or approval of the Organization. This, of course, is the crux of the charter.

Now we know that this fundamental objective has been surrounded in the charter with many if's, and's and but's. I do not have the time today to discuss all of the special cases which the charter explicitly spells out as exceptions to the general rule. But despite our natural regret that this primary objective of the charter has been tempered, we are satisfied that the United States can work effectively for the eventual elimination of harmful restrictions within the framework of the basic principles as they are set forth in the provisions of the present charter. For I think we should recognize that a blanket and unequivocal provision to reduce trade barriers would be observed mostly in the breach, whereas this more realistic treatment of the situation can be expected to produce tangible results.

Furthermore, an agreement between fifty-odd nations could obviously not be secured on important trade principles without some compromise. Even our domestic legislative action on simple issues, as you ladies and gentlemen so well know, often requires compromise. But just as is the case with domestic legislation, the businesslike compromise which we made and which other nations made in hammering out the charter resulted not in a weakening but in a broadening of the area of agreement.

When we read the charter, we can tell clearly under what conditions and to what extent a nation may fail to act in accord with its main purposes. The charter will furnish an international yardstick of performance where none at all now exists. We know that new unilateral restrictions, bilateral preferences, and trade barriers will be doubly difficult to erect and that they can only be resorted to as open and above-board efforts to deal with persistent and difficult internal problems which are present or which may arise in the future.

The second great contribution of ITO is that throughout its entire length it spells out the cardinal principle of equality of treatment for all nations adhering to the charter. This is the same mostfavored-nations principle that was first embodied into our law in 1922 at the urging of then Secretary of State Charles Evans Hughes, and upon which our reciprocal trade agreements program was founded by former Secretary of State Cordell Hull and under which that trade program has flourished for the past 15 or more years. Under the charter, margins of preference and other discriminatory practices cannot be increased-on the contrary, all deviations from the principle of equal treatment will be placed on the defensive and provision for their ultimate elimination is contemplated.

Another positive advantage the charter gives us is a great gain in freedom from restrictions. As an importer myself, and president of an organization that represents the interests of importers throughout the United States, I have been directly and consistently concerned by one restrictive trade barrier of great practical importance which the ITO is committed to attack squarely: The problem of customs "red tape". In many instances, the lack of any standardization or reasonable customs procedures represents the most formidable trade barrier throughout the world today.

The whole trading community is gratified that the United States Treasury and other Government departments and agencies have been

studying this problem very earnestly and that the administration is expected soon to present a bill to the Congress designed to simplify and modernize American customs administrative procedures.

This important step toward facilitating the flow of American trade will have the hearty support of American importers, exporters, and anyone who has ever got his neck caught in the strangulating noose of customs regulations either here or abroad.

Gratifying as it is that the United States is taking the lead in this as it has in other matters, the 'job can only be considered as just started unless and until other countries follow suit. The Habana. charter firmly commits the members of the ITO to take steps not only to eliminate burdensome and unduly complicated customs regulations but also to standardize valuation methods, currency conversion, customs formalities, marks of origin and various other customs procedures. And they will further be committed to the establishment of appropriate courts and administrative or arbitral tribunals for review of complaints.

This is a matter of enormous importance. Furthermore, the participating countries are required under the charter to make public promptly through the ITO all customs laws, and all judicial and administrative decisions and rulings in advance, in such manner as to enable governments and traders to become acquainted with them. Another gain in freedom from restrictions stems from those sections of the charter concerned with cartels. Here for the first time is a definite commitment on the part of those nations which have always fostered restrictive business practices to work towards the liberalization of their economies. Any American businessman who has tried to compete with a foreign monopoly will surely welcome this obligation.

In addition, the charter sets forth provisions which have as their aim the liberalization of state trading. If the American exporter finds that foreign cartels offer him a type of competition which he cannot fairly meet, the practices of state bodies are even more difficult, and sometimes impossible, for the private enterpriser to contend with. Under the charter, state trading bodies are required to conduct their affairs on the basis of the same competitive principles that apply to private trade.

May I simply inject this thought: I do not think the ITO will necessarily commit what we commonly call the iron curtain countries to join the organization or modify, necessarily, their principles, but I do have in mind that in other countries committed to the principles of democracy we do have a certain amount of state trading and, in fact, we have some in the United States itself, and that it will afford us an opportunity of working out a satisfactory method of doing business with democratic countries that have partly private enterprise and partly state trading.

