In an evaluation of H.R. 6492, an import quota bill introduced by Congressman Mottl, the Congressional Research Service reported that with such an approach—

The largest gains from the quota would likely accrue to General Motors with their X-body compacts and 46 percent market share, even though Ford, Chrysler and American Motors appear to be the companies most injured by foreign competitors.

If General Motors is able to weather the storm while the other companies cannot, we would end up with a single U.S. auto manufacturer- a situation that I hope we can avoid both for the sake of our whole country and my district in particular.

Mr. Chairman, I do not at this time have a particular solution to propose. I know that you are skeptical of hard line positions such as import restraints, and I know that you intend to proceed cautiously in that area; however, I urge the committee to be ready to depart from its traditional free trade posture if conditions continue as they are, or decline to an even worse situation in the near future.

Many Members of Congress are ready to take bold action if they feel American free trade attitudes will continue to be used to unfair advantage. It would be better if the committee could present a thought out and responsible measure, rather than have the heat of the situation lead to poorly conceived action.

I think that we must encourage other methods of responding to the auto industry slump in addition to legislative approaches. While government can and must help, the private sector can and must contribute. A bank in Washington, D.C., for example, has decided to provide auto loans for domestic cars at a rate lower than that for imports. A major national stockbroker has instituted a program where its employees qualify for a $1,000 credit on the purchase of certain Chrysler-manufactured automobiles.

Mr. VANIK. Restate the circumstances under which the $1,000 credit is given.

Mr. PEASE. Mr. Chairman, it is my understanding that the employees of this national stock brokerage firm can qualify for a $1,000 credit from their own employer if they purchase Chryslermanufactured automobiles.

On my initiation, UAW workers in Ohio's 13th District will be signing petitions describing their situation and their feelings. The petitions will be sent to Japanese manufacturers.

Efforts like these, together with what I see as a growing "Buy America" consumer attitude, can do much to help our auto industry out of the most serious challenge it has faced since the Great Depression.

I know this committee will certainly want to continue its leadership in finding ways to help our entire auto industry weather the current storm.

I thank you.

Mr. VANIK. Are there any questions of Mr. Pease? Mr. Schulze?
Mr. SCHULZE. Thank you, Mr. Chairman.

In my opinion, this concurrent resolution is window dressing so that we can symbolically say we have done something, and perhaps it might even be categorized as a political document, because we do have an election coming up.

I am not trying to put you on the spot, but generally what w are doing here is posturing, and I think it is time to do somethin I wonder whether you agree with it?

Mr. PEASE. Thank you, Mr. Schulze.

I am cosponsor of the resolution and I do support it. I wou agree with you, that there are not very many teeth in this resol tion. I see this as part of the solution. Part of what we have to d it seems to me, is sensitize the Japanese Government and th Japanese industry to the extreme amount of concern in the Unite States about the imbalance.

Mr. SCHULZE. If the administration took a strong position, don you think that could be done, and done pretty quickly?

Mr. PEASE. If the administration took a strong position, tha would certainly help, yes.

Mr. SCHULZE. Do you think they have some of the tools now tha they need to impress that on any government in the world wit whom we deal?

Mr. PEASE. Yes. I would say the administration has the tools. would hope that the administration would use those tools.

Mr. SCHULZE. I would hope that you would feel similarly in othe situations that perhaps will not affect your district.

We are going to have some of them coming before us by the en of this year, and perhaps next year. I would hope that all of thos affected can get together and we can have some impact an straighten out some of these temporary aberrations.

I don't think we have to change our long-range free trade polic necessarily, but we can correct these situations.

Mr. VANIK. Mr. Gibbons?

Mr. GIBBONS. I did not come here to defend the administration but I hate to sit here and hear it castigated unfairly.

I think the administration took a very firm position against the Japanese when the President allowed the change in the importa tion tariff on trucks, truck components. I am not sure the policy was wise, but when you increase the tariff from 4 percent to 2 percent on something as large as trucks, it was a rather brave position. As I understand it-

Mr. SCHULZE. If I can reclaim my time-I think we should look at the bottom line for whether it has a dramatic impact. I don' think it has.

