Mr. FULTON. And working for the lifting of the level of the whole world, including our own country.

Mr. ROSENTHAL. That is vital.

Mr. FULTON. Now, if you were a conservative, I do not know what you are but if you were a conservative, and were taking a postulate that you were looking at a new step forward, as a conservative, mind you, you would say, "Fulton, let's start with it just as it is. Take the world or the United States as it is and move in an orderly fashion from there. Make your first step from present practicalities." You would be a practical man if you were a conservative.

If that is true I want to say that the American Tariff League is the most liberal organization that I have heard before this committee for a long time because they throw the pebble clear out in the pond and say, "Here is this high level that we want to reach that is even above what the New Dealers ask. And if the charter is not that progressive and so highly moral in principle, we are not going into the charter with its present practical exceptions because it is based on conditions as they now exist."

To me as a progressive conservative that is slightly shocking because it is a complete departure from traditional bases of action. I think the American Tariff League should again check its conscience and check with its members and see if, as Bernard Shaw said often, that the conservative in his off moments produces some of the greatest liberal advances.

I just want to get the positions outlined, that the ones on this side. of the table, the Republican side, who are for this charter, have taken the conservative position; let us look at trade as it is, let us look at international relations as they are, let us then set a method of procedure which will gradually bring up onto a level that we look for through orderly progress.

Then, may I stop and say that I am slightly horrorstruck when I find the American Tariff League coming in here and saying to the conservative side of the table, "Drop it all and if you do not get clear up to a new theoretical ideology of foreign trade, don't go into it." Thank you very much. I think you have added a great deal to the enjoyment of the occasion.

Mr. GORDON. Thank you very much for your fine statement, Mr. Rosenthal.

This concludes the hearing of witnesses for today. We adjourn until tomorrow at 10 o'clock.

(Whereupon, at 12: 55 p. m., the committee adjourned to reconvene at 10 a. m., Thursday, May 4, 1950.)

MEMBERSHIP AND PARTICIPATION BY THE UNITED STATES IN THE INTERNATIONAL TRADE ORGANIZATION

THURSDAY, MAY 4, 1950

HOUSE OF REPRESENTATIVES,
COMMITTEE ON FOREIGN AFFAIRS,

Washington, D. C.

The committee met pursuant to adjournment at 10: 15 a. m., in theForeign Affairs Committee room, United States Capitol, Hon. John Kee (chairman), presiding.

Chairman KEE. The committee will come to order.

We will continue with our hearing today upon House Joint Resolution 236 providing for membership and participation of the United States in an International Trade Organization and authorizing an appropriation therefor.

We have with us today Mr. Earl O. Shreve, representing the United States Chamber of Commerce.

Mr. Shreve, you may proceed in any manner you wish.

STATEMENT OF EARL 0. SHREVE, UNITED STATES CHAMBER OF COMMERCE, WASHINGTON, D. C.

Mr. SHREVE. Gentlemen, I am Earl O. Shreve, representing the Chamber of Commerce of the United States on the question of this country's adherence to the proposed Habana charter for an International Trade Organization. I am former president of the national chamber and appear before you today as a member and representative of the chamber. Before beginning this statement, I would like to express the appreciation of the chamber of commerce at being permitted to present its official opinion on this important matter. The probable effect of the Habana charter would be so far-reaching as to touch the lives of everyone in this country and so should be a matter of widest public concern.

With all the testimony which you gentlemen have heard and are scheduled to hear, I will make my presentation as brief as possible and will discuss only three major points; what the chamber has done about the proposed International Trade Organization, why the chamber feels that the Habana charter will not accomplish its stated objectives, and, finally, what can be done to achieve those objectives. I shall be glad to answer questions at any time during the testimony, or when it is concluded.

