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a great deal about our obligations and the like to other peoples. I have great respect for all of that argument. I don't agree with any of it. These trade treaties are really a delegation to the bureaucrats to decide that point for us. I say that that vital, fundamental point in our very existence, in our very souls, must be decided by the people.

Mr. SIMPSON. We were told in the course of these hearings that perhaps some 26 of the countries with which we have made these agreements require confirmation on the part of their legislative bodies before the agreements are effective. I picture that our men are around over the world selling the idea of the agreements and accurately stating that they can make the agreements without the approval of the legislative body in this country. I see, as a result of that practice, a belief growing up in other countries that our legislative body here can properly delegate vast powers to a board or a group of nonelected officials to go about the world and solve many post-war problems, and to the extent that that is true, I believe the policy as carried out in these trade agreements is highly undesirable, and I agree with you, as I understand your position to be, that the elected officials should in every instance, at least in the policy-forming instances, in dealing with foreign countries and post-war problems, be responsible. I think that such matters, matters of life and death over our sovereign rights, are too great to be delegated to a group not responsible to the electorate.

I think that in view of the fact that in your statement, as I interpreted it, you placed considerable weight upon that delegation of authority and its possible effect on post-war tíme, I for one would be glad to have further comment from you on that phase.

Mr. CROWTHER. That is the only phase I am really interested in. The question of protection or free trade is an interesting discussion. The various economic methods and phases and all that, they are interesting. But when it comes to making vital decisions, I believe that they should be made by the people, and since we have a representative government, not a democratic government, those decisions should be made by the Congress. I happen to be one of those that believes in the Congress.

Mr. SIMPSON. As I interpret these hearings, Mr. Crowther, I am forced to conclude that a situation might arise wherein every Member of Congress was opposed in entirety or in part to a given trade treaty and yet the entire Congress could do nothing whatever to cancel that agreement. I am further forced to believe that that would be true even if, on the surface, the agreement was arbitrary, proved unwise, and was evidently designed to accomplish some ulterior purpose. Am I correct in understanding that the will of Congress could not change one of those agreements?

Mr. CROWTHER. That is a constitutional question in which you gentlemen are much better able to give an opinion. My opinion—for what it is worth, and it isn't worth much-is that Congress could not change it. That is the way I interpret it.

Mr. SIMPSON. That is all. Thank you.
Mr. DEWEY. May I ask a question?

Mr. Crowther, I am very much interested in one situation which is collateral to the trade agreements. As I understand it, you are directly opposed to bilateral agreement theory between countries. What effect, do you think, if any, have the so-called international cartels upon reciprocal trade agreements that now exist? Don't they circumvent a great many of our treaties? I would be very much interested if you cared to discuss for a few minutes the international cartels in raw materials and, as they extend, now, into certain other phases of our economy.

Mr. CROWTHER. I cannot give you a discussion which is worth anything, and by that I mean a discussion which cites you book, chapter, and verse. That is very difficult to get at. The records of all of these cartels are secret; a good many of them haven't any records. But it would be rather interesting to plot these agreements against the known cartels in the world. I have heard no protest from any of the large cartels, as in tin and nickel, rubber, and many of the other products. I have heard no protest, but a great deal of commendation, from their representatives in the United States. I would not like to say that those who drew these agreements had that in mind. I do not think they did, because I know a good many of the men who participated in the actual work, and I think they are all honest, hard-working chaps who would be very much embarrassed by having their work labeled as perfect as the Under Secretary has labeled it. But I think the information on which they work, a great deal of it having to do with prices, comes from the cartels. I don't know. It is a subject which I would like to see explored by someone with more time and more capacity than I have.

Mr. DEWEY. Would you go a little further! This subject of cartels is, as you say, not an open book to anyone. It is very difficult to find any records of them. But they do touch on trade agreements. There are informal, bilateral, and sometimes multilateral agreements in various lines of products, are there not?

Mr. CROWTHER. Yes.

Mr. DEWEY. "That could completely offset any trade agreements, formal trade agreements, between the countries

Mr. CROWTHER. Completely.
Mr. DEWEY. Who are participants in the cartels. Is that true?
Mr. CROWTHER. Completely, and then they go still beyond that.
Mr. DEWEY. Pardon?