Mr. GIBBONS. It started the day before yesterday. I am sure it will have an impact.

Mr. SCHULZE. It is late in the ball game.

Mr. GIBBONS. Mr. Schulze, I am on my time. May I have my time? Your time has expired. I was recognized.

Mr. VANIK. That is right.

Mr. GIBBONS. I can be just as hardnosed and just as unpleasant as you are, and perhaps more; I started earlier than you did. Let me tell you, when the Treasury Department changed the rules on the importation of trucks, it changed it in accordance with law, and the whole procedure has been in accordance with law. The President has the power to override the Treasury Department and the President did not do it. He increased the tariff on imported trucks, truck parts, whatever you prefer to call them,

from 4 percent to 25 percent, effective, I think, last Friday. He could not have done it any faster than he did.

So you are not stating the administration's position correctly. I know you have some problems in the steel industry. All of us have problems, but we are not going to solve them without some resort to reason.

As I understand it, and I am not here to defend the Japanese by any manner or means, they have no import duty on trucks or truck parts or American automobiles or American parts or American steel; they are in a wide-open position.

The trouble is, we are not trying to manufacture any automobiles to go to their district; they drive on the left-hand side of the road. I don't know any American manufacturer who is even interested in putting out a prototype that drives on the left-hand side of the road. You know, we have to look at this thing rationally.

Mr. JONES. Would the gentleman yield?

Mr. GIBBONS. I will be glad to yield.

Mr. JONES. Since the political aspect of this has been raised, and even though the Republican candidate seems to have a multiple China policy, I think their Japan policy is relatively consistent with the administration. I don't think there is any political gain to be made with regard to Japan.

Mr. GIBBONS. I appreciate the gentleman's correct observation. Mr. Schulze, if you feel unpleasant because I jumped on you, I did, and I am sorry. I had to.

Mr. SCHULZE. Will the gentleman yield?

Mr. GIBBONS. I will be glad to.

Mr. SCHULZE. I do not at all. I think we both want the same thing. As you correctly stated I am quite concerned. We are talking about a broad range of issues and not necessarily just one. I deeply believe that if the administration, any administration in power, could do and could have been doing something that we would not have been put in the position we are in right now.

Things could have been done by previous administrations.

Mr. GIBBONS. One of the things we could have done is give the American consumer the correct directions the country and the world had to go on the price of fuel. That was Congress fault. Every administration since I have been here has been trying to get the price of fuel up to the world prices and Congress has consistently refused to do that. That is one of the problems.

I can feel a great sympathy for the automobile people for having tried to float a fuel-efficient car when Congress insisted that gasoline sell for 30, 35, 40 cents a gallon when the world price would have brought it up to $1 or $1.50 a gallon.

To that extent the Congress is responsible for that bloodletting. With that in mind I am willing to do something for the automobile industry but we have got to be very cautious in America, as I see it, Mr. Chairman, that we do not raise a bunch of crippled industries. The strength of America has always depended on the fact that we could move ahead from one position to another relying upon our strength, not upon our weakness. That is the solution to our problem.

Mr. VANIK. I would like to say this with respect to Mr. Schulze comment with respect to the resolution. I think this committee ha not taken the political course. I regret that that statement wa made. I think the resolution is an effort to clear up the position Congress and do the doable.

For example, I think that we are setting forth our displeasur and offering to a trading partner a notice, by this Congress, tha we simply will not tolerate and cannot exist with and canno preserve our customary trading relationship with a trade imba ance that persists in this manner.

One of the objectives is the notice that it gives to our tradin partner. The second advantage is that it does not dictate to ou trading partner how it is to bring about a satisfactory result. I leaves that as a matter of flexibility.

It would be very difficult for us in this committee and in thi Congress to criticize automobile imports or steel imports or elec tronic imports or imports of any kind if our accounts were in bette balance. I think that the important advantage of this resolution i that it leaves it to the discretion of our trading partner to come up with a solution.

