A considerable number of the Members of this body are becoming increasingly alarmed with the actions and attitude of the Office of Foreign Agricultural Relations. My distinguished colleague and fellow Californian, Mr. John Phillips, who has observed its operations for the last 15 years, is deeply concerned. Also uneasy about the situation are such gentlemen as Mr. Horan, of Washington, and Mr. Whitten, of Mississippi. This office was established for the purpose of serving the interests of United States farmer by observing and reporting conditions in foreign countries which are of importance from the standpoint of competition and export demand. I understand this to mean that the Office should help American farmers not only in finding export outlets for their products but also help protect American farmers in every way it can against unfair foreign competition. It is astounding to me, however, to observe that more and more this office seems intent upon finding markets for the agricultural products of other nations in this country to the detriment of domestic producers. only that, its representatives have been known to encourage other countries to buy their own agricultural needs, not from American farmers but from producers in nondollar areas, thereby saving those countries' dollar exchange for the purchase of other United States products.

Not

It is indeed unfortunate that the principal adviser to the Secretary of Agriculture and to the officials of the Department of Agriculture on foreign-trade policy is employed by and paid by the Foreign Service of the State Department. The primary interest of the Department of Agriculture should be in the problems and welfare of American farmers. To have as its principal foreign-trade adviser a person employed by and paid by the State Department is inconsistent with that interest. No matter what such adviser's background may be or no matter how great his ability and integrity, he cannot help but listen to and be influenced by the policies of the State Department, which at no time in recent years have been consistent with the best interests of a very large segment of American agriculture.

It is to be remembered that Secretary of State Acheson was opposed to the escape clause in the Trade Agreements Act, in the first place, and ever since its enactment last year, he has been engaged in a continual rearguard fight against it.

Willard L. Thorp, Assistant Secretary of State in charge of economic matters, said in a New York speech the other day that he was greatly concerned with the significant increase in demands of American producers for protection. Secretary Acheson says that the escape clause should be applied only to cases of genuinely serious injury to domestic industry. Apparently, serious injury to him means that a farmer must lose his market, his land and his barn and ask to be put on relief rolls before he has suffered genuinely serious injury, Those sick-hearted souls who are losing sleep because farmers are asking for protection against foreign imports would do well to come out to California and sit under a fig tree long enough to see what is going on. They will discover that fig growers there have an investment of some $35,000,000 in land and equipment. They also have an investment of years of toil and dedication to the culture of a fruit which the Federal Government itself years ago encouraged and actually promoted as a proper agricultural activity for the area. They have homes and families. They are an established integral and valuable part of America. They are willing to compete with anyone in the sale of their product as long as conditions of competition are anywhere near fair.

There is a limit to the extent to which these farmers can reduce their costs of production by efficiency and hard work, and they have pretty well reached that limit. They are caught in an over-all price structure over which they have no control. They either pay $1 per hour for unskilled farm labor, or they go without, and the figs are not harvested. The processing plants either pay $3 per hour for skilled piece-rate workers, or those workers will go somewhere else the aircraft industry, for example. Like labor, the cost of equipment and materials is also high and beyond their control.

These farmers cannot compete with figs from the Mediterranean, where the standard of living of the producer is far lower-where there is no such thing as a minimum wage. Costs of production despite a relative lack of efficiency and mechanization, beat anything the American producer can possibly match. On top of that there being a great demand for dollar exchange, foreign governments have developed a practice of manipulating their currency values in a manner which further accentuates the cost differential and produces a price that reflects even less than the real cost of the exported product.

And, to add a note of irony to the situation, the foreign fig producer is now threatening the livelihood of the American fig producer because of increased production and improved quality made possible by United States financial and technical assistance for which the American producer was required to contribute in the form of taxes. The California fig growers have been made to pay for their own possible extinction. And, you wonder why they are protesting. In recent years, an unhealthy transformation has taken place in the makeup of the Office of Foreign Agricultural Relations. The International Commodities Branch, which has within it a number of very able men, well acquainted with the commodities with which they are concerned and having first-hand knowledge of the problems of American producers of those commodities, had been gradually pushed in the background while more and more attention and money has been given to the Regional Investigation Branch, which is composed of persons, a considerable number foreign-born, who know practically nothing about American agriculture and are not particularly well-informed as to agricultural matters in the countries from which they come or with which their duties are concerned. It is the Regional Investigation Branch which has represented American agriculture at the international trade agreement conferences. This branch has given indication time and again that it is more interested in finding markets in the United States for foreign producers of agricultural products rather than finding foreign markets for American producers of such products. California specialty crops, which do not benefit under the mandatory price support programs and which are trying their best to stand on their own feet, have been and are being sacrificed in the interest of their foreign competitors.

