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no country has shown over the course of the years a greater disposition than Peru to cooperate with the United States in international affairs.
Peru was one of the first countries to aline itself on our side following Japan's attack. The steps taken by her to support our cause first took material shape with the freezing of Japanese assets which the Peruvian Government decreed on December 8, 1941.
Subsequently, she was the first country to sever relations with the Axis Powers pursuant to the action taken at the Rio Conference. A reciprocal-trade agreement between the United States and Peru was concluded last year and, as I happened to be in Lima at that time, I was in a position to observe at first-hand the extremely sympathetic reaction of the press and the public. Only the sincerity of Peru's friendship for the United States and the liberality of our foreign-trade policy have enabled that country to maintain or alter her traditionally close relations with us, and her liberal treatment of American goods in the face of the various types of discrimination practiced by us against her in the shape of excessive tariffs and quota restrictions against her principal products.
Our treatment of Peruvian imports amounted virtually to the exclusion of Peru's principal products from our markets, and was practically throwing Peru's export trade into the arms of European and Japanese competitors while Peru continued for years to supply from the United States a substantial part of her requirements of manufactured goods and farm and forest products. Under these circumstances the feeling was growing that such inequity could no longer continue, and I was a witness to the efforts made by the European interests, primarily Germany, in an attempt to capitalize the situation to their benefit and to our detriment.
The signing of the Peruvian-American reciprocal trade agreement after 2 years of negotiation went far toward offsetting this growing feeling, and seemed to promise for the future a realistic trade policy which gave point and meaning to the good-neighbor policy.
I am not going to take your time with a dissertation on the economic principles involved in Secretary Hull's reciprocal trade agreements policy, nor on the economic advantages to be derived by our country from the continuation of that policy. That has already been done and conclusively by Secretaray Hull himself, by Mr. Jones, and by various representatives of the State Department, and other witnesses who have preceded me. These principles, furthermore, were reinterated time and time again at the extensive hearings held when the act was first passed and on the occasion of each of its renewals.
To my mind, the enlightened self-interest of our country, which should be the guilding factor in the consideration of these matters, would be well served by the renewal of this legislation. If we do not buy, we cannot sell. If we cannot sell our foreign trade disappears and our potential and willing customers are driven into the arms of competing and often hostile countries.
Thank you, gentlemen.
STATEMENT OF J. M. WELLS, REPRESENTING THE UNITED STATES
Mr. WELLS. The companies represented by our association manufacture approximately. 95 percent of the dishes made in this country. They employ about 25,000 men and women.
We oppose the renewal of the Reciprocal Trade Agreements Act primarily because we believe the transfer of this authority to the executive branch of the Government is contrary to the intent of the Constitution in two respects. First, that all revenue measures should originate in the House, and second, all treaties with foreign nations should be ratified by the Senate.
Also, we oppose it because in many, if not all, of the treaties already negotiated, American industry, labor, and agriculture have been sold down the river by our State Department. I know of no concession granted the United States in any treaty that would mean the elimination of work opportunities for any substantial number of workers in the treaty country. Foreign nations just do not treat their nationals that way. On the other hand, concessions made by our representatives had caused considerable unemployment in various industries before the war, but this was nothing compared to what the situation would have been, had there been no war. And this condition can only be intensely aggravated after peace comes and the factories of foreign countries are again in production on civilian goods. That, gentlemen, will be when we are trying to give full-time employment to our returned soldiers and sailors at American rates of pay.
Let me give you as briefly as possible the experience of the pottery industry. When the treaty with Great Britain was being negotiated we were advised that there were under consideration certain reductions in the duties specified in paragraphs Nos. 211 and 212; No. 211 covering plain and decorated earthenware and No. 212 china. Under both paragraphs Japan had been for a number of years the largest exporter to this country. We were naturally at a loss in these circumstances to understand how the committee could be considering reductions in the tariffs under No. 211 and No. 212 in a treaty with Eng. land. All our efforts to obtain any information from our State Department were a total failure. We finally discovered what was planned through friendly importers of British wares, who had encountered no difficulty in obtaining full information from the British Embassy.