What the chamber has done about the ITO:

After careful and mature consideration of the proposed Habana charter for an International Trade Organization the chamber of commerce, at the annual meeting of its membership in April of 1948,.

adopted our present policy, on the basis of which I appear today. That policy reads:

The Chamber of Commerce of the United States supports the objectives of an International Trade Organization to provide for collaboration, consultation, and negotiation among the nations on various matters affecting international trade and commerce.

The charter constituting such an organization must provide positive declarations in behalf of the maintenance of private initiative and enterprise in world commerce. Stress should be placed upon the necessity of reliance on free private and competitive enterprise to release the regenerative forces which alone can bring about world recovery. The declarations further should preclude any activities by the organization which would interfere with our freedom of action in regard to domestic policies.

The present Habana charter is not consistent with these principles, and the United States should withhold acceptance of this charter and seek renegotiation. It was with sincere regret that this policy decision was reachedthe more so since the chamber was, in effect, pioneering as the first important business organization to take a definite position on the Habana charter. The chamber appreciated the thorough and unceasing efforts of the Department of State to achieve a worth-while economic agreement, but was convinced that the objectives of an international trade organization could not be attained by the Habana charter.

I would like to digress here for a moment to offer some information which may provide a proper evaluation of the chamber policy.

The Chamber of Commerce of the United States is a national organization of 3,123 trade associations and local chambers of commerce, with 20,588 additional business members. The underlying membership is conservatively estimated at 1,350,000 individual businessmen, which really makes it by far the largest business organization in the world. The Chamber of Commerce is, perhaps, unique in that its membership and direct interests embrace every important activity in our economy; and, through its membership-small businesses as well as large presents the opinion of a cross section of our entire economy. Thus, it may be seen that policies of the Chamber of Commerce of the United States do not represent the narrow views of some special group or particular interest, but are drawn from the diverse interests of the country as a whole and are voted by its membership. This voting is so regulated that no geographic concentration of interests nor economic concentration of power can override the broader interests of our entire membership.

Since the Chamber of Commerce of the United States is a democratic organization and since its membership encompasses the widest range of interests, the members retain every right to express themselves as individuals. In the case of our policy on the Habana charter there may be some members who are in a minority disagreement, but the official attitude of the chamber favors the objectives of an international trade organization but does not believe that the Habana charter can accomplish those objectives.

To return to the activities of the chamber with respect to the proposed ITO, the chamber has followed closely each stage in the development of an international trade organization from the initial Proposals for the Expansion of World Trade and Employment, issued by the Department of State in December 1945, to the signing of the present charter for an International Trade Organization at Habana on March 24, 1948. Each of these proposals was subjected to detailed

analysis and study by the chamber. Frequent conferences between members of the chamber and Department of State officials served as a valuable medium for the exchange of ideas and information. From time to time the chamber offered written comments to Department of State officials concerning the various proposals. During the Habana Conference one member of the chamber was a member of the United States delegation, serving as an advisor, while two others closely associated with various chamber committees were also in attendance. I might add that I stopped off in Habana for a short while to consult with members of the United States delegation to the United Nations Conference on Trade and Employment.

The steps immediately preceding the adoption of the present policy began with the establishment of an over-all committee on the proposed ITO. I would like to interject here, if I may, that such special committees are only rarely established by the Chamber; generally, the existing committees are competent to consider matters of this nature, but in this case it was felt that since the proposed ITO covered such a wide range of subjects the Chamber could best consider this subject by establishing a special committee consisting of representatives of the various Chamber departments.

The report of the Interdepartmental Committee, based on exhaustive studies by the committee and staff members, was presented to our board of directors in April 1948. This report is appended to this statement, but I would like to read to you several pertinent sections.

The Chamber of Commerce of the United States remains firm in the belief that an international trade organization could be a constructive and very useful vehicle for international cooperation in economic affairs.

