sumption does not exist and if we are to maintain our present standard of living as the highest in the world, we must continue to apply the equalizing factors of tariffs or import quotas to protect the standard of living of the American worker and the opportunities of free enterprise to American industry. Careful and thorough investigation must accompany the use of these equalizing factors. It is a contention of advocates of the free-trade theory of the economic division of labor that the marginal or high-cost producers should turn to other production. In other words, the fisherman or cannery worker should go find himself something else to do or to make-which is not necessarily possible in either an economic or desperation sense in a highly developed economy where investment and employment opportunity are long since established and organized to meet the real economic needs of our country.

We have traveled a far piece of the road in our journey from high tariffs to the goal of free trade. In 20 years we have reduced our tariffs on dutiable goods from a level of more than 50 percent then to 12 percent today. In addition, we have made most sparing use of nontariff trade restrictions such as import licenses, quotas, currency exchange requirements, et cetera, such as are effective in many other countries involved in world trade. Further reduction through the instrument of trade agreements should be approached with care and caution and with considerably greater emphasis on the requirements and limitations of domestic industry.

Wholesale concessions made in haste and without careful consideration and consultation with industry, as represented by some existing trade agreements, contain inequities that have proved damaging. The principles of H. R. 4294 will give the legitimate interests of domestic industry and labor greater recognition in any new agreement that may be negotiated, and make rectification of injury suffered in previously negotiated agreements more readily attainable. This we consider to be essential.

Perhaps more consideration and study should be given to a balancing of world trade between all countries rather than to opening wider the gates to the world's most highly developed market, the United States, with the implied obligation that we become the principal market place for all the world's manufacture and production.

Perhaps exporting countries should be encouraged to develop a market in this country for goods which are not readily obtainable here rather than simply to duplicate goods of our own manufacture in competition with our own labor and manufacture.

Perhaps more consideration should be given to the imposition of import quotas in exchange for reduced tariffs. Our industry would favor import quotas based on a percentage of national consumption to the end that imports would grow as consumption increased and American industry could expand with the assurance that it would enjoy at least its own share of the market.

Our investigation and study of the history of the domestic canned tuna industry indicated that it has suffered serious injury on three specific occasions, detailed below, as a result of trade agreements negotiated under existing legislation. We do not believe that it is necessary to present detailed facts about the production and imports of tuna, employment in the industry, capitalization, and so forth, since several

studies of the industry have only recently been completed by several governmental agencies.

I would, however, request at this time, Mr. Chairman, approval to file a subsequent statement with condensed statistical information supporting these points.

The CHAIRMAN. Without objection.

(The material referred to is as follows:)

SUPPLEMENTARY STATEMENT OF TUNA RESEARCH FOUNDATION

TARIFF HISTORY OF CANNED TUNA

Historically, canned tuna in oil has always been afforded tariff protection. Under the Tariff Act of 1922 all canned fish not categorically named was placed under one basket heading calling for a 30 percent ad valorem duty. This included canned tuna which, at that time, was imported in such small amounts as to be considered negligible.

The Tariff Act of 1930 continued the same duty, but provided that a special category was to be made listing canned tuna in oil at the 30 percent ad valorem duty. From 1931, the first year of the listing of canned tuna in oil, the imports rose from 937,000 pounds to 14,382,000 pounds in 1933, or a rise of 1,400 percent. During the same period the percent of imported canned tuna compared to the total amount consumed in the United States rose from 3.3 percent in 1930 to 30.6 percent in 1933.

Because of the tremendous increase in imports of 1933 to the detriment of the domestic canned tuna industry, President Roosevelt raised the tariff to 45 percent ad valorem beginning January 13, 1934. The immediate effect in terms of both amount imported and percentage of the total consumption of canned tuna in the United States will be seen from the table appearing below:

TABLE I.-Percent and amount of imported canned tuna in oil

From the above table it is evident that although the imports were temporarily curbed following the imposition of the 45 percent duty, they quickly regained a large share of the American market, reaching 13.6 percent in 1937. This duty of 45 percent ad valorem on tuna in oil remained in effect until 1943. However, after 1939 the imports dropped due to World War II, which was then in progress. In 1943, through a trade agreement with Mexico, the duty on tuna in oil was lowered to 22% percent ad valorem. The effect of this was not immediate, due again to wartime circumstances and indeed not until 1950 did foreign imports command any appreciable amount of the domestic market for canned tuna in oil. However, in the latter year the Japanese had recovered sufficiently to export the greatest amount of canned tuna in oil that they had ever produced, to and including their record year of 1933. The share of the total market for tuna in oil of imported canned tuna jumped from 5.9 percent in 1948, receded temporarily to 3.1 percent in 1949, and zoomed to 17.3 percent in 1950. This represented the highest level which foreign imports had climbed in relation to domestic production and actual total consumption since 1933.

On January 1, 1951, the trade agreement with Mexico was abrogated by Mexico and the tariff on tuna in oil returned to 45 percent ad valorem. The same process took place that had been observed in 1933 and 1934. Immediately after the imposition of the 45 percent tariff, the imports of tuna in oil dropped considerably to 3,615,000 pounds in 1951, but began climbing the next year, 4,288,447 pounds, or an increase of 18.5 percent was registered.

