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production for the war effort. Before the war is over, a very large percentage of our production will have been converted to the production of war materiais. Millions of new workers are being added to the labor force, while millions of others are being drawn out of industry and agriculture into the armed forces.
When the war is over, we will be confronted with the terrific problem of maintaining sufficient volume of production of civilian goods to provide employnient in private industry and agriculture for the millions who will be returning to civilian life from the armed forces as well as those already engaged in production. While there are many people now working who are doing so only temporarily out of patriotic motives, obviously competition for jbs will be severe.
Failure to successfully meet this problem will sooner or later result in unemployment, accumulating surpluses, depressed prices, and will bring about dejendence upon “Government-made work” relief plans on an unprecedented scale.
The restoration of our foreign outlets for both industrial and agricultural exports is therefore vitally important in order to permit our agriculture and irdustry to maintain a sufficient volume of production to avoid widespread unemployment and depression prices.
The preservation of private enterprise is also at stake in our post-war trade policy. If we should decide to adopt the policy of extreme nationalism with embargo triffs, bilateral trading, and control of imports and exports we would inevitably be forced into complete regimentation of business and agriculture in order to effectively enforce such foreign-trade controls. The complete licensirg and control of imports and exports which would be required under such a system inevitably leads to further regimentation and control of domestic industry and agriculture by government. In addition, the greatly reduced volume of our exports would inevitably force drastic Government controls over domestic production and prices, and increasing reliance upon governmental subsidies for industry, labor, and agriculture through higher tariffs subsidy payments, and Government work projects. The continued extension of Government controls under such policies would seriously jeopardize the continuation of private enterprise.
It is significant to note that the nations of the world which have resorted to the most extreme nationalistic measures of embargo tariffs, bilateral trading and trade controls-namely, Germany, Italy, and Japan-have become the extreme examples of absolute dictatorial power and complete governmental control of industry, labor, and agriculture.
American agriculture has a very important stake in the restoration of our export outlets.
In normal times nearly one-half of all our exports consist of agricultural commodities, and the producers of many of our major agricultural commodities are heavily dependent upon export markets for a large share of their products, as shown by the following table: Commodity : Percent Commodity :
Percent Wheat. 20 Pears.
20 Tobacco 40 Lard.
40 Dried apricots_60 Raisins.
50 Much has been said about "the American market for the American farmer," but the American market alone is not enough to provide an adequate standard of living for American farmers. American agriculture cannot have a standard of living comparable to industry and labor if agriculture is forced to depend upon the domestic market alone for the outlets for its production. Unless we can regain export outlets for many of our basic commodities, it will mean reduced production and reduced income for millions of farmers. There are 10,000,000 farm people in the South dependent upon cotton and 5,000,000 in the Corn Belt dependent upon corn and hogs, not to mention millions of others dependent upon other export commodities.
It is much more important to the American farmer to have profitable markets for his total production than to have exclusive access to a domestic market too restricted to maintain an adequate income for American agriculture.
An embargo policy, if carried to its logical conclusion, would be disastrous, not only to the producers of agricultural commodities dependent upon export markets but ultimately would be disastrous to the producers of other agricultural commodities, such as dairy products, beef cattle, and fruit and vegetables.
It would be disastrous to them in two respects : First, the loss of foreign outlets for surplus commodities would result either in enormous surpluses which wreck domestic prices or force drastic restrictions in production of such commodities, and in either case the result would be to encourage the producers of these surplus commodities to shift to the production of such as dairy products, beef cattle, and fruits and vegetables, which, in turn, would produce disastrous surpluses that would injure the price structure for these products.
Secondly, agriculture would suffer from such a policy by reason of the curtailed purchasing power of industrial workers due to the reduced volume of production and employment, which would result from the loss of our export trade through embargo tariffs and other trade barriers. The home market for dairymen, cattlemen, poultrymen, and wool growers is made up primarily by the income of our industrial workers. The farm cash income from these commodities rises and falls with the changes in the income of industrial workers. To the extent that trade agreements make possible increased outlets and increased production of industrial commodities, and thereby provide increased employment and income for industrial workers, the income of agricultural producers benefits therefrom.
