Rice Growers Association of California, Post Office Box 958, Sacramento, Calif. San Antonio Chamber of Commerce, San Antonio, Tex. San Francisco Bay Area World Trade Promotion Committee of the San Francisco Bay Area Council, Chamber of Commerce Building, 417 14th Street, Oakland, Calif. San Francisco Chamber of Commerce, 333 Pine Street, San Francisco, Calif. Foreign Trade Association of the San Francisco Chamber of Commerce, 333 Pine Street, San Francisco, Calif. Junior World Trade Association of the San Francisco Chamber of Commerce, 333 Pine Street, San Francisco, Calif. San Francisco Clearing House Banks, care of American Trust Co., San Francisco, Calif. San Francisco Junior Chamber of Commerce, 333 Pine Street, San Francisco, Calif. Schenley International Corp., Empire State Building, 350 Fifth Avenue, New York, N. Y. Structural Engineers Association of Northern California, 1227 Russ Building, San Francisco, Calif. Tapioca Institute of America, 441 Lexington Avenue, New York, N. Y. Transglobe Traders F. & E. Standard Cedar Co., Inc., and Delaware Paper Mills, 441 Lexington Avenue, New York, N. Y. Twentieth Century Fund, 15 Pearl Street, New York, N. Y. United Atlas Co., 15 Pearl Street, New York, N. Y. United Electrical, Radio, and Machine Workers of America, 1029 Vermont Avenue NW., Washington, D. C. United Nations Council of Harvard, Little Hall 21A, Harvard University, Cambridge, Mass. United Packinghouse Workers of America, 515 Engineering Building, 205 West Wacker Drive, Chicago, Ill. Washington Federation of Churches, 1751 N Street NW., Washington, D. C. Women's Action Committee for Lasting Peace, 1 East 57th Street, New York, N. Y. (appeared in each of the hearing cities). Women's Division of the Methodist Church, 150 Fifth Avenue, New York, N. Y. Women's International League for Peace and Freedom, 410 South Michigan Avenue, Chicago, Ill. World Affairs Council of Rhode Island, Providence, R. I. World Trade Center, Inc., 800 Financial Center Building, San Francisco, Calif. Yahr-Donen Corp., New York, N. Y. Young Men's Business Club of New Orleans, New Orleans, La. Young Women's Christian Association, Denver, Colo. Young Women's Christian Association, San Francisco, Calif. Young Women's Christian Association of Chicago, 203 North Wabash Avenue, Chicago, Ill. ORGANIZATIONS SAYING LITTLE OR NOTHING ABOUT THE PROPOSED CHARTER, BUT American International Underwriters Corporation, 11 John Street, New York, California Almond Growers Exchange, 18th and C Streets, Sacramento, Calif. California Walnut Growers Association, 1745 East Seventh Street, Los Angeles, Calif. Cherry Growers and Industries Foundation, 1437 American Bank Building, Portland, Oreg. Colorado Raw Fur Dealers Association, 1611 Wazee Street, Denver, Colo. Colorado Wool Marketing Association, Inc., 425 Continental Oil Building, Denver 2, Colo. Combined Metals Reduction Co., Post Office Box 178, Salt Lake City 8, Utah (for Colorado Mining Association and others). Federated Association of World Traders, Inc., 130 West 42d Street, suite 705, New York, N. Y. The Mountain States Beet Growers Marketing Association, Box 414, Greeley, Colo. National Bankruptcy Conference, Cambridge, Mass. National Wool Growers Association, 509 Pacific National Life Building, Salt Lake City, Utah. Northwest Horticultural Council, Wenatchee, Wash. Northwest Nut Growers, Dundee, Oreg. Pineapple Growers Association of Hawaii, 215 Market Street, San Francisco, Calif. Wine Institute, 717 Market Street, San Francisco, Calif. United States Hop Growers Association, Mills Building, San Francisco, Calif. ORGANIZATIONS GENERALY OPPOSING THE ITO Agricultural Council of California, Sacramento, Calif. The American Cotton Manufacturers' Association, Washington, D. C. Atlantic Coast Fisheries,1 4 Fish Pier, Boston, Mass. The Cotton Textile Institute, Inc., 320 Broadway, New York, N. Y. Independent Petroleum Association of America, 500 Investment Building, Washington, D. C. Massachusetts Fisheries Association, Inc.,1 Administration Building, Fish Pier, Boston, Mass. Mississippi Shipping Co., New Orleans, La. The National Association of Cotton Manufacturers, 80 Federal Street, Boston, Mass. National Association of Wool Manufacturers, 386 Fourth Avenue, New York, N. Y. The National Federation of Textiles, Inc., 389 Fifth Avenue, New York, N. Y. National Renderers Association, 945 Pennsylvania Avenue NW., Washington, D. C. The New England Shoe & Leather Association, 210 Lincoln Street, Boston, Mass. New Orleans Cotton Exchange and New Orleans Association of Commerce, New Orleans, La. North American Lace Co., Inc., 245 Fifth Avenue, New York, N. Y. (for the American Amalgamated Lace Operatives of America of Philadelphia, a union, and the American Lace