and members of the committee, I appear before your ommittee today in my capacity as president of the Peruvian Amerian Association, Inc., in opposition to H. R. 4294, and any other legslation tending to impede the importation of lead and zinc. I am a ice president of W. R. Grace & Co., and a director of Pan American race Airways, but I am not appearing today on behalf of those cororations except to the extent that they are members of the Peruvian American Association and associate themselves with its views on this egislation.

The Peruvian American Association is made up of firms and indiiduals who have an interest in maintaining and improving trade nd cultural relations between the United States and the Republic f Peru. Since the greater part of the membership is represented by ersons engaged in business between the two countries, it is fair to ay that the interest in trade relations predominates, although the ultural aspects are not overlooked. A list of the membership of the ssociation is attached to this statement.

The association does not make it a practice to seek to be heard on egislation, but when measures are proposed which are clearly damging to trade between the United States and Peru and which will ave harmful effects not only on the Peruvian economy but on the conomy of the United States, we feel called upon to present a tatement.

We regard the legislation under consideration as coming within the ategory which calls for comment by our association. It is harmful oth to the United States and to Peru, as we propose to show.

I have been closely following trade and cultural relations between he United States and Peru for many years. I resided in Peru from 1938 to 1947 as a manager of W. R. Grace & Co., which gave me an xceptional opportunity to study the commercial development of that ountry. I had the honor, during my residence there, of serving as president of the American Society of Peru which in turn gave me a most unusual insight into the cultural and political relations between our two countries, and the attitude of the Peruvian business community, as well as the man in the street, toward the United States. Gentlemen, in this relatively short span of years I have seen the United States grow from a minority supplier of manufactured goods

to a stage where it is now supplying over 56 percent of Peru's imports. This progress has not been accidental. United States products have won their enviable place in the Peruvian market against vigorous European competition by reason of quality and service and the superior production and salesmanship by United States firms agains the rest of the world.

To take away from Peru at this time the United States market for its lead and zinc will deprive that country of one-half of its export trade to the United States and one-third of the dollar exchange its now receiving, and reverse the wholesome trend of growth which United States manufacturers have been enjoying in the Peruvian market.

The export of lead and zinc to the United States is of desperate in portance to the economy. Peru sells us 90 percent of her production of these minerals, and received in 1952 a total of $41 million for suc sales. In terms of the United States consumption of these mineral. this is an insignificant figure, but believe me, gentlemen, when I tel you it is tremendously important to this friendly, neighboring republic. In fact, it represents just one-third of the value of all of Peru's imports of manufactured goods from the United States. Among the most important are automobiles and trucks from Michigan; agricul tural machinery from Illinois and Iowa; electrical equipment from New York, Ohio, and Pennsylvania; textile machinery from Massachusetts and Rhode Island; irrigation and construction equipment from Wisconsin and California; enamelware from Indiana: chemicals and drugs from Missouri, New Jersey, and Maryland; and textiles from New England and the South. The list is long and impressive and I mention these things to bring home to you the fact that this not a remote Peruvian problem but one which touches the homes ar factories and banks and union halls of virtually every community in these Unitel States.

I said a moment ago that the sum of Peruvian imports of lead arc zinc into this country was relatively insignificant in our entire miner picture. Total mining production, plus imports of these two minerals into the United States in 1952, was approximately 2,400,000 tons, of which Peru's contribution was 206,000 tons, or 81% percent.

To discourage Peruvian exports of lead and zinc to the United State at this time is to invite twin dangers. One danger is that we are co stantly exhausting our own underground stockpile of these minerals within our own borders. The Paley report estimates our needs in 1975 at 1,950,000 tons of lead and 1,600,000 tons of zinc, which repre sents an overall increase in our requirements of those two minerals of about 50 percent.

With the continuing reduction of our own underground supplies. the prospect becomes alarming, even if we do not assume futur emergencies such as World War II and Korea, where Peruvian lea and zinc came to our aid. It should be remembered in this connection that of all the ground in the Western Hemisphere, that of the United States has been the most exhaustively explored for deposits of these minerals. Mining experts state that sources of any large potential increase in the production of lead and zinc in the United States are not known.

Is it not then to the national interest to conserve what we do have to the greatest degree possible by taking advantage of the production

of friendly countries who badly need the dollars and are disposed to make their production available to us?

The other danger to which I refer arises from the fact that by depriving these friends of access to our dollars, we are driving away he trade which generations of United States businessmen have been uilding up and forcing our customers to look elsewhere not only for heir imports, but also for markets for their exports.

Peru is one of the few countries in the world today which has freed usiness entirely from exchange controls and other restrictions under he free flow of trade. She has recently adopted a new mining code nd a new petroleum code, both of which offer sound inducements to Jnited States capital to enter the country and which are already ttracting new United States enterprises.

At this point, I would like to mention that those portions of the proosed tariff which deal with oil are bound to have a discouraging effect n Peru's new petroleum industry. As I have mentioned above in the ase of lead and zinc, the day may come when we will be very grateful o have all the oil we can get for the needs of our ever-growing inustrial machine, not only from Peru but also from Venezuela.

No loans by the United States or by the Mutual Security Agency ave been made to the Peruvian Government, nor have such loans been olicited by them. The Peruvian Government has consistently been riendly to the United States and to the United States industries and itizens, and has taken vigorous steps to stamp out communistic acivities.

Recently it has been emphasized that our national policy should be o help other countries outside of the Iron Curtain to stand on their wn feet rather than to help them directly-that we should help them > help themselves.

Peru is conspicuously a country which has helped itself and is elding itself today. It is not asking for help from the United tates. It asks onl ythat there be no artificial barriers against the ow of its products into the United States and the investment of United States capital in Peru.

In addition to the harmful effects of the proposed tariff on United tates citizens who will have to pay a higher price for lead and zinc nd the products manufactured with those minerals, and in addition o the harmful effect on United States exporters who can sell to Peru nly if Peru can sell to the United States, there are many thousands f United States stockholders of North American companies which produce metals in Peru and are entering the oil industries in Peru. These United States citizens would be adversely affected by anyhing that would be damaging to the producers of minerals and petroleum in that country. Moreover, let us remember that it is he policy of the United States to encourage United States private nvestment in Latin America. What investor will feel disposed to out risk capital into a country whose dollar needs are being threatened with tariff action with the obvious result that it will be more difficult for him to obtain dollars with which to return his investment profitably.

To sum up, the proposed tariff can only result in increased cost of lead and zinc to the American consumer; it is inflationary; if, as is possible, it should shut off Peru from access to this market, it will eliminate directly $40 million of sales which American manu