It would be little short of disastrous to go back to the old system of embargo tariffs and trade wars. Trade agreements offer a means by which we can readjust our tariffs up or down in a highly flexible manner so as to gain the maximum of advantages from other nations in return for concessions which we are willing voluntarily to make to them.
The results of 9 years of experience under the trade-agreements program show the advantages of this method of dealing with our foreign-trade problems justify the continuation of this mechanism for promoting increased trade.
While some mistakes have been made in the negotiation of trade agreements, careful studies of the program as a whole have failed to disclose any measurable injury to American agriculture chargeable to trade agreements. On the other hand, substantial gains have been made.
During the period 1928–29 to 1933-34, when we were under the Smoot-Hawley tariff rates, without trade agreements, the total acreage equivalent of competitive agricultural imports was reduced 2,900,000 acres, but during this same period we lost agricultural exports equivalent to 21,000,000 acres. Thus agriculture lost seven times as much as it gained.
During the ensuing years, under the trade-agreements program, the acreage equivalent of agricultural exports in 1937-38 totaled 7,014,000 acres more than in 1933–34; whereas the acreage equivalent of agricultural imports was reduced to a total of 531,000 acres below 1933–34.
The acreage equivalent of the principal agricultural exports during the crop year 1938–39—with concessions made under the trade-agreements programtotaled 28,375,000 acres, which was nearly four times as much as the acreage equivalent of the principal competitive agricultural imports during that year.
In 1938–39 our agricultural exports to non-trade-agreement countries averaged 15 percent less than in 1934–35; whereas our exports to trade-agreement countries in the 2-year period 1938–39, when trade agreements were in effect with 16 countries, averaged 50 percent more per year than in 1934-35, when only 1 agreement (with Cuba) was in effect for as much as a year.
In the 3-year period, our exports to trade-agreement countries of agricultural commodities on which they had made concessions in agreements, averaged $tit.236,000 annually, compared to $47,236,000 annually during the 2-year preagree ment period, 1934–35.
Concessions have been obtained through trade agreements on United States industrial production, which in 1937 accounted for nearly 29 percent of the total value of our industrial exports and concessions have been obtained on our agricultural commodities which in 1937 accounted for nearly one-half of the total value of our agricultural exports.
Thirty trade agreements have been negotiated with 27 countries since 1931. Trade agreements with 20 countries had been signed prior to the outbreak of the present world war in 1939. In 1939 the foreign trade of the United States was valued at $5,500,000,000; manufacturing wages and salaries amounted to $13,200,000,000; cash farm income, excluding Government payments, was $7.900,000,000; and the index of industrial production was 108; and the index of farm prices was 87.
The present basic policy of the American Farm Bureau Federation with respect to trade agreements is embodied in a resolution adopted at the twenty-first annual meeting of the federation, on December 7, 1939, which reads as follows:
"Recognizing the fact that our tariff policies had failed to protect the domestic price of basic farm commodities generally produced in surplus volume in this country, and further that such policies had contributed to the disparity that had developed between farm prices on the one hand and industrial prices and wages on the other, the American Farm Bureau Federation in 1934 authorized its board of directors to support legislation permitting the negotiation and consummation of reciprocal trade agreements with other nations;, insisting, however, that in negotiating such agreements no concessions be made which might have the effect of reducing or holding the domestic price of any agricultural commodity below the parity level.
"The federation recently sponsored a study by recognized economists of the economic effects of all important existing trade agreements. This study seems to reveal that there has been a substantially larger increase in exports to agreement than to nonagreement countries, and that there has not been any appreciable difference in the percentage of increase in imports from agreement and nonagreement countries. Many factors have no doubt contributed to this increased trade, including our gold policy and a general upturn in world business. From all facts thus far available, it appears that while the greatest portion of increased exports has been in industrial products, from which agriculture has only indirectly benefited, yet this study, together with other information available to the federation, reveals that the net effect of the agreements has been helpful rather than hurtful.
