Mr. REED. I believe I replied by saying that whether we try or do not try to stop our foreign trade we are stopping that foreign trade unless we take affirmative steps to increase our imports as compared to our exports because we cannot continue on the basis that we are because our trade will reduce, in my humble judgment.

Mr. GRANT. Mr. Reed, it would be fair to say, would it not, that through the years our country has grown under the principles of a protective tariff?

Mr. REED. Our country has grown.

Mr. GRANT. Our economy?

Mr. REED. Our country has grown, has grown magnificently but to what extent protective tariff has contributed to it, I do not know. As I said this morning, I believe that with small industries, growing industries, that one should not exclude the desirability of tariff protection during the period of adolescence or infancy of that industry. To what extent our protective tariff has contributed or otherwise to the greatness of America today, I have no opinion because I have not analyzed it in those terms.

Mr. GRANT. You and I may not agree to the extent to which it has contributed but the fact remains that that protection has been there during this period of growth.

Mr. REED. Not during all the period. Have we been a high tariff country from the beginning?

Mr. GRANT. We have been a protective tariff country during the years of its growth.

Mr. REED. I regret to say that I do not recall exactly what our protective tariff has been from the beginning. If you tell that that is the case, I have no disagreement and do not question your state

ment.

Mr. GRANT. The only point I wanted to make on the record was that during that period General Electric grew to its present size.

Mr. Gearhart has just handed me the tariff history beginning back with 1897 and with the exception of a few years of the Underwood Tariff Act, it has been a protective tariff under this industrial time that America has grown. The only point I wanted to make was that it was under that system that the General Electric Co. has grown to its present size.

I believe that is all, Mr. Chairman.

Mr. KNUTSON. That will conclude with Mr. Reed.

Mr. DOUGHTON. Mr. Chairman, I want to congratulate this witness on the frank manner in which he has attempted to answer questions. I believe that his manner has been outstanding.

Mr. REED. Thank you, sir.

Mr. KNUTSON. Without objection we will have made a part of the record this study by the Tariff Commission entitled, "Exports and Reciprocal Trade Agreements, and An Analysis of Evidence Sub mitted to the Committee for Reciprocity Information." (The information is as follows:)

EXPORTS AND RECIPROCAL TRADE ACREEMENTS-AN ANALYSIS OF EVIDENCE SUBMITTED TO THE COMMITTEE FOR RECIPROCITY INFORMATION

Two basic theses underlie the reciprocal trade program: (1) Foreign trade barriers are stifling United States exports; (2) United States trade barriers are

preventing a sufficient quantity of imports to pay for existing and potentially expanded exports.

Let us consider these theses.

If foreign trade barriers are proving a serious obstruction to our exports, we would expect widespread and serious complaint to be made of such restrictions. Opportunity for such complaint was presented at the reciprocal trade agreement hearings, held in January 1947. These hearings had wide publicity and all who were adversely affected by foreign trade restrictions were invited to forward statements to the Committee for Reciprocity Information. Yet, in spite of this publicity and the presumed seriousness of the situation, only 136 concerns and associations filed statements concerning alleged foreign trade barriers.

It is true the complaints covered a number of articles, but in many cases the items or the barriers complained of were trivial. These statements or so-called briefs were confidential, so that no public analysis.can be made of them. However, some of the same concerns that filed the briefs later appeared at the hearings which were public. The appearances at the hearings, however, were still more disappointing than the small response shown by the briefs. Only 56 appearances showed up to press their case for the reduction of duties imposed by foreign countries.

There follow two lists. The first list includes most of the items covered in the briefs requesting reductions in foreign duties.

List 1. Principal items covered by CRI briefs requesting amelioration of foreign trade barriers

The second list includes most of the export items which were discussed in the public CRI hearings in January. With the second list are given comments. These comments are abstracted from so-called digests of the testimony of the witnesses. The digests were made by the Department of Commerce and should be unprejudiced.

The requests for mitigation of foreign trade barriers made in the briefs are omitted from these digests, but the general nature of the comments indicates that many of the complaints of foreign trade barriers were unimportant. Some were undoubtedly serious.

List 2. Condensed abstracts of oral testimony of witnesses appearing before CRI and representaed as seeking redress from foreign trade barriers.

Ceramics:

Tiles: Canadian duties and marking regulations hamper exportation to that country.

