SEPTEMBER 19, 1962

PAGE 19857

TRADE EXPANSION ACT

Mr. MUSKIE. Mr. President, I rise in support of the trade expansion bill. I do so because I believe this proposed legislation represents a balanced program for a national trade policy. As a Senator from a State which grew on trade, but has felt the adverse effects of foreign competition, I can appreciate the advantages of expanded trade, and, at the same time, I understand the problems which such trade can create.

I do not need to remind my colleagues of the benefits of international trade. Even those who have doubts about the present bill agree, I believe, that our Nation must trade, in order to continue its economic growth. We need raw materials from other lands; we shall benefit from expanded markets overseas; healthy competition between domestic and foreign manufacturers can bring us improved products at lower prices; and the strength of the free world, I am sure, will be increased by the bonds of commerce.

But to sing the praises of trade expansion is not to ignore the prices it exacts. Wherever there is competition in the marketplace, someone must adjust. Not everyone can win. Someone may be hurt.

Because we are concerned about the human cost involved in economic competition, we have devised ways and means of softening the blows of economic adversity in domestic legislation. We have unemployment compensation programs, aid for small business, and area redevelopment legislation, for example, all of which are designed to help individuals and businesses adjust to changing conditions of competition.

The administration's trade bill, as introduced, recognized that international trade would involve adjustments. Under the Trade Agreements Act, escape clause proceedings were included, to enable the President to provide protection for domestic industries when the going was too rough and the competition from abroad impossible to meet in the normal play of the market.

The trade expansion bill added a new program comparable to our area redevelopment program, under the adjustment assistance, provisions of the bill. For the first time, the Federal Government indicated that it was prepared to assume the responsibility of direct assistance where economic injury was traceable to national trade policy.

The House of Representatives improved upon the original bill, particularly in the field of general negotiating authority for increases in duties and quotas, the escape clause, and in the prenegotiating protection procedures.

Even so, I felt that H.R. 11970 fell short of meeting particular problems which industries in my own State and in other States confronted in the field of foreign trade. In the State of Maine, many of our communities have a single industry. Individual plants are faced by consistent competitive pressure from overseas, especially from the low-wage countries. This competition is severe in textiles, shoes, forest products, and electronics. As small businesses, these companies have narrow survival margins.

In recent years they have found that not only the volume of imports but also the rate of expansion of imports has disrupted markets and threatened them with economic ruin. What they need is not gigantic walls of protection, shielding them forever from the world market, but sufficient protection to shelter them while they adjust to changing conditions.

Some have said that such industries are inefficient, that they might as well be allowed to go out of business quickly, rather than lingering. This is a proposition I cannot accept. Maine industry and Maine workers can compete if they are given a fair chance.

In towns where there is but one industry, where economic resources are limited, adjustment assistance may come too late to restore the economic health of the community. Our experience with the area redevelopment program, while encouraging, demonstrates that the road back to prosperity is a long and hard one.

It has been my belief that neither high tariffs of extreme protectionism nor adjustment assistance after the loss of industries represented a complete and adequate answer to the problem of economic injury resulting from changes in trade patterns.

Almost a year and one-half ago, I introduced S. 1735, the Orderly Marketing Act. This legislation was designed to give the President specific authority to negotiate orderly marketing agreements with foreign countries where such agreements could provide reasonable protection against sudden increases in imports, without closing the door against reasonable import competition from abroad. This legislation, which was cosponsored by Senators TALMADGE, CHAVEZ, SMATHERS, BUSH, LONG of Louisiana, BARTLETT, WILEY, MCCARTHY, BIBLE, and McGEE, had the support of the shoe industry, in particular.

I want to pause here to pay tribute to the shoe manufacturers and to the shoe workers who have supported this concept, not as an impassable barrier to trade, but as a reasonable approach to an orderly sharing of our domestic market, even under difficult conditions.

S. 1735 was directly related to the problem of low-wage-cost competition. It offered a formula for negotiating with foreign countries agreements which would relate the level of imports of a given commodity to the share of the domestic market currently enjoyed by such imports. The marketing agreements would permit an increase in imports in line with expanding domestic consumption. This proposal was comparable in principle to the Geneva Textile Agreements, concluded earlier this year.

Subsequent to the introduction of the orderly Marketing Act, the Trade Expansion Act was submitted to the Congress. I urged that the principle of orderly marketing be incorporated in the trade legislation. To accomplish this purpose, on August 2, 1 submitted an amendment to H.R. 11970. The new amendment was designed to carry out, within the framework of the general trade bill, the intent of the Orderly Marketing Act. I was pleased to have bipartisan cosponsorship of this amendment, including Senators BARTLETT, CHAVEZ, COTTON, DODD, MURPHY, PASTORE, PELL, WILEY, LONG of Missouri, and RANDOLPH.

An August 14, 1 testified before the Senate Committee on Finance, urging that the orderly marketing agreement principle be incorporated by the Committee on Finance in H.R. 11970. 1 was deeply gratified, 1 month later, on September 14, when the committee adopted an amendment adding section 352 to the bill.

Section 352, as the committee report points out, gives "the President discretionary authority to enter into orderly marketing agreements with foreign countries, limiting the export of certain articles to the United States where such agreements offer an appropriate device to prevent or remedy serious injury to domestic industries found to be injured under the escape clause procedure."

The committee also has improved the escape clause, to make clear that trade agreements need not be the sole cause of injury, in order for an industry to seek relief. This was accomplished by the amendments which require that injury result only "in major part" from trade concessions. Furthermore, the industry need not be "down and out," to be eligible for relief. The committee language notes that the Tariff Commission take into account the "inability to operate at a reasonable profit."