Manufacturers Association of Providence, R. I.). Trans-Atlas et Cie., Ltd., 343 South Dearborn Street, Chicago Ill. EXHIBIT No. 9 INTERNATIONAL TRADE ORGANIZATION HEARINGS BEFORE SENATE FINANCE COMMITTEE, MARCH 31, 1947 STATEMENT OF WILLIAM TAYLOR PHILLIPS, ACTING CHIEF, INTERNATIONAL RESOURCES DIVISION, DEPARTMENT OF STATE, WASHINGTON, D. C. Mr. PHILLIPS. Yes, sir. I am William Taylor Phillips, 1018 Valley Drive, Alexandria, Va. I am at present Acting Chief of the International Resources Division, in the Department of State. My background is in the general field of economics. I taught economics 2 years at Cornell University and 2 years at the University of New Hampshire, after having received a PhD in economics from Cornell University. I worked in the Bureau of Labor Statistics, and in the Office of Price Administration during 1942 and part of 1943; from there I went to the State Department, originally in the Division of Economic Studies, then in the Commodities Division, which was a newly constituted division during the war and which, in turn, became the International Resources Division. The CHAIRMAN. Going now to chapter VII [reading]: 1 One statement presented for both. "INTERGOVERNMENTAL COMMODITY ARRANGEMENTS "SECTION A. INTERGOVERNMENTAL COMMODITY ARRANGEMENTS IN GENERAL "Article 46. Difficulties relating to primary commodities "The Members recognize that the relationship between production and consumption of some primary commodities may present special difficulties. These special difficulties are different in character from those which manufactured goods present generally. They arise out of such conditions as the disequilibrium between production and consumption, the accumulation of burdensome stocks and pronounced fluctuations in prices. They may have serious adverse effects on the interests of producers and consumers, as well as widespread repercussions jeopardizing general policies of economic expansion." At this point, Mr. Phillips, let me ask you, is the chapter limited to primary commodities or does it, for example, expand later on into industrial commodities? Mr. PHILLIPS. It is limited, sir, to primary commodities, except that nonprimary products may, in special instances, be brought under the chapter. We had in mind two particular types of cases: First, a group of primary products, such as fats and oils, which might encompass one or more fabricated products, and second, a commodity such as rubber, where you might have a general world surplus, and you probably would have to take into account synthetic production in the United States and Canada, and the U. S. S. R. However, the chapter is primarily directed at primary commodities. "OBJECTIVES OF INTERGOVERNMENTAL COMMODITY ARRANGEMENTS "Intergovernmental commodity arrangements may be employed to enable countries to overcome the special difficulties referred to in Article 46 without resorting to action inconsistent with the purposes of this Charter by achieving the following objectives: "(a) to prevent or alleviate the serious economic problems which may arise when production adjustments cannot be effected by the free play of market forces as rapidly as the circumstances require; (b) to provide during the period which may be necessary, a framework for the consideration and development of measures which will have as their purpose economic adjustments designed to promote the expansion of consumption or a shift of resources and manpower out of over-expanded industries into new and productive occupations; "(c) to moderate pronounced fluctuations in the price of a primary commodity above and below the level which expresses the long-term equilibrium between the forces of supply and demand (in order to achieve a reasonable degree of stability on the basis of remunerative prices to efficient producers without unfairness to consumers); "(d) to maintain and develop the natural resources of the world and protect them from unnecessary exhaustion; and "(e) to provide for expansion in the production of a primary commodity which is in such short supply as seriously to prejudice the interests of consumers." Dr. Phillips, is there not a fundamental inconsistency between the objectives of Article 47 and the other objectives of the Charter? Mr. PHILLIPS. Yes, sir, there is, in this sense. The activities which might be included in an intergovernmental commodity arrangement, which would be under governmental auspices, might require, in fact very probably would require, the imposition of export quotas, perhaps a two-piece system- a domestic price and a world price and other types of restrictions which the whole Charter attempts to do away with. The reason that we feel it may be necessary to resort to these particular activities