There, I think, it makes a great contribution.

Mr. FULTON. Will you clarify your reference to the iron curtain countries there?

Mr. ROSENTHAL. I mean I am not at all certain from the experience of the last few years that the Soviet Union or some of the countries allied to it economically and politically at this time will see fit to join the ITO, or will, where they have complete state trading, modify their practices according to the ITO. I raise that point, Mr. Fulton, only

because that has been a subject of attack by those who are opposed to the charter. I do not have that alone in mind, even though the United States today does business with Czechoslovakia, and private American merchants are doing business with them. I have in mind other countries which do not practice free enterprise as fully and completely as we do, even though we perform some state dealing in certain commodities for defense purposes, and I think there are those countries which do not do business as we do but share our principles socially, politically, and economically.

Finally, I consider that the charter offers substantial advantages to American business in the matter of commodity agreements. The charter, in my opinion, will be an important instrument in checking the indiscriminate use of such agreements and will subject those which prove absolutely necessary to stringent rules designed to protect consumer nations. Since the most important consumer of many key commodities is the United States, this is a real gain for us. Under the charter, any commodity agreement which is drawn up must give consumer nations a full voice with producer nations in its terms and administration. Those persons who are familiar with the past history of commodity agreements know that, all too frequently, the interests of the producing countries have been allowed to run roughshod over the interests of the consumer countries. Under the ITO that situation will be corrected, and such commodity agreements as both consumers and producers consider necessary will reflect their mutual interests.

Before I conclude, I should like to touch on two objections that have often been made to the charter. I mention them only because I fear that criticism of and dislike for a few points may blind us to the benefits of the charter as a whole.

One of these objections concerns the provisions on international investment. I agree that the articles on investment are weaker than the potential American investor would like. But I submit that there is nothing which will impair the present insecure position of the American entrepreneur who invests abroad. I believe that while these particular articles may not do the American investor much good, they certainly do him no harm. I also believe that after the charter is accepted, we should immediately attempt to work out on a country-bycountry or multilateral basis a satisfactory investment program in conjunction with a coordinated Point IV program. This idea is, in fact, encouraged in the charter itself.

Critics have also made reference to the principle of one nation, one vote. Many feel that because we can be outvoted, we will be outvoted. I submit that that fear is unworthy of us. I have sat on a great many business committees, but I have yet to find that a representative of one of our larger corporations is fearful that because he has one vote he will be dominated to the disadvantage of his company in the chambers of commerce and other business organizations in which he is active. And I am not afraid that the United States, with its intelligence, its wisdom, and its financial and economic strength will lack its full share of influence in the councils of the world. Let us remember also that in matters of quantitative restrictions, hinging on foreign exchange, monetary reserves or balance of payment difficulties, the International Monetary Fund has a decisive voice-and our position in that body is very strong indeed.

In our judgment the Habana charter for an International Trade Organization lays a sound foundation for economic peace-an economic peace based on a program for economic progress which takes into full account the very difficult realities of the world in which we live.

To us, the Habana charter is not the final goal of international economic cooperation. The Habana charter and the creation of the ITO will be but a good beginning. There will be many changes as the trading nations of the world work together for their common good. Review is explicit in the charter, and there will be many opportunities to improve its workings, as we go along, for the benefit of all. And so, in urging that the Congress approve the Habana charter and so help bring the ITO into being, the National Council of American Importers does so in full awareness of the fact that this is not a final charter. We are, however, confident of its basic strength and in the correctness of its fundamental direction. We firmly believe that this new international agency, with the progressive leadership and strong support of the United States will accomplish much good over the years that lie ahead for all nations and peoples of good will.

Mr. GORDON (presiding). Mr. Rosenthal, thank you very much for your comprehensive statement.

Mr. Carnahan

Mr. CARNAHAN. Mr. Rosenthal, you are not particularly apprehensive of any very bad results that might come from adopting the charter as it is, and look forward to improving it as we go along? Mr. ROSENTHAL. Very definitely.

Mr. CARNAHAN. That is all, Mr. Chairman.

Mr. GORDON (presiding). Mr. Fulton, have you any questions? Mr. FULTON. In your membership, as I am a Representative from Pennsylvania, do you have Pennslyvania companies and firms?