It seems one State Department agreed with the statements of British pottery manufacturers that under each of these paragraphs there were certain items of which England was the largest exporter to this country. They picked out under No. 211, “Cups and their saucers and plates, costing above a certain price at the factory. Under paragraph No. 212 they picked out that certain type of china known as bone china, which under previous tariff bills had enjoyed a paragraph and a rate of its own and is higher priced than other china. It was defined as china containing a minimum of 25 percent of calcined bone by weight before firing. In spite of our protests and prophecies before the Tariff Commission, reductions of approximately 40 percent in the tariff on these two groups were included in the British treaty.
Shortly afterward our Treasury Department agreed with importers of British ware that “cups and their saucers and plates” meant, under “Cups," egg cups, mugs, steins, boullons, and cream soups. Under “Saucers”—and, mind you, the wording in the treaty was “cups and their saucers”—they included fruit dishes, ice-cream dishes, cereal dishes, cream soup stands, and oatmeals. Under “Plates” they included bread plates, cake plates, chop dishes, baby plates, and compartment plates. As a result the British were able to bring in practically complete sets under the lowered duties and at prices which made it impossible for us to compete on comparable decorations.
Also, shortly before the restrictions on trading with Japan were put into effect, the Japanese were showing samples of bone china, which they had not previously produced, and taking orders at prices far below those of either the British or American manufacturers for regular china. We had told the Tariff Commission, at the hearings before the treaty was signed, that this exact thing would happen.
Everyone knows that one of, if not the, chief objective of the State Department in negotiating these trade agreements is to lower the American protective tariff rates and to permit ever-increasing imports of competitive merchandise. The desire to increase American exports seems entirely secondary. Certairly there could be no better proof of this than the lopsided treaties that have already been made. This total disregard for American labor's work opportunities becomes even more glaring when the trades that have been made are measured in man-hours of labor, and that, I maintain, is the only proper way to fairly gage concessions in tariff rates.
Spokeston for the State Department have gone even further than admitting the trade treaties are a tariff-lowering device. They have said in practically so many words that these are the first steps toward a final objective of complete free trade.
Just what can be their reason for furthering a policy that would be so completely destructive of the American living standard ? Surely there is no one so gullible he still believes that the elimination of aii or any part of the American tariff is going to make the world just one big happy family. If that myth was never exploded before, it certainly has been by the present conflict. I grant you the statement has been made by certain free-trade fanatics that the Smoot-Hawley Tariff Act is largely responsible for this war. Nothing could have been more specious than the reasons given by Hitler for attacking Poland, Norway, Denmark, and the Low Countries, and by Hirohito for Pearl Harbor, and yet it never occurred to either one of those nimble brains, in their mad scramble for plausible alibis, that they could justify their criminal actions to even their strongest supporters by blaming them on the American tariff policy.
Let us note the difference between this indefensible desire on the part of our present administration to permit the indiscriminate dumping in this country of the products of the pauper and regimented labor countries of the world, and the attitude of Great Britain. In the last issue of the British Pottery Gazette and Glass Trade Review there is an account of a tour of the English pottery districts by the Honorable Hugh Dalton, Member of Parliament, and President of the British Board of Trade. The following is quoted from one of his statements to the potters:
An industry which can export goods of high quality, for the manufacture of which very small quantities of imports are required, will be performing a very
great service to the country in the post-war days. You will be in that position, and I am quite sure you will be ready to render that service.
And again, in the same article, quoting from the same speech: Next, after whisky, pottery is the most important export branch, particularly because you make practically no demand on imports.
There, gentlemen, is Great Britain's realistic approach to finding jobs for her returning soldiers and sailors. A minimum of imports, a maximum of exports. You will find no open door after the war to England, nor to any of her colonies, for the products of any country whose wage rates are below hers. We all remember the tremendous “buy British” campaign that was in full swing before the war and that was supported entirely by Government funds. Be sure it will be continued in even higher tempo after the war.
It was amusing to read in one of the press reports on the imminent International Food Congress that one of the subjects to be discussed at that exceedingly exclusive conclave was to what extent certain or all countries should attempt to become self-sufficient. Sur anyone with the I. Q. of a 10-year-old knows that every intelligent government with even the faintest regard for the best interest of its citizens will encourage to the utmost all efforts to produce as much of what they consume as is humanly possible. That comes very close to the basic law of self-preservation.