is that certain commodities are so vitally important to particular countries such as, for example, wool, meat, and dairy products from Australia or tin from Bolivia. In that sort of a situation it is felt that there will be commodity arrangements among producers, whether we like it or not, simply because those countries are either unable or unwilling to let the slow market readjustment take place. They feel that they must take some sort of action. That action very often results in such things as reserving the domestic market exclusively for domestic production, which might be accomplished through embargoes or quotas. It might be done through an export subsidy whereby a country attempts to force its own production on the world markets. In that case, a subsidy race may ensue where the largest purse would determine which country actually got rid of its surplus. So, we feel that intergovernmental action will be taken and that arrangements will be entered into; they have in the past, and we know that they will be in the future. What we are trying to do in this chapter is to lay down some rules of the road, so to speak, which will eliminate some of the worst characteristics of agreements as we have seen them in the past. Previous agreements in many cases have involved producers only. The consumer has had nothing to say about the activities taken under the agreement. In many cases agreements have merely provided an umbrella for producers, whether efficient or inefficient. In most cases they have been conducted more or less behind a veil of secrecy. The attempt here in this chapter is to admit that there probably will be agreements. We are not trying to encourage such arrangements nor to prohibit them, but we feel that whatever agreements are entered into should follow specific rules of the game, the most important of which is the requirement that consuming interests should have an equal voice in determinations with the producing interests. That, plus full publicity, we feel, will give a great measure of protection against possible abuses that have appeared in the past. The CHAIRMAN. Is the net effect to exclude private arrangements? Mr. PHILLIPS. Yes. The fear is that you take action such as that described in chapter VI to eliminate restrictive business practices, there might be a tendency for private interests, particularly in some of the smaller countries, to shift to an intergovernmental basis, and private producers might urge that their governments press for intergovernment arrangements on all kinds of fabricated products. We don't want that to occur. That is one of the major reasons for limiting this chapter almost exclusively to primary production. We do not want it to become an outlet for fabricated products which were subject to a cartel arrangement, under what might be governmental auspices. The CHAIRMAN. Now, let us suppose that the United States entered into one one of these intergovernmental commodity arrangements on, let us say, wheat. What, exactly, would the United States have to do to bring its arrangement into consonance with the facts of wheat growing, wheat harvesting, wheat storage, wheat distribution, wheat pricing? Mr. PHILLIPS. Senator, I believe the technique would be as follows: The countries of the world, both producing and consuming, that are substantially interested in world wheat would get together and undertake negotiations among themselves for a wheat agreement. Precisely what form that agreement would take, it is impossible to say. The CHAIRMAN. It would have some characteristic; would it not? Mr. PHILLIPS. Yes, sir; it would have characteristics, and after negotiation, it would be referred to the Congress. The CHAIRMAN. Now, what would be the normal characteristics of an agreement of that kind; let us say, as to a wheat agreement? Mr. PHILLIPS. Well, my guess would be that a wheat agreement would probably involve export quotas that the producing countries would guarantee to ship. It might well involve commitments on the part of the importing countries to import certain quotas. In addition, there might be a permitted price range. The CHAIRMAN. There might be price ranges in there? Mr. PHILLIPS. Within a price range, you presumably would have a commitment on the consumers to take X bushels of wheat at something within the price range. The CHAIRMAN. Then, there would be delivery schedules and delivery points? Mr. PHILLIPS. Yes. Well, there would be delivery points, certainly, but whether or not it would be necessary to schedule shipments under international auspices would be hard to say. The CHAIRMAN. Well, somewhere in the arrangement, those things would naturally be taken care of; would they not? Mr. PHILLIPS. Yes, sir. The CHAIRMAN. Now, the