Furthermore, even if Canada were to phaseout all of this subsidy, the fact is that American fishermen, for years and years to come, will be competing against Canadian vessels and Canadian processing facilities which have been subsidized in the past, and this is an extremely unfair disadvantage under which our fishermen have been operating for a long time.

This committee, I suspect, at least as much as any in the Senate, is concerned with the balance-of-payments situation of the United States. I believe Senator Kennedy pointed out that last year our deficit in trade in fish products alone was in excess of $2 billion. A substantial percentage of that comes from the unfairly subsidized exports from Canada.

Finally, Mr. Chairman, I know that you, of all people, do not need to be remainded about how the United States fishermen feel about their government. In fact, I doubt that in the setting of the Committee, one could accurately articulate precisely how United States fishermen feel about their government.

Our fishermen in Massachusetts, as I am sure yours in Maine, were somewhat bemused by the farmer's strike and the presence of thousands of farmers in Washington earlier this year because the farmers, among other things, as you recall, were arguing that their price supports were inadequate.

That really struck us. Fishermen, of course, do not know anything about price supports.

As you well know, our fishermen not only do not have price supports, but under the 200-mile limit law-the Fishery Conservation and Management Act of 1976-in several instances they have been ordered by their own government, for reasons of conservation and depletion of stocks, not to fish at all. There have been total closures and, at the moment, as you well know, quotas have been reduced to a level where many fishermen feel that there is an economic closure on some species. While they see their government-quite rightly, perhaps, in terms of the need to conserve the species and ultimately the industry-ordering them to cut down and, in some cases, to suspend their fishing, they do not see their Government, on the other hand, recognizing some kind of a compensatory obligation to their fishermen.

For many years I have tried to convince people in the House that fishermen were farmers-they happen to be farmers of the sea rather than farmers of land, but they are essentially producers of food-and I sometimes tremble to think what would happen if the jurisdiction over fisheries matters were under the Department of Agriculture and the Agriculture Committees of the respective Houses. I suspect our fishermen years ago would have been paid to sit on the dock and not go fishing in some of the earlier programs that we have had. But the kind of legitimate concern that this government has expressed for its traditional, conventional farmers of the land, as you well know, has never been expressed to our own fishermen.

At this point, given a world where people are starving, given the extraordinary depletion of protein resources-most particularly, as you well know, in the Northwest Atlantic-given the sacrifices our own fishermen are being asked to endure, perhaps for a matter of years to the determination of this Congress to conserve those species, to say that the foreigners cannot fish, one can imagine the response

and the reaction of an American fisherman who is being ordered by his own government on grounds of conservation to suspend fishing and who, while he sits on the dock, sees trucks bringing în subsidized Canadian fish.

This is an absolutely intolerable situation. It seems to me that the very least we can do at this point, as a symbolic gesture that there is awareness and concern in this Congress for the fishermen of this country, is to say to the Treasury Department, this time you cannot do it. This time we are going to overturn that waiver. This time we are going to recognize our own fishermen, and what they have been subjected to for the better part of a decade is going to be terminated. We are not about to accept the usual, conventional arguments of convenient diplomacy from the Department of State which we heard for years in operation to the 200-mile limit, that we cannot afford to somehow offend our friends. Canada clearly is one of the friends of this Nation, and it seems to me that the basic relationship between the United States and Canada will survive whatever determination is made.

I think, for once, it is time for us to make determinations in accordance with our own statutes, in accordance, as I say, with the recognition of the importance of our own fishermen, and I urge the committee to report the resolution as quickly as possible.

Senator HATHAWAY. Congressman, thank you very much. I think that what the fishermen might say about the Government might be about what Vance said about Young. I think it would have to appear that way in the record.

I really appreciate the testimony that you have given, the leadership that you have given with respect to protection of fishermen's rights and I am going to follow your advice and urge-well, I should not say this at the outset of the hearing, until I hear Mr. Mundheim and what defense he has of the waiver.

But, at the present time, I would be inclined to follow your advice and urge the committee to report the resolution out.

However, I reserve judgment until I hear Mr. Mundheim and all of the rest of the witnesses.

Senator Hansen?

Senator HANSEN. Mr. Chairman, I must admit that I know very little about the fishing industry. The coastline in Wyoming is not very extensive.

But I am concerned about this. It seems to me that, for a number of years, we have been leading the world in working towards a reduction in tariffs and nontariff barriers. I am completely convinced that the time has come for the United States to show that in spite of our willingness and our eagerness to show friendship and understanding and increase trade among nations generally, we have to be concerned about jobs in this country.