I believe that our trading partners have been as concerned abou the feelings in Congress as they are with the feelings in the execu tive branch of the Government. They realize and must realize that the Congress can retaliate with legislative solutions, which I do not think are the best solutions, which may express emotion or passion They realize that that stands there as a possibility if they fail to do something about this imbalance in trade.

So, I think from the standpoint of constructive trade legislation this procedure by which we advise a trading partner about the unacceptability or inadvisability or the folly of pressing us with these tremendous imbalances of trade is a warning to our trading partner that they should respond constructively.

It gives Japan the flexibility to determine the manner in which it may decide to be a better trading partner by making a constructive effort to reach the problem of an imbalance which I do not believe would be acceptable in this country.

Now that is what I wanted to say about the resolution. I do not think it has any motivation to give anybody any political comfort. I think it is an important economic signal by the Congress to our trading partners. That is the spirit in which I have introduced the resolution and the spirit in which I support it.

Are there any further questions of Mr. Pease? Mr. Frenzel.

Mr. FRENZEL. Mr. Chairman, I want to thank our colleague, Mr. Pease, for his excellent testimony and to suggest, as I would have had you not made your statement, that that is about the thrust of his testimony. Our colleague from Pennsylvania suggests that it is unimportant and yet I believe, as our chairman believes, that it is an important statement, an important warning, an important communication, and that was the thrust that I got from your testimony. Is that correct?

Mr. PEASE. Yes, Mr. Frenzel, exactly so. As I said before, it seems to me that you can go with restrictions legislatively but first of all it is worthwhile to tell the Japanese in no uncertain terms and other trading partners how serious we view the problem.

I believe that this resolution is an important step in putting Congress officially on record doing that and as such I think it will have an important impact.

Mr. FRENZEL. This committee has gone really out of its way in attempting to communicate to our trading partner, who is our friend and important ally whom we want to treat with respect and by whom we want to be treated with respect, that there is a real problem out there that they are not addressing adequately.

We have made a number of trips to Japan, we have published a number of documents on the subject but I think it is important that we make a formal statement that says things are out of whack and you have to address the problem as much as we do.

I think the timing of it is excellent because it follows the Treasury change in definition of the truck industry which was of course ratified by the President since he did not stop it, and I would hope that that double expression, one from the Executive and one from the legislative, will have an important impact in Japan.

The members of this committee do understand that these are important allies and important trading partners and we want to work with them. It is a lot better to settle a lawsuit than it is to go to suit. That is what we are trying to do.

Mr. Vanik. Mr. Frenzel, I would like to comment in another respect. That is that this committee has taken a most vigorous effort to deal with the imbalance of trade problems and with the problems we have had with imports in a very constructive way. I want to point out the GAO report, which was the basis of the Treasury's redefinition of cab chassis, was a request made by this committee. It was this committee's interest in that subject which stimulated development of the cab chassis report by the General Accounting Office and which resulted in what I thought was a very necessary change in classification by Treasury.

We have been carefully monitoring this issue. I think it is traceable directly to our initiative here. I feel that Congress has a need to express itself separately, on its own basis, to trading partners with whom we have specific difficulties.

Mr. FRENZEL. Thank you, Mr. Chairman. I would like to conclude by saying again I thank my colleague. I think his suggestion or rather his conclusion in his testimony on the CRS, on 6492, is important to us. If we move on an emotional basis or move too quickly we will get a solution which is not a solution or one which creates additional problems.

Again I thank you for taking the time here. I yield back the balance of my time.

Mr. SCHULZE. Mr. Chairman, if I may have 30 seconds I would like Don to know anything I said was not meant personally toward you. Yes, it is the committee in all candor. I think in the private meetings that we have had and members of this committee have had, we have expressed this to our trading partners.

I think we have had opportunities in the past to take a firmer stance which if we had done that we might not be in this position today. I also think the full committee bears a great deal of responsibility for the situation in which we find ourselves today. We have not allowed sufficient retention of capital for expansion and modernization.