Mr. ROSENTHAL. Yes, sir. I do not know how many of our members are resident of Philadelphia, Pittsburgh, and other parts of Pennsylvania, but I do know we have some.

Mr. FULTON. Could you, at your convenience, get me a listing of the firms and individuals who might be interested in your association who are from Pennsylvania or do a large part of their business there? Mr. ROSENTHAL. Yes, sir.

(The information requested is as follows:)

PENNSYLVANIA MEMBERS OF THE NATIONAL COUNCIL OF AMERICAN IMPORTERS

Cooper, T. G., & Co., Inc., 2400 E. Venango Street, Philadelphia 34, Pa.

Ebeling & Reuss, Inc., 707 Chestnut Street, Philadelphia 6, Pa.

Fisher, Bruce & Co., 219 Market Street, Philadelphia 6, Pa.

Hirshenhorn, S., & Sons, 1015-1016 Lafayette Building, Fifth and Chestnut Streets, Philadelphia 6, Pa.

Insurance Co. of North America, 1600 Arch Street, Philadelphia, Pa.

Lippincott Johnson & Co., 919 Walnut Street, Philadelphia 5, Pa.

Paper Makers Imporing Co., Inc., Drake Building, Easton, Pa.

Porter, Alfred H., 225 South Fifteenth Street, Philadelphia 2, Pa.

Sickles, Louis, 914 Walnut Street, Philadelphia 5, Pa.

Vandegrift, F. B., & Co., Brouse Building, Philadelphia, Pa.

Wanamaker, John, Philadelphia, Thirteenth and Market Streets, Philadelphia, Pa. Weil, Lewis P., 90 Church Lane, Philadelphia 44, Pa.

Mr. FULTON. Under the United Nations, we have had the one vote. As you have pointed out under our business organizations in this

country we have agreed in large part to a one-vote system. Do you think that will hamper our position in putting forward what we feel are good policies and progressive moves under the charter? Do you think that one vote will be limiting?

Mr. ROSENTHAL. No, I do not think that one vote will be limiting. I think we have a great deal of influence, as our work in the United Nations has shown. We are recognized as one of the leaders in world political and economic affairs today and I am not the least bit fearful of that.

Mr. FULTON. Once the policies have been outlined that are largely the policies that we have been operating under, even since the 1920's in the conducting of our international trade and our tariff laws and regulations, do you have any apprehension that the fact that we have only one vote might cause us to be smothered under an avalanche of foreign votes that will be contrary to our best interests and then have put on us a moral obligation where we cannot protect ourselves?

Mr. ROSENTHAL. I do not think that follows at all. The charter commits us to the principle of the lowering of all trade barriers and to bargain with other nations in good faith. That carries out the trade-agreements program which we have had for a number of years. There is nothing in the charter that compels us to lower a rate of duty or to change any of our domestic practices as a finite matter. It does commit us to the principle of negotiating with other nations, with a view to everyone lowering trade barriers in order to stimulate the exchange of goods and services among all peoples of the world and we are only committed to negotiate with them, based on that sound principle.

Mr. FULTON. Actually under article 17 of the charter, section 1, it specifically provides that these negotiations for the substantial reduction of general levels of tariffs and other changes in imports and exports, is to be made upon a reciprocal and mutually advantageous basis. That does not mean we would be acting against the self-interest or self-protection of the United States by any means, do you think?

Mr. ROSENTHAL. I believe we will be required to lower some of our tariffs further and to do other things provided other countries also reduce their barriers and reduce their tariff rates, with a view to increasing the exchange of goods among all peoples.

Mr. FULTON. So then within an area of reference of our own public security and general welfare, under article 17, section 1, it is presumed that we, and each of the other countries who are members, will act with a wholesome selfishness.

Mr. ROSENTHAL. I think that is correct and based on your conversation with Mr. Anthony, I would have the feeling that other nations are just as interested in fulfilling their moral obligations and are just as trustworthy as we are. I do not think we are the only ones in the world who will stick to their word. I think others will, too. I think as the wealthiest Nation in the world today, we must recognize that other nations cannot immediately eliminate all of their restrictions. I think we have to understand that.

Mr. FULTON. When we have had this policy starting, let us say definitely in 1922 when Secretary of State Hughes decided we should give equal treatment among nations in our trade agreements, and following through the reciprocal trade agreements we, by our policy have been morally bound by these principles, have we not?