The Chamber firmly believes that continuing studies and the march of events will permit the achievement of an acceptable charter through further negotiations. Assumption by the United States of responsibility for an immediate and continuing flow of goods to other nations makes the early establishment of an international trade organization much less urgent. A structure of freer world trade on a multilateral basis remains a desirable objective. It probably can be erected once a foundation for normal economic relations has been established through our activities under the Foreign Assistance Act. There appears to be no reason for acceptance by our Government of conditions in an international trade organization which may be in conflict with American principles. The Economic Cooperation Administration will have a dominant influence in world economic relations for the next several years. Through its aid it may be possible to develop more universally acceptable standards with fewer exceptions.

The report of this committee, incidentally, reflected independent departmental studies. Although I will take up in just a moment the reasons why the Chamber feels that the Habana charter will not attain the objectives of the proposed international trade organization, I would like here to list the main criticisms of the Habana charter which were presented by the Interdepartmental Committee.

1. The exceptions and escapes are so numerous as to subordinate and obscure the general objectives of nondiscriminatory multilateral trade. Although ostensibly intended as a medium for the elimination of quantitative restrictions, preferential agreements, and discriminatory trade practices, these exceptions may be merely a device for giving sanction to their continuance.

2. There was a failure to eliminate or substantially mitigate the discriminatory system of preferential tariffs. On the contrary, opportunity has been provided for nations to establish new preferences.

3. From the United States standpoint there is grave danger in concessions in the charter to the philosophy of state planning, control, and trading. We

65515-5027

are especially concerned by the implications of the provisions for intergovernmental commodity agreements.

4. Foreign-investment provisions of the charter fail to provide positive incentive to a flow of American capital to underdeveloped nations.

5. The United States is at a disadvantage in having only one vote. Particularly is this true in the light of the number of charter provisions ambiguously drafted and therefore subject to further interpretation by the Organization.

There is one other activity of the chamber of commerce concerning the ITO which I would like to bring to your attention. The Economic Research Department, which holds economic institutes several times each year on current outstanding economic problems, conducted a conference on the ITO on June 15, 1948, in Washington. The speakers were drawn from the Department of State, the Legislative Reference Service, and several private firms, in order to have the case for, and the case against, the Habana charter. The comments made by the speakers were assembled in a booklet, America and the International Trade Organization, for distribution to the chamber membership and all those interested in the question of the ITO to read and then decide themselves the logic or fallacies of the Habana charter. Copies of this booklet will be made available for your information or for inclusion in the record.

This institute, where the platform was occupied by both proponents and opponents of the Habana charter, was the first large public meeting devoted to the appraisal of the document. Further, it was held after the chamber had announced its own position. I mention this to indicate the earnest desire of the chamber of commerce to have all aspects of this important matter receive full and free discussion.

I would like to call your attention to The Chamber and the Charter, published by the chamber of commerce in July 1949, which gives detailed information on the actions of the chamber of commerce concerning the proposed international trade organization as well as the reasons for chamber opposition to the Habana charter. I would like to present that for the record at this time. Chairman KEE. Without objection, it will be included in the record at this point.

(The document referred to is as follows:)

THE CHAMBER AND THE CHARTER

The position of the Chamber of Commerce of the United States on the proposed Habana charter for an International Trade Organization

INTRODUCTION

Ever since the end of the war, the United States has borne the role of economic world leadership to a hitherto unimaginable degree. Instead of leaving the impoverished nations to their own impotent efforts this Nation has undertaken its task in the firm conviction that real peace will come only when each nation has political and economic stability.

To aid in the advance toward that stability, therefore, the resources and energies of the United States have been used unsparingly. Aid to Greece and Turkey, UNRRA, the British loan, the activities of the Export-Import Bank, participation in the United Nations and its specialized agencies and, finally, the European recovery program-all these stand as monuments to the efforts of this Nation in aiding the other peace-loving countries in their tortuous steps toward that necessary stability. The "bold new program," which is still in the planning stage, is another proposal aimed at achieving the economic stability which is a prerequisite to world peace and prosperity.