Wyoming has some interests in trade by virtue of the fact that we produce cattle and meat in Wyoming. I know that when we examine the relationship between this country and the European community, we see that those nations have not demonstrated the same kind of total commitment that has characterized out policies for a long time. I am disturbed over the fact that we presently have an imbalance of payments. I am concerned about the unemployment that seems to be

directly as a result of a myopic view of what we do as compared with what out countries do. I just want to say to you that I am sympathetic.

Representative STUDDS. May I say, Senator, that I deeply appreciate your interest. It is a very good omen to see a bipartisan coalition of Maine and Wyoming on a question like this. I am beginning to wonder about Wyoming's coastline. Having shared the conference committee meetings on the Outer Continental Shelf with the Senator from Wyoming, I have been carefully studying my maps to find his part of the Outer Continental Shelf.

As you know, we have conferees from the Senate from Idaho and Arkansas and Wyoming and other "coastal" States. It has been an absolutely fascinating experience.

I appreciate deeply the effort the Senator has made to learn of areas other than his own, and I hope someday-well, perhaps the Senator would prefer that I stay out of questions involving ranching and mining.

Senator HANSEN. It is a nice way to go broke, if you want to get in it. We have a lot of mortgaged ranches in Wyoming that you might like

Representative STUDDS. May I just point out one thing in response to what you said, sir?

The duties which we seek in attempting to overturn the waiver are not, as you know, the imposition of some kind of an arbitrary tariff wall. They are, quite literally, what is meant by the word "countervailing." They are calculated precisely only to offset the amount and the value of the subsidy granted by the Government of Canada, so they are an equalizing, not an attempt to get ahead.

Senator HANSEN. Mr. Chairman, thank you very much. I have to run to a markup, but I did want to come by to let you know that despite the fact that we do not have a very long shoreline, I share your concern in trying to do whatever we can to expand job opportunities in this country and to rectify or address the balance-ofpayments problem.

Representative STUDDS. I thank the Senator. I know that he has a busy schedule, and I know he will be relieved to know that the House of Representatives has just spared him the additional burden of having to try Ambassador Young.

Senator HATHAWAY. Thank you very much, Gerry. Good to see you, and thanks for your excellent statement, all of which will be put into the record.

[The prepared statement of Mr. Studds follows:]

STATEMENT OF REPRESENTATIVE GERRY E. STUDDS OF MASSACHUSETTS

Thank you, Mr. Chairman. I appreciate this opportunity to appear before you today to support passage of Senate Resolution 483, which would disapprove the Treasury Department's decision to waive collection of countervailing duty on government-subsidized Canadian fish imported into the United States. I have filed a similar resolution (H. Res. 1260) in the House of Representatives, and am seeking action on it there. However, since the law permits either body to disapprove a decision to waive collection of countervailing duty, I strongly urge your Committee and the full Senate to proceed with passage of S. Res. 483.

At least since the early 1970s, the Canadian government has been building up the Canadian fishing industry to enable it to capture export markets. Their stated goal is to make Canada the #1 fish exporting country in the world and

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their strategies to this end are, to use the words of Canada's Minister of Fisheries and the Environment, "too many to number." These strategies include governmentally-encouraged industry cooperation in market research and promotion, government grants for port development and modernization, government grants to connect water supply lines to processing plants, federal fishing vessel insurance at below-market rates, a federal price support apparatus, grants of up to 50% of the cost of new icemaking machinery for fishing vessels and processing plants, and direct per-pound payments to fishermen and processors handling groundfish such as cod, haddock, and flounder.

While many of the things the Canadian government does to assist its fishing industry in capturing export markets in the United States are not at least in the opinion of the Treasury Department-countervailable, I have mentioned them to try to give you an understanding of the magnitude of the Canadian government's efforts to capture fish markets in the United States. Those efforts have been successful, and a key part of them has been the direct payments to fisherman and processors under the Groundfish Temporary Assistance Program which has existed in several variations since 1974.

On April 13, 1977 the Treasury Department made a final decision, in response to an industry petition filed a year earlier, that the Canadian government's Groundfish Temporary Assistance Program and vessel construction grants were export subsidies, and then waived collection of the countervailing duty. The 1977 decision affected only 3 tariff items covering imports valued at about $2 million per year.

A few weeks after the 1977 decision was issued by the Treasury Department, the same petitioner filed a new petition covering many more tariff items. Although the Treasury Department had just made one determination that the Groundfish Temporary Assistance Program was an export subsidy, the Department took the full year permitted by statute to make the same decision with respect to the additional tariff items. The Canadian government paid its fishermen and processors the full subsidy (amounting to at least 13% ad valorem) during most of the year for which the Treasury Department delayed its decision on the new petition.

