TRADE EXPANSION ACT OF 1962

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• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP64B00346R000300110006-5
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• Document Page Count: 107
• Document Creation Date: December 15, 2016
• Document Release Date: September 25, 2003
• Sequence Number: 6
• Publication Date: June 12, 1962
• Content Type: OPEN

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LEGISLATIVE COUNSEL
TRADE EXPANSION F 962
REPORT
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
TO ACCOMPANY
H.R. 11970
A BILL TO PROMOTE THE GENERAL WELFARE,
FOREIGN POLICY, AND SECURITY OF THE UNITED
STATES THROUGH INTERNATIONAL TRADE AGREE-
MENTS AND THROUGH ADJUSTMENT ASSISTANCE TO
DOMESTIC INDUSTRY, AGRICULTURE, AND LABOR,
AND FOR OTHER PURPOSES
JUNE 12, 1962.-Committed to the Committee of the Whole House
on the State of the Union and ordered to be printed
U.S. GOVERNMENT PRINTING OFFICE
84790 WASHINGTON : 1902
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CONTENTS
I. Purposes ------------------------------ Page
e
II. General statement_____________________ _ 2
III. Principal features of the bill_____________________________ 2
A. Authority to enter into trade agreements (see. 201(a)) ------ 2
B. Authority to modify import restrictions------------------- 2
C. Preagreement procedures and safeguards------------------ 3
D. General provisions relating to trade agreements------------ 4
E. Tariff adjustment and other adjustment assistance--------- 5
IV. Reasons for the bill____________________________ 6
A. The need for an expanded trade program ----------------- 6
The need for safeguards______________________
V. General description of the bill____________________________ 14
A. Form of the bill________________________________ 14
B. Authority to enter into trade agreements ----------------- 14
C. Authority to modify import restrictions___________________ 14
D. Preagreement procedures and safeguards------__ ------------------ 17
E. General provisions relating to trade agreements------------ 18
F. Postagreement safeguards-adjustment assistance ---------- 22
VI. Technical explanation of the bill_____________________________ _ 33
Title I-Short title and purposes (sees. 101-102) -------------- 33
Title II-Trade agreements:
Chapter 1-General authority (sees. 201-202) ------------ 34
Chapter 2-Special provisions concerning European Eco-
nomic Community (sees. 211-213) -------------------- 35
Chapter 3-Requirements concerning negotiations (sees.
221-226) ----------------38
Chapter 4-National security (sees. 231-232)------------- 40
Chapter 5-Administrative provisions (sees. 241-243) ----- 41
Chapter 6-General provisions (sees. 251-257) ------------ 42
Title III-Tariff adjustment and other adjustment assistance-_ 46
Chapter 1-Eligibility for assistance (sees. 301-302) ------- 46
Chapter 2-Assistance to firms (sees. 311-320) ----------- 50
Chapter 3-Assistance to workers (sees. 321-338) --------- 57
Chapter 4-Tariff adjustment (sec. 351)_________________ 64
Chapter 5-Advisory Board (see. 361)__----------------- 67
Title IV-General provisions (sees. 401-405) ----------------- 67
VII. Changes in existing law made by the bill, as reported______________ 69
Separate views of Hon. Burr P. Harrison and Hon. A. S. Herlong, Jr_____ 82
Separate views of the Republicans on H. R. 11970---------------------- 83
Separate views of Hon. Thomas B. Curtis on H. R. 11970--------------- 97
Additional views of Hon. Steven B. Derounian on H. R. 11970----------- 101
Additional views of Messrs. Mason, Knox, Utt, Betts, and Alger in opposi-
tion to H.R.11970----------------------------------------------- 102
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87TH CONGRESS j HOUSE OF REPRESENTATIVES REPORT
2d Session J No. 1818
JUNE 12, 1962.-Committed to the Committee of the Whole House on the State
of the Union and ordered to be printed
Mr. MILLS, from the Committee on Ways and Means,"Submitted
the following
REPORT
The Committee on Ways and Means, to whom was referred the bill
(H.R. 11970) to promote the general welfare, foreign policy, and secu-
rity of the United States through international trade agreements and
through adjustment assistance to domestic industry, agriculture, and
labor, and for other purposes, having considered the same, report
favorably thereon with amendments and recommend that the bill as
amended do pass.
The amendments are as follows:
Page 9, line 16, strike out "State" and insert: "State,".
Page 45, line 8, strike out " (13)" and insert: " (3)".
Page 68, line 1, strike out "Senate)" and insert: "Senate),".
Page 68, lines 1 and 2, strike out "a two-thirds vote" and insert:
"the affirmative vote of a majority of the authorized membership".
Page 72, strike out line 14 and all that follows through line 8 on
page 77.
I. PURPOSES
The purposes of H.R. 11970 are:
1. To extend the authority of the President to enter into foreign
trade agreements from July 1, 1962, through June 30, 1967;
2. To authorize the President to proclaim, subject to certain
conditions and limitations, such modification or continuance of
any existing duty or other import restriction, such continuance of
existing duty-free or excise treatment, or such additional import
restrictions as he determines to be required or appropriate to
carry out any such trade agreement; and
3. To authorize, in appropriate circumstances, adjustment
assistance to industries, firms, and workers who may be seriously
injured, or threatened with serious injury, by increased imports
resulting from trade agreement concessions.
1
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2 TRADE EXPANSION ACT OF 1962
H.R. 11970 represents many months of effort by your committee
to bring to the House a trade agreements proposal which meets the
needs of the times and which will serve the interests of United States
industry, agriculture, and labor.
Your committee devoted 1 month to public hearings and received
testimony from over 400 witnesses representing all segments of the
United States economy. In addition, hundreds of written communi-
cations were received from interested persons from all parts of the
country. This extensive information was helpful to the committee in
its task of formulating the policies reflected in H.R. 11970.
In addition to the public hearing your committee met in executive
sessions for more than 6 weeks and deliberated at length on the admin-
istration's proposals, which were embodied in H.R. 9900, 87th Con-
gress. In the opinion of your committee, H.R. 11970 will satisfy the
exigencies which require its passage.
III. PRINCIPAL FEATURES OF THE BILL
[A general discussion of the bill and a detailed technical explanation
of the bill follow later in this report.]
A. AUTHORITY TO ENTER INTO TRADE AGREEMENTS (SEC. 201(a))
The President is authorized to enter into foreign trade agreements
from July 1, 1962, through June 30, 1967.
B. AUTHORITY TO MODIFY IMPORT RESTRICTIONS
1. Basic authority (sec. 201 (b))
The President is authorized to reduce duties by 50 percent of the
July 1, 1962, level and to increase duties to 50 percent over the July 1,
1934, level. This is the basic authority and is not supplanted by
other authorities discussed below. He can also impose additional
import restrictions (e.g., quotas).
2. EEC authority (sees. 211 and 212)
The President is authorized to reduce by more than 50 percent
duties on articles within categories when he has determined that the
United States and the countries composing the European Economic
Community (EEC-popularly referred to as the "Common Market")
together accounted for 80 percent or more of the free world trade in
such categories of articles in a representative period. The President
is to select an international statistical classification system which the
Tariff Commission will translate into United States tariff terms.
Section 211 authority cannot be used in the case of an article referred
to in the agricultural publication named in the following paragraph.
The President is authorized, in an agreement with the EEC, to
reduce by more than 50 percent duties on articles referred to in
Agricultural Handbook No. 143, United States Department of
Agriculture, as issued in September 1959, whenever the President
determines that such an agreement will tend to assure the mainte-
nance or expansion of United States exports of like articles.
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TRADE EXPANSION ACT OF 1962 3
3. Tropical commodity authority (sec. 213)
The President is authorized to reduce by more than 50 percent
duties on tropical agricultural or forestry commodities whenever he
determines that like commodities are not produced in significant
quantities in the United States. This authority is also conditioned
on a Presidential determination that the EEC has made a commit-
ment with respect to its duties or other import restrictions which will
tend to assure access for such a tropical agricultural or forestry
commodity to its markets comparable to the access which such
commodity would have to the United States markets.
4. Low rate articles authority (sec. 202)
The President may reduce duties by more than 50 percent where
the rate was 5 percent ad valorem or less on July 1, 1962.
5. Limitations on use of authority
(a) Reservation of articles from negotiations (sec. 225).-In addition
to articles covered by outstanding proclamations under the national
security or escape-clause provisions of existing law, or the bill, the
President would be required, in certain circumstances, to reserve from
negotiations any article with respect to which the Tariff Commission
found that imports of such article were seriously injuring or threaten-
ing such injury to the domestic industry concerned. These articles
would be reserved for a 4-year period which begins on the date of en-
actment of this bill where, within that time, the President includes
any such articles on a proposed negotiating list and the Tariff Com-
mission finds and advises him, upon application of the interested in-
dustry, that the economic conditions in such industry have not sub-
stantially improved since the date of the last Tariff Commission
escape-clause investigation.
(b) National security provisions (sec. 282).-The bill retains present
provisions governing the authority of the President to take action to
adjust the level of imports when he finds they threaten to impair the
national security.
(c) Staging requirements (sec. 253).-The bill requires, in general,
that tariff reductions would be made in no less than five annual
stages, except in the case of the exercise of the tropical commodity
authority.
(d) Communist furs.-The bill continues in force the present em-
bargo on certain furs and skins which are the product of the U.S.S.R.
or China (sec. 257 (e) (1)).
C. PREAGREENIENT PROCEDURES AND SAFEGUARDS
1. Tariff Commission procedures (sec. 221)
The bill requires the Tariff Commission to advise the President as
to the economic effect of any proposed trade agreement action with
respect to any article. The President is required to furnish the Tariff
Commission with a list of articles which he contemplates negotiating
upon, and the Commission is required, within 6 months thereafter, to
give him this advice. Hearings must be held by the Tariff Commis-
sion and all interested persons must be given opportunity to present
their views.
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4 TRADE EXPANSION ACT OF 1962
2. Other hearings (sec. 223)
The President is required to afford interested persons an opportunity
to present their views on matters pertinent to a trade agreement nego-
tiation to an agency or interagency committee which he designates.
Such committee is required to hold public hearings. These hearings
would mainly center about the composition of the United States nego-
tiating list and the nature of concessions which the United States
should seek to obtain from foreign countries with whole the agree-
ment is proposed to be negotiated.
D. GENERAL PROVISIONS RELATING TO TRADE AGREEMENTS
1. Special Representative (sec. 241)
The President is to appoint a Special Representative for Trade Ne-
gotiations who would be the chief representative of the United States
at any negotiations conducted under the bill. He would have the
rank of ambassador extraordinary and plenipotentiary, and be an
ex-officio member of the organization referred to in the next section.
2. Interagency trade organization (sec. ,242)
The President is required to establish a Cabinet-level interagency
trade organization. This organization would advise the President
on trade agreement matters, including tariff adjustment for seriously
injured industries and foreign import restrictions referred to 5(b),
below.
3. Congressional delegates (sec. 243)
Two Members of the House of Representatives and two Members
of the Senate are to be accredited to United States trade agreement
delegations. These congressional delegates would observe trade
agreement negotiations in which the United States is participating.
4. Reports to Congress (secs. 226 and 402)
The President is required to transmit to each House of Congress a
copy of each trade agreement entered into under this new authority,
together with a statement of his reasons for entering into such agree-
ment.
The President and the Tariff Commission are also required to sub-
mit annual reports to the Congress on programs under the bill.
5. Most-favored-nation principle (sec. 251)
The bill provides that in general import restrictions proclaimed
under the bill will be extended to products of all countries. The
principal exceptions are-
(a) Communist products (sec. 231).-The President is to take
action as soon as practicable to prevent the application of trade
agreement benefits to products of Communist countries or areas.
The scope of the definition "Communist country" has been broadened
with the intended effect of requiring denial of trade agreement benefits
to products of Cuba, Poland, and Yugoslavia.
(b) Foreign import restrictions (sec. 252).-The bill requires the
President to take all appropriate and feasible steps in his power to
eliminate unjustifiable foreign import restrictions which impair the
value of tariff commitments made to the United States, oppress the
commerce of the United States, or prevent the expansion of trade.
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He may not, however, give concessions on U.S. duties in order to
accomplish this end.
Further, the President is required, to the extent that such action is
consistent with the purposes stated in the bill, to prevent the appli-
cation of trade agreement benefits to products of countries which
maintain unwarranted nontariff trade restrictions against the United
States or which engage in discriminatory acts or policies which un-
justifiably restrict United States commerce.
E. POST-AGREEMENT SAFEGUARDS-ADJUSTMENT ASSISTANCE
1. Petitions, for assistance (sec. 301)
Any firm, group of workers, or industry seeking tariff adjustment or
other adjustment assistance may petition the Tariff Commission.
2. Tariff Commission investigations (see. 221)
Upon receipt of such petition, the Tariff Commission is required to
promptly make an investigation to determine whether as a result of
concessions granted on an article in trade agreements, such article
is being imported into the United States in such increased quantities
as to cause or threaten serious injury to the domestic industry con-
cerned. The Commission is authorized to take into account all
economic factors which it considers relevant, including idling of
productive facilities, inability to operate at a profit, and unemploy-
ment or underemployment.
The Commission must complete the industry investigation within
120 days (which period may be extended 30 additional days by the
President). Reports of determinations as to the basic eligibility of a
firm or a group of workers to apply for adjustment assistance of a
nontariff nature must be made by the Tariff Commission within 60
days from the receipt of any petition.
The Commission must report the results of all investigations to
the President. Should the Commission find, in an industry investiga-
tion, that there is serious injury, it is required to make a finding as
to the amount of tariff adjustment which is necessary to prevent or
remedy such injury.
No industry can be given tariff adjustment, nor may any firm or
group of workers be given adjustment assistance, unless there is a find-
ing that the conditions in such industry or firm or the unemployment
conditions within the group of workers, have been caused by increased
imports resulting from trade agreement concessions.
3. Presidential action (see. 351)
After receiving a report from the Tariff Commission containing an
affirmative finding with respect to an industry, the President is
authorized to adjust the tariff to a level not in excess of 50 percent
above the July 1, 1934, rate of duty, or to impose additional import
restrictions (such as quotas) or to do both. The President, in addi-
tion, also may permit the workers and firms in such industry to be
certified to be eligible to apply for adjustment assistance.
If the President takes tariff action, such action will be reviewable
periodically by the President and may be reduced or terminated or
extended by the President after he receives advice from the Tariff
Commission. The bill provides that outstanding escape-clause proc-
lamations, made pursuant to section 7 of the Trade Agreements Ex-
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tension Act of 1951, would be treated in the same manner as tariff
increases proclaimed under section 351.
4. Congressional action (sec. 351 (a) (2) )
In cases where the President does not take the action found by the
Tariff Commission to be necessary to prevent or remedy serious injury,
the bill requires Presidential implementation of a Tariff Commission
finding in an escape-clause case upon the adoption by the Congress,
by a majority of the authorized membership of each House, of a reso-
lution approving the action found by the Commission to be necessary.
5. Assistance to firms (sec. 311 et seq.)
Any firm which is certified to be eligible for adjustment, assistance
may file an application with the Secretary of Commerce. Such assist-
ance to firms is premised upon the certification of a sound economic
adjustment proposal, reflecting the maximum self-help on the part
of the firm and appropriate consideration of the interests of the firm's
workers.
Adjustment assistance to firms may be given in the form of technical
assistance, loans (or loan guarantees or deferred loan participation
agreements), or permission to carry back a net operating loss (for
Federal income tax purposes) for 5 years rather than the usual 3 years.
6. Assistance to workers (sec. 321 et seq.)
Adversely affected workers would be eligible to receive adjustment
assistance, in the form of weekly allowances (payable during periods
of unemployment or retraining), retraining, and, in certain cases, re-
location allowances. Allowances will be payable only to workers who
have been employed substantially over the previous 3 years, who have
been attached for at least 6 months in the last year to a firm or firms
or subdivisions thereof found to be affected by imports, and who have
become unemployed because of lack of work due to the effect of
increased imports on such a firm after the enactment of this bill.
The trade adjustment allowance will be 65 percent of the worker's
average weekly wage, subject to a limitation of 65 percent of the
national average manufacturing wage. These allowances are to be
received for a duration. of no more than 52 weeks, with two excep-
tions-one to assist in completing retraining and one for workers over
60. Allowances may not be paid to workers who refuse, without good
cause, to take or complete retraining unless they accept or return to
approved retraining.
IV. REASONS FOR THE BILL
A. THE NEED FOR AN EXPANDED TRADE PROGRAM
1. The interests of commerce and industry
Important changes have taken place in the world economy since
trade agreements legislation was last enacted by the Congress. The
European Economic Community, still an inconclusive experiment in
1958, has achieved a high rate of growth and is moving substantially
toward eventual free trade among member countries. At the same
time our own gross national product has risen at a disappointingly
low rate -less than 3 percent annually-and we have developed a
deficit in our balance of payments.
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(a) Exports in the United States economy.-The United States ex-
ports more goods to foreign markets than any other country-in 1961
nearly $20 billion. Excluding exports financed by our own support
and. aid programs, United States exports were approximately $17.5
billion in 1961. When measured against imports of $14.5 billion, this
means a favorable balance of commercial trade of about $3 billion-
the largest single credit factor to our balance of payments.
Yet our exports are relatively small in comparison to our gross
national product. Endowed with an abundance of natural resources,
a large domestic market, and an expanding population, the United
States has not been as dependent on foreign commerce as less self-
sufficient countries. Consequently, it is generally conceded we have
not taken full advantage of our opportunities for expanding the
domestic economy by increasing our sales in the international
marketplace.
We can no longer afford to pass up these opportunities. The vigor
and progress of our own economy cannot be assured if we confine our
commercial efforts within our own borders. We must seek out new
markets in the rapidly expanding economies of the rest of the free
world.
For a variety of important products, this country's stake in its ex-
port trade is already high, as shown by the following table :
Exports as a percent-
age of U.S. pro-
duction, 1960
Locomotives--------------------------------------------------------
52
Carbon black-------------------------------------------------------
35
Construction and mining equipment-----------------------------------
33
Oilfield machinery and equipment-------------------------------------
32
Synthetic rubber---------------- _------
-----------------------------
25
Lubricating oils ---------------
---------------------------
25
Source: "United States Commercial Exports and Imports as Related to Output, 1960 and 1959," U.S.
Department of Commerce.
There is every reason to believe that this list can be expanded, with
a resulting increase in our net earnings from foreign trade. Today, in
our commerce with almost every country in. the world, we export more
than we import. If tariff reductions by foreign countries and by
the United States raise exports and imports in proportion to their
current volume, our export surplus will grow as well.
(b) United States ability to compete.-The margin of United States
exports over imports indicates that on the whole United States
products successfully compete in world markets. Even Japan, often
alleged to be a low-cost producer, purchases more from us than we
do from her. In 1961 the favorable margin in our trade with Japan
was almost $700 million-over 20 percent of the United States overall
trade surplus.
Your committee has paid close attention to discussions of the com-
parative costs of production here and abroad. It is clear that wage
levels are lower than our own in many areas of the world. But it must.
be remembered that the higher efficiency of each worker in a mecha-
nized. economy such as our own tends to offset lower wage rates abroad.
Significantly, many of the highest paying industries in the United
States are our strongest exporters and. have demonstrated their ability
to compete successfully in the markets of countries with wage scales
considerably lower than our own. This results because our unit cost
of production-the only true competitive test-is lower.
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TRADE EXPANSION ACT OF 1962
Moreover, there are other factors in our competitive favor. Capital
financing is more readily available in this country, and on easier
terms, than is generally true elsewhere. Many raw materials are less
expensive here than in most foreign markets. American mass pro-
duction and marketing experience, and the high quality control and
efficient servicing of our products also strengthen the hand of United
States businessmen competing with foreign products.
(c) Market opportunities in the European Economic Community.-
Our need to export and our ability to compete are worldwide in scope.
But we have a special problem-and a special opportunity-in our
trade with the EEC. Its six present members (Germany, France,
Italy, Belgium, Netherlands, and Luxembourg) have a population ap-
proximating our own and a combined gross national product almost
half ours. They are moving swiftly-unexpectedly swiftly-toward a
general pooling of their economic resources and policies, including the
elimination of all tariffs among themselves and the harmonization of
their individual tariffs into a common external tariff wall.
In addition, negotiations are now taking place looking toward
membership of the United Kingdom and several. other countries of
Western Europe in the EEC. The prospect is that before long there
will be in operation behind the common tariff wall of the Common
Market an integrated economy comprising up to 300 million people,
with a productive capacity second only to that of the United States.
