-18 Conclusion Under our Section 305 authority, we are initiating an examination of the trade ramifications of the EC's proposed Third Country Meat Directive, which would ban imports of meat not produced in conformity with strict new EC inspection rules. Under our Section 307 authority, we are initiating an investigation of Taiwan's export performance requirements in the automotive sector. We are concerned about the adverse affects of such practices on our domestic automobile industry. To summarize, Mr. Chairman, the work of the Office of the U.S. Trade Representative is multi-faceted. Our work has become more complex over the years, as U.S. involvement in international trade has expanded. In order to preserve and advance U.S. interests in international trade, we are continuously engaged in both the preparations for and conduct of multilateral and bilateral trade negotiations. The basic operations in which we will be involved in FY87 will be at least as demanding as the work we carried out in FY86. At the same time, we have realized some economies through efforts to streamline our internal operations and to institute cost savings programs affecting direct expenditures. Thus, we believe that our request for a budget authorization at the level of $12,216,000 will be adequate to carry out our basic work. In addition to our basic work, we will be involved in a special effort during FY87: the initiation of a new round of GATT negotiations. We are currently examining the degree to which this efforts will strain our resources. The information we -19 require to complete that analysis is not fully available to us today, as the new round is still in a preparatory stage. We will be firming up our assessment of requirements in this area during the summer. Ideally, we will find that we can stretch our requested authorization level to address both our basic work and the initiation of the new round. We will make a serious effort to do so. Ambassador Yeutter and our staff are firmly committed to sharing the burden of reducing our national budget deficit. perhaps more than others, realize that this deficit must be reduced if we are to improve our international trade position. We, Senator DANFORTH. Mr. Ambassador, you are telling us that this budget does not include additional resources for a possible new round of negotiations. What would you propose to do then? Ambassador WOODS. Well, we are going to assess the circumstances with regard to a new round of trade negotiations over the summer. When we submit our fiscal 1988 budget request, we will indicate to the Office of Management and Budget as to whether we would require supplemental for the new round of trade negotiations. I believe that was indicated in the President's budget submission in January. Senator DANFORTH. All right. As you know, there is some question as to whether Congress would agree to new round authority. You may remember the reaction on this committee to the Canadian negotiating authority. Ambassador WOODS. All too well, Senator. Senator DANFORTH. I would think that there is a fair question as to whether the Congress would be receptive to new round authority. Ambassador WOODS. I understand that. That, and our own questions about whether a new round would, in fact, be initiated, were the reasons why we did not put funding for the new round in our budget request that came forward to the Congress in January. Senator DANFORTH. Now last fall the President announced a new initiative with respect to 301 cases. Does this budget contemplate more spending requirements with respect to prosecuting 301 cases? Ambassador WOODS. To date, the 301 cases which we have initiated have been prosecuted with the staff level we have had in 1985 and continue to have in 1986. We would envision that continuing to prosecute 301 cases effectively in 1987 with the same level of staff. Senator DANFORTH. You think that will be effective or is this a signal to us that the announcements with respect to 301 cases were little more than announcements, good press, but nothing much is going to come of it? Ambassador WOODS. No; there is no question but that 301 cases use up staff resources. However, the staff resources that are used up in prosecuting a 301 case are not just USTR staff resources. We get data from the Department of Commerce, from the Department of Agriculture, as well as the ITC and other places in the U.S. Government. So the tip of the iceberg, in a sense, is in USTR, but there are substantial resources that get devoted to those issues in other agencies. Senator DANFORTH. Well, should those of us who believe that we should be very aggressive in prosecuting 301 cases, be concerned that this budget is not sufficient? Or could you- Ambassador WOODS. I don't believe- Senator DANFORTH [continuing]. Assure us that the USTR is going to be very aggressive in 301 cases and that this is a sufficent budget for an aggressive 301 strategy? Ambassador WOODS. Absolutely. This is a sufficient budget for an aggressive 301 strategy. Senator DANFORTH. Do you think that there is enough in this budget for travel for USTR? Ambassador WOODS. Well, our travel budget Senator DANFORTH. I am told that you all are flying around on People's Express, which is fine, but I mean are you cutting it a little too thin, do you think? Ambassador WOODS. We are trying to find every possible way we can to stretch our travel budget, and we will continue to do that next year. One of the advantages of airline deregulation has been reduced