Fused silica and quartz: We have tried to develop foreign markets, but our prices are about three times as high as the English prices.

Medical optical instruments: United States medical optical instruments are sold in Latin America in competition with European products. Some exports go to Canada.

Clinical thermometers: Approximately 10 percent of our production is exported. In general our quotations are too high.

Eyeglasses: We have had trouble with the preferential British Empire duties. Metals and metal wares:

Steel: Foreign tariffs are so high that only steel products they are unable to produce can be exported. We are more concerned with foreign than with domestic tariffs. Today, countries are buying our products which normally exclude them.

Tool and fine steel: Exports are negligible and no substantial foreign markets are expected. Prefer retention of import duty to lower foreign tariffs. Aluminum: The industry is not asking for foreign concessions. It wants protection in the home market.

Aluminum wares: There are some exports to Latin America. Where it is possible to export aluminum, no concessions are requested. In prewar period exports were only a small percentage of production.

Stoves: Sixty-six out of 200 concerns are interested in exporting. High tariff rates, special sales taxes, and inequitable exchange restrictions all tend to place the industry at a disadvantage with those of other exporting countries which have lower labor costs.

Sporting arms and ammunition: The firearms exported from the United States are substantially cheap, single- and double-barrel shotguns, whereas semiautomatic guns are imported. Exports to South America were declining before the war.

Razor blades: Shipments cannot be made to "Sterling Bloc" countries.
Cheap razor blades, duty free, are now being macnufactured in Sweden,
Belgium, and Switzerland.

Horseshoes and allied products: Wants free entry in all negotiating countries. For a period of years-or until Germany resumes production-United States will be called upon to supply the continent with horseshoes. Machinery and instruments:

Metal cutting tools: Removal of foreign embargoes desired, but United States duties are more important. Large exports are not anticipated. Textile machinery: The amount that the American industry can export will be small and consists of special machines.

Textile machinery: The industry is primarily interested in having tariff protection against imports. About 10 percent of production is exported. Dye, bleach, and finishing machinery: Exports are 10-15 percent of total business. Germany's and Japan's former export markets are available to the United States.

Conveyer equipment: Requests no change in duties charged by other countries.

Power cranes and shovels: Requests foreign concessions. Export business 17 percent of production. Practically no foreign competition in sizes above 21⁄2 cubic yards capacity.

Tobacco machinery: The company is having its cigarette machines made in England-in order to meet foreign competition.

Machine tools: If all restrictions on trading in machine tools were relaxed throughout the world, probably the United States would import more than it would export. Foreign competition has increased.

Heavy duty Diesel engines: German industry is demolished while British are unable to serve the markets. 1946 export business accounted for 30 percent of production.

Business machines: Export obstacles are high duties compared with low duties on capital goods as well as Empire preferences. But demand is tremendous and we are behind on export deliveries.

Typewriters: High tariffs and scarcity of dollar exchange are the principal obstacles to exports. Industry would like to see a free market everywhere.

Dictaphones: The Canadian tax on the motor is 25 percent whereas it should be 121⁄2 percent. Arbitrary values are applied in some places.

Electrical measuring instruments: Exports are relatively small and import duties more important than foreign concessions.

Automotive equipment:

Truck trailers: A low percentage of exports could increase substantially. Asks no special protection and welcomes reciprocal tariffs at lowest level possible.

Motorcycles: Hard to obtain licenses in British Empire countries. More concerned with United States than with British duty. But reduction of world barriers would be an equivalent fo reduction of duty to British. Food, drinks, and tobacco:

Rice: About 35 percent of production exported, and 15 percent Territorial shipments.

Apples: Requests equal opportunity for United States apples in world markets. Foreign production increasing.

Citrus fruit and products: Foreign tariff concessions are essential. There is a large domestic surplus.

Dried fruit: Exports normally account for 22 percent of the total production of deciduous fruit trees and grapes. Industry wants access to world markets on fair competitive terms.

Sugar: The British export bounty has enabled British refiners to take away foreign markets previously supplied by the United States.

Sterilized milk and cream: High tariffs hamper development of export markets. The industry is growing rapidly.

Salmon: A considerable part of the red salmon production is exported. Most of our exports go to the United Kingdom and other British possessions. Great Britain imposes a duty of 10 percent on canned salmon, except from Canada whence it enters free.

