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ZC ZC 31 COATES VILLE PA 3/26/33
PMS PRES I DENT JIMMY CARTER
THE WHITE HOUSE
WASHINGTON, D.C.
BT
DEAR MR. PRES I DENT:

WE ARE' CONCERNED AND AN GRY . STEELWORK ERS HERE IN
COATESVILLE, PA., LIKE THOS E IV HUNDREDS OF OTHER
COMMUNI TI ES, NEED JOBS NOW. OUR PLANT LACKS MUCH-NEEDED
ORDERS FOR HEAVY - GAUGE PLATE STEELS OF THE KIND USED TO
AANVUF AC TURE ? RESSURE VESSELS. LUK EVS! MAJOR FABRICATI ON
CUSTOMERS REPORT @VTI RE PLANTS. I DLED, OR BARELY LIMPING
ALONG, BECAUSE THEY DO NOT HAVE PRESSURE VESS EL ORDERS.

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YET, UNLESS YOU ACT PROMPTLY, GAS IF I ERS FOR THE NATION'S FIRST COMMERCIAL PLANT TO PRODUC E SYNTHETIC GAS FROM COAL WILL BE BUILT BY JAP AN ES E FABRICATORS USING JAPANESE STEEL PLATE.

THE AMERICAN NATURAL RESOURCES PROJECT AT BEULAH, N.D., WILL BE BUILT WITH DEPARTMENT OF ENERGY SUPPORT THROUGH GUARAVTEED LOANS UNDER YOUR REC EN TLY-JI GNED SYNTHETIC FUELS AC T. THE GASIFI ER DES I GUERS. AMERICAN LURGI, SOU GHT WORLD BI DDING ON THIS PROJECT DESPITE INTEREST ON A NUMBER OF AVAILABLE, WELL-QUALIFIED U.S. FABRICATORS. OF

IN ANNOUNCING THE ANR PROJECT, YOU POINTED OUT THAT
IT WAS THE FIRST TO BENEFIT FROM FUNDS THE GOVERVM ENT WILL
BANK FROM THE WINDFALL OIL PROFI TS TAX. - WE CERTAINLY DIDN'T
EXPECT THAT THOS E TAX ES FROM AMERICAN OIL COMPANIES WOULD BE
US ED. TO SUPPORT JAPANES E STEEL AND FABRICATI ON IN DUS TRY JOBS
AT THE EXP ENS E OF AMERICAN LABOR, PARTICULARLY DURING A
PERIOD OF HIGH UN EMPLOYMENT AND UNDER-UTI LI ZATI ON. IN THE
IN DUS TRI ES CONCERNED.

CHICAGO BRI DGE AND I RON, WHICH IS A VALUED LUKEVS
CUSTOMER , WAS THE LOWEST AMERICAN BI DDER FOR THE PRESSURE
VESS EL EQUIPMENT AT THE BEULAH PLANT. UNFORTUNATELY, EU EN
AF TER SI DDING WORK AT LESS THAN COST, CB&I LOST THE 91 D TO A
JAP AN ES E COMPETI TOR. WE UNDERS TAND THAT A LETTER OF INTENT
HAS BEEN ISSUED FOR THE PURCHASE OF 14 GASIFI ER VESSELS FROM
HI TACHI LTD., IN JAP AN. WE BELI EV E THE SAVINGS REALI ZED BY
THE FOREI GN PURCHASE WILL BE MORE THAN WIPED OUT BY THE NET
COST TO THE ECONOMY OF GOING OFFSHORE WITH THE JOB. IN AN
ANALYSIS OF THE BUY AMERICAV AC T. (5.2313) BY THE LI BRARY OF
CONGRESS CON GRESSIONAL RES EARCH SERVICE, DATED FEBRJARY 23,
1973, AND ADDRESS ED TO PENNSYLVANIA'S SEVATOR JOHN H. HEINZ
Ill. IT WAS DEMONSTRATED THAT UNLESS THE FOREI GV PRICE IS AT
LEAST 50 PERC EVT LESS THAN THE DOMES TIC PRICE. THERE IS, IV
FACT, A COST TO THE EC ON OMMY IN TERMS OF LOST CORPORATE
FEDERAL AVD STATE TAXES, PURCHASING POWER WAGES AND
SALARI ES, INDIVIDUAL FEDERAL, STATE, LOCAL AND SALES TAXIS,
AND SOCIAL SECURI TY TAX ES.