Even the House Committee on Appropriations is disturbed by the apparent subordination of the Office of Foreign Agricultural Relations to foreign-aid programs and the Department of State. It is so stated in its report accompanying the Department of Agriculture appropriation bill for fiscal year 1953. It is particularly disturbed by the fact that section 32 funds have been used in the purchase of mandatory support items for foreign aid. What has been done is to help bail out the Commodity Credit Corporation, which has been burdened with a surplus of these items. This practice is inconsistent with the main purpose for which section 32 funds are allocated, namely, to aid in the marketing of nonmandatory support crops, of which California specialty crops constitute an important part.

It is interesting to note that the House committee reduced the budget request of this office by $135,000. There is good reason to feel that the appropriations should be further reduced or entirely transferred to the State Department until clear evidence is shown by that office of complete independence of influence by the State Department and that the primary function it is performing is to serve the interests of American agriculture. In my opinion, unless it primarily serves the interest of American agriculture, it has no place in the Department of Agriculture.

Getting back to the subject of figs, the Secretary in his letter to Mr. Cain states that only 300 tons of foreign figs suitable for shipment to the United States during the remainder of the 1951-52 season were available in foreign countries as of January 1, 1952. The actual fact appears to be-from import figures furnished to me by the fig industry-on the other hand, that from January 1, 1952, through April 25, 1952, 1,476 tons of foreign figs have actually entered the United States destined for consumption in the United States; 637 tons in the form of whole dried figs and 839 tons in the form of fig paste. Thirty-eight tons arrived during the week ended April 25 and there is no indication that many more tons will not arrive between now and July 1. Both whole dried figs and the fig paste have the identical competitive effect in the United States market. Approximately 80 percent or more of the whole dried figs imported into the United States are converted to paste and used by bakers in fig bars. Competitive-wise it makes absolutely no difference whether bakers bring dried figs into the United States in the form of whole dried figs for the purpose of making paste or in the form of paste made in a foreign country. We do not know where the Secretary obtained his figure of 300 tons, but the fact is—if my figures are correct-that this figure represents approximately a 400-percent error. The above import figures were furnished by a private reporting concern in New York, which has been utilized by the California Fig Institute for several years and which has always been highly reliable. The figures are always very close to the official Department of Commerce figures when they finally become available 2 or 3 months later.

The Secretary then states that only about 3,000 tons of figs have entered the United States for consumption between July 1, 1951, through January 31, 1952,

and implies that that quantity was only about one-half what the fig industry indicated were to come in. I think this is an entirely unfair implication of a misstatement of facts by the fig industry and is wholly unsubstantiated by the facts available to me. The facts show that the fig industry indicated that imports for the entire crop year would probably reach 6,000 tons and actually to date, imports of figs in the form of whole dried figs and in the form of dried fig paste-have totaled 7,992 tons, of which 2,154 tons have been rejected by the Food and Drug Administration as unfit for human consumption.

The Secretary further states that American shipments or gs to date in the current crop year have exceeded those of the last crop year. He fails to state, however, that the relatively small shipments of last crop year were from a crop that was one-fifth below normal and that even with such a short crop that American figs backed up in the hands of packers had a substantially excessive inventory on hand at the end of the crop year, July 1, 1951, which was caused primarily by excessive imports.

The Secretary also fails to state the very significant fact that the shipments this crop year have been made at a very substantial financial loss to the fig packers and that figs have been selling for some time at less than the packers paid the growers therefor. I am informed that the Tariff Commission has information to prove that the American fig packers have lost almost $800,000 this crop year on a crop of figs worth approximately $5,500,000. That is a loss in excess of 10 percent of the entire value of the crop to the farmers. Certainly, it is unfair to imply that because the fig packers have shipped a small quantity of figs this year, at a loss, in excess of their shipments last year from a short crop indicates that no relief is justified. The Secretary, in his letter, then reaches the conclusion that during the remainder of the 1951-52 season, that domestic demand would have to be satisfied almost wholly from domestic sources until the new shipping season starts. This is wholly inconsistent with the fact that during the month of March and to April 25, 723 tons of foreign figs have entered the United States to satisfy domestic demand, while an equal amount of excessive carryover in the hands of American packers remains in warehouses in California. In the Secretary's letter, he apparently assumes that the request for emergency treatment was made only in order to restrict imports during the balance of the current crop year. This assumption is incorrect, but even so, the necessity for emergency treatment would still be present. If relief is justified and is to be granted in the form of a quota for the coming 1952-53 crop year which begins July 1, 1952, every day of delay reduces the effectiveness of such relief in the desired effect of raising grower prices to or near parity. In my opinion, the Secretary fails to recognize the psychological effect that would result from an early announcement of relief. If a limitation of imports for the coming crop year were announced immediately or had been announced 30 days from the time the application was filed with the Secretary, an immediate firming of American prices would have had a much greater beneficial effect on grower prices than would an announcement of an import limitation on July 1, August 1, or September 1. A late announcement of an import limitation would help the packers much more than it would help the growers whose prices may have already been determined and who are currently finding great difficulty or inability to obtain bank credit for working capital.

