The CHAIRMAN. Will industry be consulted at any time between the convening of the Geneva Conference and the final ratification of the agreements entered into? Mr. CLAYTON. You refer now to trade agreements? The CHAIRMAN. I am talking about the ITO. Mr. CLAYTON. That is the ITO. I have to explain, Mr. Chairman, that the work done by the conference in London, beginning on October 15, and the work to be done in Geneva beginning on April 10, regarding the International Trade Organization, is preliminary and preparatory work, and the charter would not be finally ratified until sometime in the fall when the big conference is called-a world trade conference is called. There will be plenty of opportunity to consult with industry about the charter, and we will do so. I would like to explain, however, that we have held very extensive hearings in seven cities in the United States. They were fully advertised in advance, and we have held these hearings to give business people and others an opportunity to come in and state their views regarding the charter. That is the proposed charter. It is only a preliminary draft. It has been widely circulated over the country. We have held numerous meetings with committees of businessmen, like the United States Chamber of Commerce, the National Association of Manufacturers, National Foreign Trade Council, and many other organizations of that kind. We have received some very valuable suggestions and constructive criticisms about the charter, and those suggestions are being carefully considered. Therefore, I assure you that up to the present time we have given American business the fullest opportunity to study and to suggest and recommend and criticize what we are trying to do. Further opportunities will be given before that charter is finally presented to the Congress. Finally, Mr. Chairman, when it is presented to the Congress, I assume the Congress itself will have extensive hearings. The CHAIRMAN. I only have one or two more questions that I wish to propound. I want to get a little information in regard to this International Trade Organization. As you know, we now have a very considerable surplus of wool in this country. I think that we have enough to supply us for at least a year, and the new clip comes in shortly. Suppose with that surplus it should be necessary for Australia and New Zealand to establish additional dollar credits in this country, and the only exportable item that they had would be wool. Could ITO tell this Government that we must permit so many million or so many hundred million pounds of wool to be admitted, notwithstanding the fact that we already have a surplus of 1 or 2 years? Mr. CLAYTON. Positively not, Mr. Chairman. They could not tell us anything of that character at all. The CHAIRMAN. Well, if we entered into an agreement, just what is the purpose? I do not think that I can put my hand on it at the moment, but as I recall, you said in your prepared statement that it was one of the purposes of the ITO to regulate commerce; is that right? Mr. CLAYTON. No, sir; I did not say that. The CHAIRMAN. Well, what is the purpose in setting up the ITO? Mr. CLAYTON. It has several purposes. I will make it as brief as I can. One of the principal ones is to develop a general code of principles on which nations should conduct their international trade and to provide a forum where nations may come and indicate any changes, substantial changes, they may make in their foreign trade programs which might seriously injure some neighbor. Heretofore, when countries have made some radical move with reference to their international economic relations, they have generally done it without any notice and without any discussion, without consultation, and they have generally hurt somebody. They have hurt one of their neighbors, and the neighbor became angry and retaliated, and in the end everybody was hurt and everybody was angry. Now, the International Trade Organization proposes to set up a kind of forum where people may go and discuss and consult about matters of that kind. That is about all it is. There is no sanction there except the one that I have mentioned in my prepared statement, which I think you understand. The CHAIRMAN. Well, that leads to another question. May I ask why the State Department hesitates to discuss the concessions it proposes to make before the agreement is signed? Mr. CLAYTON. Not, Mr. Chairman, before the agreement is signed, but before an agreement is actually negotiated. You must bear in mind, gentlemen, that we are going there as a set of traders, representing the United States. We are going to negotiate with representatives of other governments on these matters, and we could not very well advertise to the world and to them what the limits of our negotiating ability may be. It would be depriving us of our principal negotiating medium and power. The CHAIRMAN. I cannot see how you can hope to obtain any definite benefits at Geneva, in the way of trade agreements, when you stop to consider that we are on a 40-hour week. We pay the highest wage scale of any country in the world. We pay time and a half for overtime. Our employers and employees must pay social security, unemployment taxes, and burdensome income taxes. Just how are you going to level all of these peaks off so as to bring about a common trading point? Mr. CLAYTON. Well, Mr. Chairman, we have the highest wages and we have the highest standard of living, but we probably have the lowest unit cost of production of producing goods of any country in the world on most items of goods, most of the big items of goods. We can produce them lower per unit than any country in the world, which is shown by our exports of last year, which were over $10,000,000,000 worth of goods, about $8,000,000,000 being commercial exports. We competed in the markets of the world for that business. The CHAIRMAN. How long will that happy situation continue when we ship the latest labor-saving machinery that we produce to any country that wants them? In fact, we give them away under lend lease. Mr. CLAYTON. Well, Mr. Chairman, lend-lease has long ceased. The CHAIRMAN. I understand, but we are still making shipments under it; that is, we are fulfilling commitments that were made before lend-lease was terminated. How about Russia? You are acquainted with Russia. How much remains under lend-lease that is undelivered to Russia? It is mostly machinery. Mr. CLAYTON. There remains about $30,000,000 worth of goods undelivered to Russia under lend-lease, and that is not free lend-lease, Mr. Chairman. Russia has entered into a commitment to pay for those goods. 