WE URGE THAT YOJ DIRECT THE DOE TO INSIST UPON AV 1.MEDI ATE RECONS I DERATI ON OF THE PROPOS ED FOREIGN VES3 EL PURCHAS E FOR THE BEU LAH PLANT, AND FURTHER TO REQUI RE THAT MAJOR CAPITAL EQUIP4EVT FOR ALL FUTURE PROJECTS BUILT WITH SYNFUEL PROGRAM LOA GUARANTEES BE PURCHAS ED' FROM AMERICAN SUPPLI ERS.

RES? ECTFULLY,

CHARLES A. CARL ON, JR.
CHAI RMAN AVD CHIEF EXECUTIVE, OFFICER LJKENS STEEL CO.
335491 LUKENS COAT

NATIONAL CATTLEMEN'S ASSOCIATION,

Denver, Colo., September 18, 1980. Hon. CHARLES A. VANIK, Chairman, Subcommittee on Trade, Committee on Ways and Means, U.S. House of

Representatives, Washington, D.C. DEAR MR. CHAIRMAN: I am writing in regard to hearings before the Trade Subcommittee of the Committee on Ways and Means, September 18, 1980, which deal with trade between the United States and Japan.

You and your subcommittee are to be commended for conducting these hearings and for your continual review of the United States-Japanese trade situation.

The National Cattlemen's Association is constantly monitoring the beef trade with Japan. We also work very close with and are supportive of the U.S. Meat Export Federation. The U.S. Meat Export Federation has an office in Tokyo and is working diligently to promote high quality U.S. beef in Japan.

Recent trade negotiations on beef with Japan including the Strauss-Ushiba and "Tokyo Round” of the MTN agreements have been beneficial to the U.S. cattle industry. They are limited in their degree of access, but they have opened the door to new trade which was not before realized.

The NCA firmly believes that the potential for trade of high quality U.S. beef to Japan is tremendous and could contribute significantly to our balance of trade.

The Japanese have honored their commitment to the United States on the agreed amount of access negotiated in the MTN up to this time.

Certain problems continue to exist in our efforts to export beef to Japan. The NCA and U.S. Meat Export Federation along with other interests are attempting to resolve these problems. Examples are: Plant certification requirements, purchase specifications from the Japanese, and product distribution in Japan.

The NCA will continue to work toward more access to the Japanese market for beef as well as seek solutions to better facilitate the movement of the product.

We will continue to keep the Trade Subcommittee members and staff apprised of our efforts and will inform you of major difficulties we might encounter.

The United States-Japan Trade Report of September 5, 1980, does a good job of spelling out the basic problems with Japan in the agricultural area.

If the NCA can be of any assistance to the Trade Subcommittee or the Japanese trade issue, please feel free to call on us. Sincerely,

SAM WASHBURN, Chairman, Foreign Trade Committee.

TANNERS' COUNCIL OF AMERICA, INC.,

New York, N. Y., August 27, 1980. Congressman CHARLES A. VANIK, Ways and Means Committee, Cannon House Office Building, Washington, D.C.

DEAR CONGRESSMAN VANIK: Following is a statement I would like to submit, on behalf of the Tanners' Council of America, in support of H. Con. Res. 376, relative to Japan-U.S. trade.

There is probably no other sector of trade between the United States and Japan that is more influenced by Japanese Government policy than the trade in hides, leather, and leather products. Since the end of World War II, the Japanese have followed a policy of buying U.S. cattlehides and then isolating their tanning and some of their leather products industries from international competition by means of quotas and high tariffs.

According to the latest information we have, the Government of Japan continues to maintain quotas on six industrialized products. Five of these are on leather and leather products. The Tanners' Council, therefore, appreciates the concern expressed in the resolution for agricultural areas, specifically mentioning leather, "where Japanese trade barriers and business practices prevent or restrict the importation or sale of American goods.”

The effects of the Japanese policy of importing only raw material and severely resisting imports of leather and manufactured leather products, has had an enormous impact not only on the balance of trade between the two countries, but upon the economic distribution of scarce resources and on employment possibilities in the United States. In addition, Japanese firms, hiding behind a protectionist barrier, are willing to pay noneconomic prices for raw materials, thus adding to inflationary forces in the sector.