In my opinion, the Secretary has not properly interpreted section 8 (a). That section was intended by Congress as an instrument which would enable him to anticipate difficulties and take corrective action well before those difficulties materialized. In my opinion, the following colloquy between Senator Holland, the author of section 8 (a), and Senator George, the manager of the trade-agreements bill on the floor of the Senate, clearly indicates the unmistakable intention that section 8 (a) be used as a preventive measure, well in advance of any adverse occurrence, rather than a corrective measure after the injury has occurred-Congressional Record, May 23, 1951, page 5806:

"Mr. HOLLAND. In connection with this question, I also submit my fourth question, as follows: In using in the report the following language, "The planting, offering for sale, or shipment of large quantities of perishable products within or without the country may create conditions which may require emergency action,' is it the intent that, when the Secretary of Agriculture reports in advance of planting and/or harvesting that such conditions exist, or threaten to exist, the President shall be authorized to take emergency action which will prevent the existence of these conditions rather than being compelled to wait until they actually occur?

"Mr. GEORGE. Section 8 (a) is designed to offer relief, on the speediest basis possible, in accordance with the provisions of section 22 of the Agricultural Ad

justment Act and the provisions of the escape clause in section 7 of the bill. Under both these provisions it is not necessary to delay remedial action until the injury has actually occurred.

"Mr. HOLLAND. I particularly appreciate that answer because it makes clear for the record that neither the Secretary of Agriculture nor the President of the United States must needs wait until the actual excess amount of production is in hand, but that they are required to and may exercise reasonable foresight and caution to determine, ahead of the actual existence of the excess product, the fact that there will be such an excess or that such an excess is seriously threatened."

I hope that under the circumstances the Secretary of Agriculture will reconsider his decision and determine that emergency relief under section 8 (a) is necessary for the relief of the dried-fig industry.

It is unfortunate, indeed, that the critical problem currently facing the American fig industry should get mixed up in a debate between the Secretary and Mr. Breckinridge. I most certainly hope it is not the Secretary's intention to divert attention from that problem by attacking the integrity and veracity of an individual spokesman for the industry. I have become involved because I am interested in helping the California fig industry as well as all California specialty crops. Any interest which I may have in Mr. Breckinridge is incidental to that primary interest and springs from the fact that he has represented the fig growers and also the producers of numerous California specialty crops in their efforts to obtain protection against unfair competition from foreign countries. In my opinion, as in the opinion of other Members of the California delegation, Mr. Breckinridge is to be commended for his vigorous approach and his courage of conviction in striving to correct a situation existing in the Office of Foreign Agricultural Relations as well as elsewhere in the Government which is detrimental to the interests of a great many of the farmers of America.

Senator JOHNSON. Does anyone else here desire to testify? If not, the hearing is recessed until 10 o'clock tomorrow morning.

(Whereupon, at 12:05 p. m., the committee recessed, to reconvene at 10 a. m. Tuesday, April 29, 1952.)

CUSTOMS SIMPLIFICATION ACT

TUESDAY, APRIL 29, 1952

UNITED STATES SENATE,
COMMITTEE ON FINANCE,
Washington, D. C.

The committee met, pursuant to adjournment, at 10 a. m., in room 312, Senate Office Building, Senator Walter F. George (chairman) presiding.

Present: Senators George, Kerr, and Flanders.

Also present: Elizabeth B. Springer, chief clerk; and Serge N. Benson, professional staff member.

The CHAIRMAN. The committee will come to order.

Mr. Moss, you may come around.

Senator O'Mahoney is scheduled first, but he is not here, so we will just go right ahead.

Mr. Moss. Thank you, Senator.

The CHAIRMAN. Other members of the committee may get in. You may identify yourself for the record.

STATEMENT OF HARRY A. MOSS, JR., EXECUTIVE SECRETARY, AMERICAN KNIT HANDWEAR ASSOCIATION, INC.

Mr. Moss. My name is Harry A. Moss, Jr. I am secretary of the American Knit Handwear Association, Gloversville, N. Y.

The CHAIRMAN. You may be seated.

Mr. Moss. Thank you.

The CHAIRMAN. You are appearing for whom?

Mr. Moss. American Knit Handwear Association.
The CHAIRMAN. Handwear Association?

Mr. Moss. Yes.

The CHAIRMAN. All right, sir. What is that association?

Mr. Moss. This association, Senator, represents the United States manufacturers of seamless knit gloves and mittens, and we are pleased to go on record in favor of simplification of customs administrative laws. We do not think it is fair to impose unnecessary burdens on importers by maintaining administrative provisions which hamper trade.

At the same time, we do assert the need for continuation of a protective tariff system in this country for many industries such as ours. We believe that Congress should be critical of any moves which would undermine the protective tariff system which has been established by Congress. Any move which might weaken our tariff in the name of customs simplification should be scrutinized.

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