cost of getting across the Atlantic. I had one of the financial people in the Executive Office of the President mention to me just the other day about how proud they were of one of our assistant U.S. Trade Representatives who had managed to get from the United States to Brussels for $280. We are doing everything we can to stretch our travel budget by taking low-cost transport. Senator DANFORTH. Well, that is commendable. We do want to create the impression throughout the world that we are serious about international trade. If other delegations are showing up with a number of people in the delegation, and they are arriving in government planes and so on, and People's Express taxis up to the ramp and some guy from the USTR piles out with a cardboard suitcase. [Laughter.] Senator DANFORTH. I'm sure that that is the image we want. Is there a problem there? Ambassador WOODS. Well, first of all, Senator, I can guarantee you there is no money in our budget for cardboard suitcases, but in addition to that, we don't think so. We think the substance of what-the message our people are bringing is more important than their mode of transportation. Senator DANFORTH. All right. So we should feel very confident that with this budget you can get around and do your job and that we are going to have a very aggressive job on 301 cases, and that USTR is in good shape. Ambassador WOODS. I believe so, Senator. Yes, sir. Senator DANFORTH. All right. Senator LONG. No questions. Senator DANFORTH. Thank you, Mr. Ambassador. Next we have Hon. Paula Stern who is the Chairman of the ITC. STATEMENT OF HON. PAULA STERN, CHAIRWOMAN, INTERNATIONAL TRADE COMMISSION, ACCOMPANIED BY COMMISSIONER DAVID ROHR, COMMISSIONER ALFRED ECKES; COMMISSIONER SEELEY LODWICK; COMMISSIONER ANNE BRUNSDALE; AND RICHARD ARNOLD, DIRECTOR, OFFICE OF FINANCE AND BUDGET Chairwoman STERN. Good afternoon, Senator Danforth. I would like to introduce those who are accompanying me this afternoon. To my left is Rick Arnold who is in charge of our finance and budget. Accompanying me also in the back are Commissioner Eckes, Lodwick, Rohr, and Brunsdale. I appreciate this opportunity to discuss with you the Commission's budget request for fiscal year 1987. As you know, in 1985, the United States chalked up a trade deficit of $148.5 billion, the larg est in history. When I appeared before you last year, the deficit was $123 billion, this being the fourth consecutive year in which a trade deficit had set a record. In recent months, the deficit has continued to climb and so, too, has our workload. The request approved by the Commission to send to you here today for fiscal year 1987 totals $33,700,000. It includes an operating budget of $29,700,000 and 482 full-time, permanent positions. Also included is a relocation budget figure of $4 million. The operating budget, in effect, represents an increase of $1.1 million or 3.8 percent over our fiscal year 1986 appropriation before the Gramm-Rudman-Hollings reduction. This is a request to fund operations at the same level as authorized for fiscal year 1986. It does not include any program increases. No additional staff is being requested. Mr. Chairman, I believe this amount represents the bare minimum necessary to meet our obligations for what we will expect to be an extremely busy year. I should stress that most of our workload, the number of investigations and studies, is beyond our control. We are usually responding to statutory requirements. Furthermore, much of our workload is subject to tight statutory deadlines. I personally feel that this budget request is not only the bare minimum necessary, but may even fall below our needs in terms of manpower. You know better than any other group that trade continues as a priority item for both Congress and also the administration. The Department of Commerce has proposed a fiscal year 1987 increase of 55 positions and $2.4 million for its trade complaint operations. Since the ITC's workload parallels that of Commerce, we, too, must be prepared for a substantial increase in the demand on our resources. But unlike the International Trade Administration of the Department of Commerce, we are not part of a large agency which can fund priority programs by moving resources from discretionary activities. Unlike the Office of the U.S. Trade Representative, we are not part of the highest levels of the executive branch and able to call on many agencies for staff support and assistance. In fact, I am currently negotiating on three separate requests from the USTR for details of Commission personnel. I would add, having heard your dialog a minute ago, if Congress does not want to go along with moving ahead on GATT next year, then I think you had better watch even more what happens to USTR's request for details from the U.S. ITC of our personnel. The USTR can't provide these positions so the ITC is being called upon to fill the gap. This never happens in the reverse. The Commission's central activity to perform its statutorily required trade-related investigations and research studies continues to grow as a result of the continuing increase in case filings that began back in fiscal year 1982. Our fiscal year 1987 investigative efforts, which we project at 324 cases, are projected to be 5.2 percent greater than in fiscal year 1985, the busiest year that the Commission has ever had in its history. We see little prospect that the forces that are producing so many requests for import relief will be reversed any time in the |