posals. They wonder why we did not assume the right to insist upon those things which may have been vital to us. us. Mr. THORP. I think we did insist on the things that were vital to While it is true this charter is not entirely as we have written it, we do not feel that any concessions that were made were concessions which were damaging to the United States. There is a limit to the extent to which the United States, even with all of its power, can or should go into an international organization and say, "It must be drawn this way," and expect all the other countries to go along with us. Mrs. BOLTON. Of course; but we are pretty poor bargainers if we cannot do things by suitable means. Mr. THORP. I think the suitable means were used, and the result shows it in what we have here. Mrs. BOLTON. I think we must have some way of getting that across to the objectors. Also because the feeling has grown during these reciprocal-trade years, that all the reciprocity has been on our side, and that if this is a carrying forward and broadening of reciprocal trade on this one-sided principle, then we are just going to be handing out again and get nothing in return. Again we are being bad bargainers and again we are being anything but Connecticut Yankees. Chairman KEE. Is that all, Mrs. Bolton? Mrs. BOLTON. For the moment, Mr. Chairman, but I wish to question the Secretary on some other things. Mr. THORP. After we have had further discussion on the committee, it might be helpful if I came back to develop some of these things more thoroughly. Mr. VORYS. I would like to say this, Mr. Chairman, that always before the reciprocal-trade agreements have come from the Ways and Means Committee, but any consideration of this is going to involve a progress report on the whole reciprocal-trade area, and that therefore the State Department should plan to have enough information submitted for our hearings to answer questions that come up. I realize we are not familiar with the reciprocal-trade agreements as is the Ways and Means Committee. Those members are going to be asking many questions which you gentlemen can anticipate better, I think, than we can. Mrs. BOLTON. I have just one more question, Mr. Chairman. Mrs. BOLTON. What compulsions would we accept by going into this? How much have we to say of our own actions after we join? Mr. THORP. We are accepting a commitment to strive along various lines of policy set forth in the charter. These are in the main lines of policy that we are striving along already. Mrs. BOLTON. Would you be good enough to give us a well-thoughtout statement of what we would be accepting and what the results might be? Mr. THORP. I will be very glad to. COMMITMENTS FOR THE UNITED STATES IN JOINING THE ITO If the United States accepts membership in the ITO, the organization will be established and the principles contained in the charter will be accepted as rules to guide the trade policies of a very large number of countries. The commitments which member countries, including the United States, would accept are summarized on pages 37 to 43 of the summary analysis of the charter which has been provided for the committee and, therefore, will not be repeated here. The rules which members of the ITO will be committed to follow are rules of which we either wholeheartedly approve or, in the cases where they fall short of complete accord with our views, are rules which we find reasonably satisfactory. On the whole, membership in the ITO would involve very little change in present United States policies. This is indicated by the small number of cases in which our present laws are inconsistent with the charter, as shown in the legal memorandum which has been presented to the committee. The inconsistencies fall almost entirely in the field of customs procedures and, as Mr. Foley testified, the changes required are changes that we would wish to make even if there were no charter. This does not, however, mean that our acceptance of the principles of the charter would be unimportant. In the first place, a reaffirmation of our intention to pursue these policies is important to other countries. Since we account for over 50 percent of the world's industrial and 20 percent of its agricultural production and about 20 percent of its international trade, it is highly important for other countries to have assurance as to the nature of the policies which the United States intends to pursue. Our agreement on the policies of the charter, even though in the main it is a reaffirmation of what we are already doing, is very important to give confidence to the rest of the world. Acceptance of membership in the ITO would mean that we would agree to continue the general policy of the Trade Agreements Act to negotiate for reduction of the general level of our tariffs on a selective, product-by-product basis. This would involve no change in our present trade-agreement procedures and would in no way change the absolute authority of the United States over its individual tariff rates. Attached is a copy of the pertinent parts of article 17 of the charter dealing with tariff negotiations, with portions underlined, which makes this clear. It would mean that we would agree to continue our present policy of not using quotas for protective purposes except in certain specified cases, such as in connection with certain agricultural products where our own production is restricted, or in case of action under the escape clause. It would mean that we would pledge ourselves to take action designed to achieve and maintain full and productive employment within our own territory through measures appropriate to our own institutions; that we would agree not to enter into commodity agreements unless they conform to certain standards set forth in the charter; that we would agree to take action to prevent harmful restrictive business practices in our country according to our own laws, and to provide information to assist the ITO in its investigation of international harmful restrictive business practices; that we would agree not to increase any of our tariff preferences; and that we would agree not to use internal taxes or regulations to discriminate against imports. It would mean that we would agree to consult with other countries where they felt our use of export subsidies was having adverse effects upon their trade. It would mean that we would agree generally to consult about our trade policies and to submit them to public scrutiny and discussion. It would mean that we would agree to bear our share of the administrative cost of the ITO. It would mean that we would commit ourselves to make the changes in our laws described in the legal memorandum referred to above. It would reaffirm some of the pledges to cooperate with other members of the United Nations in the fields of employment and development