United States has entered into an agreement of that kind, and it concerns wheat, let us say. What does the Government, as such, do about it, to perform its part of an agreement of that kind? Mr. PHILLIPS. The sequence of events would be as follows: The negotiated instrument would be submitted to the Congress. It might be a treaty, in which event it would be sent to the Senate for ratification. The CHAIRMAN. I am very much interested in that statement. What is your authority for that, under the charter? Mr. PHILLIPS. Well, sir, there is nothing in the charter that says how it would be ratified. It would be ratified in accordance with our own procedures. The CHAIRMAN. And where does it say that? Mr. PHILLIPS. Well, the reason I say that is this: It does not say it in the charter, but all this chapter does is to set up the mechanism within which you negotiate commodity agreements. Then, once negotiated, they would follow the course of any intergovernmental agreement, whether or not the ITO were in being. And when we make treaties, or regulatory commodity agreements, they follow the normal procedure of coming to the Congress for ratification. The ones in which we have participated have been, I think, coffee, sugar, and wheat. But there is no intent here to set up an international agency which would sanction such agreements without acceptance or rejection by participating members in accordance with their own internal procedures. The CHAIRMAN. Well, that would be a matter of profound interest to the Congress. I certainly would like to have some reference to language which will support your view. Mr. PHILLIPS. Well, sir, I don't believe there is anything in the chapter that would refute my view. The CHAIRMAN. That is far different from supporting your view. Mr. PHILLIPS. As I say, what we are after in this chapter is this: We are merely establishing some general principles and some general guides under which regulatory agreements may be negotiated. Following that, it is purely a matter of internal processes as to whether or not you engage in a commodity agreement, or whether you even engage in the negotiations, sir. The CHAIRMAN. Well, you state without equivocation that it is the intent of the State Department that any of these intergovernmental commodity arrangements shall come back to the Congress for approval. Mr. PHILLIPS. Yes, sir. Any regulatory intergovernmental commodity agreement must, in our opinion, be referred to the Congress. The CHAIRMAN. Have you made up your mind whether it comes to both Houses, or to the Senate as a treaty? Mr. PHILLIPS. That I am unable to answer, sir. I could consult with our Legal Division and asked them. The CHAIRMAN. They are already working on one or two phases of the matter, going to the same question. Will you be good enough to ask them to give special attention to chapter 7? Mr. PHILLIPS. Yes, sir. (The Department submitted the following reply :) The Honorable EUGENE D. MILLIKIN, DEPARTMENT OF STATE, Washington, April 15, 1947. Chairman, Committee on Finance, United States Senate. MY DEAR SENATOR MILLIKIN: I have been informed that during the course of the testimony of Mr. William T. Phillips of the Department on chapter VII of the proposed draft charter for an International Trade Organization, the question arose whether intergovernmental commodity agreements would be referred to the Congress for congressional approval and, if so, whether such agreements would come to both Houses of Congress, or to the Senate as a treaty. I have already written to you on the question of reference of the charter of the International Trade Organization itself to the Congress and have indicated that, under the circumstances outlined in my previous letter, no decision has as yet been made on the form in which congressional approval will be asked. Like the charter in general, chapter VII is as yet a preliminary draft and is subject to possible change. It therefore is difficult to say whether commodity agreements negotiated pursuant to the provisions of chapter VII would be referred to the Senate for its advice and consent or whether the approval of both Houses would be asked. I may point out that certain commodity agreements have been presented and approved as treaties. On the other hand, commodity agreements under chapter VII may involve allocation and related powers which would be of interest to the Congress as a whole. Decision has thus not been made on the manner of submission of such agreements to the Congress. Insofar as such commodity agreements impose any obligations on the United States requiring legislative implementation in any way, it is the intention of the Department that they should be submitted to the Congress. Sincerely yours, DEAN ACHESON, |