Mr. CROWTHER. They go still beyond that, because all the members of these cartels double-cross each other. That is to say, a German concern supplying so-and-so to this other place will make a stock transfer so the price received is not really the ultimate price. The politics inside the cartels is very interesting and would give any of us here cards and spades in what politics can be. I don't think that answer is responsive to your question.

Mr. DEWEY. I am really just searching to discover if it is a situation that should require our best study. We are preparing to probably enter into negotiations with the other United Nations countries on the post-war situation. It would strike me that a better knowledge of those cartels and how they touch ourselves and our economy should be had. What do you think of that?

Mr. CROWTHER. We ought to have a great deal more knowledge than we now have. This whole thing has been built up on assertion, with very little knowledge, and we seem to have reached a point where the mere asking for knowledge is resented. I think we ought to have a searching inquiry—and here is a place where so-called experts could function inquiring into these cartels and what they do not a superficial examination, not mere asking the cartel managers what they do. If

you do initiate such an inquiry it would be of infinite benefit now and after the war.

Mr. DEWEY. And would play, you think, an important role in our future economy?

Mr. CROWTHER. It might be decisive.
Mr. Dewey. Thank you very much, sir.

Mr. REED. Mr. Chairman, following my last testimony, I would like also to insert this table.

The CHAIRMAN. Without objection, it will be inserted.

(The table is inserted at the conclusion of Mr. Reed's examination of the witness.)

The CHAIRMAN. We thank you, Mr. Crowther, for your appearance and the information you have given the committee.

Mr. CROWTHER. May I, sir, thank you and the members of the committee for your courtesy ?

The CHAIRMAN. You are very welcome, I am sure.

The next scheduled witness, could not be here this afternoon, so I will call Mr. Eugene Thomas, president of the National Foreign Trade Council. Mr. Thomas, will you give your name, address, and occupation to the stenographer?

Mr. THOMAS. Eugene P. Thomas, 26 Beaver Street, New York, president, National Foreign Trade Council.

The CHAIRMAN. Mr. Thomas, about how much time do you think you will require?

Mr. THOMAS. My prepared statement will take 10 minutes.

The CHAIRMAN. You may proceed without interruption for 10 minutes.

STATEMENT OF EUGENE P. THOMAS, NEW YORK; PRESIDENT,

NATIONAL FOREIGN TRADE COUNCIL

of 3 years.

Mr. THOMAS. Mr. Chairman and gentlemen of the House Ways and Means Committee:

I appear here on behalf of the National Foreign Trade Council to support the demand of American foreign traders generally for continuance of the Reciprocal Trade Agreements Act for another period

The council membership comprises manufacturers, merchants, exporters and importers, rail, sea and air transportation interests, bankers, insurance underwriters, and others concerned in the promotion and expansion of the Nation's foreign commerce.

The council is a nonpartisan organization which aims primarily, in respect to foreign commercial policy, at what is considered to be best in the national interest. From this standpoint its membership supported the Reciprocal Trade Agreements Act from its inception in 1934, and has consistently advocated and supported its continuance in succeeding triennial periods when it came up in Congress for renewal. Its continuance we consider to be indispensable to the

safeguarding of our international trade interests, now and following the war.

The annual national foreign trade conventions of the council, which have an average attendance of about 1,000 delegates from all parts of the Nation, have endorsed from the beginning the reciprocal trade agreements program. At the last national foreign trade convention, which was held in Boston, October 7-9, 1942, the Convention unanimously passed a declaration from which I quote as follows:

A formula should be agreed upon for the abandonment of discriminatory bilateral trading and the adjustment of uneconomic tariffs, having proper regard for the maintenance of the standards of living in the participating countries. The convention believes the reciprocal trade-agreements program should be continued in force.