At the same time, a complicating factor had entered the tuna in oil picture commencing in 1948. From that year imports of canned tuna packed in brine solution were brought into the United States under the terms of a trade agreement with Iceland, which listed tuna in a basket category at a 121⁄2 percent rate ad valorem. Although these were negligible until the return of the 45 percent tariff on tuna in oil they immediately assumed nearly the comparable importance to that of tuna in oil before 1951. The table below shows the amount and the percentage of the total domestic consumption that this product attained since 1950.

TABLE II.-Amount and percent of tuna in brine imported into United States

Thus, it will be noted that historically a tariff of 45 percent on tuna in oil regulated imports of canned tuna within a volume that the domestic canned tuna industry can accommodate. However, reductions brought about through the negotiation of trade agreements involving concessions in duty immediately result in an import volume damaging to the domestic industry.

The negligible importance of Mexico as an exporter of canned tuna to the United States is demonstrated in table III, below:

The trade agreement effective in 1943, which reduced the duty on canned tuna from 45 percent to 221⁄2 percent, clearly shows that Mexico was not a factor, and why canned tuna was included in this trade agreement remains a mystery.

The effect of the concession on duty on canned bonito (sold in the United States as a subsitute for tuna) is shown in table IV below:

Prior to 1948, imports of bonito canned in oil were not separately reported in official statistics. They were probably insignificant or nil before the war. The emergence of the present substantial import trade in bonito, canned in oil, was a direct result of the wartime and postwar development of the fish-canning industry in South American countries, particularly in Peru. This industry was developed largely through the activities of our point 4 program.

TABLE V.—Ca nned tuna imports and percent of total consumption

1 Negligible.

2 Estimated by Tuna Research Foundation, Mar. 27, 1953. Source of all tables: U. S. Fish and Wildlife Service.

Mr. MORRIS. 1. In 1943 a trade agreement with Mexico became effective which reduced the duty on canned tuna in oil from the existing rate of 45 percent to 2212 percent. Mexico was not a factor in the canned-tuna business; in fact, exported only negligible quantities from the date of the agreement through 1946 and none since

then. No regard during this trade-agreement negotiation apparently was given to the fact that Japan would, after the cessation of hostilities, reemerge as the world's largest exporter of canned tuna. No consideration was given to the fact that Japanese exports of tuna to this country in the 1930's at a duty of 30 percent, not 221⁄2 percent, completely demoralized the entire domestic industry until President Roosevelt by Executive order in January of 1934 increased it to 45 percent. This increase brought about a balance between imports and domestic production and permitted the industry to recover. Little consideration was given to the industry's point of view in the negotiation of the agreement. Only the abrogation of this trade agreement by Mexico, effective January 1, 1952, which returned the duty to 45 percent, saved the domestic industry, and it was a close call as Japan, having rebuilt her fishing industry, flooded the country with canned tuna at the reduced rate.

2. In 1943 a trade agreement was negotiated with Iceland. Despite the fact that Iceland neither catches, processes, or consumes tuna, tuna canned in brine was thrown into a basket category of fish upon which the duty was reduced from 25 percent to 122 percent. As a result, Japan switched the bulk of its exports to us from tuna canned in oil at 45 percent to tuna canned in brine at 1212 percent. Only subsequent voluntary restriction of exports by the Japanese enables the domestic industry to live. This is a situation brought about by trade agreements under present legislation and is about as logical as the imposition of a tariff of 45 percent on black shoes and 1212 percent on brown. Again-industry was not given due consideration.

3. As a result of negotiations under the general agreement on tariffs and trade, the duty on bonito canned in oil has been cut from 30 percent to 15 percent. Bonito is sold in this country as a substitute for canned tuna and rapidly growing imports of this product, principally from Peru, have diverted approximately 7 percent of domestic consumption from tuna to bonito.

In view of the above experiences, it is our considered opinion that the adoption of the principles involved in H. R. 4294 will tend to prevent recurrence of similar acts injurious to the domestic tuna industry and we therefore recommend the inclusion of these principles in the extension for 1 year of Reciprocal Trade Agreements Act. The CHAIRMAN. Are there any questions?

Mr. KING. Yes, Mr. Chairman.

The CHAIRMAN. Mr. King wishes to inquire.

Mr. KING. I wish first to compliment Mr. Morris on the understandable manner in which he has drawn up this statement. And I wish, further, Mr. Chairman, to have this record spell out the fact that this committee, in acting on my own and Mr. Camp's proposals in the last session of Congress, recognized the injury and the depressed and serious situation confronting the industry in my district, and pretty much along the entire west coast. And I believe, Mr. Morris, there has not been another instance, in the 7 or 8 years I have been on this committee, when not only this committee but the House has acted on legislation similar to that which sought to remedy and alleviate the very serious situation that confronted the tuna-packing industry in this country. This proves the seriousness of the tunafish problem.