This will create an opportunity of wholly new dimensions for U.S.
exports, which already amount to nearly $7 billion per year to Western
Europe as a whole. In recent years the EEC has been growing at a
rate substantially greater than our own. In the next 10 years its
gross national product may well rise by 50 percent or more and its
imports even faster-in many cases by as much as 100 percent over
present levels. This will mean the same explosion of demand for
consumer durables that we have known for the last generation-and
there will be rising purchasing power to satisfy it.
To take advantage of this opportunity, however, we must first
cope with the challenges of the EEC's new trade policy. As men-
tioned, it is moving with surprising vigor toward eliminating all
internal tariffs on goods traded among its members and at the same
time it is in the process of adopting a uniform common external
tariff applicable to goods imported from nonmember countries in-
cluding the United States. Their internal tariffs have already been
reduced by 40 percent for industrial commodities and 30 to 35 percent
for a substantial number of agricultural products, and are expected to
be eliminated altogether somewhat before the end of this decade.
This means that the height of the EEC's common external tariff
will be of critical importance to United States exports. If its external
duties remain high, many United States industrial and agricultural
products will be handicapped by duties imposed on them while prod-
ucts of their competitors in the EEC will be duty free. If, however,
the common external tariff can be brought down so as to narrow or
eliminate the competitive disadvantage which internal tariff elimina-
tions will bring, we stand to share in the trading benefits promised
by the economic growth of the EEC.
To bargain down the EEC's external tariff barriers so as to put
American producers on an equal footing in terms of tariffs, we must
agree to reductions in our own tariff barriers, on a mutually beneficial
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businesslike basis. To accomplish! this, the President needs the
bargaining authority contained in H.A. 11970.
2. The interests of labor
American workers have benefited greatly from the trade agreements
program during the 28 years of its operation. In promoting freer
trade this program has contributed significantly to the creation of
more and better jobs for our workers.
The importance of foreign trade to the American worker is estab-
lished by a recent study published by the Bureau of Labor Statistics.,
This study shows that exports of merchandise in 1960 supported the
equivalent of 3.1 million jobs for American workers in that year.
Most of these jobs were in nonfarm industries, with a total of 1.3
million in manufacturing-principally chemicals, primary metals,
machinery of all types, and transportation equipment. All 50 States
participate in export employment, directly and indirectly. This in-
cludes, of course, the agricultural States of the South and Central
areas of the country, as well as the industrial East and Far West.
Another study of the Bureau of Labor Statistics 2 indicates that in
1960, an estimated 941,000 workers were supported by activities con-
nected with imports. This estimate includes employment in trans-
porting and distributing imports to factories or to wholesalers and in
processing the imported raw materials and semimanufactures.
An evaluation was also made by the Bureau of Labor Statistics 2 of
employment which would be required to produce in the United States
the equivalent of those imports which were classified as "competitive"
with United States output. This resulted in an estimated 1 million
jobs, including the direct as well as the indirect employment associated
with the domestic production of the imports in question. The Bureau
of Labor Statistics report emphasized that the calculated figure did
not necessarily represent jobs "lost" by American workers as a result
of imports. Many of the million jobs have never existed in this
country since the products have traditionally been imported and have
no true domestic counterpart. The report also made clear that it
does not indicate the amount of additional employment that might
be created if the products were made in the United States. If such
imports were to be eliminated, there would be a reduction in United
States exports, thus adversely affecting export job opportunities as
well as the distribution of employment. Moreover, jobs related to
production in lieu of these imports would generally be lower in terms
of skills required and hence in income production than jobs associated
with our export industries.
Important as international trade has been to the American worker
its importance is now greater than ever. The attainment of our goal
of full employment will depend to a significant extent on the response
we make to the new patterns of international trade that are emerging-
patterns which will test our ability to maintain and expand our
access to the growing foreign markets.
In the judgment of your committee, the best way to utilize inter-
national trade to improve employment opportunities is to expand
that trade, not to restrict it. A significant expansion of trade will,
1 "Domestic Employment Attributable to U.S. Exports, 1960" (Bureau of Labor Statistics, U.B. Depart-
ment of Labor), in "Hearings on Trade Expansion, 1962," Committee on Ways and Means, pt. 2, p. 685 ff.
2 "Employment in Relation to U.S. Imports, 1960" (Bureau of Labor Statistics, U.S. Department of
Labor) in "Hearings on Trade Expansion, 1962," Committee on Ways and Means, pt. 6, p. 3888 ff.
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10 TRADE EXPANSION ACT OF 1962
of course, involve an increase in imports which will mean some loss
of jobs. However, that loss is expected to be only a fraction of the
resulting employment gain expected from exports. The Department
of Labor has estimated that the number of workers displaced during
the first 5 years of the expanded trade program would be, on the aver-
age, 18,000 per year, while the anticipated increase of exports of
several billion dollars would generate several hundred thousand jobs.
(Based on the Department's 1960 economic data, it is estimated that
at least 150,000 jobs are created for each $1 billion worth of exports.)
Great as the employment benefit is expected to be from expanded
trade, our interests as a nation and those of the American worker
require attention to the situation of those workers who will be dis-
placed---even though their number may be small compared with the
labor force as a whole. Their displacement will be the price of the
national gain from expanded trade and in those cases where it would
be inappropriate to assist these workers and their employers by in-
creasing tariffs or otherwise restricting imports, they should be helped
to adjust to the new international competition-to become able to
enjoy its benefits themselves.
S. The interests of agriculture
Export markets are of great importance to American farmers.
Production from 1 out of every 6 acres harvested goes into export
channels. American farmers export about 15 percent of their pro-
duction, while the nonagricultural sectors of our nation's economy
export only about 8 percent. Farm product exports in fiscal year
1961 amounted to $5 billion out of total farm marketings of $34 billion.
For producers of several important crops, exports are of vital im-
portance. Rice producers depend upon export markets for well over
one-half of their crop. Wheat farmers depend upon exports for half
of their production. For cotton, soybeans, and tallow, exports pro-
vide about 40 percent of the markets, and for tobacco, exports account
for about 30 percent of the crop.
With greater access to foreign markets, and the countries of the
EEC in particular, United States agricultural exports can be expected
to grow. During the past 5 years, our sales of farm products to the
present EEC countries have increased 29 percent. In fiscal year 1961,
our agricultural exports to the EEC came to $1.1 billion, or about
one-third of our total dollar exports of farm commodities.
In future trading with the EEC, there are opportunities and prob-
lems. The potential for doing business is increasing markedly for
an important number of our farm products. For others, however,
the future is open to question because of the nature of the EEC com-
mon agricultural policy. On some farm commodities this policy
strongly favors internal suppliers over outside suppliers. We must
have the means to influence the development of such policies so that
United States agricultural exports will not be displaced by less efficient
production in the EEC induced by excessive protection against
imports.
Also significant for American agriculture are the prospects for export
to the EEC of other dollar-earning agricultural products such as fruits
and vegetables, which will be subject in the EEC tariff system to fixed
import duties. At present, for example, the EEC is a market for one-
third of United States fruit exports. Because the European Coin-
munity is a customs union, producers within the common barrier will
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TRADE EXPANSION ACT OF 1962 11
have a competitive advantage over the United States farmer. Thus,
even though the EEC's economic expansion should greatly increase
the demand of its peoples for high quality fruits and vegetables which
the United States can supply, high customs barriers could divert
much of this market to our European competitors.
The EEC, however, is not the only reason for agriculture's interest
in this bill. The power to obtain export concessions deriving from the
bill could be used to bargain concessions with all of our trading part-
ners. There is ample evidence that a liberal trade policy helps Amer-
ican farmers to capitalize on their export market potential throughout
much of the free world.
It would be unfortunate, in the view of your committee, if our
tremendous natural advantages as a food exporter were sacrificed
because the United States was not equipped to bargain effective
trade agreements.
4. The trade program and the international position of the United States
The international position of the United States today differs pro-
foundly from that in prior decades. This change results primarily
from three developments: The creation of the EEC, the emergence
of newly independent, less-developed countries, and the trade offen-
sive of the Sino-Soviot bloc. The provisions of H.R. 11970 are in-
tended to reflect the changed position of the United States.
(a) The United States and the European Economic Community.-
In the 5 years since the establishment of the European Economic
Community, its success has become assured. Supported by the
United States from the outset as a political necessity to bring free
countries of Europe into a close and permanent association presenting
a strong, united front to the Soviet threat, the EEC has proven that
its economic benefits to the free world can be fully as important as its
political potential.
As the EEC develops, it will be more and more capable of speaking
with a single voice as its political identity emerges. That voice, if
linked with our own, will be sufficient to determine such fundamental
issues as the volume of foreign aid to be directed to the underdeveloped
world; the basis for providing access for developing countries to mar-
kets in the industrialized countries; the basis for achieving monetary
stability among the world's major currencies; and the approach to
dealing with the problem of the growing economic strength of the
Sino-Soviet bloc.
To accomplish these objectives, there must be increasingly close
coordination of the policies of the two great economic entities of the
free world. Your committee's bill is intended to be an important tool
in assuring such coordination.
(b) The United States and other free world countries.-United States
relationships with the other nations of the free world are being altered
not only by the development of the EEC but by other forces as well,
and the bill also affords authority to the President for expanded
tariff negotiations with these countries. These nations, too, have a
great opportunity for increasing their trade with the EEC, but they
likewise would be substantially harmed if the trade effects of the EEC
were diversionary. These countries therefore share with the United
States a common interest in bargaining for the reduction of the EEC
tariff wall.
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12 TRADE EXPANSION ACT OF 1962
It is evident that the less developed countries as a group are the
most vulnerable to Communist pressures. Greater stability and
growth in their export earnings through expanded trade will reduce
this vulnerability. Aid programs cannot accomplish the job by them-
selves, and it makes little sense for industrial nations to spend con-
siderable sums on aid while maintaining trade policies and barriers
which would prevent the attainment of self-sustaining economic
growth.
Your committee's bill provides the means for moving ahead towards
this objective. It emphasizes the continuation of the nondiscrimina-
tory import policy of the United States. It provides for the possible
elimination of duties on certain noncompetitive tropical products in
concert with the EEC. And it affords the opportunity for bringing
these countries more closely into mutually advantageous trade rela-
tionships with the United States and other industrialized countries.
(c) The problem of Communist-bloc trade.-One of the significant
developments in the last 5 years has been the emergence of the Sino-
Soviet bloc as a world trader of growing importance. Bloc trade
today--while still a small fraction of that of Europe or the United
States--runs at several billions of dollars a year. Its concentration
in a limited number of nations adds to its political significance.
The determination of the bloc to use economic weapons as a means
of penetrating and overcoming the free world is admitted. Its trade
lures are used to attract less developed countries at the outset with a
view to making them more and more dependent on bloc trade for
their economic survival.
Your committee's bill has improved the statutory provisions relat-
ing directly to bloc trade and in addition has created the basis for a
better alinement of policy in the free world for providing alternative
markets to countries which are targets for Communist-block economic
pressure.
B. THE NEED FOR SAFEGUARDS
In view of the expanded tariff negotiations which your committee
believes now to be necessary and authority for which has been provided
in the bill, your committee has directed a special effort toward refining
and expanding safeguards to protect the interest of United States
firms, workers, and industries, including agricultural interests. These
safeguards have traditionally fallen into two categories: those appli-
cable before trade agreements are concluded, which attempt to insure
that the nature and extent of contemplated concessions will not seri-
ously injure domestic firms and workers; and those available after
tariff concessions are put into effect, which seek to remedy serious
injury (or threat thereof) that may nevertheless result from such
concessions. H.R. 11970 incorporates, in the judgment of your com-
mittee, substantial improvements and strengthening of both of these
forms of safeguards.
1. Preagreement safeguards
Before any trade agreement is concluded, it is important that the
President and his negotiators be given the benefit of a careful and
authoritative study of the probable domestic economic effects of pro-
posed concessions. Under the bill, this study would be made by the
Tariff Commission and would result in a thorough report to the
President on all relevant f aspects of such economic repercussions.
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TRADE EXPANSION ACT OF 1962 13
The President must also seek the advice of Federal agencies and other
sources which he considers appropriate.
It is also required that the President make public his intention to
engage in negotiations on any article, and that any person interested
in such article be given an opportunity in public hearings to present
his views and any evidence on the effect of tariff reductions on that
article. On the basis of information submitted to him from. various
sources, those articles which the President feels should be withheld
from negotiations would be placed on a reserve list, from which
United States negotiators could not draw in offering trade concessions.
Any article for which escape-clause or national security action is in
force must also be reserved from negotiations, along with certain
other articles under specified conditions.
2. Postagreement safeguards
(a) Staging.-The possibility of larger tariff reductions under your
committee's bill than in the past makes it even more advisable that
such reductions be put into effect gradually, so as to give United States
firms and workers opportunity to adjust to their effects. Accordingly,
the bill requires that the tariff reduction authority must be spread over
five or more annual installments or the equivalent, with the single
exception of reductions on tropical agricultural or forestry commodities
when like products are not produced in the United States in significant
quantity.
(b) Tariff adjustment and other adjustment assistance.-In the past,
the United States has provided protection for American firms and
workers against injurious competition from foreign imports in the
form. of tariffs or quotas with the effect of restricting foreign compe-
tition. Under the bill, tariff adjustment through the escape-clause
procedure would be retained as one of the President's alternative
courses of action where there has been serious injury to the industry
as a whole as a result of increased imports from trade agreement
concessions.
However, your committee has concluded that tariff adjustment
alone may be inappropriate to protect United States firms and work-
ers. Such assistance cannot be specifically adapted to the individual
requirements of those in an industry affected by imports. Under
current law no relief whatsoever is available to firms and workers in-
jured by imports unless their injury is shared by a large part of their
industry. Furthermore the granting of tariff adjustment in par-
ticular cases necessarily has an impact on our total foreign economic
policy. It necessitates the granting of tariff compensation to our
trading partners on other products in order to counterbalance what-
ever United States tariffs are raised under the escape clause.
For these reasons your committee has included in this bill a program
of adjustment assistance for firms and workers who are injured by
import competition. Under this program, firms adversely affected by
trade agreement concessions would be eligible for Federal loans, tech-
nical assistance, and certain tax assistance. Unemployed workers
would be eligible for assistance, including trade readjustment allow-
ances and retraining in new skills.
The furnishing of this assistance is fully consistent with our tradi-
tional practice of protecting American commerce and labor from
serious injury resulting from imports. It will enable those firms and
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workers injured by increased imports to receive prompt help that is
suited to their individual needs. It will also encourage a constructive
adjustment to the competitive situation.
V. GENERAL DESCRIPTION OF THE BILL
A. FORM OF THE BILL
The bill can be generally divided into three major subjects: (1) the
authority to enter into trade agreements, (2) the authority to proclaim
changes in the tariff treatment of articles in order to carry out any
such trade agreements, and (3) the authority to assist those industries,
firms, and workers who may be seriously injured by reason of increased
imports due to trade agreement concessions. These major subjects
may in turn be subdivided in terms of limitations, conditions, and
safeguards, which are necessary concomitants of this grant of authority.
B. AUTHORITY TO ENTER INTO TRADE AGREEMENTS
The President would be authorized by H.R. 11970 to enter into
trade agreements with foreign countries or instrumentalities thereof
during the period from July 1, 1962, through June 30, 1967.
Thus, whenever the President determines that any existing duties or
other import restrictions of any foreign country or the United States
are unduly burdening and restricting our foreign trade, and that any
of the purposes stated in the bill will be promoted thereby, he is
authorized to enter into a trade agreement for the purpose of changing
such restrictions.
Your committee considers it important that a 5-year extension be
granted by the Congress in order to give adequate time to prepare
for, conduct, and complete major multilateral tariff negotiations
(sec. 201(a) (1)).
C. AUTHORITY TO MODIFY IMPORT RESTRICTIONS
The President is authorized to make changes in the import restric-
tions of the United States which are required or appropriate to carry
out any trade agreement entered into by him under this bill. This
authority is circumscribed and conditioned by certain required
determinations the President must make and procedural steps he must
follow (sec. 201(a) (2)).
1. Basic authority
The basic authority in the bill permits the President to--
(a) Decrease by 50 percent any rate of duty existing on July
1, 1962, or
(b) Increase by 50 percent any rate of duty existing on July
1, 1934.
The basic grant of authority also permits the modification of existing
import restrictions other than duties, while at the same time authoriz-
ing the imposition of additional import restrictions (e.g., quotas).
2. European Economic Community authority
In addition to the basic authority to decrease duties by 50 percent
(which may be used in a trade agreement with any foreign country or
instrumentality), the bill grants a specific authority which waives this
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TRADE EXPANSION ACT OF 1962 15
50-percent limitation and which can be used only in trade agreements
to which the European Economic Community is a party. This
authority is granted primarily in recognition of the fact that internal
tariffs among the member countries of the EEC are scheduled to be
eliminated. In this circumstance, if the President is not authorized by
reciprocal negotiations to bargain down our tariffs substantially, or
eliminate them, in return for concessions by the EEC, United States
exporters of both agricultural and industrial products to the EEC will
face the competitive disadvantage of tariffs which their competitors
within the EEC will not have to pay.
Nevertheless, your committee has limited the authority of the
President to exceed the basic 50-percent limitation in this instance.
The President would only be able to exceed the basic limitation in
the case of articles included in categories of goods in which the United
States and the EEC together supply 80 percent or more of the free
world export value of such goods. It is expected that, to a very large
extent, the categories in question will be those in which the United
States exports more than it imports. In addition, the President could,
if lie so determined, negotiate with the EEC on a common list of
articles of major interest to both American and European exporters,
as a result of which industries on each side would be assured that their
competitors abroad would be treated in the same way and that new
export opportunities were being opened for them at the same time that
their own domestic markets would become subject to new foreign
competition.
To determine the categories to which this authority may be applied,
the President will select a system of comprehensive classification of
articles by category, and thereafter the Tariff Commission is required
to group the tariff classifications of the United States under the
appropriate categories specified in such system. Your committee
provided that when the schedule of category content prepared. by the
Tariff Commission is first used, it may not thereafter be further
changed. Thus, the exact relationship of a given United States tariff
provision to a given category of the selected system would be made
certain and definite.
This specific authority may not be used in the case of articles listed
in the agricultural handbook referred to in the next paragraph (though
the trade in any such article would be included in applying the 80-
percent formula which underlies this grant of authority) (sec. 211).
A further specific authority to exceed the basic 50-percent limitation
on reduction in duties is given in the case of articles referred to in
Agricultural Handbook No. 143, United States Department of
Agriculture, as issued in. September 1959. However, there are
prescribed conditions and limitations on the use of this authority
which it is intended will afford a meaningful safeguard to our agricul-
tural interests.
This authority can only be used if the President determines that the
agreement in question will tend to assure the maintenance or expan-
sion of United States exports of the like article. It is intended that
this test be applied with exactness. For example, if the handbook
refers to "cherries," and if the United States cherry exports consist
only of sweet cherries, the President would not use this authority on
all cherries, but only on sweet cherries, subject, of course, to the other
conditions of the section which must be met (sec. 212).
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16 TRADE EXPANSION ACT OF 1962
3. Tropical commodity authority
The bill provides an authority the primary beneficiaries of which
will be less developed countries. This authority permits the President
to exceed the basic 50-percent limitation on reduction in duties on any
article, but only where he determines that--
(a) such article is a tropical agricultural or forestry commodity
(i.e., one principally produced between the 20 degree latitude
lines) ;
(b) the like article is not produced in significant quantities in
the United States; and
(c) the EEC has made a commitment with respect to its
tariff or other import restrictions which is likely to assure access
to the markets of the EEC comparable to that which such
article will have to the United States markets. Further, such
access must be given by the EEC substantially on a nondiscrimi-
natory basis.
Before the President may utilize this authority, the Tariff Com-
mission, upon request of the President, must make findings as to
whether or not an article is a tropical agricultural or forestry com-
modity, and also whether or not the like article is produced in sig-
nificant quantities in the United States.
This authority embraces unprocessed commodities and those com-
modities which have undergone only such minimum processing as is
customarily required to prepare them for marketing in substantial
volume in international trade (sec. 213).
4. Low-rate articles authority
The bill grants the President the authority to exceed the basic
50-percent limitation in the case of articles subject to duties of not
more than 5-percent ad valorem (or the equivalent).
It is not your committee's intention, in recommending the grant
of this authority, to minimize the significance of rates of duty at
this level. However, your committee is aware that in some cases
these low rates could be further reduced or eliminated in exchange
for concessions to the United States. It is expected that negotia-
tions with the use of this authority will be conducted with the same
degree of care which will apply to negotiations conducted with the
use of other authority (sec. 202).