"In giving our support to the continuance of reciprocal trade agreements, we renew, with increased emphasis, our demand that no agreement be consummated, the effect of which might be to force or hold domestic prices for any farm commodity below parity level. Any other course would justify the condemnation of and opposition to such agreement by all agricultural groups.
"We further insist that in the negotiation of trade agreements, economic factors be given consideration equivalent to the weight accorded to the factors of diplomacy and statecraft. To this end we urge that the Reciprocal Trade Act be amended to provide that no agreement be consummated unless unanimously approved by the Secretaries of State, Commerce, and Agriculture."
On April 16, 1943, the executive committee of the federation met in Washington and reviewed the federation's policy with respect to trade agreements, and adopted the following recommendation with respect to the continuation of this program:
"That we go on record in favor of the extension of the President's power to negotiate reciprocal trade agreements, but insist that methods of negotiation be modified to require adequate hearings, and that a 30- or 60-day interval ensue following the signing and publication of the terms of a proposed agreement before it would become effective, and that the statute should also require a provision in every agreement of an 'escape clause,' under which either Government could amend or cancel any provision of such agreement after constulting with the other Government whenever the Government desiring to nullify such provision finds that this provision is resulting in injury to a domestic industry by reason of an unexpected volume of imports or other unforeseen conditions or circumstances.
“That we further insist that no agreement be consummated which would have the effect of forcing or holding the price of any farm commodity below the parity price."
As indicated in these two resolutions, the American Farm Bureau Federation favors the extension of authority to negotiate trade agreements, but urges that methods of negotiation be modified so as to provide certain safeguards.
Specifically, the following safeguards are now recommended by our executive committee: Provision should be made to insure that adequate hearings, with due public notice, will be held before any proposed trade agreement is concluded. When a proposed agreement has been negotiated, its terms should be given widespread publicity, and the agreement should not become effective for a period of from 30 to 60 days after the publication of the terms of such agreement, during which time the public would have opportunity to study these provisions and register their approval or disapproval of any provisions. Third, the statute should require also that all agreements hereafter contain an "escape clause” permitting either Government to modify or withdraw in whole or in part any concession granted in such agreement whenever either Government found that a concession granted by it would result in injury to domestic producers of such article or similar articles due to increased quantities of imports or other unforeseen developments and conditions. We insist that no trade agreement be consummated which would have the effect of forcing or holding down prices of any agricultural commodities produced in the United States below the parity price. It has long been the policy of government to restore and maintain the prices of agricultural commodities at parity levels. This policy should be fully recognized and carried out in the negotiation of trade agreements, so that no concessions will be made in any agreements which will nullify or interfere with the effectuation of this policy with respect to our agricultural commodities. All proposed concessions, therefore, with respect to agricultural commodities, should be carefuily scrutinized so as to avoid the influx of such a volume of agricultural imports as to either hold or force the price of the domestic commodity below parity. Any other course would justify condemnation of and opposition to such trade agreement by American agriculture.
We believe the application of these safeguards in the administration of the trade agreements program will give proper assurances to farmers and other domestic interests with respect to safeguarding domestic markets, without wrecking or seriously impairing the effectiveness of the trade-agreements machinery as an instrumentality to restore our export outlets and help bring about a greater measure of economic stability among the nations of the world, which is so vital to the restoration and maintenance of a lasting peace.
LETTER FROM H. L. DILLINGHAM, SECRETARY, AMERICAN GLASSWARE ASSOCIATION,
NEW YORK, N. Y.
AMERICAN GLASSWARE ASSOCIATION,
New York City, April 19, 1943. The WAYS AND MEANS COMMITTEE, House of Rpresentatives, the Capitol,
Washington, D. C. GENTLEMEN: The American Glassware Association is a trade organization representing manufacturers of more than 75 percent of the dollar volume of glass cooking and tableware, tumblers, illuminating, industrial, scientific, and ornamental glassware-the United States total volume of this production now exceeding $100,000,000. These kinds of glassware definitely are affected by glasstariff rates that are changed by trade agreements.