Distilled spirits: Foreign outlet will be required. There are excessive foreign burdens.

Coca-Cola concentrate: Should be assessed for duty by foreign countries as a raw material, also classified as a food product.

Dark-fired tobacco: From an export figure of about 50,000,000 pounds annually, some 20 years ago, the exportation of dark-fired tobacco has dropped to practically nothing. Trade preferences, quotas, and tariff restrictions have discriminated against United States tobacco. Burley tobacco: Exports must increase to prevent price decline. Textiles:

Corsets and brassieres: Exports are a very small percent of production. They go chiefly to English speaking countries that have no domestic production. Knitted underwear: Has practically no export business because it cannot meet the low wages in Britain.

Handkerchiefs: The United States and Puerto Rico cannot compete in foreign markets with products from China.

Cotton insulation: Exports are small but the potential foreign market is large. Foreign tariffs should be reduced.

Sundries:

Fur: The export market for better furs is very limited.

Dressed and dyed furs: A good deal of the exports were odds and ends which were sent to China. China now has an embargo on such imports. Hatters' fur: Small quantities are exported to South America.

Work gloves: During the war we exported a few work gloves. Aside from that we never have exported gloves. We do not expect to.

Leather: Some special grades may be exported, or there may be some seasonal exports.

Shoes: Should have a certain amount of export business, especially to Canada. Canadian duty is higher than ours. Existing tariffs preclude the possibility of sizable exports.

Ladies handbags: Most exports in prewar years consisted of overproduction of handbags at different seasons of the year.

Plastic buttons: Able to compete in foreign markets because of lack of raw materials in hands of foreign competitors.

Jewelry: At present, domestic industry can compete in foreign markets for machine-made jewelry. Previously, Germany formerly lead these markets.

Roller skates: Canadian duty is 25 percent. If reduced to 15 percent, a fairly good market would exist.

Wood cased lead pencils: The shortage of wood-cased lead pencils throughout the world has increased the market for United States pencils. We are shut out of a few countries.

Fountain pens: Expensive pens have always enjoyed a generous market abroad.

Crayons, water colors: The industry sells almost all its product to public school authorities or to children. Many foreign governments prefer their schools to use domestically manufactured products.

Mechanical rubber goods: Small proportion of production exported. We do not seek reciprocity.

Rubber footwear: Do not have hope of increasing exports. Foreign tariff concessions would not help. We cannot compete abroad.

Fishing tackle: Exports, mainly to Canada, are principally high priced. Otherwise have little opportunity to sell abroad.

Flashlight cases and battery products: Interested in export market but not at the expense of our own tariff reductions. Foreign countries can produce at lower costs.

Special photographic machines and paper: Cannot obtain import licenses because article is not essential.

Woodworking machinery: Foreign trade impediments should be removed. There are fairly substantial markets in Australia, New Zealand, and Latin America. European labor costs are lower.

Porcelain insulators: Exports about 5 percent of domestic production. Same relative position between import duties into United States and export duties into other countries should be maintained.

Roofing granules: Wants to export free to its subsidiary in Canada.

Wax: Most countries have local wax companies but United States product is superior.

Whereas there were only 56 appearances, such as they were, "seeking export concessions," there were 464 appearances "opposed to duty reductions."

That foreign trade barriers are no great bar to United States exports is indicated by the advance in exports from 3.2 billion dollars (average, 1936-40) to nearly 10 billion dollars in 1946. Meanwhile foreign trade restrictions have increased rather than diminished.

The reason that foreign trade barriers do not greatly bar our exports is that our principal exports are articles greatly desired by foreign countries and on which they impose mostly low duties, if any. Europe is not placing insurmountable barriers upon our food products that are keeping Europe from starvation. A score of backward countries seeking to industrialize are not preventing the entry of our machinery equipment and industrial supplies. Nine-tenths of the world that does not pretend to produce automobiles, radios, electric apparatus, and the like is certainly not erecting protective tariffs against what they do not pretend to produce.

Certainly the United States does not have to worry about export barriers when its goods are in so great demand.

To show that our increased exports are not merely the result of abnormal relief operations, the following table compares prewar and 1946 exports to various regions.

United States exports (including reexports) to certain regions and countries, 1936–44 (average) and 1946