5. Limitations on use of authority
In addition to those limitations contained within the provisions
granting tariff authority to the President, there are other general
limitations on such authority. These are as follows:
(a) Reservation of articles from negotiations.-The bill provides that
certain articles shall be reserved from negotiations for the reduction
of any duty or other import restriction or the elimination of any duty.
Articles covered by escape-clause proclamations under existing law or
under the bill are to be reserved so long as proclamations with respect
to such articles are continued. Similarly, articles covered by procla-
mations taken under the national security provisions of existing law
or similar provisions of this bill are to be reserved so long as such
proclamations continue in force.
There may also be reserved those articles (not covered by escape-
clause proclamation) which the Tariff Commission found in escape-
clause investigations were being imported in such increased quantities
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TRADE EXPANSION ACT OF 1962
as to cause or threaten serious injury to the domestic industry con-
cerned. These articles will be reserved for the 4-year period commenc-
ing with the date of the enactment of the bill if they are listed for trade
agreement consideration and the Tariff Commission finds (on applica-
tion by the interested industry) that economic conditions in the in-
dustry underlying the basic escape-clause finding have not sub-
stantially improved (sec. 225).
(b) National security provisions.-The bill provides for continuing
the policy of existing law that no action is to be taken reducing or
eliminating tariffs when the President determines that such action
would threaten to impair the national security. In addition, the bill
continues the existing provision under which the President shall take
action to adjust the imports of a given article (or its derivatives) when
he finds such imports threaten to impair the national security (sec.
232).
(c) Staging requirements.-The bill provides, in general, for the
gradual effectuation of tariff reductions in not less than five annual
stages. Only articles falling under the special authority for tropical
agricultural and forestry commodities are excepted from the staging
provision. In order to insure that the rate of duty on any article
subject to reduction is not simultaneously reduced under two trade
agreements, the bill provides that no reduction under the second
agreement shall take effect before the expiration of 1 year after the
effective date of the last reduction made under the first agreement
(sec. 253).
(d) Fur embargo.-The bill continues in effect section 11 of the
Trade Agreements Extension Act of 1951. This provision prohibits
the importation of certain furs and fur skins which are the product of
the Soviet Union or Communist China. This embargo bill cannot (see.
lifted in whole or in part by the authority granted by the
257 (e) (1)).
D. PREAGREEMENT PROCEDURES AND SAFEGUARDS
Certain preagreement procedures (including public hearings and
safeguards) are required by the bill. Those discussed in (1) and (2)
below must be satisfied before the President can make a binding offer
of a United States concession as to any article in a trade agreement.
1. Tariff Commission procedures
The bill provides that in connection with any proposed trade agree-
ment, the President must publish a list of the articles on which he may
consider offering United States concessions. The list must make
clear which type of authority he intends to use with respect to each
listed article.
After receipt of this list from the President, the Tariff Commission
is required to conduct public hearings at which interested persons
would be given an opportunity to appear, present evidence, and be
heard with respect to any article on the list. The hearings would be
for the purpose of developing information which would be of assistance
to the Commission in carrying out its assigned task of advising the
President of its judgment as to the probable economic effect of modi-
fications of duties or other import restrictions on United States
industries producing like or directly competitive articles.
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E EXPANSION ACT OF 1962
Within 6 months of the receipt of such list, the Commission would so
advise the President. The Commission would take into account, in
making the required judgment, the probable effect of increased im-
ports on such factors as employment, productive facilities, and profit-
ability in the industry concerned, as well as other relevant factors. It
is expected that the advice of the Commission will be of material
assistance to the President (sec. 221).
2. Other hearings
The bill also provides for hearings to be held by an agency or inter-
agency committee designated by the President. While interested
persons appearing at such hearings would be permitted to discuss any
aspect of a proposed agreement, it is expected that these hearings
would focus on the subject of concessions which the United States
should seek from the other parties to the proposed trade agreement.
The committee holding these hearings is required to furnish the
President with a summary of such hearings (sec. 223).
8. Departmental advice
The President is required to seek information and advice with re-
spect to any proposed trade agreement from the Departments of Agri-
culture, Commerce, Defense, Interior, Labor, State, and Treasury.
In addition, the President may also seek information and advice from
other appropriate sources (sec. 222).
E. GENERAL PROVISIONS RELATING TO TRADE AGREEMENTS
1. Special representative
The bill requires the President to appoint, from time to time,
a Special Representative for Trade Negotiations who will be subject
to Senate confirmation, and who will be the chief negotiator for the
United. States during any trade agreement negotiation conducted
under title II of the bill.
The bill provides that this representative will seek information
and advice in the performance of his negotiating tasks from repre-
sentatives of industry, agriculture, and labor. Ile is also expected
to seek information and advice from such Government agencies
as he deems appropriate.
The bill provides that such representative shall be a member ex
officio of the interagency trade organization referred to below and
shall have ambassadorial rank. Your committee considers that the
importance of this subject warrants this rank in order that the special
representative can most effectively deal with high foreign officials in
the course of performing his functions (sec. 241).
2. Interagency trade organization
The bill provides for the establishment of an interagency trade
organization (patterned after the existing Trade Policy Committee
established under Executive Order 10741 of November 25, 1957).
This organization, which will be at the Cabinet level, will [make
recommendations to the President on basic policy issues arising in
the administration of the trade agreements program; make recom-
mendations as to what action the President should take on tariff
adjustment reports under section 301(c) from the Tariff Commission;
advise the President of the results of hearings concerning unjustifiable
foreign import restrictions and recommend appropriate action with
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respect thereto; and perform such other functions with respect to the
trade agreements program as the President may designate.
This organization will function under such procedures and through
such committees as the President may deem necessary to enable the
organization to carry out its assigned tasks effectively. One function
of the organization will be to provide a forum where interested persons
can present views concerning unjustifiable foreign import restrictions
and discriminations which adversely affect U.S. commerce (sec. 242).
The committee received the following communication front the
President concerning its decisions with respect to it special repre-
sentative and the interagency trade organization:
MAY 17, 1962.
Hon. WILBUR D. MILLS,
Chairman, Ways and Means Committee,
House of Representatives, Washington, D.C.
DnAR MR. CHAIRMAN: I have been informed that in the considera-
tion by the Ways and Means Committee of the trade expansion bill
of 1962, considerable attention has been focused upon the organiza-
tional arrangements for advising the President in carrying out his
functions under the trade agreements program.
I understand that the committee has provided for a Special Repre-
sentative of the President to assume principal responsibility for nego-
tiating each trade agreement under the act, and that the committee
bill will provide for an interagency mechanism to perform a number of
advisory functions, now provided for under Executive Order 10741.
I have no objection to these changes.
I should like to info.cm the committee that it is my intention to
carry forward, in its general outlines, the present interdepartmental
machinery for assisting the President, in the administration of the
trade agreements program, subject to such reorganization as may be
dictated by experience and in the light of new responsibilities imposed
by the bill. It is also my intention to retain the Secretary of Coni-
merce as chairman of the Cabinet-level committee provided for in the.
committee bill.
In my judgment, the major trade. negotiations under this act will
require a high degree of leadership and coordination in the executive
branch., reflecting the judgment both of. those who conduct our foreign
policy and of those whose responsibility it is to advance the interests
of American business, labor, and agriculture. I believe it is proper
for me as well to assure you and your colleagues of the immediate and
powerful interest which the White House will maintain in these mat-
ters, in accordance with the provisions which you have proposed,
particularly through the work of the Special Representative of the
President.
* * *
* *
Sincerely,
3. Congressional delegates
The bill requires that two Members of the House and of the Senate
be accredited to the United States delegation conducting trade agree-
ment negotiations under the bill. These delegates from Congress
would not participate in negotiations but would be able to sit as
observers during negotiation conferences (sec. 243).
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1. Reports to Congress
The bill provides that the President shall transmit promptly to the
Congress a copy of each trade agreement entered into, together with
a statement of his reasons for entering into the agreement (sec. 226).
The bill also requires a report from the President annually on the
operation of the trade agreements program and the tariff adjustment
and other adjustment provisions of the bill. The report is required
to include pertinent information concerning operations under the
bill. The Tariff Commission is also required to file a report (at least
once a year) on the operations of the trade agreements program (sec.
402).
Your committee believes that these reporting provisions will be of
assistance to the Members of Congress in evaluating the effectiveness
of the several types of authority granted in the bill. The Committee
on Ways and Means intends to study such reports carefully and keep
fully informed as to the conduct of the trade agreements and adjust-
ment assistance program.
5. 111ost favored-nation principle
The bill provides that, with certain exceptions, duties and other
import restrictions proclaimed under the bill or existing legislation
will be extended to products of all countries. This policy is consistent
with the purpose in the bill of strengthening economic relations with
foreign countries through the development of open and nondiscrimi-
natory trading in the free world (sec. 251).
The principal exceptions to this general rule are as follows:
(a) Communist products.-The President is required, as soon as
practicable, to suspend, withdraw, or prevent the application of the
reduction, elimination, or continuance of any existing duty or other
import restriction, or the continuance of any existing duty-free or
excise treatment, proclaimed under the bill to products, whether
imported directly or indirectly, of any country or area dominated or
controlled by Communism. All of the countries or areas whose
products would be denied trade agreement benefits, except Cuba,
Poland, and Yugoslavia, are presently being denied such benefits
under section 5 of the Trade Agreements Extension Act of 1951. It
is contemplated that the effect of this provision of the bill would be to
add to the countries and areas covered by section 5 the three countries
named above. The list of countries or areas denied trade agreement
benefits under the bill would accordingly be as follows :
Albania.
Associated States of Indochina: Any part of Cambodia, Laos,
or Vietnam which may be under Communist domination or
control.
Bulgaria.
China, any part of which may be under Communist domination
or control.
Cuba.
Czechoslovakia.
Estonia.
Germany (the Soviet zone and the Soviet sector of Berlin).
Hungary.
Korea, any part of which may be under Communist domination
or control.
The Kurile Islands.
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TRADE EXPANSION ACT OF 1962 21
Latvia.
Lithuania.
Outer Mongolia.
Poland and areas under its provisional administration.
Rumania.
Southern Sakhalin Island.
Tanna Tuva (Tannu Tuva).
Tibet.
Union of Soviet Socialist Republics and areas in East Prussia
under the provisional administration of the U.S.S.R.
Yugoslavia.
Your committee feels that trade agreement benefits should be
denied to any country or area dominated or controlled by Communism.
At such time as any such country or area is no longer so dominated or
controlled, trade agreement benefits would, of course, be extended to
products of such country or area.
The phrase "as soon as practicable" is intended to take into account
the time required by the procedures for suspension, withdrawal, or
termination of concessions or of a most-favored-nation commitment
(sec. 231).
(b) Foreign import restrictions.-The bill directs the President to
take all appropriate and feasible steps within his power to eliminate
any unjustifiable foreign import restrictions which impair the value
of tariff commitments made to the United States, oppress the com-
merce of the United States, or prevent the expansion of trade on a
mutually advantageous basis. The President may not negotiate the
reduction or elimination of any United States import restriction under
the bill in order to obtain the relaxation or removal of any such
unjustified restriction. Your committee feels that the United States
should not make concessions in exchange for removal or reduction of
such unwarranted restrictions.
As a further expression of your committee's concern about unjus-
tifiable restrictions, provision is made which requires the President,
to the extent such action is consistent with the purposes stated in the
bill, to suspend, withdraw, or prevent the application of trade agree-
ment benefits to products of any foreign country or instrumentality
receiving such benefits when such country or instrumentality-
(i) maintains nontariff trade restrictions, including unlimited
variable import fees, which substantially burden United States
commerce in a manner inconsistent with trade agreements, or
(ii) engages in discriminatory or other acts (including tolerance
of international cartels) or policies unjustifiably restricting
United States commerce.
The President is also required, to the extent such action is consistent
with the purposes stated in the bill, to refrain from proclaiming bene-
fits of trade agreement concessions to carry out any trade agreement
with a country or instrumentality maintaining such restrictions or
engaging in such acts or policies.
Your committee does not believe that there can be effective use of
the trade agreement process to lower trade barriers if unjustifiable
restrictions of a tariff or nontariff nature are maintained or erected, or
other actions are taken which are inconsistent with trade agreement
commitments. When such barriers are placed in the way of trade,
trade agreements cannot fully attain the objectives sought. Your
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22 TRADE EXPANSION ACT OF 1962
committee expects that every reasonable effort will be made to bring
about the removal of such unjustifiable restrictions so that the
objectives of the trade agreements program will be attained. Your
committee also expects that as new obstructions to trade appear,
every reasonable effort will be made to stop them (sec. 252).
F. POSTAGREEMENT SAFEGUARDS-ADJUSTMENT ASSISTANCE
The bill provides for adjustment assistance to industries, firms,
and workers who may be affected by increased imports resulting from
trade agreement concessions.
In the case of industries which are seriously injured, or threatened
with serious injury, authority is given to adjust tariffs or to impose
additional import restrictions (e.g., quotas), or both. Authority is
also provided to give other assistance to the firms and workers of
such industry. The form of assistance given may thus be tariff
adjustment for the industry as a whole, adjustment assistance to firms,
adjustment assistance to workers, or any one or more of such forms of
assistance.
Adjustment assistance (other than tariff adjustment) may be given
in the case of injury to particular firms or workers even though there
is no injury to the industry as a whole.
1. Petitions for assistance
Any firm, group of workers, or industry, or their representatives,
seeking tariff adjustment or other adjustment assistance, or both,
may file a petition with the Tariff Commission. The word "firm"
includes farms, mines, and fishing enterprises.
2. Tariff Commission investigations
The bill provides that the Tariff Commission shall, upon receipt of
any such petition (whether filed by a firm, group of workers, or an
industry) institute an investigation of the industry engaged in the
production of the article like or directly competitive with the imported
article concerned. An industry investigation will be conducted
whether the petition seeks tariff adjustment or other adjustment
assistance or both. If adjustment assistance, other than tariff adjust-
ment, is specifically requested, however, the Tariff Commission will
make a separate injury determination with respect to each petitioning
firm or group of workers.
The bill requires that, in the case of individual firms or groups of
workers petitioning for adjustment assistance, other than tariff adjust-
ment, the Tariff Commission's report to the President is to be made
in 60 days. In the case of industry investigations, such report must
be made within 120 days (with a permissible 30-day extension).
It can be expected that there will be cases where a petition for
adjustment assistance is received while an industry investigation
is in progress or when. such an investigation has been recently com-
pleted. To facilitate the Tariff Commission's discharge of its responsi-
bilities within the time allotted, the Tariff Commission is authorized
to limit the time within which petitions for firm or worker adjustment
assistance may be filed while the industry investigation is underway,
and no petition filed within 1 year after an industry investigation has
been completed will have the effect of requiring a new investigation
with respect to such industry.
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TRADE EXPANSION ACT OF 1962 23
All Tariff Commission investigations must include public hearings
for which reasonable notice must be given and at which any interested
person must be given an opportunity to present evidence and be heard.
In industry investigations, the Tariff Commission will determine
whether, as a result of concessions granted under trade agreements,
an article is being imported into the United States in such increased
quantities as to cause, or threaten to cause, serious injury to the
domestic industry producing an article which is like or directly
competitive with the imported article. In investigations of particular
firms, the test is substantially the same, but the inquiry is directed to
the firm in question. In. the case of workers, the Tariff Commission
will determine whether increased imports duo to trade agreement
concessions cause, or threaten to cause, unemployment or under-
employment of a significant number or proportion of the workers in
the firm or in an appropriate subdivision of the firm producing articles
like or directly competitive with the imported article.
In determining what constitutes serious injury, the Tariff Com-
mission is to take into account all economic factors which it considers
relevant, including idling of productive facilities, inability to operate
at a profit, and unemployment or underemployment of workers.
In the case of an industry investigation, the Tariff Commission
will inquire into the effect of the imports in question on the whole
industry concerned and will base its determination on the results of
such. inquiry. In the case of investigations of individual firms, the
Tariff Commission will inquire into the effect of the imports in ques-
tion on the overall operations of the firm. In the case of investigations
concerning workers, the Commission will inquire into the effect of
the imports in question on employment in the workers' firm or in an
appropriate subdivision thereof.
Your committee believes that it is important that adjustment
assistance in all instances be given only where it has been concluded
that the conditions requiring assistance were caused by increased
imports resulting from tariff concessions made under trade agreements.
It is your committee's intention, for purposes of this bill, that in
general, the industry, in the case of any industry investigation, will
include those operations of those establishments in which the domestic
article in question (i.e., the article which is "like," or "directly com-
petitive with," the imported article, as the case may be) is produced.
If the domestic article in question is produced in an establishment
along with several other articles, the overall operations of the estab-
lishment would be included in the domestic industry. Where a
corporate entity has several establishments (e.g., divisions or plants)
in only one of which the domestic article in question is produced,
the establishments in which the domestic article is not produced
would, as a general rule, not be included in the industry. This would
be particularly apt to be the case where the allied establishments
produce articles which are wholly unrelated to the articles produced
in the establishment in which the domestic article in question is pro-
duced, unless the equipment and skills devoted to production of the
domestic article in question are freely interchangeable among estab-
lisliments of the firm. 5
It should be recognized, however, that the determination of the
extent to which establishments producing articles different from the
domestic article in question may be separated from the establishments
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24 TRADE EXPANSION ACT OF 1962
under the same corporate roof that produce the domestic article in
question will necessarily be affected by the accounting procedures
that prevail in a given case. That is, the establishments not produc-
ing the domestic article in question would not be excluded from the
domestic industry if it is impracticable to distinguish or separate their
operations from the operations of their allied establishments in which
the domestic article in question is produced.
Your committee has incorporated in the bill a provision which
has the effect of permitting an extension of the scope of the term
"directly competitive." Under this provision, an imported article
may be considered "directly competitive with" a domestic article,
or vice versa, if the one is at an earlier or later stage of processing
than the other, or if one is a processed and the other an unprocessed
form of the same article, and if the economic effect of importation of
the imported article is comparable to the effect of importation of
articles in the same stage of processing as the domestic article.
The term "earlier or later stage of processing" contemplates that
the article remains substantially the same during such stages of proc-
essing, and is not wholly transformed into a different article. Thus,
for example, zinc oxide would be zinc ore in a later stage of processing,
since it can be processed directly from zinc ore. For the same reason,
a raw cherry would be a glace cherry in an earlier stage of processing,
and the same is true of a live lamb and dressed lamb meat (see.
405 (4)).
Upon completion of any investigation under the provisions of the
bill-whether based on an application for tariff adjustment or for
other adjustment assistance---the Tariff Commission would report its
findings to the President.
If the Commission should find serious injury to an industry, it is
required to report to the President the tariff adjustment (i.e., the duty
or other import restriction, or combination thereof) which it finds
would be required to prevent or remedy the injury. The President
would thus be given the benefit of expert advice on what level or
amount, of tariff adjustment might- be employed to correct the injury
in the event that lie should determine that tariff adjustment is an
3pppropriate form of adjustment assistance in the case at hand (sec.
3. Presidential action
Whenever the Tariff Commission reports to the President a finding
of serious injury or threat thereof to an industry, the President may
take any of several courses of action:
(a) He may provide tariff adjustment on the imported prod-
uct, involved in the investigation;
(b) He may provide that the firms in the industry may request
the Secretary of Commerce for certifications of eligibility to ap-
ply for adjustment assistance;
(c) He may provide that the workers in the industry may
request the Secretary of Labor for certifications of eligibility to
apply for adjustment assistance; or
(d) He may take any combination of such actions.
No order of priority among these various courses open to the Presi-
dent is intended to be established nor is there a requirement that the
President must take some action. If the President fails, however, to
take the particular tariff adjustment action found necessary by the
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TRADE EXPANSION ACT OF 1962 GG~D
Tariff Commission to remedy the serious injury in question (even
though he takes tariff adjustment action other than that so found by
the Tariff Commission), then he would have to proclaim such action
if each House of Congress, by the affirmative vote of a majority of
the authorized membership thereof, adopts a concurrent resolution
stating in effect that Congress approves the Tariff Commission's tariff
adjustment finding.
It is important to note that under paragraphs (b) and (c) above, a
firm or group of workers is not automatically eligible to apply for
adjustment assistance. Upon request by a firm in the industry found
to be seriously injured or threatened with such injury, the Secretary
of Commerce must conclude whether the increased imports found by
the Tariff Commission to have caused or threatened serious injury to
the industry as a whole have also caused serious injury to the indi-
vidual firm in question. Similarly, upon request by a group of workers
in a firm in such industry, the Secretary of Labor must conclude
whether the increased imports have caused or threatened unemploy-
ment or underemployment to a significant number or proportion of
the workers of the firm or an appropriate subdivision thereof.