Because of this industry's concern in the future procedures and regulation that may be included in a law to extend the Trade Agreements Act, a special com. mittee was appointed from the membership to determine and present to the Congress the industry opinion in this important matter. This committee has re viewed thoughtfully the effects of existing trade agreements on this division of the industry and submits the following information for the consideration and records of the Ways and Means Committee.
The members of the American Glassware Association are fully aware of the necessity of extending the foreign commerce of this country and realize that foreign markets for our production cannot be secured for United States manufacturers unless foreign manufacturers are given an opportunity to sell their products on equal terms with American manufacturers in the domestic market. We agree that any digression from this policy at this time by our Government might be misunderstood by our allies.
In view of the present situation, it is our opinion that it is wise that sound trade treaties should be negotiated for the mutual benefit of all concerned and are highly desirable; that the power to negotiate these treaties should at all times be vested in the hands of experts who will not make uneven trades and who always will keep in mind the welfare of American industry, labor, and agriculture. Great care should be exercised that no tariff concessions are made which will create unfair conditions so that American manufacturers cannot compete on equal terms with imported products that may be sold here in quantity under the terms of any trade agreement.
To further safeguard the interests of all manufacturers, workers, and commercial enterprises in this country, it is our sincere belief that all treaties so negotiated before becoming operative should be submitted to and ratified by the United States Congress. This action would return the final approval on all tariff legislation to the House of Representatives and the ratification of all treaties to the Senate, which procedures definitely are prescribed in the Constitution.
We shall appreciate having this letter placed in the printed record of the statements made at the hearings conducted by your committee on this matter. Respectfully submitted.
HERMAN L. DILLINGHAM, Secretary for American Glassware Association Committee for Trade Agreements
LETTER AND BRIEF FROM W. N. WATSON, SECRETARY, MANUFACTURING CHEMISTS'
ASSOCIATION, WASHINGTON, D. C.
Washington, D. C., April 20, 1943.
House Office Building, Washington, D. C. DEAR SIR: Attached hereto is a brief filed on behalf of the Manufacturing Chemists' Association of the United States, on the subject of renewal of reciprocal trade agreements as set forth in House Joint Resolution 111. Very truly yours,
W. N. WATSON.
To: The Ways and Means Committee, House of Representatives, Washington,
D. C. From: Manufacturing Chemists' Association of the United States, Washington,
D. C. Subject: Renewal of Reciprocal Trade Agreements Act as embodied in House
Joint Resolution 111.
The chemical industry in the United States is playing an important part in the winning of the war. It hopes to play a similar part in the reconstruction to follow.
While the principal market for its products is the domestic one, this industry is an important importer of materials and a substantial exporter of these products on which heretofore it has been able to compete on world markets. On the basis of this broad interest we are hopeful that we can make some constructive observations in connection with the subject now before you.
We think cooperation with other nations is both necessary and desirable. Furthermore, we think other nations should know of our intention to cooperate with them after the war.
In this connection there seems to be considerable confusion of thought as to the importance of renewal of the Trade Agreemen Act. It is said that failure to renew the act will signify our unwillingness to cooperate and a further intention to pursue a policy of isolationism.
We disagree with both conclusions.
We propose to start with the assumption that we will cooperate within the limits of our ability and to mutual advantage.
The question then is whether the renewal of the Trade Agreements Act is the best vehicle for (a) making known our intention; (b) for our actual post-war cooperation.
Our intentions can be embodied in any affirmative action the Congress may take, and our intention will be judged by what the enactment provides. It is of more importance than to ask: Is the renewal of the Trade Agreements Act our best or even a good vehicle for post-war economic cooperation ?
If the declared objectives of the Trade Agreements Act are contrasted with the objectives set forth in article VII of the mutual aid agreements and of articles 4 and 5 of the so-called Atlantic Charter (to which art. 8 applies), it is selfevident that the latter are far broader in scope and much more applicable to the whole problem of post-war cooperation.
How is it possible then for other nations to misjudge our intentions when we have signed these newer commitments with about 35 nations and have trade agreements only with 26 or 27?