The act was passed in 1934 to meet a crisis of exceptional dimensions, following the economic and financial disaster of 1929 when our exports fell by two-thirds and millions of our workers were unemployed. In 1933, our total foreign trade had dropped to slightly over $3,000,000,000 contrasted with a total of more than $9,000,000,000 in 1929. In 1937, when the act was only 3 years in operation, under conditions unfavorable for its success; the total trade of the United States had risen to a value of nearly $6,500,000,000. In that period, when the Axis Powers were secretly preparing for a war of political and economic conquest and world domination, and devising economic policies to further this end, our exports to countries with whom trade agreements had been made increased by 61 percent as compared with the value in the years 1934-35, while our exports to nonagreement countries showed an increase only of 38 percent. That was a period also of numerous restrictions on multilateral trade.

In response to Senate Resolution 325 of January 28, 1933, a study was made by the United States Tariff Commission, which reported in respect to a wide range of dutiable items in our tariff which were more or less noncompetitive with, or unsuited for, domestic production; and in respect also to those imports which represented less than 5 percent of our total domestic production. Lists of over 1,000 items filed in these categories were published at the time and were accepted as evidence that numerous import concessions could be made by the United States in order to provide for an expanded production in our export industries.

After this war we shall face an emergency different mainly from that of 1933 in the more vastly complicated nature of the recovery problem. When resistance to the United Nations is crushed in Europe and Asia, we must supply vast quantities of food, medicines, and relief to those continents. The program of relief and rehabilitation will merge insensibly into the problem of reconstruction of the foreign trade of the world. In that process of reconstruction we shall have to give and take. We shall have to examine every possibility of taking goods and services from abroad which will add to, rather than detract from, the general welfare of this country, which must be preserved as a chief factor in world rehabilitation.

Consequently, we shall have to deal with other governments looking for the greater development of international trade. Unless, therefore, the Executive power of the Nation is given the right to make trade agreements with other nations, we shall have our hands tied when it comes to the settlement of post-war international trade. There is no other mechanism established by the laws of the United States to perform the particular function of cooperative removal of trade barriers by reciprocal bargaining. This Trade Agreements Act does provide the authority or the bargaining power necessary to induce any other country to lower or remove its tariff barriers against our trade, on the quid pro quo basis of corresponding adjustment on our part.

The Secretary of State and other Government officials have appeared at these hearings and presented figures showing the definite advantages to American industry, agriculture, and labor from the agreements entered into with 31 countries.

The facts in the case having been clearly established, Congress now may arrive at a sound conclusion based upon these facts. The record of 9 years' progress under the act shows conclusively that its operation has been beneficial to the welfare of the United States. As the war draws to a close, we shall again be facing emergency conditions as they affect our foreign trade. It is the firm conviction of the great majority of American businessmen engaged in foreign trade that Congress should not at this critical time reverse its tariff policy.

While it is clearly in the self-interest of the United States to participate actively with others of the United Nations in the world leadership That is demanded of us, it will likewise be in the best interest of other nations to know, in the face of a disrupted world economy, that the United States is prepared to continue unequivocally its present foreigntrade policy in a cooperative program of world economic reconstruction. No alternative to the present trade-agreements policy has yet been devised which can meet so effectively the crucial days that lie ahead, nor should the soundness and permanence of this policy be qualified by limiting its duration to less than 3 years.

The act does not tie the hands of Congress, if at some future time circumstances should arise to compel the adoption of other measures. It is evident, however, that the industrial and agricultural interests of this country should not be subjected to disturbing changes relating to tariff-making powers, which would detract from the paramount task of winning the war and the planning for post-war foreign-trade reconstruction. Reversal of our foreign commercial policy at this stage would inevitably tend to disturb our future economic relations with our allies and counteract efforts in Latin America to establish a solidarity of interest in the winning both of the war and the peace. It would be highly unfortunate at this time to create serious doubt in the minds of the other United Nations as to our willingness to cooperate in developing sound world economic relations in the post-war period. Nor would some foreign countries fail to point out that we have abandoned a policy which has served to augment and liberalize trade for 8 years, and stand before the world without any alternate acceptable substitution for reciprocal and nondiscriminatory trading.

Flexibility in tariff concessions has been recognized by both our political parties as an indispensable requisite of tariff-making, if the United States is to make her foreign trade contributory to domestic economic stability. The history of the past 8 years shows that the executive agencies have provided an efficient machinery for the breaking down of barriers to our trade with other nations by a method of friendly bargaining, rather than by provocative unilateral reprisals.

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