't'hese additional tests are required (in the case of such firms and
groups of workers) by the fact that when the Tariff Commission finds
serious injury (or threat thereof) to an industry, it may not necessarily
be the case that each individual firm in that industry has been so
affected. (Conversely, if the Tariff Commission does not find serious
injury to an industry, this does not, of course, rule out the possibility
that an individual firm or group of workers in that industry might be
experiencing serious injury or threat thereof and therefore might be
eligible for adjustment assistance.)
The function given to the Secretaries of Commerce and Labor, in
this instance, reflects the committee's intention that adjustment
assistance is not to be extended to a firm or group of workers which
has not satisfied the conditions of eligibility. Under this procedure,
these firms and workers would not be required to return to the Tariff
Commission for an injury determination, though it is anticipated that
the Secretaries of Commerce and Labor would make full use of Tariff
Commission information derived from its investigation of the firms'
and workers' industry.
When, upon petition by a firm or group of workers for adjustment
assistance, other than tariff assistance, there has been no affirmative
determination with respect to an industry by the Tariff Commission,
but the Tariff Commission has found that the firm or group of workers
therein has been seriously injured, or threatened with serious injury
by reason of increased imports due to trade agreement concessions,
the President may certify such firm or group of workers as eligible to
apply for adjustment assistance.
4. Assistance to industries
As indicated above, the President may (upon receipt of a Tariff
Commission finding of serious injury to an industry) take action
adjusting upward the import restrictions on the article concerned.
However, he may, not later than 60 days after receiving the report of
the Tariff Commission, ask for additional information from the Tariff
Commission. In this case, the Commission is required to submit a
supplementary report to the President not later than 120 days after
it receives his request.
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TRADE EXPANSION ACT OF 1962
The President may decline to take the particular tariff adjustment
action found by the Tariff Commission. If so, he is required within
60 days after receiving either the Commission's affirmative finding or
its supplementary report (if he has requested additional information)
to submit a report to the House of Representatives and to the Senate
stating why he has not done so. Within the prescribed 60-day period
following the President's report, the Congress, by an affirmative vote
of the majority of the authorized membership of each House, may
adopt a concurrent resolution stating in effect that the Congress
approves the action found and reported by the Tariff Commission.
Within 15 days after such a resolution is adopted, the President is
required to proclaim the restrictive action found and reported by the
Tariff Commission.
The bill provides that the President may, when he determines that
it is in the national interest, reduce or terminate import restrictions
proclaimed under previous or future escape-clause actions. He may
do so only after receiving the Commission's advice as to the probable
economic effect on the industry concerned of the reduction or termina-
tion, and after seeking the advice of the Secretary of Commerce and
the Secretary of Labor.
Any increased import restrictions under the escape-clause provision
will terminate not later than 4 years after the effective date of the
initial proclamation of the escape-clause action or the date of the
enactment of the bill, whichever is the later, unless (following petition
by the industry) the President determines, after receiving the advice
of the Tariff Commission and after seeking the advice of the Secretary
of Commerce and the Secretary of Labor, that extension of the restric-
tions in whole or in part is in the national interest. The period of
extension may not exceed 4 years at any one time.
Between 6 and 9 months before an escape-clause action would
terminate unless extended by the President, the industry concerned
has the right to petition the Tariff Commission to advise the President
of its judgment as to the probable effect on the industry of the expira-
tion of the escape-clause action. Such petition will result in an
investigation during which the Tariff Commission will look into all
economic factors which it considers relevant and will hold public
hearings. The Tariff Commission will then advise the President as
to the probable economic effect on the applicant industry if the.
increased import restrictions terminate (sec. 351).
5. Assistance to firms
The bill provides that firms determined to be eligible to apply for
adjustment assistance may receive, upon application, any or all of
three forms of assistance-financial, technical, or tax.
It is expected that many applicants will be firms whose capital
reserves and borrowing ability have been depleted. Therefore, pursu-
ant to the bill, such firms could receive direct Federal loans or assist-
ance through Federal participation in, or guarantee of, private loans
to assist in adjustment to import competition.
Firms may also be provided with technical assistance in order to
devise the most effective adjustment proposal and to carry it out in
the most efficient manner.
Firms with current losses due predominantly to import competition
may be given the opportunity to carry back the loss for income tax
purposes for 5 years instead of the normal 3 (sec. 311).
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(a) Adjustment proposals.-The bill provides that a firm certified as
eligible to apply for trade adjustment assistance may file its applica-
tion with the Secretary of Commerce, indicating its need for assistance.
Within a reasonable time, it must submit a proposal for its economic
adjustment. This adjustment proposal will describe in some detail the
nature and cost of the proposed adjustment effort, and the resources
to be devoted to it from Federal and other sources. The firm may be
furnished technical assistance in order to prepare an adequate adjust-
ment proposal.
Adjustment proposals from firms applying for adjustment assistance
are to be certified by the Secretary of Commerce as (1) giving reason-
able assurance of contributing to successful adjustment; (2) giving
adequate consideration to the interest of workers involved ; and (3)
assuring a maximum self-help effort by the firm.. No financial or tax
assistance and no further technical assistance may be given until
the adjustment proposal has been certified.
With respect to the first point mentioned above, it is recognized
that there may be some firms for which adjustment assistance is
inappropriate and which could not adjust to their difficulties in this
way. Even though such firms may have been certified as eligible to
apply for adjustment assistance, the Secretary of Commerce should
not authorize assistance unless he is satisfied that it will be of practical
~henefit to the applicant. Adjustment assistance should be treated not
.as indemnification of past losses, but as constructive aid for the re-
nabilitation of a commercial enterprise. With respect to the second
point, adjustment plans that would permit the rehiring of workers
laid off due to increased imports resulting from trade agreement
concessions are to be preferred (sec. 311).
(b) Use of other agencies.-The Secretary of Commerce will be re-
quired to submit each firm's certified adjustment proposal to what-
ever Federal agency or agencies he determines to be appropriate to
furnish the financial and technical assistance necessary to carry out
such proposal. Such agencies may include the Small Business Ad-
ministration, the Departments of Agriculture and Interior and the
Area Redevelopment Administration. Each such agency will deter-
mine whether any part of the assistance called for by the proposal
comes within the legal authority, regulations, and policies of the
agency, and whether it is prepared to furnish such assistance out of
its own appropriations. If the agency, for any reason, is not pre-
pared to furnish any or all the necessary assistance, it will promptly
notify the Secretary of Commerce, who may then furnish such assist-
ance as remains necessary to carry out the adjustment proposal.
The Secretary will, to the maximum extent practicable, provide such
financial and technical assistance through existing agencies having the
necessary expertise, by making available to them funds appropriated
under the bill (sec. 312).
(c) Authority of the Secretary of Commerce.-The terms and condi-
tions under which the Secretary of Commerce may furnish technical
and financial assistance not furnished under the programs of other
agencies are comparable to those presently applicable to other Federal
assistance programs.
(i) Financial assistance.-Financial assistance may be fur-
nished for plant and equipment, including modernization and
conversion and, in exceptional circumstances, for working capital.
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TRADE EXPANSION ACT OF 1962
Loans made or deferred participations taken up are to bear
interest at a rate no lower than 4 percent. Loans made, guar-
anteed, or covered by deferred participation agreements may
have maturities of no more than 25 years (with a possibility of a
10-year extension for orderly liquidation). Private loans may be
guaranteed or covered by participation agreements only if they
are made at a reasonable rate of interest. An interest ceiling is
provided on the portion of any such loan guaranteed or covered.
Guarantees and deferred participation agreements are to be
limited to 90 percent of whatever portion of a loan is made for
adjustment purposes.
No financial assistance is to be provided unless the Secretary
of Commerce determines that there is reasonable assurance of
repayment (although it is not necessary that collateral be re-
quired). Financial assistance is not to be furnished if it is other-
wise available to the firm on reasonable terms from non-Federal
sources (sees. 314-315).
(ii) Technical assistance.- -Technical assistance may include
such aids as managerial advice, market analyses, research in and
development of new or existing techniques and products, and any
other technical service that would help promote adjustment to
import competition. Subject to the requirement to make use of
existing Government agencies to the maximum extent practicable
or appropriate in extending technical assistance, the bill author-
izes provision of technical assistance through non-Federal sources,
on a contract basis or otherwise. Certain types of technical as-
sistance, such as management studies, might better be handled
outside of the Government. A firm may be required to share the
cost of technical assistance as appropriate (sec. 313).
(iii) Tax assistance.--The bill authorizes the Secretary of
Commerce to certify eligibility for tax assistance when he deter-
mines that such assistance will materially help the firm to adjust
and that the firm has sustained a loss which arose predominantly
from a business seriously injured, in the loss year, due to increased
imports resulting from a trade agreement concession. The ex-
istence and amount of such loss are to be determined under the
Internal Revenue Code. This will permit a firm to carry back
the loss for tax purposes 2 years beyond the 3 years normally
allowed. A firm without sufficient profits for the 3 taxable years
preceding the loss year to take full advantage of the present
carryback provisions, may receive a refund out of taxes for the
2 additional preceding years. Under present law it would only
be able to get a tax advantage of the loss against possible future
income (sec. 317).
6. Assistance to workers
(a) In general.--The bill provides that workers eligible to apply for
adjustment assistance may receive several forms of assistance:
(i) Trade readjustment allowances, a weekly cash allowance
intended to supplement regular unemployment compensation and
to be generally available for 52 weeks of unemployment, including
weeks of training.
(ii) Training, for vocational readjustment. Failure, without
good cause, to take training to which the worker is referred will
terminate his trade readjustment allowances.
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TRADE EXPANSION ACT OF 1962 29
(iii) Relocation allowances, for workers unable to obtain suit-
able local employment, to cover the cost of moving the family to
an area where a job is available.
The worker assistance provisions are to be administered by the
Secretary of Labor, principally on the basis of agreements with States
to operate through the State employment security agencies.
Only "adversely affected workers" (as defined in sec. 338(2)) are
eligible for worker assistance. Generally, eligibility will require the
following steps:
(i) a finding by the Tariff Commission that the worker's
industry, or his group of workers, is seriously injured by increased
imports resulting from trade agreement concessions;
(ii) depending upon the circumstances, a certification by the
President or the Secretary of Labor of eligibility to apply for
worker assistance based on such injury; and
(iii) a determination that the worker has been separated
because of lack of work in an import-affected firm or subdivision.
(b) Trade readjustment allowances.-The cash allowances under the
bill are paid only for weeks of unemployment beginning not earlier
than 31 days after enactment of the bill and after the date determined
under section 302(d) as the beginning of the import-caused unemploy-
ment problem. The separation itself must occur after the beginning
date but within 2 years of a certification that workers of the firm or
subdivision a're eligible for worker assistance. (This 2-year period
can be shortened by a Presidential determination under sec. 302(c).)
A week of unemployment is a week in which the worker earns less
than 75 percent of his average weekly wage and either works in the
adversely affected employment for less than 80 percent of his average
hours, or, if he has been totally separated from the adversely affected
employment and is working at some other job, is not working on a
full-time basis.
To be eligible for trade readjustment allowances, the worker must
have been separated due to lack of work in an adversely affected
employment; that is, in a firm or subdivision with respect to which
there has been a certification of worker eligibility. This test of
separation due to lack of work is stricter than under State law. A
worker who leaves his job voluntarily may be eligible for State un-
employment insurance if he had good cause but he would not be
eligible for trade readjustment allowances under this bill if he left
voluntarily, no matter how good the cause.
To be entitled to trade readjustment allowances, a worker must
have had substantial employment over the 3 years immediately pre-
ceding his separation from adversely affected employment. The
worker must have earned wages of $15 or more in at least half the
weeks of the 3 years; and, in the 52 weeks preceding his separation,
he must have had 26 weeks of employment, at wages of at least $15,
in a firm or firms the workers of which have been found adversely
affected by imports.
These employment requirements relating to entitlement to allow-
ances are substantially stricter than those under the Manpower
Development and Training Act of 1962 or under State unemployment
insurance law. The Manpower Act requires only 3 years of gainful
employment at any time in the worker's past. Of the 37 States
where the unemployment insurance qualifying requirements are, or
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31111 TRADE EXPANSION ACT OF 1962
can be, expressed in terms of weeks of employment, only 2 have a
requirement of more than 20 weeks in a 52-week base period; 20
require less than 20 weeks, and 15 require 20 weeks (sec. 322).
c. Weekly amount of trade readjustment allowances.-The trade re-
adjustment allowance for a week is 65 percent of the individual's
average weekly wage but it cannot exceed 65 percent of the average
weekly manufacturing wage. The individual's average weekly wage
is determined on the basis of the so-called high-quarter formula typical
of most State unemployment compensation laws.
The maximum amount that can be paid to any worker for a week
is 65 percent of the annual average weekly wage paid to production
workers in manufacturing for the latest calendar year for which the
figure has been published by the Bureau of Labor Statistics of the
Department of Labor. Currently the most recent published figure,
for the year 1960, is $89.72. The official average for 1961 will be
published shortly, and is expected to be about $92.34, which would
give a maximum weekly trade readjustment payment based thereon
of $61.
The worker's weekly allowance will be reduced by one-half of any
remuneration that he receives for services performed during the week
of unemployment. This formula gives him an incentive to find work.
The amount of the trade readjustment allowance is further limited
by the requirement that the total amount that a worker receives as
trade readjustment allowance, remuneration for services performed
during the week, and unemployment insurance and training allowance
under the Manpower Act or Area Redevelopment Act, cannot exceed
75 percent of his average weekly wage.
Your committee believes that the scale of trade readjustment
allowances is appropriate in view of the fact that the finding that
the unemployment was caused by increased imports resulting from
the removal, in whole or in part, of tariff protection implies that con-
tinuation of the prior tariff would have provided full job protection.
This worker assistance is, therefore, in the nature of an adjustment to
conditions brought about by removal of prior job protection and is
not unemployment insurance. The terms of worker assistance are not
meant to be precedents for the unemployment insurance program.
An adversely affected worker may receive his weekly trade read-
justment allowance for weeks while he is attending training. The
trade readjustment allowance would be in lieu of any training allow-
ance he might receive under any other Federal law for worker train-
ing. If, under another Federal law for the training of workers, an
adversely affected worker who is taking training could receive a
higher weekly payment, his trade readjustment allowance for a week
of training will be increased to such higher amount.
The bill provides that trade readjustment allowances will not
duplicate benefits already available to the worker, but will merely
supplement them, as necessary, to provide the designated level of
weekly payments for a potential duration of 52 weeks in most cases.
A worker's trade readjustment allowance for a week is reduced by
any unemployment insurance to which he is entitled for such week,
whether or not he has filed a claim for the unemployment insurance.
If, for any week in which the worker is not taking training, he is found
ineligible for State unemployment insurance solely on account of his
claim for a trade readjustment allowance, his trade readjustment
allowance will be reduced as if he had received State benefits.
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TRADE 'tXPA$V'SIOTq ACrl'' bF "f 982' 31
With respect to a worker who is taking training, however, unem-
ployment, insurance for a week would be deducted from his trade re-
adjustment allowance for that week only if the worker received the
unemployment insurance. The bill provides that if an adversely
affected worker is paid unemployment insurance under State law for
a week during which he is taking approved training, the State may be,
= reimbursed from trade readjustment allowance funds for the unem-
ployment insurance, to the extent of the trade readjustment allowance
to which the worker would have been entitled. It is intended that
reimbursed unemployment insurance payments not be charged to
employers' accounts and that trainees not have their eligibility for
unemployment insurance reduced on account of such payments.
This treatment of the relationship between payments to workers in
training, reimbursement, and State unemployment insurance does not
differ from that provided in the Manpower Development and Training
Act.
The bill prevents a worker from obtaining duplicate benefits by
first exhausting his entitlement` to benefits under unemployrrrent
insurance or a Federal training law and then applying for trade read-
justment allowances. The potential duration of trade readjustment
allowances is reduced by the number of weeks for which the worker
received such other benefits when he later files for a trade readjustment
allowance. He is paid at that time the amount by which his trade
readjustment allowance would have exceeded these other benefits-for'
the prior weeks. ; This. provision for payment would come into opera-
tion, for example, where unemployed workers have been receiving
unemployment or training benefits and there is a section 302 certifica-
tion of trade impact with a beginning date preceding the date of their
layoff (see. 323).
d. Time limit on trade readjustment allowances.-Under the bill a
worker may receive trade readjustment allowances for not more than
52 weeks, with two exceptions. A worker who is taking training may
receive up to 26 additional weeks of allowances to assist him in com-
pleting his training. In view of the difficulty that older workers
would have in finding jobs, a worker who was at least 60 years old
when he was separated is entitled to 13 additional weeks if he remains
unemployed, is available for work, and .otherwise meets the require-
ments of the bill. No worker can receive both the additional 26 weeks
and the additional 13 weeks.
The extra 26 weeks' duration for workers taking training will not
encourage workers to put off training since a worker's referral to
training is not within his control. If a worker refuses, without good
cause, to accept training to which he may be referred early in the
52-week period, his allowance would be suspended.
The normal 52-week duration may be paid to a worker only for
weeks of unemployment beginning within 2 years after the beginnings
of the appropriate week. The additional 26 or 13 weeks may be paid
within 3 years. For a worker totally separated, the appropriate
week is the week of his most recent total separation. For a worker
partially separated, the appropriate week is the first week for which he
received a trade readjustment allowance following his most recent
partial separation (sec. 324).
(e) Application of State law.-Except where inconsistent with the
purposes of this bill, the availability and disqualification provisions of
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TRADE EXPANSION ACT OF 1962
the applicable State unemployment insurance law will apply to claims
for trade readjustment allowance. The particular State law that
would apply is, generally, that of the State in which the individual
would be entitled to unemployment insurance (sec. 325).
(f) Training.-The bill provides that every effort shall be made to
return adversely affected workers to full employment through what-
ever testing, counseling, training, and placement services are available
under any Federal law. If the training provided is not within com-
muting distance of the worker's residence, his transportation may be
paid, at not more than 10 cents a mile, and while at the facility, he
may be paid subsistence expenses not to exceed $5 a day. These
limitations are the same as those provided in the Manpower Develop-
ment and Training Act. An individual who goes away for training
and for any reason does not complete the course will receive trans-
portation home. In determining "commuting distance" account will
be taken of the established labor market area, patterns of place of
work!and place of residence, and usual community practice.
Insofar as practicable, preference is to be given to training arrange-
ments which coordinate the training program for workers with the
readjustment program of the employers. Such arrangements would
afford the worker an opportunity to preserve his seniority and other
rights, and would afford the employer an opportunity to rehire or
retain his work force. The training offered to any worker should take
his desires into account.
Training is of such importance under the program proposed by this
chapter that trade readjustment allowances would be denied to a
worker who, without good cause, refuses to accept suitable training to
which he is referred, or fails to continue the course or to make satis-
factory progress in it. The denial of allowances would continue until
he accepts or resumes approved training (sees. 326-327).
(g) Relocation allowances.-A relocation allowance is provided by
the bill for a totally separated worker who is the head of a family
to iriake it possible for him to take a 'ob in another location if he has
no reasonable prospects for suitable reemployment locally. A
worker is a "head of a family" if he has dependents who would
make the move with him.
A relocation allowance may be paid to a worker only if, for the
week in which lie applies for a relocation allowance, he is entitled to a
trade readjustment allowance (or he would have been so entitled ex-
cept for certain specified circumstances, such as the fact that he has
the new job, etc.)
A relocation allowance consists of both the reasonable and necessary
expenses incurred in transporting the worker, his family, and their
household effects from their present location to that of the new job,
and a lump-sum payment equivalent to 2% times the national average
manufacturing wage (secs. 328-330).
(h) Agreements with States.-The bill provides that the Secretary
of Labor may enter into agreements with States under which the
State agency will carry out many of the specific functions associated
with payment of allowances and the handling of training. The pro-
cedure for these State agreements follows the pattern established
tinder prior laws (sec. 331).
(i) Review.-The bill provides (as does the Manpower Training
Act) that determinations under chapter 3 as to the entitlement of
individuals to assistance are final and conclusive, and not subject to
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TRARE > X?ANSIOX ACT OF 1062 3
review except as the Secretary of Labor may by regulation provide.