99616-47-pt. 1- 2 The CHAIRMAN. When are they going to pay for them? Mr. CLAYTON. It extends over a period of 30 years, with interest, in installments over a 30-year period; but aside from that, I would just like to comment on the other aspect of your question, which is, I take it, that you are of the opinion that we should not ship machines, tools, and equipment and know-how and that sort of thing to the rest of the world. I would just want to remind you, Mr. Chairman, that our best trade is with the highly industrialized and developed countries of the world, and that is very obvious why that should be so. They have a higher standard of living, and they have a greater purchasing power. While Canada is a small country from the point of view of population, it is a highly industrialized country, and we did a business of 11⁄2 billion dollars last year with Canada. The CHAIRMAN. Mr. Clayton, I am very sorry to interrupt you at this point. However, it is necessary that we be in the House. Mr. COOPER. Did you complete your answer, Mr. Clayton? Mr. CLAYTON. I just wanted to emphasize, Mr. Chairman, that we do our biggest business, and we get our biggest export trade with countries that are highly industrialized. Great Britain has always been one of our best customers, and Canada buys more than perhaps any other two countries in the world, and they are highly industrialized. The CHAIRMAN. Mr. Clayton, would it be convenient for you to return Friday morning at 10 o'clock? Mr. CLAYTON. That is Friday and not tomorrow? The CHAIRMAN. We will try to get through with you Friday if we can possibly do so. Mr. CLAYTON. I will be glad to come back Friday at 10 o'clock. The CHAIRMAN. The committee will now adjourn. (Whereupon, at 11:10 a. m., Wednesday, March 26, 1947, the committee adjourned until Friday, March 28, 1947, at 10 a. m.) RECIPROCAL TRADE AGREEMENTS PROGRAM FRIDAY, MARCH 28, 1947 HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, Washington, D. C. The committee met at 10 a. m., pursuant to adjournment, in the hearing room of the Committee on Ways and Means, New House Office Building, Hon. Harold Knutson (chairman) presiding. The CHAIRMAN. The committee will come to order, please. We again have before us Mr. Clayton, the Under Secretary of State, this morning. STATEMENT OF THE HONORABLE WILLIAM L. CLAYTON, UNDER SECRETARY OF STATE FOR ECONOMIC AFFAIRS, DEPARTMENT OF STATE, WASHINGTON, D. C.-Resumed The CHAIRMAN. Mr. Secretary, I just want to ask one preliminary question. About how many statements were filed with the Committee on Reciprocity Information? Mr. CLAYTON. We had, I think, about 1,000. There were 1,000 briefs filed and we had over 500 witnesses appear before the committee. The CHAIRMAN. Those were furnished in duplicate, triplicate, or how many copies? Mr. CLAYTON. There were 10 copies of each brief. The CHAIRMAN. Would you file one copy of each with the committee, please? Mr. CLAYTON. Mr. Chairman, I am informed that all these briefs were furnished in confidence to the committee under the rules of procedure which stated publicly to the participants that these briefs would not be divulged but would be kept in confidence and would not be published. The CHAIRMAN. Well, I would like to know if the Ways and Means Committee is not just as capable of treating these things in confidence as are a number of Bureau officials downtown. Mr. CLAYTON. Well, Mr. Chairman, may I take that request under advisement and check on it a little bit and see. We want to furnish the Congress everything that we properly can. We do not want to withhold anything, but we did notify these people that they could file their briefs in confidence and that they would not be made public, and all of the data contained in them would be considered confidential and the briefs were filed on that understanding. The CHAIRMAN. How many briefs were filed by parties who did not appear? Mr. CLAYTON. I am informed that it was about half of the people, or the interests who filed briefs, who did not appear. Approximately half. The CHAIRMAN. Well, in the event that it should not be feasible for you to furnish the committee with copies of the briefs that were filed, we would like to have the names and addresses of those who did file briefs. Mr. CLAYTON. In the event we cannot furnish the briefs, you would like to have the names and addresses of those who did file the briefs? The CHAIRMAN. Yes; and those who did not appear, both. Mr. CLAYTON. We can give you that information; yes, sir. The CHAIRMAN. But we would prefer to have copies to save us the trouble of communicating with them. Mr. CLAYTON. Yes, sir. (The following statement subsequently filed by Mr. Clayton:) I am informed that the rules of the Committee for Reciprocity Information provide that all information filed with the Committee other than that presented at public hearings is confidential and for the use only of the interdepartmental trade-agreements organization. This rule was adopted in order to obtain the maximum of information from interested parties. Following the announcement on November 9, 1946, of intention to negotiate with 18 countries, a number of interested persons consulted with representatives of the Committee for Reciprocity Information regarding the preparation and filing of briefs. Some of these persons, either before or at the time their briefs were filed, orally requested, for reasons which appeared to the Committee to be entirely justified, that even the fact that they had filed briefs should not be made public. These persons were, therefore, informed that the fact they had filed briefs would be regarded as confidential. Accordingly, only the names of the persons and concerns who requested an opportunity to appear at the public hearings have been published. Those who filed briefs, whether or not participating in the hearings, can, of course, make such briefs public; but it would be a breach of confidence for the Committee itself to do that or even to give out the names of those who filed briefs, except as to those persons or concerns who appeared or were scheduled to appear at the public hearings. The CHAIRMAN. Mr. Doughton is recognized. Mr. DOUGHTON. I ask your consent, Mr. Chairman, to have inserted in the record at an appropriate place, a letter from Mrs. Malcolm E. Cummings, State president of the New York League of Women Voters. The CHAIRMAN. There is no objection. It will be inserted at this point. (The letter is as follows:) NEW YORK LEAGUE OF WOMEN VOTERS, Representative ROBERT L. DOUGHTON, House Ways and Means Committee, House Office Building, Washington, D. C. DEAR MR. DOUGHTON: The New York League of Women Voters would greatly appreciate your consideration of the enclosed statement in lieu of our appearance at the hearings which your committee will hold on the reciprocal trade program and the international trade organization. This statement, which was prepared for the hearing held in New York by the Department of State, on February 27, presents our position with clarity. Sincerely yours, DOROTHY T. CUMMINGS, |