Yet we have the astounding suggestion of our Vice President that after the war we shall scrap all of our synthetic rubber plants, with the huge investment of untold millions, and the jobs for thousands of our men and women, so the little yellow and brown men of the Far East may have another bowl of rice and the English and Dutch owners of the rubber plantations may again enjoy their dividends. That, I would guess, to steal a word from one of your honorable colleagues, would come under a definition of globaloney philanthropy.
And speaking of national self-sufficiency, it must be evident to everyone that the other countries of the world are most certainly going to be more self-sufficient after this war than ever before. They are not going to permit their enormous war material plants to rust in idleness. With plant capacity available and labor for just whatever they want to pay for it, they are going to be making the automobile and tractors, the farm machinery, the machine tools, the typewriters, the business machines, the radios, the electrical household appliances and many, many more that were formerly imported from the United States. And I prophesy that in only a few short years, unless we are wise enough to furnish an adequate protective tariff, the employees of those industries in our country will be walking the streets while the importers are bringing in great quantities of the things they used to build.
Before that time comes I hope the manufacturers of those articles, who in the past have generally encouraged lower tariffs, will finally realize the obvious fact that when a dinner set is sold in this country they have an infinitely better chance of selling a radio, or a refrigerator, or a vacuum cleaner to the man who made that set if he works in America at American wages than if he works in Japan at Japanese wages.
To refer again to the pottery industry. In spite of the fact we have what would be considered among the higher tariff rates and that
we are one of the oldest industries in this country, as well as in the world, we have never enjoyed in peacetimes more than 65 percent of our home market, and there has never been a single individual who has become a millionaire through his profits from dish making. The reason for this is simple. In spite of the most modern factories in the world, the tariff rates, ad valorem on foreign valuation, have never been sufficient to meet import prices on similarly decorated ware. When 65 percent of all the money we take in goes to labor and our wage rates are nearly 3 times those of England, 4 times those of Germany, 5 times those of Czechoslovakia, and more than 12 times those of Japan, it is readily apparent that it would require an ad valorem rate fantastically high to give us real protection.
We are hopeful that when the next tariff bill is passed we will have better luck than we have in the past in persuading the Congress to place our commodity on an American valuation basis. I am certain practically all other American producers who have foreign competition feel the same way. The foreign value basis was always unfair to us and the situation was becoming worse than ever when the war started.
Another reason we are opposing the renewal of this act at this time is that under the present chaotic and abnormal foreign-trade conditions and with no one able to forecast the post-war situation, it is worse than folly to attempt to write treaties now that will be fair to both parties in the early peace years. Surely no reasonable person can quarrel with that statement. Yet we know that if they still have the power the State Department, while Rome burns, will be fiddling with whatever other country they can find that is willing to trade a mess of pottage for large chunks of the American market that rightfully belongs to the American producer and the American worker.
Now I would like to make it clear that I and the people I represent are strong for foreign commerce. The more of it, the better. But we are not for the kind of foreign commerce that permits the foreign producer to offer his goods on the American market at prices that cannot be met by the American producer of similar merchandise. As you know, approximately 65 percent of our imports in normal times come in duty free, which presumably means that commodities in that group are not grown or produced in any appreciable quantity in this country. All right, let us steadily increase these imports of this noncompetitive merchandise which forms such a large percentage of our total imports. The one sure way to do that is give the necessary protection to the competitive industries. So they can, in peacetimes, keep their factories and farms and mines operating close to capacity and can give full employment at American wages to our returning warriors. Then we will have an American market for coffee and tea and tin and rubber and silk and hemp and all the other commodities on this free list that will mean greater imports in value and volume than our total imports have ever reached in the past.
Please understand that our industry has never asked for a tariff rate that would exclude imports and give a monopoly of the American market. All we want is a chance to meet the prices of imported wares of the same type. We are strongly confident that, given an even break, we can, through superior quality and design, capture our proper share of the business in our own country. We know beyond perad