There would be no review of the certification that the unemployment
in the worker's firm was caused by imports. The bill also directs the
Secretary to provide for review of State, agency determinations in
the same manner and to the same extent as determinations under the
State law, unless such State review procedure is impracticable or is
inconsistent with the purpose of chapter 3. Determinations by State
agencies which will be subject to the same review as unemployment
insurance determinations include determinations on issues similar to
those involved in unemployment insurance claims.
The omission of a comparable judicial review provision with respect
to other determinations under the bill is not intended: to affect the
reviewability of such determinations under judicial precedents or
statutory provisions governing review of such determinations (see.
336).
7. Adjustment Assistance Advisory Board
Your committee's bill would create a Cabinet-level Adjustment
Assistance Advisory Board to provide the President and the agencies
administering the adjustment assistance program, other than tariff
adjustment, with advice on developing coordinated programs for
such adjustment assistance, giving full consideration to ways of pre-
serving and restoring the employment relationship of firms and work-
ers where possible, consistent with sound economic adjustment. The
Board would consist of the Secretaries of Agriculture, Commerce,
Health, Education, and Welfare, Interior, Labor, and the Treasury,
and the Administrator of the Small Business Administration, and any
other officer whom the President considers appropriate. The Secre-
tary of Commerce would serve as Chairman.
In addition, industry committees may be established by the Chair-
man for the purpose of advising the Board. Members of such com-
mittees would be appointed by the Chairman and would becomposed
of representatives of employers, workers, and the public.(sec. 361).
VI-TECHNICAL EXPLANATION OF THE BILL
TITLE I-SHORT TITLE AND PURPOSES
Section 101. Short title
Section 101 of the bill provides that the bill when enacted may be
cited as the "Trade Expansion Act of 1962."
Section 102. Statement of purposes
Section 102 of the bill provides that the purposes of the bill are,
through. trade agreements affording mutual benefits to the United
States and the other parties to such agreements-
(1) To stimulate the economic. growth of the United States
and maintain and enlarge foreign markets for the products of
U.S. agriculture, industry, mining, and commerce;
(2) To strengthen economic relations with foreign countries
through the development of open and nondiscriminatory trading
in the free world;
(3) To assist in the progress of countries in the earlier stages
of economic development; and
(4) To prevent Communist economic penetration.
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TITLE IT-TRADE AGREEMENTS
CHAPTER 1-GENERAL AUTHORITY
Section 201. Basic authority for trade agreements
Section 201(a) of the bill provides in effect that whenever the
President finds as a fact that any existing duties or other import
restrictions of any foreign country or the United States are unduly
burdening and restricting the foreign trade of the United States
and that any of the purposes stated in section 102 of the bill will be
promoted thereby, he may--
(1) During the period beginning on July 1, 1962, and ending
on June 30, 1967, enter into trade agreements with foreign coun-
tries or instrumentalities thereof (such as the European Economic
Community) ; and
(2) Proclaim such modification or continuance of any existing
duty or other import restriction, such continuance of existing
duty-free or excise treatment, or such additional import restric-
tions, as he determines to be required or appropriate to carry out
any such trade agreement.
The proclaiming authority provided by section 201 (a) (2) is limited
to proclamations required or appropriate to carry out trade agree-
ments entered into after June 30, 1962, and before July 1, 1967,
pursuant to section 201(a). There is no time period in which such
proclamations must be issued.
As used in section 201(a)(2), the term "duty or other import restric-
tion" includes (1) the rate and form of an import duty, and (2) a
limitation, prohibition, charge, and exaction other than duty, imposed
on importation or imposed for the regulation of imports. (For the
definition of this term, see par. (2) of sec. 405 of the bill.) As used in
section 201(a) (2), the term "modification" includes an increase or
decrease in a rate of duty and an increase or decrease in any other
import restriction. Paragraph (6) of section 405 of the bill makes it
clear that the term "modification" includes the elimination of a duty.
It does not include the elimination of import restrictions which are
not duties. The authority to proclaim additional import restrictions
permits the imposition of new import restrictions (such as quotas).
In the case of an item which was dutiable on July 1, 1934, but which
is duty free at the time of the proclamation under section 201 (a),
this authority includes the imposition of a duty at a rate not higher
than 50 percent above the rate existing on July 1, 1934.
Section 201 (b) (1) contains the general rule that no proclamation is
to be made pursuant to section 201 (a) decreasing any rate of duty to
a rate below 50 percent of the rate existing on July 1, 1962. This
general rule is subject to the exceptions provided by sections 202, 211,
212, 213, and 254. The phrase "existing on July 1, 1962" as applied
to a rate of duty is defined in paragraph (4) of section 256 as meaning
the lowest nonpreferential rate of duty existing on such date or (if
lower) the lowest nonpreferential rate to which the United States is
committed on such date and which may be proclaimed under section
350 of the Tariff Act of 1930. In general, this will mean the most-
favored-nation rate of duty on an article on July 1, 1962. However,
in the case of any article with respect to which a trade agreement
has been entered into under section 350 of the Tariff Act of 1930
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TRADE EXPANSION ACT OF 1962
before July 1, 1962, it means the lowest nonpreferential rate to which
the United States is committed with respect to such article on such
date but which has not yet been proclaimed.
Where an article is subject to more than one rate of duty (or to a
compound rate), section 201(b) (1) is to be applied separately to each
such rate (or component). For example, article A is subject to a 20
percent ad valorem duty and a specific rate of 4 cents a pound.
Under section 201(b)(1), the ad valorem rate could not be reduced
below 10 percent, and. the specific rate could not be reduced below
2 cents a pound.
Section 201(b) (2) provides that no proclamation may be made
pursuant to section 201(a) increasing any rate of duty to (or imposing)
a rate more than 50 percent above the rate existing on July 1, 1934.
The parenthetical phrase "(or imposing)" applies in the case of any
article which was subject to a rate of duty on July 1, 1934, but which
by reason of legislation, or action taken under section 201(a), is free
of duty on the date of the proclamation. In such a case, a duty not
higher than 50 percent above the rate of duty existing on such article
on July 1, 1934, may be imposed. Where an article is subject to
more than one rate of duty (or to a compound rate), section 201(b) (2)
is to be applied separately to each such rate (or component).
Section 202. Low-rate articles
Section 202 provides, in effect, that a proclamation may be made.
under section 201 (a) reducing the rate of duty on an article by more
than 50 percent, or eliminating the duty, if the rate of duty on such
article existing on July 1, 1962, is not more than 5 percent ad valorem
(or ad valorem equivalent). The term "ad valorem equivalent" is
defined in paragraph (7) of section 256. In general, such paragraph
(7) provides a method of converting a specific rate (or a combination
of rates which includes a specific rate) to the equivalent ad valorem
rate. Such equivalent rate is to be determined by the President on
the basis of the value of imports, during a period determined by the
President to be representative, of the article concerned.
The second sentence of section 202 provides that, in the case of an
article subject to more than one rate of duty, the first sentence thereof
is to be applied by taking into account the aggregate of such rates
as if they constituted a compound rate. For example, assume that
article A is subject under one provision of law to a rate of duty of 2
percent ad valorem and under another provision of law to an addi-
tional duty of 6 cents a pound.. If the ad valorem equivalent of this
specific rate is 2.5 percent, then the first sentence of section 202 applies
and the proclaiming authority under section 201(a) will not be limited
by section 201(b)(1) to 50 percent of the rate of duty existing on July
1, 1962. If, however, the ad valorem equivalent of this specific rate
is more than 3 percent, section 202 will not apply to article A.
CHAPTER 2-SPECIAL PROVISIONS CONCERNING EUROPEAN ECONOMIC
COMMUNITY
Section 211. In general
Under section 211(a), in the case of any trade agreement which
includes the European Economic Community (hereinafter in this
explanation referred to as "EEC") as a party to the agreement, the
limitation contained in section 201 (b) (1) is not to apply to any article
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which is in a category with respect to which the President determines
that the United States and all countries of the EEC together account
for 80 percent or more of the aggregated world export value of all of
the articles within the category. The determination by the President
with respect to a category is required to be made before he enters
into the trade agreement.
Section 211(b) provides for the establishment of a comprehensive
classification of articles by category through action by the President
and the Tariff Commission. Paragraph (1) provides that, as soon as
practicable after the date of enactment of the bill, the President is to
select a system of comprehensive classification of articles by category
and make public his selection of such system. Paragraph (2) pro-
vides that as soon as practicable after Presidential selection of such a
system, the Tariff Commission is to determine the articles in the
U.S. tariff schedules falling within each category of the system and
make public all such determinations. Paragraph (2) further pro-
vides that only the Tariff Commission may make changes as to the
articles included in any category. In addition, such changes may be
made only for the purpose of correction and may not be made on or
after the date on which the first public list is furnished to the Tariff
Commission under section 221 which specifies section 211 as the
section pursuant to which consideration may be given to reducing the
rate of duty with respect to one or more articles below the 50 percent
limitation contained in section 201 (b) (1).
Paragraph (1) of section 211(c) provides that, for purposes of mak-
ing a determination under section 211(a) with respect to any category
of articles, the determination of the countries which are members of
the European Economic Community is to be made as of the date of
the President's request for advice from the Tariff Commission under
section 211(d). Paragraph (2) of section 211(c) provides that aggre-
gated world export value with respect to any category is to be com-
puted (A) on the basis of a representative period in the most recent
5-year period for which statistics are available and which contains at
least two periods which need not be consecutive, but each of which
must contain at least 12 continuous months; (B) on the basis of the
dollar value of exports as shown by trade statistics in use by the
Department of Commerce; and (C) by excluding exports from any
country of the EEC to another EEC country and exports to or from
any country or area which, at any time during the representative
period for such category, was denied the benefits of trade agreement
concessions under section 5 of the Trade Agreements Extension Act of
1951 or under section 231 of the bill. In the case of any trade agree-
ment, the representative period must be the same for all articles within
the category, but there may be different periods for different cate-
gories.
Section 211(d) states that, before the President makes a determina-
tion under section 211(a) as to any category, the Tariff Commission,
upon his request, is to make and advise him of its findings as to-
(1) The representative period for such category;
(2) The aggregated world export value of the articles falling
within such category; and
such)arttcThe lesaccounted for by thegUnited States and the countries
of the EEC.
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Section 211(e) provides that the authority under section 211 to
proclaim reductions below the 50-percent limitation in section
201(b) (1) is not to apply to any article referred to in Agricultural
Handbook No. 143. However, any such article is to be included in
any category in which it would otherwise fall under this section for
the purpose of applying the 80-percent formula and applying section
211(a) with respect to articles in such category which are not referred
to in Handbook No. 143. This section and section 212 are mutually
exclusive with respect to the proclamation of reductions of duties on
articles referred to in Agricultural Handbook No. 143.
The operation of section 211(e) and of the 80-percent formula
may be illustrated in general terms by the following example. The
Tariff Commission, in accordance with section 211(b) (2) has deter-
mined that category X includes 10 articles. Of these 10 articles one,
article A, is referred to in Agricultural Handbook No. 143. After
requesting and receiving the findings of the Tariff Commission specified
in section 211(d), the President determines that the representative
period for category X is the period from April 1, 1960, through
June 30, 1962. He further determines that (1) the aggregate dollar
value of exports of these 10 articles during this representative period
which are to be taken into account was $1 billion, and (2) of this
aggregate value, the exports of the United States and of the European
Economic Community which are to be taken into account was $830
million. In making the determinations described in the preceding
sentence, the President will include exports of article A; but he will
exclude the articles within the category which were exported from one
EEC country to another EEC country, and he will also exclude
articles which were exported to or from any Communist country or
area (whether such trade was between Communist countries or be-
tween a Communist country and a non-Communist country). As a
result of his determinations, to the extent required or appropriate to
carry out the trade agreement with respect to which he has made such
determinations, he may proclaim a rate of duty for any (or all) of the
articles in category X (other than art. A) which is lower than 50 per-
cent of the rate of duty on such article existing on July 1, 1962 (or
he may proclaim the elimination of any such duty). However, no
such proclamation, which is based on his determinations under section
211, may be made with respect to article A.
Section 212. Agricultural commodities
Section 212 provides that in the case of any trade agreement which
includes the EEC as a party, the 50 percent limitation contained in
section 201(b)(1) is not to apply to any article referred to in Agri-
cultural Handbook No. 143, U.S. Department of Agriculture, as
issued in September 1959, if (before he enters into such agreement)
the President determines that such agreement will tend to assure the
maintenance or expansion of U.S. exports of the like article. For this
purpose, the fact that certain articles, which are referred to in such
handbook, may not be classified as agricultural commodities under
existing coding practices of certain governmental agencies is not ty
change the status of such articles as ones to which section 212 mao
apply.
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TRADE EXPANSION ACT OF 1962
Section 215. Tropical agricultural and forestry commodities
Section 213(a) provides that the 50 percent limitation contained in
section 201(b) (1) is not to apply to any article which the President
determines to be a tropical agricultural or forestry commodity, if he
determines that two additional conditions are met. First, the Presi-
dent must determine that the like article is not produced in significant
quantities in the United States. Second, the President must deter-
mine that the EEC has made a commitment with respect to duties or
other import restrictions which is likely to assure access for such article
to the markets of the EEC which (1) is comparable to the access
which such article will have to U.S. markets, and (2) will be afforded
substantially without differential treatment as among free world
countries of origin.
Section 213(b) defines the term "tropical agricultural or forestry
commodity" for purposes of section 213(a). The term refers to any
agricultural or forestry commodity more than one-half of the world
production of which is determined by the President to be in the area
lying between 20? north latitude and 20? south latitude. The term
"commodity" in this section is intended to embrace not only the article
in its raw form, but also in the form resulting from such minimum
processing as is customarily required to prepare it for marketing in sub-
stantial volume in international trade.
Section 213(c) provides that before the President makes a deter-
mination under section 213(a), the Tariff Commission shall, upon the
request of the President, make findings as to whether the article is a
tropical agricultural or forestry commodity, and whether it is pro-
duced in significant quantities in the United States, and the Com-
mission shall advise the President of such findings.
CHAPTER 3-REQUIREMENTS CONCERNING NEGOTIATIONS
Section 221. Tariff Commission advice
Section 221 (a) provides for the publication and transmission to the
Tariff Commission (in connection with any proposed trade agreement
under title II of the bill) of lists of articles which may be considered
for modification or continuance of U.S. duties or other import re-
strictions or continuance of U.S. duty-free or excise treatment. The
list must identify those articles on which the duty may be considered
for reduction below the 50 percent limitation contained in section
201(b)(1) by specifying as to each such article the particular section
pursuant to which such a reduction maybe contemplated, i.e., section 202,
211, 212, or 213. It is intended that the President be bound by the
list, so that, unless he has specified an article in the manner provided
in the preceding sentence, he cannot negotiate any reduction of the
rate of duty on such article below the 50 percent limitation contained
in section 201(b) (1). The preceding sentence would not apply in the
case of rounding a rate of duty within the limits of section 254.
Section 221(b) requires the Tariff Commission, within 6 months of
receipt of the list, to advise the President of its judgment as to the
probable economic effect of modifications of duties or other import
restrictions on indit tries producing like or directly competitive
articles. It is intended that the Tariff Commission, in arriving at
its judgment, is to take into account the probable economic effect of
such modifications in terms of idling of productive facilities, inability
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TRADE EXPANSION ACT OF. 1962
to operate at a. profit, and unemployment or underemployment, and
shall take into account such other economic factors as it considers
relevant. It is expected that the Tariff Commission advice would
be only with respect to the probable economic effect of reductions in
duties or other import restrictions or (where so indicated) eliminations
of duty.
Section 221(b) also provides that the Tariff Commission is to hold
public hearings in the course of preparing such advice. It is expected
that, as under present procedures, the reports by the Tariff Com-
mission to the President under section 221(b) would not be made
public.
Section 222. Advice from departments
Section 222 requires the President, before entering into a trade
agreement under title II of the bill, to seek information and advice
with respect to such agreement from the Departments of Agriculture,
Commerce, Defense, Interior, Labor, State, and Treasury, and from
such other sources as he may deem appropriate.
Section 223. Public hearings
Section 223 provides that in connection with any proposed trade
agreement the President is to afford an opportunity for interested
persons to be heard concerning any article on a list published pursuant
to section 221, any article which should be so listed, any concession
which should be sought by the United States, or any other relevant
matter. It is expected that in these hearings emphasis will be placed
on concessions which the United States should seek from other
countries.
The second sentence of section 223 requires the President to
designate an agency or an interagency committee which shall, after
reasonable notice, hold public hearings which shall be conducted in
accordance with such regulations as it shall prescribe and publish.
Such agency or committee is required to furnish the President with a
summary of the hearings.
Section 224. Prerequisite for offers
Section 224 prohibits the President from making an offer for the
modification or continuance of any duty or other import restriction,
or continuance of duty-free or excise treatment, -with respect to any
article until the President has received the advice of the Tariff Com-
mission on that article, or 6 months has expired since he asked for that
advice, and until he has received the summary of the public hearings
at which an opportunity to be heard with respect to such article was
afforded under section 223. Section 224 is intended to permit the
President to begin the early stages of a negotiation before receipt
of the advice and summary, but to prevent him, until receipt thereof,
from making any offer which, if accepted, would be binding (subject
to the conclusion of the trade agreement) as to a specific modification
of the rate of duty on any article.
Section 225. Reservation of articles from negotiations
Section 225(a) requires the President to reserve from negotiations
under title II of the bill for the reduction of any duty or other import
restriction or the elimination of any duty, any article as to which
there is in effect, at the time of such negotiations, any Presidential
action taken under section 232 (safeguarding national security) or its
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predecessor (sec. 2 of the Trade Agreements Act approved July 1,
1954) or under section 351 (tariff adjustment) or its predecessor (the
escape-clause procedure provided for in sec. 7 of the Trade Agreements
Extension Act of 1951).
Section 225(b) imposes a requirement on the President with respect
to the reservation of articles from negotiation which is separate from
and additional to the reservation requirement of section 225(a)(3).
It requires him to reserve from negotiation, during the 4-year period
beginning on the date of the enactment of the bill, any article which,
by a majority of the members voting in an escape-clause proceeding,
the Tariff Commission found was being imported in such increased
quantities as to cause or threaten serious injury to a domestic industry.
However, such reservation is mandatory only upon the request of the
industry concerned made within 60 days of the publication of a list
under section 221 containing the article, and only if the Tariff Com-
mission then finds and advises the President that economic conditions
in the industry have not substantially improved since the date of the
Tariff Commission's report of its finding of injury to the industry.
An industry may not make a request under section 225(b) if it failed
to make such a request the first time such article was included in a
list published under section 221.
Section 225(c) authorizes the President to reserve any other article
he determines to be appropriate, taking into consideration the advice
of the Tariff Commission furnished under section 221(b), the advice
furnished him under section 222, and the summary furnished him
under section 223.
Section 226. Transmission of agreements to Congress
Section 226 provides that, after entering into any trade agreement
under title II of the bill, the President is to transmit promptly to each
House of the Congress a copy of such agreement together with a
statement of his reasons, in the light of the advice of the Tariff Com-
mission under section 221(b) and of other relevant considerations, for
entering into the agreement.
CHAPTER 4-NATIONAL SECURITY
Section 231. Products of Communist countries or areas
Section 231 provides that, as an exception to the most-favored-
nation principle, the President shall, as soon as practicable, refrain
from applying any reduction, elimination, or continuance of any exist-
ing duty or other import restriction, or the continuance of any existing
duty-free or excise treatment, proclaimed in carrying out any trade
agreement under title II of the bill or under section 350 of the Tariff
Act of 1930 to products of any country or area dominated or controlled
by Communism, whether imported directly or indirectly. It is con-
templated that, in addition to those countries and areas which have
been designated pursuant to section 5 of the Trade Agreements
Extension Act of 1951, upon the enactment of the bill Poland (and
areas under its provisional administration), Yugoslavia, and Cuba
will be designated pursuant to section 231. In addition, action under
this section is to be taken if, in the future, any additional country or
area becomes dominated or controlled by Communism. Action under
this section with respect to any country or area may be terminated
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TRADE EXPANSION ACT OF 1962 41
when such country or area is no longer dominated or controlled by
Communism.
Section 232. Safeguarding national security
Except for conforming changes, section 232 is identical to, and con-
tinues in effect, the provisions of section 2 of the Trade Agreements
Act approved July 1, 1954, as amended by section 8 of the Trade
Agreements Extension Act of 1958.
Section 232(a) provides that no action is to be taken pursuant to
the bill or section 350 of the Tariff Act of 1930 to decrease or eliminate
the duty or to decrease any other import restriction on any article if
the President determines that the reduction or elimination would
threaten to impair the national security.