In 1979, out of a total U.S. hide production of a little over 34 million, over 7 million hides went to Japan. These 7 million hides produce between $500 to $600 million worth of leather. U.S. tanners, however, were able to ship only $5 million worth of leather into this huge market. The low level of these shipments were in contravention of the Japan-U.S. agreement on leather which was estimated to allow movement of $30 to $40 million worth of leather per year.

Early in 1979, after almost 2 years of negotiation, the U.S. was able to conclude an agreement with the Government of Japan calling for an increase in the illegal Japanese quotas for U.S. leather imports. The Japanese at that time also agreed to facilitate the utilization of these quotas. So far, the Japanese have issued licenses and have gone through the motions of living up to the agreement. However, the statistics clearly prove otherwise. The Japanese have not lived up to that portion of the agreement that involves "facilitation of the utilization of the quotas or licenses."

In all the testimony regarding this issue, the Japanese industry keeps insisting that they are noncompetitive with the U.S. industry. They use this argument to defend their need and right to protection. In effect, they claim that the free market should only operate when it is to their advantage. It should not be a factor when economic considerations are such that the Japanese are disadvantaged.

I am certain that, in spite of the fact that the leather sector holds a particular significance for the Japanese, the same basic philosophy pervades a major part of their trade policy. House Concurrent Resolution 376 is therefore of vital importance because there can be no progress on the issues involved in Japan-U.S. trade unless the Japanese make a clear and specific effort to dissolve the trade barriers that inhibit access to their markets by efficient industries and agricultural interests. The leather industry is a clear example of an industry where restrictive practices have, and continue, to hamper progress. These practices cannot be allowed to continue. Yours very truly,

EUGENE L. KILIK, President.

OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE,

Washington, D.C., December 23, 1980. To House Committee on Ways and Means:

Please find enclosed the response to a question (See p. 25) addressed to Ambassador Hormats by Chairman Vanik during the August 26, 1980, hearing of the Trade Subcommittee. Sincerely,

CALMAN J. COHEN,

Director, Congressional Relations. The U.S. trade deficit with Japan improved from $11.6 billion in 1978 to $8.7 billion in 1979. The question posed relative to this improvement in the U.S. trade balance with Japan, is whether or not a depreciation in the yen's exchange value vis-a-vis the dollar during 1979 contributed to this improvement. A yen depreciation could have possibly led to short run improvement in the U.S. trade balance with Japan by re ing the dollar price of goods imported from Japan and priced in yen. In the longer run, however, because of adjustments in the volume of trade, a yen depreciation would be expected to improve Japan's trade balance with the United States.

The improvement in the U.Š. merchandise trade balance with Japan in 1979 took place with a simultaneous depreciation of the yen vis-a-vis the dollar. The annual average value of the yen fell from 210 to the dollar in 1978 to 219 to the dollar in 1979, or by 4 percent. During 1979, however, the devaluation of the yen was sharper from 195 to the dollar on December 31, 1978, to 240 to the dollar on December 31, 1979, or by 19 percent.

It has not been found possible to easily calculate the immediate impact of yen depreciation on the improvement in the U.S. trade balance with Japan in 1979. While it does collect data permitting the calculation of changes in U.S. trade volume overall, the U.S. Government does not currently collect data permitting the estimation of changes in U.S. bilateral trade volumes with specific countries, in this case, Japan. Without such information on the changes in U.S. trade volumes with Japan from 1978 to 1979, estimation of the pure price effects of yen devaluation on the bilateral trade balance are not feasible. Furthermore, a great deal of Japanese export products to the United States are priced in dollars rather than yen; hence, the depreciation of the yen for such products would not necessarily lead to an immediate reduction in the dollar cost of U.S. imports of such products from Japan.' For these reasons, we have not been able to distinguish between the role of longer term volume adjustments resulting especially from the dollar depreciation vis-a-vis the yen in 1977-1978 and the role of the shorter term price effects of 1979 yen depreciation yis-a-vis the dollar in the improvement in the U.S. trade balance with Japan in 1979.

Japanese exporters often attempt to maintain export prices constant in dollars, at least in the short run, despite fluctuations in yen/dollar exchange rate. Variations in the yen price received by Japanese exporters resulting from this practice are reflected in fluctuations in profit margins.

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