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international agreement known as the General Agreement on Tariffs and Trade (GATT), the United States now has tariff arrangements with about 40 countries on over 60,000 items comprising more than half of the world's total foreign trade. As a result of those agreements, major European countries have removed, in respect to almost all U.S. industrial products, restrictions which limit the amount of a specific U.S. item entering the country.

Over the last few years this kind of trade liberalization has contributed to the increase in U.S. merchandise exports to Europe from $4.5 billion in 1958 to $6.5 billion in 1960-an increase of more than 40 percent. U.S. producers have found increased markets in Europe for their canned and frozen fruits, fats and oils, textiles, cars, plastics, refrigerators, and other products.

With the removal of quantitative restrictions, tariff rates become the chief remaining barrier to trade in many instances. However, the kind of limited tariff negotiating power made available to the President in 1934 is now inadequate to reduce these remaining barriers to trade and to meet the needs of our economy in the 1960's. This is so because:

• First, we have negotiated about all the meaningful tariff concessions we effectively can under the present authority.

the present tariff negotiating authority we will be powerless to negotiate on an equal basis with the fastest-growing, most dynamic market area in the world, the so-called Common Market3 of Western Europe.

Regional trade groups present a new challenge

In

The European Economic Community-popularly known as the Common Market-and other similar regional economic groupings, a radically new development on the world economic scene, make the trade bargaining authority of the United States more critical than ever before. addition to the Common Market, the seven-nation European Free Trade Association (EFTA)* and the Latin American Free Trade Association (LAFTA) unite several nations in an area in mutually beneficial and protective arrangements which give each member a much stronger trade bargaining power than any of them could command individually.

3 The six Common Market countries: Belgium, France, Germany, Italy, Luxembourg, Netherlands.

* EFTA countries: United Kingdom, Denmark, Norway, Sweden, Austria, Switzerland, Portugal.

5 LAFTA countries: Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay.

States with an immense challenge-one which demands urgent action. Either these groups can offer U.S. exporters increased opportunities in those rapidly expanding markets or they can raise barriers which will greatly restrict our access to them. The outcome depends in large part on this country's willingness and ability to continue its participation in programs for reducing tariffs and eliminating other trade barriers.

A uniting Europe

the immediate challenge

By far the most important of these trade groupings from the point of view of our trade policy in the 1960's is the Common Market. Soon the United States will be trading with a unified European economic grouping able to match this country in population, productive skills, and economic resources. And should Great Britain obtain membership in the Common Market, for which she has applied, the power and trading influence of this European Economic Community will be greater still.

The Common Market is growing fast

Common Market countries today carry on over a fourth of the total trade of the free world. In 1960 they imported from countries outside their area $19.4 billion worth of goods, of which almost

country purchased over $2 billion of the Common Market's exports of $19.5 billion.®

The European Economic Community is growing in economic strength by leaps and bounds. Over the last year the trade of the six member countries with each other rose 25 percent, while that with the rest of the world climbed by 17 percent. The area's industrial production increased by more than one-eighth, and its gross national product gained by 62 percent.

The economies of the Common Market countries have showed continued progress over the past 10 years, challenging the United States to intensify its economic growth. Since 1950 the Community's gross national product has been growing at an annual rate of over 5 percent, while that of the United States has progressed only 3 percent yearly. Its annual rate of increase in production in the industrial sector has averaged 8 percent compared to a U.S. gain of little more than 3 percent.

What does this represent in terms of one specific commodity-motor vehicles, for example? Since 1950 the U.S. output of motor vehicles has changed relatively little, averaging about 7 million vehicles annually in that period. Production in the Common Market increased more than five times during

These totals do not include intra-Community trade, which amounted to about $10 billion in 1960.

one-tenth of U.S. production to about one-half. British output of motor vehicles has also expanded rapidly at about half the Community rate.

Tariff differences can hurt U.S.

Western Europe has been one of the fastest growing areas for our exports, which rose from nearly $3 billion in 1953 to over $6 billion in 1960. But now we face possible tariff discrimination which may gravely jeopardize that market for us. A study paper prepared for the Joint Economic Committee of the Congress states that "the loss to U.S. exports by reason of the Common Market, as enlarged, has been conservatively estimated at $800 million a year.

The

The study points out that the proposed Common Market tariff on U.S. automobiles is 29 percent, contrasted with no internal tariff on shipments of autos between Common Market members. tariffs on radio and TV sets will be 20 percent; automatic dishwashers, 18 percent; electric washing machines, 19 percent; most clothing, 22 percent; varnishes and lacquers, 19 percent; and office and calculating-machine parts, 14 percent.

As the Common Market members gradually eliminate all tariffs among themselves over a period of years and establish, again over a period of years, one single tariff for their entire area, it will be more difficult for businessmen from outside countries to compete.