Section 232(b) provides that upon request, application, or notice
from specified sources the Director of the Office of Emergency Plan-
ning (OEP) must undertake an investigation to determine whether
the article is being imported into the United States in such quantities
or under such circumstances as to threaten to impair the national
security. If he so finds, he is required to so advise the President, who
is required to take such action as he deems necessary to adjust im-
ports unless he determines that the article is not being imported in
such quantities or under such circumstances as to threaten to impair
the national security.
Section 232(c) enumerates various factors to which the President
and the Director of the OEP are to give consideration in carrying out
their functions.
Section 232(d) requires a report to be made and published on each
final disposition of any request for investigation under section 232(b).
It also requires the Director of the OEP to publish procedural regu-
lations governing the exercise of the authority vested in him by sec-
tion 232(b).
CHAPTER 5-ADMINISTRATIVE PROVISIONS
Section 241. Special Representative for Trade Negotiations
Section 241 (a) requires the President to appoint, by and with the
advice and consent of the Senate, a Special Representative for Trade
Negotiations, who is to be the chief representative of the, United
States for each negotiation of a trade agreement under title II of the
bill. He also is to be the chief representative for such other negotia-
tions as in the President's judgment require that the Special Repre-
sentative be the chief representative of the United States. The
Special Representative is to hold office at the pleasure of the President,
receive the same compensation and allowances as a chief of mission,
have the rank of ambassador extraordinary and plenipotentiary, and
be an ex officio member of the interagency organization established
pursuant to section 242(a).
Section 241(b) requires the Special Representative to seek informa-
tion and advice in the performance of his functions from representa-
tives of industry, agriculture, and labor, and from such U.S. agencies
as: he deems appropriate, including the Tariff Commission.
Section 242. Interagency trade organization
Section 242(a) requires the President to establish an interagency
organization at the Cabinet level. Section 242(b) provides that this
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42 TRADE EXPANSION ACT OF 1962
organization will make recommendations to the President on basic
policy issues concerning the trade agreements program, make recom-
mendations to him concerning action, if any to be taken under section
351 (relating to tariff adjustment), advise the President of the results
of hearings concerning unjustifiable foreign import restrictions held
pursuant to section 252(c) and recommend appropriate action with
respect thereto, and perform other trade agreement functions which
the President may designate.
Section 242(c) requires the organization to draw upon the resources
of agencies to the maximum extent practicable, and permits the
President to establish procedures and committees to enable the organ-
ization to carry out its functions.
Section 243. Congressional delegates to negotiations
Section 243 provides for the selection by the President, before
each negotiation, of two members (not of the same political party)
of-the Committee on Ways and Means and two members (not of the
same political party) of the Committee on Finance to be duly accred-
ited to the U.S. delegation for the purpose of observing such trade
negotiation. The members are to be selected upon the recommenda-
tion of the Speaker of the House of Representatives and the President
of the Senate, respectively.
CHAPTER 6-GENERAL PROVISIONS
Section 251. Most-favored-nation principle
Section 251 provides that, except as otherwise provided in title II
of the bill, any duty or other import restriction or duty-free treat-
ment proclaimed in carrying out any trade agreement under title II
or under section 350 of the Tariff Act of 1930 shall apply to products
of all foreign countries, whether imported directly or indirectly.
Section 252. Foreign import restrictions
Section 252(a) provides that whenever unjustifiable foreign import
restrictions impair the value of tariff commitments made to the United
States, oppress the commerce of the United States, or prevent the
expansion of trade on a mutually advantageous basis, the President
is to (1) take all appropriate and feasible steps within his power to
eliminate such restrictions, and (2) refrain from negotiating the re-
duction or elimination of any U.S. import restriction under section
201(a) in order to obtain the reduction or elimination of any such
restrictions.
Section 252(b) provides that whenever it foreign country or instru-
mentality, the products of which receive benefits of trade agreement
concessions made by the United States, maintainsnontariff trade re-
strictions (including unlimited variable import fees) which substan-
tially burden U.S. commerce in it manner which is inconsistent with
the provisions of trade agreements or engages in discriminatory or
other acts (including tolerance of international cartels) or policies
which unjustifiably restrict U.S. commerce, the President steal], to
the extent that such action is consistent with the purposes of section
102, suspend, withdraw, or prevent the application of benefits of trade
agreement concessions to products of such country or instrumentality
or refrain from proclaiming benefits of trade agreement concessions to
carry out it trade agreement with such country or instrumentality.
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TRADE EXPANSION ACT OF 1902 43
Section 252(c) provides that the President is to provide an oppor-
tunity for interested persons to present views concerning the existence
of unjustifiable import restrictions maintained against U.S. commerce.
It also provides that the President shall, upon request by any inter-
ested person, provide for public hearings after reasonable notice.
Such hearings are to be provided through the organization established
pursuant to section 242(a).
Section 253. Staging requirements
Section 253(a) provides in effect that the total reduction of any
rate is not to take place, except as otherwise provided in section 253
or in section 254 (rounding authority), more rapidly than in five equal
annual installments. The first installment may take place on the
date of the first proclamation to carry out the trade agreement.
It will be noted that a postponement (other than a postponement
by reason of legislation or action [hereunder) of the taking effect, of
a reduction, or a failure to make the maximum permissible reduction
for a stage, will increase the maximum permissible reduction for
subsequent stages. For example, assume that under a trade agree-
ment it was contemplated that the rate of duty on article A is to be
reduced from 80 percent to 40 percent. The initial proclamation
under the trade agreement does not specify any reduction in the rate
of duty on article A. Two years later, the first such reduction is
proclaimed. This first such reduction may be 24 percent, and the
rate may be reduced by an additional 8 percent upon the expiration
of 1 year after such first reduction and by a further reduction of 8 per-
cent upon the expiration of 1 more year.
Section 253(b) provides an exception to the staging requirements of
section 253(a). By reason of section 253(b) no staging is required
as to reductions and eliminations of duty which rest upon the authority
of section 213(a) (tropical agricultural and forestry commodities).
Section 253(c) provides that if a rate of duty has been or is to be
reduced under a prior trade agreement, no reduction under a subse-
quent trade agreement can take place until one year after the taking
effect of the final reduction which is made under the prior agreement,
whether such final reduction is the last reduction as originally sched-
uled in the prior trade agreement or is an intermediate reduction
which becomes the final reduction as a result of an agreed elimination
of the subsequent reductions under such agreement.
Section 253(d) provides that any period during which a part of a
reduction is not in effect by reason of legislation or action taken under
legislation (sec. 351 of the bill, for example) shall be excluded in
computing the time periods set out in section 253.
Section 254. Rounding authority
Section 254 provides that the President may, if he determines that
it will simplify the computation of the amount of duty imposed with
respect to an article, exceed the limitation provided by section
201(b) (1) or 253 by not more than whichever of the following is
lesser: (1) the difference between the lowest rate of duty permitted
by such section and the next lower whole number, or (2) one-half of
1 percent ad valorem or an amount the ad valorem equivalent of
which is one-half of 1 percent.
The operation of this section may be illustrated by the following
examples: First, with regard to an ad valorem rate of duty, if a rate
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is 14.5 percent, then exercise of the 50 percent reduction authority
would yield a rate of 7.25 percent. The latter figure could be rounded
down to 7 percent for the following reasons: (A) 7 percent would be
the next lower whole number below 7.25 percent, and (B) 0.25 percent
is less than one-half of 1 percent.
Second, with regard to a specific rate of duty, if a specific rate is
14.5 cents, then exercise of the 50 percent reduction authority would
yield a rate of 7.25 cents. The first limitation would permit rounding
down to 7 cents, since that figure is the next lower whole number
below 7.25 cents. However, whether a reduction of 0.25 cent would
be permitted. by the second limitation would depend upon the value
of the good. If the value of the good were 50 cents, then a rounding
down to 7 cents would be permitted, since 0.25 cent would be an
amount the ad valorem equivalent of which is one-half of 1 percent.
If the value of the good were less than 50 cents the rounding down
to 7 cents would not be possible.
Section 255. Termination
Section 255(a) provides that every trade agreement under title II
of the bill is to be subject to termination or withdrawal, upon due
notice, at the end of a period specified in the agreement. This period
is not to be more than 3 years from the date on which the agreement
becomes effective, and, if the agreement is not terminated or with-
drawn from at the end of such period, it is to be subject to termination
or withdrawal thereafter upon not more than 6 months' notice.
Section 255(b) provides that the President may at any time ter-
minate, in whole or in part, any proclamation issued under title II
of the bill.
Section 256. Definitions
Section 256 sets out definitions of terms used in title II of the bill.
Paragraph (1) provides that the term "European Economic Com-
munity" means the instrumentality known by that name or any suc-
cessor thereto.
Paragraph (2) provides that the countries of the European Eco-
nomic Community as of any particular date are to be those which
on that date are agreed to achieve a common external tariff through
the European Economic Community. The relevant date. is the one
determined by the context in which the term is used. Thus in section
211(c)(1) (special categories for EEC negotiations), it, is the date
of the President's request to the Tariff Commission under section
211(d). In section 213(a)(3) (tropical agricultural and forestry com-
modities), it is the date of the President's determination.
Paragraph (3) provides that the term "agreement with the European
Economic Community" means an agreement to which the United
States and all countries of the EEC (determined as of the date such
an agreement is entered into and pursuant to the definition in par.
(2) of see. 256) are parties. This paragraph further provides that
each country for which the EEC signs shall be treated as a party to
the agreement.
Paragraph (4) provides that the term "existing on July 1, 1962,
as applied to a rate of duty, means the lowest nonpreferential rate
which existed on that date or, if it is lower, the lowest nonpreferential
rate to which the United States is committed on that date and which
may be proclaimed under section 350 of the Tariff Act of 1930.
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TRADE EXPANSION ACT OF 1962
Generally speaking, this definition is designed to permit the application
of the limitations of section 201(b) (1) (50-percent authority) and
section 202 (low rate authority) to rates agreed upon at the last round
of multilateral negotiations under such section 350 but which may
not be in effect on July 1, 1962.
Paragraph (5) provides that the term "existing on July 1, 1934,"
as applied a rate provides duty, refers rthe terma "existing" without the
Paragraph h (6) p ov
specification of any date, when used in connection with any matter
relating to the entering into of a trade agreement or any proclamation
to carry out a trade agreement, means existing on the day on which
such trade agreement was entered into.
The first sentence of paragraph (7) provides that the term "ad
valorem equivalent" means the ad valorem equivalent of a specific
rate, or in the case of a combination of rates including a specific rate,
the sum of the ad valorem equivalent of the specific rate and of the
ad valorem rate. The second sentence provides that the ad valorem
equivalent is to be determined by the President on the basis of the
value of imports of the article concerned during a period determined
by him to be representative. The third sentence requires the Presi-
dent, in determining the value of imports, to utilize, to the maximum
extent practicable, the standards of valuation contained in section 402
(value) or 402a (value-alternative) of the Tariff Act of 1930 applicable
to the article concerned during such representative period.
Section 267. Relation to other laws
Section 257(a) makes certain. changes in section 350(b) of the Tariff
Act of 1930 which are necessary in order to coordinate its provisions
with the provisions of the bill. Such section
Subsection (b) repeals section 350(a)(5) and 350(e).
350(a)(5) is replaced by sections 251 (most-favored-nation principle)
and 252 (foreign import restrictions) of the bill. Such section 350(e)
is replaced by section 402 (reports) of the bill.
Section 257(c) extends the authority to enter into trade agreements
under section 350 of the Tariff Act of 1930 until the close of December
31, 1962, with respect to trade agreements entered into pursuant to
notices of intention to negotiate which were published in the Federal
Register of May 28, 1960, and of November 23, 1960. Thus the
limitations and provisions of section 350 will apply in respect of any
such agreement rather than the limitations and provisions of the bill.
Subsection (d) amends the second and third sentences of section
2(a) of the act approved June 12, 1934 (the 1934 trade agreements
legislation) to continue in effect the relation of trade agreements to
section 336 of the Tariff Act of 1930 (equalization of costs of produc-
tion) and to the third paragraph of section 311 of such act (relating
to flour manufactured in a bonded manufacturing warehouse from
imported wheat).
Paragraph (1) of subsection (e) repeals sections 5, 6, 7, and 8(a)
of the Trade Agreements Extension o o1951. Sections t 5, 6, and
countries or
are superseded by sections 231 (products areas), 301 (Tariff Commission investigations and reports), and 351
(tariff adjustment authority) of the bill. Left unrepealed (for the
limited purpose of the agreements referred to in sec. 257(c)) are
sections 3 and 4 of such 1951 act. Also not repealed is section 11 of
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t6i TRADE EXPANSION ACT OF 1962
such act, which relates to the prohibition on the importation of certain
furs which are the product of the Soviet Union or Communist China.
Paragraph (1) also leaves unaffected the amendment to section 22(f)
of the Agricultural Adjustment Act made by section 8(b) of the 1951
act, providing that no agreement heretofore or hereafter entered into
by the United States shall be applied in a manner inconsistent with
the requirements of section 22. Paragraph (2) of subsection (e) is
designed to insure the uninterrupted operation of any action taken
by the President under section 5 of the Trade Agreements Extension
Act of 1951, relating to customs treatment of products of Communist
countries. Paragraph (3) of subsection (e) provides for the con-
tinuation of any investigation instituted under section 7 of the Trade
Agreements Extension Act of 1951 as though the application by the
interested party were a petition under section 301 of the bill. for tariff
adjustment under section 351. In determining the time for making
the report on such investigation, the petition is to be treated as having
been filed on the date of the enactment of the bill.
Subsection (f) repeals section 2 of the Trade Agreements Act ap-
proved July 1, 1954, and preserves any action taken under it as
hough the action had been taken under its successor, section 232
(safeguarding national security) of the bill.
TITLE III-TARIFF ADJUSTMENT AND OTHER ADJUST-
MENT ASSISTANCE
CHAPTER 1-ELIGIBILITY FOR ASSISTANCE
Section 301. Tariff Commission investigations and reports
Section 301(a)(1) provides that petitions for tariff adjustment
under section 351 or for determinations of eligibility to apply for
adjustment assistance under chapter 2 or 3 of title III of the bill may
be filed with the Tariff Commission by firms, groups of workers, or
industries. Section 301(a)(1) also specifies who may file a petition
with respect to a firm, group of workers, or industry.
Section 301(a) (2) provides that whenever a petition is filed under
section 301(a), the Tariff Commission must transmit a copy of the
petition to the Secretary of Commerce.
Section 301(b)(1) provides for Tariff Commission determinations of
injury to domestic industries from imports. It provides that the
Tariff Commission shall promptly make an industry investigation
(1) upon request of the President, (2) upon resolution of either the
Senate Committee on Finance or the House Committee on Ways and
Means, (3) upon the Commission's own motion, or (4) upon the filing
of any petition under section 301(a) (1). The investigation is to be
made to determine whether, as a result of concessions granted under
trade agreements, the article in question is being imported into the
United States in such increased quantities as to cause, or threaten to
cause, serious injury to the domestic industry which is producing an
article which is like or directly competitive with such imported article.
The phrase "as a result of concessions granted under trade agree-
ments", as applied to concessions involving reductions in duty, means
the aggregate reduction which has been arrived at by means of a trade
agreement or trade agreements (whether entered into under sec. 201
of this bill or under sec. 350 of the Tariff Act of 1930).
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Subsection (b) (2) provides that in making an industry determina-
tion under subsection (b) (1) the Tariff Commission is to take into
account all economic factors which it considers relevant, including
idling of productive facilities, inability to operate at a profit, and
unemployment or underemployment.
Subsection (b) (3) provides that no industry investigation shall be
made, upon the filing of a petition under section 301(a) (1), with respect
to the same imported article and the same domestic article as have
been the subject matter of a previous industry investigation under
section 301(b), unless 1 year has elapsed since the Tariff Commission
made its report to the President on the results of such previous investi-
gation. This provision will not prevent a second industry investiga-
tion within the 1-year period on motion of the Tariff Commission, on
request of the President, or on resolution of the Senate Committee on
Finance or the Mouse Committee on Ways and Means. Nor will it
prevent, in a case where the Tariff Commission has not made an
affirmative finding with respect to the industry, any firm or group of
workers in the industry from filing a petition under section 301 (a) (1)
during such 1-year -period for a finding of injury with respect to that
firm or group of workers.
Section 301(c) (1) provides for Tariff Commission determinations
of injury to individual firms from imports. When a petition is filed
by a firm for a determination of eligibility to apply for adjustment
assistance under chapter 2, the Tariff Commission is required to make
a determination with respect to the firm, in addition to making the
industry determination under subsection (b). The Commission must
determine whether, as a result of concessions granted under trade
agreements, an article complained of in the petition and alleged to
be like or directly competitive with an article produced by the firm
is being imported into the United States in such increased quantities
as to cause, or threaten to cause, serious injury to such firm.
Subsection (c) (2) provides for Tariff Commission determinations
of injury to workers from imports. When a petition is filed for a
determination of eligibility of workers to apply for adjustment assist-
ance under chapter 3, the Tariff Commission is required to make a
determination with respect to such workers, in addition to making
the industry determination under subsection (b). The Commission
must determine whether, as a result of concessions granted under
trade agreements, an article complained of in the petition and alleged
to be like or directly competitive with an article produced by such
workers' firm, or an appropriate subdivision of the firm, is being
imported into the United States in such increased quantities as to
cause, or threaten to cause, unemployment or underemployment of a
significant number or proportion of the workers of such firm or
subdivision.
Under subsection (c) (3) the Tariff Commission may provide that,
during a period specified by the Tariff Commission (which period may
not begin earlier than 30 days after the publication of notice of hearings
with respect to an industry and may not end later than the date of the
report of the Tariff Commission with respect thereto under subset.
(f) (2)) no petition may be filed under section 301 (a) (1) by a firm or
group of workers in such industry with respect to the same imported
article and the same domestic article.
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Section 301(d) provides that in the course of any investigation under
section 301, the Tariff Commission shall, after giving reasonable
notice, hold public hearings and shall afford interested parties an
opportunity to be present, to produce evidence, and to be heard at
such hearings.
Section 301(e) deals with the function of the Tariff Commission
after completion of its investigation. It provides that should the
Commission find with respect to any article, as a result of its investi-
gation, that the serious injury or threat thereof described in subsec-
tion (b) exists, the Commission is to find the amount of the increase
in, or imposition of, any duty or other import restriction on such
article which is necessary to prevent or remedy such injury. Pur-
suant to the phrase "increase in, or imposition of, any duty or other
import restriction", the Tariff Commission could find that both an
increase in duty and the imposition of a quota are necessary to prevent
or remedy injury. The Commission is required to include the finding
described in section 301 (e) in its report to the President.
Section 301(f) relates to the Tariff Commission reports. Paragraph
(1) provides that the Tariff Commission is to report to the President
the results of each investigation under section 301 and is to include
in each report any dissenting or separate views. Paragraph (1) also
requires that the Commission furnish to the President a transcript of
the hearings and any briefs which may have been submitted in con-
nection with each investigation.
Paragraphs (2) and (3) of section 301 (f) fix the maximum time for
making of reports by the Commission of its determinations. In all
three cases (with respect to industries, firms, and groups of workers)
the Commission must report its determination at the earliest practi-
cable time. Paragraph (2) further requires that the Commission's
report of its industry determination under section 301(b) must be
made not later than 120 days after the date on which the petition
is filed (or the date on which the request or resolution is received or
the motion is adopted, as the case may be), unless the President
extends such time for an additional period not to exceed 30 days.
Upon making such report to the President, the Commission must
promptly make the report public and cause a summary of the report
to be published in the Federal Register.
Paragraph (3) of section 301 (f) provides that in the case of a de-
termination with respect to any firm or group of workers, under section
301 (c) (1) or (c) (2), the Commission's report must be made not later
than 60 clays after the date on which the petition is filed for determina-
tion of eligibility to apply for adjustment assistance.
Section 802. Presidential action after Tariff Commission determination
Section 302 deals with action which may be taken after the Tar
Commission has made an affirmative determination.
Section 302(a) relates to industries. It provides that after receiving
a report from the Tariff Commission containing an affirmative finding
(under sec. 301(b)) of serious injury or threat thereof with respect to
any industry, the President may (1) provide tariff adjustment for such
industry pursuant to section 351; (2) provide, with respect to such
industry, that firms therein may request the Secretary of Commerce
for certifications of eligibility to apply for adjustment assistance under
chapter 2 of title III of the bill; (3) provide, with respect to such
industry, that groups of workers therein may request the Secretary
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of Labor for certifications of eligibility to apply for adjustment assist-
ance under chapter 3 of title III of the bill; or (4) take any combina-
tion of such actions. No order of priority as between tariff adjust-
ment and other adjustment assistance is established.