By delaying its decision on the new petition for a year, the Treasury has allowed the Canadian government to improperly subsidize approximately $200 million of fish exports to the United States. During this year, the Canadian fish exports to U.S. markets continued to underprice U.S.-caught fish, and to displace them from the marketplace. Now that the Canadians' temporary subsidy program has succeeded in capturing new U.S. markets for Canadian fish, the Treasury Department is asking approval once again for its waiver on the collection of countervailing duty. The net effect of the Treasury Department's delay and granting of waivers has been and will be (if the wavier is allowed to stand) to allow the Canadian government to accomplish completely the goals of its Groundfish Temporary Assistance Program, which included the use of artificially low prices to capture U.S. markets from our domestic fishermen.

The Canadian government's direct subsidies to groundfish fishermen and processors have always been viewed as temporary, as the name of the program implies. The Groundfish Temporary Assistance Program was begun after our law was passed permitting the Treasury Department to waive collection of countervailing duties, and it is reasonable to assume that the Canadians planned to phase it out before our law permitting waivers expires next January 4. In my opinion the Canadian government has very skillfully used a section of our trade laws by using export subsidies to enable low-priced Canadian fish to capture U.S. markets. Once those markets have been captured by the use of artificially low prices, U.S. fishermen will have to combat the newly-established lines of supply as they attempt to regain their position in the marketplace. Under these circumstance, I find it impossible to agree to any further waivers of countervailing duty on Canadian fish.

Mr. Chairman, one of the witnesses scheduled to testify later in this hearing may attempt to explain the increasing dominance of Canadian fish in U.S. markets in terms of supply, rather than price. In this regard, I would like to bring to your attention that the Department of Labor has completed an investigation of this situation, and has certified the workers on at least 8 fishing vessels in my district as eligible to apply for Worker Adjustment Assistance because of the impact of fish imported from Canada. I would like to quote one paragraph from these determinations by the Labor Department because of its relevance to your deliberations today.

"The wholesalers also indicated that decreasing purchases from Provincetown were in large measure due to the increased purchases of fresh and frozen Canadian fish by their customers-fishmarkets, supermarkets, and restaurants. The Department's investigation revealed that many fish distributors and wholesalers use the imports of Canadian ground and flatfish as leverage in bidding down the exvessel price paid to domestic fishermen for the same species of ground and flatfish."

Mr. Chairman, the Canadian Government has engaged in a large-scale effort to enlarge its share of wholesale and retail fish markets in the United States. In the process it has used improper governmental subsidies to enable Canadian fish to undercut U.S. fish prices. I believe this situation should be ended at once, and urge your committee to report Senate Resolution 483 for favorable action by the full Senate.

Senator HATHAWAY. Now, Mr. Mundheim, we will resume where we left off. I think you were talking about the vessel subsidy.

STATEMENT OF HON. ROBERT MUNDHEIM-Resumed

Mr. MUNDHEIM. I was just describing, Mr. Chairman, how we calculated that subsidy and said that if we take the average appropriation over the last 12 years and divide it by the total catch in the most recent year available, then that calculation indicates a subsidy of approximately 0.85 percent ad valorem.

Then there is a third, broad category of

Senator HATHAWAY. The vessel subsidy is what, approximately, 50 percent? The cost of the vessel?

Mr. MUNDHEIM. It is 35 percent.

Senator HATHAWAY. It is 35 percent.

Mr. MUNDHEIM. Not every

Senator HATHAWAY. And then you take that percentage of what the cost of the vessel would be, the total cost? Is that what you are doing? Mr. MUNDHEIM. That would be the 35 percent, but the question isyou cannot determine the

Senator HATHAWAY. No; 35 percent is what the Canadian Government pays. If the vessel costs $100, they pay $35.

Mr. MUNDHEIM. They pay $35.

Senator HATHAWAY. What percentage of all of his costs is the cost of the vessel, amortized over whatever life it would be given?

Mr. MUNDHEIM. There are, then, various other kinds of subsidies for doing this, which go to diminish the costs that the fishermen would have.

If you take just what goes to a particular vessel, on a particular vessel, if it costs $100, there might be up to $35 of grant from the Canadian Government.

Now, the problem is that not every vessel benefits from that grant, and we cannot identify the fish imported through a particular vessel. So what we have to do is take the value of that grant and spread it over the entire catch, and that is why we get down to this 0.85 percent ad valoreum subsidy. That is how we quantify it if we were to countervail it.

Now, the third type

Senator HATHAWAY. Wait a minute. I am not sure I understand your conclusion. It is 85 percent of what?

Mr. MUNDHEIM. It is 0.85 percent. In other words, on the fish coming in, that is what it would amount to. That is how we would quantify the subsidy.