In effect, the Senate Committee on Finance has recognized that international trade and the conditions of such trade are changing. With the development of modern industrial plants overseas, we no longer have an absolute advantage in industrial efficiency, especially in areas where wage costs represent a substantial part of the costs of production.

Under the bill, as reported by the committee, an industry injured or threatened with injury from imports has three kinds of relief available to it under the escape clause procedures. The first is the imposition of tariffs or other import restrictions. The second is the orderly marketing agreement. The third is adjustment assistance.

The second alternative, that of the orderly marketing agreements, represents meaningful protection for the substantial group of industries confronted with low-wage competition from highly industrialized and efficient operations overseas. At the same time, it will not shut the door to foreign trade; but it will assure foreign manufacturers an opportunity to share in the orderly growth of our domestic market.

Traditionally, American industry has maintained a substantial advantage over foreign competition, even in low-wage areas, because of the relatively higher productivity of American labor. Since the end of World War 11, we have seen that advantage whittled away as foreign companies have acquired modern plants and equipment-many times, equivalent to our own.

The experience of the shoe industry illustrates what happens when an efficient, highly competitive domestic industry is hit by efficient, highly competitive imports from countries where labor output is high and wages are low.

Imports of footwear, leather, and non leather types, have increased 234.5 percent since 1957 -- from 11 million pairs in 1957 to 36.8 million pairs in 1961. For the first six months of 1962 they had more than doubled the rate of the comparable period of one year ago. While imports have been increasing, our exports have dropped from 4.4 million pairs in 1957 to three million pairs in 1961.

The impact of such competition must be measured, not only in terms of the volume of imports, but also in the rate of expansion and the ability of the foreign competitor to concentrate on certain lines of production and to shift rapidly from one line to another. The key to the problem is market disruption.

The orderly marketing agreement procedure under section 352 provides a tool for the President to use, in cases in which the device as practicable, in halting market chaos and in giving domestic manufacturers a breathing space in which to adjust to changing competitive conditions.

As the committee report has noted, the orderly marketing agreement approach is particularly applicable "when industries concerned have relatively low capital investment, high labor input, and manufacturing techniques which are easily transferred and labor skills which are easily acquired, and in which there is a tendency to overproduction for the world market. In such industries rapid expansion is possible and these industries are frequently characterized by substantial wage differentials as between countries."

Mr. President, I believe this amendment represents a constructive contribution to the cause of realistic and meaningful trade expansion. It has the enthusiastic support of the shoe industry. I have here seven telegrams from the industry indicating its reaction to the incorporation of section 352 in the bill. I ask unanimous consent that the telegrams be printed at this point in the RECORD.

There being no objection, the telegrams were ordered to be printed in the RECORD, as follows:

SUMMIT, N.J.,

September 18,1962.

Senator EDMUND MUSKIE,

Old Senate Office Building,

Washington, D.C.:

Congratulations on Finance Committee acceptance of principles of your amendment for orderly marketing. This represents a sound and constructive achievement. We believe the shoe manufacturing industry will welcome this measure as providing basis for ultimate import relief.

MERRILL A. WATSON. Executive Vice President,

National Shoe Manufacturing Association.

NEW YORK. N.Y.

Boston, Mass.,

September 18, 1962.

Hon. EDMUND S. MUSKIE,

Senate office Building,

Washington, D.C.:

Our association extends heartiest congratulations to you on Senate Finance Committee's acceptance of your amendment providing for orderly marketing arrangements by the President. This action is a constructive achievement and culminates months of personal effort which have proven successful. We believe shoe manufacturing industry will welcome this measure as providing basis for ultimate important relief by the administration.

Your support of the shoe industry is deeply appreciated by fellow officers.

MAXWELL FIELD,

New England Shoe and Leather Association.

PORTLAND, MAINE.

September 18,1962.

Senator EDMUNDS. MUSKIE,

Senate Office Building,

Washington, D.C.:

My personal congratulations to you upon acceptance by the Senate Finance Committee of your amendment for orderly marketing arrangement. Your support is greatly appreciated by the shoe manufacturers in your State.

Regards, ABE W. BERKOWITZ,

Songo Shoe Manufacturing Co.

Auburn, MAINE,

September 18,1962.

Hon. EDMUND MUSKIE.

Senate Office Building, Washington, D.C.:

I just learned that your orderly marketing amendment has been accepted by the Senate Finance Committee, to be considered by the Senate when voting on the proposed tariff bill.

May I express for my own company and in behalf of shoe manufacturers in Maine my congratulations and sincere appreciation of your efforts in our behalf. Also in recognition of the probable advantage to shoe workers in your State.

Lucien FRENCH,

Charles Cushman Co.

WATERVILLE, MAINE,

September 18,1962.

Hon. EDMUND S. MUSKIE,

Senate Office Building,

Washington, D.C.

I appreciate everything you have done in supporting the orderly marketing arrangement amendment.

Sincerely.

HAROLD ALFOND,

Norrowock Shoe Co.

DEXTER, MAINE,

September 18,1962.

SENATOR EDMUND S. MUSKIE,

Senate Office Building,

Washington, D.C.

The shoe manufacturers of Maine appreciate the support which you have given to the orderly marketing arrangement amendment.

DEXTER SHOE CO,

HAROLD WOLFF.

LYNCHBURG, VA.,

September 18,1962.

Senator EDMUND S. MUSKIE,

Senate Office Building,

Washington, D.C.

Congratulations on the adoption of the principles of your orderly marketing amendment. This is a great step forward for the shoe industry, and we welcome it as a necessary basis for ultimate import relief.

PERCY N. BURTON.