Subsections (b) (1) and (b) (2) authorize the Secretary of Commerce
(in the case of any firm) and the Secretary of Labor (in the case of
any group of workers) to make the certification of eligibility to apply
for adjustment assistance referred to in subsections (a) (2) and (a) (3),
respectively.
Subsection (b)(1) provides that the Secretary of Commerce is to
certify, as eligible to apply for adjustment assistance under chapter 2,
any firm in an industry with respect to which the President has acted
under subsection (a) (2), upon a showing by such firm to the Secretary's
satisfaction that the increased imports (which the Tariff Commission
has determined under sec. 301(b) to result from concessions granted
under trade agreements) have caused serious injury or threat thereof
to such firm.
Subsection (b) (2) provides that the Secretary of Labor is to certify,
as eligible to apply for adjustment assistance under chapter 3, any
group of workers in an industry with respect to which the President
has acted under subsection (a) (3), upon a showing by such group of
workers to the Secretary's satisfaction that the increased imports
(which the Tariff Commission has determined under sec. 301(b) to
result from concessions granted under trade agreements) have caused
or threatened to cause unemployment or underemployment of a
significant number or proportion of workers of such workers' firm,
or appropriate subdivision thereof, producing the article concerned.
Section 302(c) deals with those situations where a report has been
made containing an affirmative finding under section 301(c) with
respect to a firm or group of workers. In such cases, the President,
after receiving the report from the Tariff Commission, may certify
that such firm or group of workers is eligible to apply for adjustment
assistance.
Section 302(d) provides that if a certification is made under sub-
section (b) or (c) of section 302 as to the eligibility of a group of workers
to apply for adjustment assistance, the certification must specify
the date on which the unemployment or underemployment began or
threatens to begin. The date to be determined is the earliest date on.
which any part of the unemployment or underemployment, which
is determined to involve a significant number or proportion of workers,
began or threatens to begin. The date when unemployment or
underemployment threatens to begin is the date on which the threat-
ened unemployment or underemployment is expected to begin and
not the date on which the threat of such unemployment or under-
employment begins. The date provided for in section 302(d) is
required in determining the entitlement of workers to receive adjust-
ment assistance under the qualifying requirements of section 322.
Section 302(e) provides for termination of any outstanding certifica-
tion of the eligibility of a group of workers to apply for adjustment
assistance. Whenever the President determines that separations from
the firm or subdivision thereof are no longer attributable to the edi-
tions specified in section 301(c) (2) or in section 302(b)(2),
terminate the effect of such certification. The termination is to
apply only with respect to separations occurring after the date
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V TRADE EXPANSION ACT OF 1962
specified by him, and is not to affect the eligibility of workers separated
before such date to apply for and receive assistance.
CHAPTER 2-ASSISTANCE TO FIRMS
Section 811. Certification of adjustment proposals
Section 311(a) provides that a firm certified under section 302 as
eligible to apply for adjustment assistance may file an application
with the Secretary of Commerce for adjustment assistance under
chapter 2 of title III of the bill. The application may be filed at
any time within 2 years after the date of such certification. In
addition, within a reasonable time after filing its application, the firm
must present a proposal for its economic adjustment.
Section 311(b) identifies the kinds of adjustment assistance which
may be furnished to firms under chapter 2-technical assistance,
financial assistance, and tax assistance. These may be furnished
singly or in combination. It further refines the concept of an adjust-
ment proposal by providing that no adjustment assistance will be
provided to a firm until its proposal shall have been certified by the
Secretary of Commerce (1) to be reasonably calculated materially to
contribute to the firm's economic adjustment, (2) to give adequate
consideration to the interests of its workers adversely affected by
trade agreement concessions, and (3) to demonstrate that the firm
will make all reasonable efforts to use its own resources for economic
development.
Section 311(c) provides that the Secretary of Commerce may
furnish technical assistance to aid the applicant firm in preparing a
sound adjustment proposal.
Section 311(d) provides that the Secretary's certification of an
adjustment proposal is to remain in force only for such period of time
as the Secretary may prescribe. This provision permits appropriate
variations in the duration of the validity of certifications and insures
that they will not be indefinitely valid.
Section 312. Use of existing agencies
Section 312 establishes the basic principle that technical and
financial assistance necessary to carry out a certified adjustment
proposal is in general to be furnished by existing agencies of the
Federal Government. Where such agency or agencies determine not
to furnish such technical or financial assistance, the Secretary of Com-
merce is authorized to furnish such assistance. In this sense, the
authority granted to the Secretary of Commerce under sections 313
and 314 is a residual authority.
Section 312(a) requires the Secretary of Commerce to refer each
adjustment proposal which he has certified under section 311 to
such Federal agency or agencies as he determines to be appropriate
to furnish the technical and financial assistance necessary to carry
out such proposal. The determination of the appropriateness of an
agency is to be made on the basis of such criteria as the legal authority
of such agency, its resources, and its capacity to carry out the proposal
or any part thereof. The agencies to which such proposals may be
referred include the Department of Commerce and agencies there-
under.
Section 312(b) provides that, upon its receipt of a certified adjust-
ment proposal, each agency to which the Secretary of Commerce
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TRADE EXPANSION, ACT OF 1962
has referred the proposal shall promptly examine those aspects of the
proposal which it deems relevant to its functions; and the agency is
to notify. the Secretary of Commerce promptly of its determination
as to what, if any, technical or financial assistance or both the agency
is prepared to furnish in order to carry out the proposal.
Section 312(c) provides that the Secretary of Commerce may
furnish adjustment assistance under sections 313 and 314 whenever
and to the extent that any agency to which an adjustment proposal
has been referred notifies the Secretary of its determination not to
furnish technical or financial assistance. The Secretary of Commerce
must determine that the assistance to be furnished under this residual
authority is necessary to carry out the adjustment proposal. In the
event that the assistance proposed to be furnished by the agency
referred to is inadequate to meet the needs of the adjustment proposal,
this provision authorizes the Secretary of Commerce to furnish the
balance of the needed assistance.
Section 312(d) authorizes to be appropriated to the Secretary of
Commerce such sums as may be necessary from time to time to carry
out his functions in connection with furnishing adjustment assistance
to firms. These sums are further authorized to be appropriated to
remain available until expended.
Section 313. Technical assistance
Section 313(a) authorizes the Secretary of Commerce, when the
requirements of section 312(c) are met, to provide such technical
assistance to a firm as in his judgment will materially contribute to
the economic adjustment of such firm. Such assistance may be pro-
vided on.such terms and conditions as he determines to be appropriate.
"Technical assistance" may include, but is not limited to, informa-
tion, market and other economic research, managerial advice and
counseling, training, and assistance in research and development.
Section 313(b) provides that, to the maximum extent practicable,
the technical assistance furnished under section 313 and section 311(c)
is to be furnished by the Secretary of Commerce through existing
Federal agencies, and otherwise may be furnished through private
individuals, firms, or institutions. It is intended by the reference to
"existing agencies" to refer to those agencies which are already con-
ducting comparable technical assistance activities under other laws.
Where technical assistance is furnished through private individuals,
firms, or institutions, it may be done on a contract basis or otherwise.
Section 313(c) provides that the Secretary of Commerce is to
require the firm to share the cost of the technical assistance under
section 313 or under section 311(c) when and to the extent the Secretary
of Commerce determines to be appropriate.
Section 314. Financial assistance
Section 314(a) authorizes the Secretary of Commerce, when the
requirements of section 312 (c) are met, to provide such financial assist-
ance to a firm as in his judgment will materially contribute to the
economic adjustment of such firm. Such assistance may be provided
on such terms and conditions as he determines to be appropriate.
Financial assistance may be in the form of guarantees of loans, agree-
ments for deferred participations in loans, or direct loans (whether or
not participated in by other lenders). In the case of a guarantee of
a loan, the Secretary would agree to make the lender whole (to the
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52 TRADE EXPANSION ACT OF 19'62
extent of the guarantee) if the borrowing firm defaulted. In the case
of an agreement for deferred participation in a loan, the Secretary of
Commerce would agree that at any fixed or determinable time after
the making of the loan he would upon demand pay the lender (to the
extent provided in the participation agreement) the unpaid balance
outstanding at the time, thereby taking up a participation. In the
case of a direct loan, the Secretary of Commerce would initially extend
all or part of the credit to the borrowing firm and thereby become the
firm's creditor. Section 314(a) also provides that the assumption of
an outstanding indebtedness of a firm, with or without recourse, is
considered to be a loan. For example, this will permit the Secretary
of Commerce to render financial assistance to a firm by purchasing its
obligations from one or more of the creditors of such firm.
Section 314(b) specifies that financial assistance may be provided
to make funds available for the following purposes: for acquisition,
construction, installation, modernization, development, conversion,
or expansion of land, plant, buildings, equipment, facilities, or ma-
chinery; or, in cases determined by the Secretary of Commerce to be
exceptional, to supply working capital. The term "working capital"
includes funds for financing technical assistance.
Section 314(c) provides that, to the maximum extent practicable,
the Secretary of Commerce is to furnish financial assistance under
section 314 through Federal agencies furnishing financial assistance
under other laws.
Section 315. Conditions for financial assistance
Section 315(a) provides that no loan is to be guaranteed and no
agreement for deferred participation in a loan is to be made by the
Secretary of Commerce in an amount exceeding 90 percent of that
portion of the loan made for purposes specified in section 314(b).
The word "portion" in subsection (a) has reference to the situation
where the firm has obtained a loan in part for purposes other than
those specified in section 314(b).
Section 315(b) prescribes a floor for interest rates on loans made by
the Secretary of Commerce and deferred participations taken up by
him. Subsection (b)(1) provides that such loans and deferred partici-
pations are to bear interest at a rate not less than the greater of (1)
4 percent per year, or (2) a rate determined by the Secretary of the
Treasury for the year in which the loan is made or the deferred partici-
pation agreement is entered into.
Section 315(b) (2) provides that the rate of interest referred to above
is to be determined annually by the Secretary of the Treasury, taking
into consideration the current average market yields on outstanding
interest-bearing marketable U.S. public-debt obligations having
maturities comparable to those of the outstanding loans under sec-
tion 314.
Section 315(c) provides that guarantees or deferred participation
agreements are to be made by the Secretary of Commerce only with
respect to loans bearing interest at a rate which he determines to be
reasonable. However, the guaranteed portion of any loan (or the
portion covered by a deferred participation agreement) is not to bear
interest at a rate more than 1 percent per year above the rate specified
as a floor in subsection (b) (determined when the guarantee is made or
the agreement is entered into), unless the Secretary of Commerce
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TRADE EXPANSION ACT OF
determines that special circumstances justify a higher rate, which may
be not more than'2 percent above such,, floor. The floor referred to in
the preceding sentence is the 4-percent rate referred to in subsection
(b) (1) (A), or the rate determined under subsection (b) (1) (B), which-
ever is higher.
Section 315(d) provides that the Secretary of Commerce may make
no loan or guarantee having a maturity in excess of 25 years, including
renewals and extensions; and he may make no agreement for deferred
participation in a loan which has a maturity in excess of 25 years,
including renewals and extensions. The limitation on maturities is
not to apply to (1) an extension or renewal for an additional period
not exceeding 10 years if the Secretary of Commerce determines that
such extension or renewal is reasonably necessary for the orderly
liquidation of the loan, and (2) securities or obligations received by
the Secretary of Commerce as claimant in bankruptcy or equitable
reorganization or as creditor in other proceedings involving the in-
solvency of the obligor.
Section 315(e) provides that no financial assistance is to be provided
under section 314 to a firm unless the Secretary of Commerce deter-
mines (1) that such assistance is not otherwise available to the firm
from sources other than the United States on reasonable terms, and
(2) that there is reasonable assurance of repayment by the borrower.
Section 315(f) requires maintenance of operating reserves for antici-
pated claims under guarantees and under deferred participation agree-
ments. It is further provided that these reserves are to be considered
obligations for fiscal purposes. This provision permits maintenance of
fractional reserves for such purposes.
Section 316. Administration of financial assistance
Section 316(a) gives the Secretary of Commerce various powers in
connection with the administration of financial assistance. It pro-
vides that, in making and administering guarantees, agreements for
deferred participation, and loans, pursuant to section 314, the Secre-
tary of Commerce may (1) require security, and enforce, waive, or
subordinate such security; (2) assign or sell, or otherwise dispose of
(upon such terms and conditions and for such consideration as he
determines to be reasonable) any evidence of debt, contract, claim,
personal property, or security assigned to or held by him in connection
with guarantees, agreements, or loans, and he may collect, compromise,
and obtain deficiency judgments with respect to all obligations as-
signed to or held by him in connection with such guarantees, agree-
ments, or loans until such time as such obligations may be referred to
the Attorney General for suit or collection; (3) renovate, improve,
modernize, complete, insure, rent, sell, or otherwise deal with, upon
such terms and conditions and for such consideration as he determines
to be reasonable, any real or personal property conveyed to or other-
wise acquired by him in connection with such guarantees, agreements,
or loans; (4) acquire, hold, transfer, release, or convey any property
or any interest therein, whenever deemed necessary or appropriate,
and execute all legal documents for such purposes; and (5) exercise all
such other powers and take all such other acts as may be necessary or
incidental to the carrying out of functions pursuant to section 314.
Subsection (b) provides that any mortgage acquired as security
under section 316(a) is to be recorded under applicable State law.
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4 TRADE EXPANSION ACT OF 1962
Section 817. Tax assistance
Section 317 provides, in general, for an extension of the net operating
loss carryback period under section 172 of the Internal Revenue Code
of 1954 from 3 years to 5 years for a firm certified for tax assistance
by the Secretary of Commerce.
Section 317(a) provides that the Secretary of Commerce is to certify
that a firm is eligible for the extended carryback if the three conditions
provided in paragraphs (1), (2), and (3) are satisfied.
Paragraph (1) of section 317(a) relates to the application by a firm
for tax assistance. In order to be eligible to apply for the 5-year
carryback, a firm must first have had a proposal for its economic
adjustment certified by the Secretary of Commerce pursuant to section
311 of the bill, and the application for tax assistance must be made in
order to carry out such proposal. In its application for tax assistance,
the firm must allege that it has sustained a net operating loss for a
taxable year. The application must be submitted to the Secretary
of Commerce within 24 months after the close of such taxable year.
The requirement of paragraph (2) of section 317(a) is satisfied only
if the Secretary of Commerce determines that the net operating loss
arose predominantly out of carrying on a trade or business which was
seriously inured, during the year of the loss, by increased imports
which the Tariff Commission has determined to result from conces-
sions granted under trade agreements. This determination would be
automatic where the firm carries on only one trade or business and
where the Secretary of Commerce finds serious import injury to the
firm in the loss year. Where more than one trade or business is
carried on, however, the carryback (which is computed by combining
all trades or businesses of the firm) would be available only if the
Secretary of Commerce determined that the loss arose predominantly
(that is, more than 50 percent) out of carrying on the import-injured
trade or business.
The requirement of paragraph (3) of section 317(a) is satisfied only
if the Secretary of Commerce finds that the 5-year carryback will
materially contribute to the economic adjustment of the firm. It is
intended that such a finding would be made only where substantially
all of the refund (or refunds) resulting from the extended carryback
will be used to carry out the economic adjustment of the firm in ac-
cordance with the adjustment proposal.
The last sentence of section 317(a) makes it clear that the deter-
mination or certification by the Secretary of Commerce is not deter-
minative of either the existence or amount of any net operating loss
for purposes of section 172 of the Internal Revenue Code of 1954.
Section 317(b) amends section 172(b) of the 1954 Code, relating to
net operating loss carrybacks and carryovers, to provide an exception
to the general statutory rule that net operating losses are to be carried
back 3 years. As amended, paragraph (1)(B) of section 172(b) will
(subject to the requirements of sec. 172(b)(3)) extend to five the num-
ber of years to which a net operating loss is to be carried back by a
firm certified under section 317(a) of the bill. No change is made in
the 5-year carryover provision of present subparagraph (B) of sec-
tion 172(b)(1) except to redesignate such subparagraph as subpar-
agraph (C).
The 5-year carryback will be available only with respect to net
operating losses incurred in taxable years ending on or after December
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TRADE -EXPANSION ACT OF 1962 00
31, 1962. Where the 5-year carryback applies to a net operating
loss, such loss is to be carried back in its entirety to the fifth year
preceding the taxable year of the loss and then carried in successive
order to each of the other taxable years to which it may be carried.
The carryback or the carryover to any one of such other taxable
years, and the taxable income of each of the taxable years through
which such loss is carried, will be determined in the manner prescribed
in paragraph (2) of section 172(b) of the 1954 Code. No changes
(other than conforming amendments) have been made to such
paragraph (2),
Paragraph (3) of section 172(b) of the 1954 Code provides special
rules for applying the 5-year carryback of new section 172 (b) (1) (B).
Subparagraph (A) of new section 172(b)(3) imposes two conditions.
If the two conditions have been satisfied, the 5-year carryback is to
apply and the 3-year carryback is not to apply for the taxable year of
the loss.
The first condition, provided under clause (i) of section 172 (b) (3) (A)
of the 1954 Code, relates to two filing requirements. The firm must
file, with the Secretary of the Treasury or his delegate, a notice indi-
cating that it has applied to the Secretary of Commerce for tax assist-
ance. After the certification has been' issued by the Secretary of
Commerce pursuant to section 317 (a) of the bill, the firm receiving it
must file a copy of this certification with the Secretary of the Treasury
or his delegate. The time and manner of filing both the notice and a
copy of the certification are to be prescribed under regulations promul-
gated by the Secretary of the Treasury or his dole ate.
The second condition, provided under clause (ii of section 172(b)
(3) (A) of the 1954 Code, requires the taxpayer to consent in writing
to the assessment of any deficiency for any year to the extent at-
tributable to the disallowance of a net operating loss deduction pre-
viously allowed with respect to the same net operating loss for which
a 5-year carryback is being sought. This assessment period may be
extended to any time to which the taxpayer and the Secretary of the
Treasury or his delegate may agree. The consent will extend the
assessment period even though the assessment of the deficiency would
otherwise be prevented by the operation of any law or rule of law at the
time of filing the consent. This consent will be required when the
Secretary of the Treasury or his delegate deems it necessary to prevent
a possible double recovery of tax on account of the same net operating
loss (for example in a case involving res judicata).
in the case of
Subparagraph (B) of section 172 (b) (3) provides that,
(i) a partnership and its partners, and (ii) an electing small business
corporation under subchapter S of chapter 1 of the 1954 Code (and
the shareholders of such corporation), paragraph (1) (B) of section
172(b) (that is, the 5-year carryback provision) is to apply as deter-
mined under regulations prescribed by the Secretary of the Treasury or
his delegate.
The 5-year carryback under section 172(b) (1) (B) applies to a net
operating loss of a partner or a shareholder in an electing small busi-
ness corporation under subchapter S only if it arose predominantly
(that is, more than 50 percent) from losses in respect of which certifica-
tions under section 317 of the bill were filed as provided under section
172 (b) (3) (A). If the net operating loss did arise predominantly from
losses in respect of which certifications were filed, then the entire net
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bb TRADE EXPANSION ACT OF 1962
operating loss of the partner or shareholder will be carried back 5 years
even though part of the net operating loss is not attributable to such
losses. If the net operating loss did not rise predominantly from such
losses, then no part of the net operating loss will be carried back 5
years.
If a corporation to which a certification under section 317(a) has
been issued was a member of an affiliated group which made or was
required to make a consolidated return either for the loss year or for
any preceding taxable year, the 5-year carryback will apply only to
the extent and subject to the conditions, limitations, and exceptions
provided in the regulations which may be prescribed under the author-
ity contained in chapter 6 of the 1954 Code (relating to consolidated
returns).
Section 317(c) amends section 6501(h) of the 1954 Code, relating to
limitations on assessment and collection of deficiencies in the case of
net operating loss carrybacks. Under the amendment, the period for
assessing a deficiency which is attributable to the application to the
taxpayer of a net operating loss carryback is not to expire before 18
months after the date on which the taxpayer files (in such manner as
may be prescribed by the Secretary of the Treasury or his delegate)
a copy of the certification issued by the Secretary of Commerce under
section 317(a).