which we accepted in articles 55 and 56 of the United Nations Charter. Acceptance of membership in the ITO would constitute an agreement to abide by its rules. If we do accept membership, we will presumably do so. But if for any reason we failed to do so, the ITO could not direct us to take any action. It could, in such case, release other member countries from their pledges to us. If dissatisfied with this action, we could then withdraw from the Organization. Establishment of the ITO with our participation would mean that we would receive comparable pledges from the other member nations; pledges committing them as firmly and as far in the way of multilateral trade as is possible under the economic conditions of the world today. These pledges of other countries would be very important to us for two main reasons. In the first place, the total of our export and import trade in 1949, for example, was in excess of 20 billions of dollars. This is a very large amount of business. It involves a lot of jobs. The acceptance by other countries of rules of international trade conduct which would, as we believe the rules of the charter would, make the conduct of that amount of United States business easier for our businessmen, both exporters and importers, is of very direct importance to the United States. Moreover, we have a tremendous interest in the economic health of the other free countries of the world. Trade is one of the most important factors in that economic health, even more important to many of them than it is to us. Adherence to the rules of the ITO and the operation of the International Trade Organization would, we believe, make that trade easier and remove many obstacles which stand in the way of its growth and development. A large amount of the benefits of the ITO will be to other countries in their trade with each other. But that trade will contribute to their economic strength and health and, hence, in that very real sense, serve our interest in seeing that they are strong and stable and have higher standards of living. It is, of course, impossible to make any quantitative estimate of what the effect of adherence to the rules of the ITO will be, or as to what the effect of the operations of the Organization itself will be. But we know that restrictions and controls are seriously hampering our own and other countries' trade today. We have historical experience to tell us that, where nations vie with each other in the use of restrictions on each other's trade, there is a contraction of trade and everybody suffers. We know that trade is vital to the life of nations and to their economic strength and health, and any measures or agreements which help to remove obstacles that stand in the way of the development of that trade make a contribution to that health and strength. "ARTICLE 17 "Reduction of Tariffs and Elimination of Preferences "1. Each Member shall, upon the request of any other Member or Members, and subject to procedural arrangements established by the Organization, enter into and carry out with such other Member or Members negotiations directed to the substantial reduction of the general levels of tariffs and other, charges on imports and exports, and to the elimination of the preferences referred to in paragraph 2 of Article 16, on a reciprocal and mutually advantageous basis. "2. The negotiations provided for in paragraph 1 shall proceed in accordance with the following rules: "(a) Such negotiations shall be conducted on a selective product-by-product basis which will afford adequate opportunity to take into account the needs of individual countries and individual industries. Members shall be free not to grant concessions on particular products and, in the granting of a concession, they may reduce the duty, bind it at its then existing level, or undertake not to raise it above a specified higher level. "(b) No Member shall be required to grant unilateral concessions, or to grant concessions to other Members without receiving adequate concessions in return. Account shall be taken of the value to any Member of obtaining in its own right and by direct obligation the indirect concessions which it would otherwise enjoy only by virtue of Article 16." Chairman KEE. If there are any questions any of you would like to ask of Mr. Thorp, we can have him here at some later time during the hearings. Mrs. BOLTON. We regret Mr. Foley's long wait. Chairman KEE. We will adjourn until 10 o'clock tomorrow and will then have Mr. Foley of the Treasury Department. (Whereupon, at 12:26 p. m., the committee adjourned, to reconvene at 10 a. m., Friday, April 21, 1950.) MEMBERSHIP AND PARTICIPATION BY THE UNITED STATES IN THE INTERNATIONAL TRADE ORGANIZATION FRIDAY, APRIL 21, 1950 HOUSE OF REPRESENTATIVES, The committee met, pursuant to adjournment, at 10:40 a. m., in the Foreign Affairs Committee room, United States Capitol, Hon. John Kee (chairman) presiding. Chairman KEE. The committee will come to order. We will continue today with our hearings on House Joint Resolution 236, a bill providing for membership and participation by the United States in the International Trade Organization and authorizing an appropriation therefor. With us we have Mr. Edward H. Foley, Under Secretary of the Treasury. Mr. Foley, we are very glad to welcome you before this committee. We will be happy for you to proceed in such manner as you think best. STATEMENT OF EDWARD H. FOLEY, UNDER SECRETARY OF THE TREASURY Mr. FOLEY. Mr. Chairman and members of the committee, it is my privilege this morning, in the absence of Secretary Snyder from the city, to state the Secretary's position on House Joint Resolution 236, now under consideration by this committee. I have with me some of our experts from the Treasury Department. With your indulgence, Mr. Chairman, if I could state our position, and then, in connection with the questions, have some elasticity to call on some of my associates to answer some of the questions, it might be more enlightening to the committee. Chairman KEE. We will be pleased to have you proceed that way. Mr. FOLEY. Thank you very much. I appreciate your invitation to appear before the committee to discuss House Joint Resolution 236, authorizing United States acceptance of membership in the International Trade Organization. There is very little on the general considerations involved in the charter that I can add to the forceful message which the President sent to the Congress when he transmitted the charter last year; or to his observation on the subject in his state of the Union message last January; or to Secretary Acheson's very forceful statement of the day before yesterday. And, before I proceed, let me state that I claim no expert familiarity with the detailed technical aspects of the ITO charter. Therefore, I shall confine myself primarily to the general |