Section 317(d) amends section 6511(d) (2) (A.) of the 1954 Code,
relating to a special period of limitation on credits or refunds with
respect to net operating loss carrybacks. Under the amendment,
the period within which a claim for credit or refund of an overpayment
of tax must be filed by the taxpayer will not expire before the expira-
tion of the sixth month following the month in which the certification
provided in section 317(a) is issued to the taxpayer by the Secretary
of Commerce.
Tentative carryback adjustments for the fourth and fifth years
preceding the taxable year of the net operating loss may be applied
for under section 6411 of the 1954 Code. If such application is
accompanied by a copy of the certification issued under section 317(a)
and if the requirements of section 6411 are complied with, such applica-
tion will be allowed in the same time and manner as under existing
section 6411.
Section 318. Protective provisions
Section 318(a) requires each recipient of adjustment assistance
under section 313, 314, or 317 to keep records which fully disclose
the amount and disposition of the proceeds, if any, of such adjustment
assistance, and which will facilitate an effective audit. The recipient
must also keep such other records as the Secretary of Commerce may
prescribe.
Section 318(b) provides that the Secretary of Commerce and
Comptroller General are to have access, for the purpose of audit and
examination, to any books, documents, papers, and records of the
recipient pertaining to adjustment assistance under sections 313, 314,
and 317.
Section 318(c) prohibits the giving of adjustment assistance under
section 313, 314, or 317, to any firm unless the owners, partners, or
officers certify to the Secretary of Commerce (1) the names of any
attorneys, agents, and other persons engaged by or on behalf of the
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TRADE-EXPANSION 'ACT OF '1962' 57
firm for the purpose of expediting applications for such adjustment
assistance, and (2) the fees paid or to be paid to any such person.
Section 318(d) prescribes that no financial assistance is to be pro-
vided to any firm under section 314 unless the owners, partners, or
officers execute an agreement with respect to hiring or retaining the
services of certain individuals holding positions, or engaging in
activities, involving discretion with respect to the provision of such
financial assistance. The agreement must bind them and the firm
for a period of 2 years after such financial assistance is provided.
Section 319. Penalties
Section 319 provides penalties for knowingly making a false state-
ment of, or knowingly failing to disclose, a material fact, or willfully
overvaluing any security, for the purpose of influencing in any way
the action of the Secretary of Commerce under chapter 2 of title III
of the bill, or for the purpose of obtaining money, property, or any-
thing of value under such chapter. Any such offense is punishable
by a fine of not more than $5,000 or imprisonment for not more than
2 years, or both.
Section 320. Suits
Section 320 provides that, in furnishing technical and financial
assistance under sections 313 and 314, the Secretary of Commerce
may sue and be sued in any court of record of a State having general
jurisdiction or in any U.S. district court. Jurisdiction is conferred
upon U.S. district courts to determine such controversies without
regard to the amount in controversy. Section 320 provides that no
attachment, injunction, garnishment, or other similar process, mesne
or final, is to be issued against the Secretary of Commerce or his
property. Section 320 also insures the applicability of certain laws
concerning (1) the supervision by the Attorney General of all litigation
to which the United States is a party (28 U.S.C. 507(b)), (2) the
exclusiveness of the Tort Claims Act (28 U.S.C. 2679), and (3) the
functions of the Solicitor General (5 U.S.C. 316).
CHAPTER 3-ASSISTANCE TO WORKERS
Section 321. Authority
Section 321 designates the Secretary of Labor as the Federal official
responsible for determining whether applicants are entitled to receive
assistance under chapter 3 of title III of the bill and for paying or
providing such assistance. The Secretary of Labor is expected to
make the fullest possible use of the State employment security agen-
cies in taking individual applications and making the weekly pay-
ments.
SUBCHAPTER A-TRADE READJUSTMENT ALLOWANCES
Section 322. Qualifying requirements
Section 322 describes the weeks of unemployment for which trade
readjustment allowances may be paid, and the qualifications the
worker must meet. Under its provisions allowances are to be paid
for weeks of unemployment (as defined in sec. 338(14)) to an adversely
affected worker (as defined in sec. 338(2)) who applies for them and
meets the specified requirements.
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58 TRADE EXPANSION ACT OF 1962
Section 322(a) provides that, for a worker to be compensated, the
week of unemployment must begin after the date determined under
section 302(d) as the date on which, as the result of increased imports,
the unemployment or underemployment began or threatened to begin.
Such week of unemployment must also begin more than 30 days after
the date of the enactment of the bill.
Section 322(b) provides that the worker must have been totally or
partially separated from the firm after the date of the enactment of
the bill and after the date determined under section 302(d). Such
separation must be within 2 years of the date on which the most
recent certification of eligibility to apply for assistance is made under
section 302(b) (2) or (c) and before the termination date (if any)
specified under section 302(e).
Section 322(c) provides that to be entitled to trade readjustment
allowances, the worker must have had substantial employment over
the 3 years immediately preceding his total or partial separation. He
must have earned wages of $15 or more in at least half the weeks of
those 3 years. In the 52 weeks preceding such separation, he must
have had 26 weeks of employment, at wages of at least $15 a week,
in a firm, or firms any of the employees of which have been certified
under section 302 as eligible to apply for adjustment assistance.
If data on a weekly basis is not available to. determine whether or
not an individual earned at least $15 in the required number of weeks
during the 156-week period, or the 52-week period, section 322(c)
provides that, under regulations prescribed by the Secretary of Labor,
other data may be used to determine whether the individual had
equivalent amounts of employment.
Section 328. Weekly amounts
Section 323(a) provides the general rule that the trade readjust-
mant allowance for a week is to be 65 percent of the individual's
"average weekly wage" (as defined in sec. 338(4)), or 65 percent of the
"average weekly manufacturing wage" (as defined in sec. 338(3)),
whichever is less, reduced by 50 percent of the amount of his "re-
inuneration" (as defined in sec. 338(7)) for services performed during
such week.
Section 323(b) provides that an adversely affected worker may
receive trade readjustment allowances for weeks while lie is attend-
ing training approved by the Secretary of Labor. The trade readjust-
ment allowance is to be in lieu of any training allowance under any
other Federal law for the training of workers. (This would not in-
clude a Federal law for the training of veterans.) Section 323(b) pro-
vides, however, that if, under another Federal law for the training of
workers, an adversely affected worker who is taking training could
receive a higher payment, his trade readjustment allowance for a
week of training will be increased to such higher amount.
Section 323(c)(1) provides for reduction in the weekly trade read-
justment allowance by the amount of any unemployment insurance
to which an adversely affected worker is entitled for that week, or
would have been entitled if there were no trade readjustment allowance
program, regardless of whether he has filed a claim for the unemploy-
ment insurance.
Section 323(c)(2) provides for reduction in the amount of the
weekly trade readjustment allowance payable to an adversely affected
worker who is taking approved training by any amount of unemploy-
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TRADE EXPANSION ACT OF 1962' oyy
ment insurance which he has received or is seeking for the week.
However, if the appropriate State or Federal agency finally deter-
mines that the worker was not entitled to unemployment insurance
for such week, the reduction will not apply for that week.
Section 323 (d) provides that if unemployment insurance, or a train-
ing allowance under the Manpower Development and Training Act
of 1962 or the Area Redevelopment Act, is payable to an adversely
affected worker for weeks for which he would have been entitled to
trade readjustment allowances if he had applied for such allowances,
the number of weeks for which he may receive trade readjustment
allowances is reduced by the number of weeks for which such unem-
ployment insurance or such training allowances are payable. Under
this section, if his trade readjustment allowance for a week is greater
than the payment he actually received, he will be paid the additional
amount for each of the earlier weeks. This section also provides that
in determining whether a worker would have been entitled to a trade
readjustment allowance for a week for which he received State unem-
ployment insurance or a Federal training allowance, his entitlement
is to be determined without regard to the provisions of subsections
(c) and (e) of section 323 and any disqualification under section 327.
Section 323(c) provides for reduction in the amount of the weekly
trade readjustment allowance whenever, with respect to any week of
unemployment, the total amount payable as remuneration for services,
unemployment insurance, training allowance, and trade readjustment
allowance would exceed 75 percent of average weekly wage. The
reduction is to be the amount of such excess. The reduction under
this section applies to any trade readjustment allowance determined
under subsection (a) or (b) of section 323. '
Section'323(f) provides that any weekly payment to be made under
section 323 which is not a whole dollar is to be rounded upward to the
next higher whole dollar amount.
Section 323(g) provides that if an adversely affected worker is paid
unemployment insurance for a week during which he is undergoing
approved training, the State is to be reimbursed for the unemployment
insurance, to the extent that the payment does not exceed the trade
readjustment allowance. The reimbursement is to be made from
sums appropriated to the Secretary of Labor to carry out his functions
under chapter 3 of title III of the bill. The amount of such reim-
bursement will be determined by the Secretary of Labor on the basis
of reports furnished him by the State agency. The amount reim-
bursed will be placed in the Unemployment Trust Fund to the credit
of the State's account.
Section 324. Time limitations on trade readjustment allowances
Section 324(a) provides that an adversely affected worker may
receive trade readjustment allowances for not more than 52 weeks,
with two exceptions: Paragraph (1) provides that such a worker
who is taking approved training may receive up to 26 additional
weeks of allowance to assist him to complete his training. Paragraph
(2) provides that an adversely affected worker who was at least 60
years old at separation is entitled to 13 additional weeks. Paragraphs
(1) and (2) are mutually exclusive, so that a worker who receives an
additional payment under one paragraph may not thereafter receive
a payment under the other paragraph.
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TRADE EXPANSION ACT OF 1962
Section 324(b) provides that trade readjustment allowances (other
than for the additional 26 or 13 weeks) may be paid only for weeks
of unemployment beginning within 2 years (104 weeks) after the
beginning of the appropriate week. The additional 26 or 13 weeks
of trade readjustment allowances may be paid only for weeks of
unemployment beginning within 3 years after the beginning of the
appropriate week. For a worker totally separated, the appropriate
week is the week of his most recent total separation; for a worker
partially separated, the appropriate week is the first week for which
he received a trade readjustment allowance following his most recent
partial separation.
It should be noted that, in the case of a week of unemployment
beginning more than 2 years (and not more than 3 years) after the
beginning of the appropriate week, payment may be made pursuant
to the additional week authority (whether 26 weeks or 13 weeks) to an
individual who otherwise qualifies for such payment even though,
during the 2-year period preceding such third year, such individual
received trade readjustment allowances for less than 52 weeks.
Section 325. Application of State laws
Section 325 provides that, except where inconsistent with chapter 3
and subject to regulations of the Secretary of Labor, the availability
and disqualification provisions of State unemployment insurance laws
are to apply to workers filing claims for trade readjustment allowances.
If the worker is entitled to unemployment insurance (whether or not
he claims it) under any State law, that law is applied to his trade
readjustment allowance claim for this purpose. If he is not entitled
to unemployment insurance, the applicable law is that of the State
in which he was separated. The State law will remain applicable
in the case of any separation until the worker becomes entitled to
unemployment insurance under the law of another State (whether
or not he has filed a claim for such insurance).
It should be noted that State law provisions disqualifying a worker
because he is taking training would be inconsistent with the provisions
of chapter 3 of title III of the bill and not applicable. In general,
State law disqualifications which cancel some or all of a worker's
benefit rights would also be inconsistent with chapter 3. The worker
is entitled to the rights provided by the bill; and, although such rights
may be postponed as a result of applying State law disqualifications,
trade readjustment allowance rights may not be canceled.
SUBCHAPTER B-TRAINING
Section 526. In general
Section 326(a) provides that every effort is to be made to return
adversely affected workers to full employment through whatever
testing, counseling, training, and placement services are available
under any Federal law. If the training provided is not within com-
muting distance of the worker's residence, section 326(a) authorizes
payment to defray transportation and subsistence expenses. The
subsistence expense allowance may not exceed $5 a day, and the trans-
portation expense may not be at a rate in excess of 10 cents a mile.
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Section 326(b) provides that before referring adversely affected
workers to training, the Secretary of Labor shall, to the extent practi-
cable, consult with the workers' firm and their certified or recognized
union or other duly authorized representative and develop a worker
retraining plan which provides for training such workers to meet the
firm's manpower needs.
Section 377. Disqualification for refusal of training, etc.
Section 327 denies trade readjustment allowances to a worker who,
without good cause, (1) refuses to accept suitable training to which
he is referred by the Secretary of Labor, (2) refuses to continue at-
tending the course, or (3) fails to make satisfactory progress in the
course. The denial of allowances continues until he accepts or re-
sumes training to which he has been referred by the Secretary of Labor.
SUBCHAPTER C-RELOCATION ALLOWANCES
Section 328. Relocation allowances afforded
Section 328, in effect, limits the class of adversely. affected workers
who may file applications for relocation allowances. In order to file
an application the worker must be the head of a family (as defined in
regulations to be prescribed by the Secretary of Labor) and must be
totally separated from adversely affected employment.
Section 329. Qualifying requirements
Section 329(a) provides that a relocation allowance may be paid
only for a move within the United States (as defined in sec. 338(8)).
Section 329 (a) also provides that such an allowance may be paid only
if the Secretary of Labor determines that the worker receiving the
allowance does not have reasonable prospects for suitable employ-
ment in the commuting area in which he resides, and that either he
has a suitable job elsewhere which affords reasonable. expectation of
long duration, or he has a bona Ado offer of such a job.
Section 329(b) authorizes payment of a relocation allowance only
if, for the week in which a worker applies for such allowance, he is
entitled to a trade readjustment allowance, or would be so entitled
if it were not for the job to which he wants to move. For this pur-
pose, entitlement to a trade readjustment allowance is to be deter-
mined without regard to reductions under subsections (c) and (e) of
section 323. This section also provides that to be entitled to a relo-
cation allowance, the individual must relocate within a reasonable
time after he applies. If. the applicant is a worker who has been re-
ferred to training by the Secretary of Labor, he must relocate within
a reasonable time after the conclusion of such training.
Section 330. Relocation allowances defined
Section 330 defines "relocation allowance" as including (1) the
reasonable and necessary expenses (as specified in regulations to be
prescribed by the Secretary of Labor) incurred in transporting the
worker, his family, and their household effects from their present
location to that of the new job, and (2) a lump-sum payment equiva-
lent to 232 times the. average weekly manufacturing wage.
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TRADE
Section 331. Agreements with States
Section 331(a) authorizes the Secretary of Labor to enter into an
agreement with a State (or with the agency administering the unem-
ployment insurance law of such State) under which the State agency
will act as agent of the United States in receiving applications for
assistance under chapter 3 of title III of the bill and in providing such
assistance. The State agency will also, where appropriate, afford
adversely affected workers who apply for assistance testing, counseling,
referral to training, and placement services, and will otherwise cooper-
ate with the Secretary of Labor and with other State and Federal
agencies in providing assistance under such chapter 3.
Section 331 (b) requires each agreement to provide the terms and
conditions under which it may be amended, suspended, or terminated.
Section 331(c) requires each agreement to provide that unemploy-
ment insurance otherwise payable to any adversely affected worker
will not be denied or reduced for any week by reason of any right to
allowances under chapter 3 of title III of the bill.
Section 332. Payments to States
Section 332(a) provides that the Secretary of Labor will certify
periodically to the Secretary of the Treasury for payment to each
State which has an agreement under chapter 3 of title III of the bill
the sums necessary to enable the State to make the payments of
allowances provided by chapter 3.
Section 332(b) requires the States to use the money received under
section 332 only for the purposes for which it is paid. It provides
further that any money not so used must be returned to the Treasury
to be applied to current applicable appropriations, funds, or accounts
from which payments to States under section 332 are made.
Section 332(c) relates to the furnishing of surety bonds to the
United States in such amounts as the Secretary of Labor may deem
necessary.
Section 333. Liabilities of certifying and disbursing officers
Section 333 (a) relieves designated certifying officers, in the absence
of gross negligence or intent to defraud the United States, from
liability with respect to the payment of allowances certified by them
under chapter 3 of title III of the bill. Section 333(b) provides similar
relief from liability for a disbursing officer with respect to any payment
by him under chapter 3 if the payment was based upon a voucher
signed by a designated certifying officer.
Section 334. Recovery of overpayments
Section 334(a) provides for the recovery of payments to any person
received as the result of a false statement of, or knowing failure to
disclose, a material fact by requiring repayment or by deductions
from future allowances payable to him under chapter 3. Recovery
may be pursuant to a finding of a court of competent jurisdiction or
(after the worker has been given an opportunity for a fair hearing)
by a State agency or the Secretary of Labor.
Section 334(b) provides that any amount repaid to a State agencyis
to be deposited in the fund from which payment was made, and any
amount repaid to the Secretary of Labor is to be credited to the cur-
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TRADE EXPANSION ACT OF 1962 63
rent applicable appropriation, fund, or account from which such pay-
ment was made.
Section 335. Penalties
Section 335 imposes penalties on any person for knowingly making
false statements of, or failing to disclose, material facts for the purpose
of obtaining or increasing for himself or any other person any payment
or assistance authorized to be furnished under chapter 3 of title III
of the bill or under an agreement thereunder. Any such offense is
punishable by a fine of not more than $1,000 or imprisonment for not
more than 1 year, or both.
Section 886. Review
Section 336 provides that determinations under chapter 3 of title III
of the bill as to the entitlement of individuals to assistance are final
and conclusive and not subject to review, except as the Secretary of
Labor may by regulation provide. The second sentence of section 336
provides that, to the maximum extent practicable and consistent with
the purposes of chapter 3 of title III of the bill, the regulations shall
provide for review of State agency determinations in the same manner
and to the same extent as determinations under the State unemploy-
ment insurance law.
Section 837. Authorization of appropriations
Section 337 authorizes the appropriation to the Secretary of Labor
of the sums necessary to carry out his functions under chapter 3 of
title III of the bill. Sums so appropriated may be made available
until they are expended.
Section 338. Definitions
Section 338 contains definitions of certain terms used in chapter 3
of title III of the bill.
(1) Adversely afected employment.-Paragraph (1) defines "ad-
versely affected employment" as employment in a firm or appropriate
subdivision of a firm, if workers of such firm or subdivision are eligible
to apply for adjustment assistance under chapter 3 of title III of the
bill; that is, if under chapter 1 of title III a certification has been
made that imports have caused or threatened to cause significant
unemployment or underemployment in the firm or subdivision.
(2) Adversely affected worker.-Paragraph (2) defines an "adversely
affected worker" as a worker who, because of lack of work in adversely
affected employment has been totally or partially separated from
such employment or has been totally separated from employment in
another part of the firm if lack of work. in the adversely affected part
resulted in his total separation.
(3) Average weekly manufacturing wage.-Paragraph (3) defines
"average weekly manufacturing wage" as the national gross average
weekly earnings of production workers in manufacturing industries
for the latest calendar year officially published annually by the
Bureau of Labor Statistics of the Department of Labor before the
period for which the assistance is furnished.
(4) Average weekly wage.-Paragraph (4) defines "average weekly
wage" as one-thirteenth of the total wages paid to a worker ,in' ahe
quarter in which his total wages were highest among the first four of the
last five completed calendar quarters immediately preceding the quar-
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ter in which occurs the week in which he was totally separated or, if
partially separated, the appropriate week as defined in regulations to
be prescribed by the Secretary of Labor.
(5) Average weekly hours.-Paragraph (5) defines "average weekly
hours" as the average hours worked by the individual in the employ-
ment from which lie has been or claims to have been separated; the
average is figured for those of the 52 weeks preceding the appropriate
week (as defined by the regulations of the Secretary of Labor) during
which he was so employed. Excluded from the computation are over-
time hours, and weeks during which the individual was sick or on
vacation.
(6) Partial separation.-Paragraph (6) defines "partial separation"
as a reduction in adversely affected employment of a worker's hours
of work to 80 percent or less of his average weekly hours (in adversely
affected employment) and a reduction in his wages to 75 percent or less
of his average weekly wage (in adversely affected employment).
(7) Remuneration.-Paragraph (7) defines "remuneration" as both
wages and net earnings from services performed as a self-employed
individual.
(8) State.-Paragraph (8) defines "State" as including, in addition
to the 50 States of the Union, the District of Columbia and the
Commonwealth of Puerto Rico. It also defines "United States,"
when used in a geographical sense, as including such Commonwealth.
(9) State agency.-Paragraph (9) defines "State agency" as the
agency of the State which administers the State law.
(10) State law.-Paragraph (10) defines "State law" as the unem-
ployment insurance law of a State approved by the Secretary of Labor
under section 3304 of the Internal Revenue Code of 1954.
(11) Total separation.-Paragraph (1) defines "total separation"
as the layoff or severance of a worker from employment with a firm in
which adversely affected employment exists.
(12) Unemployment insurance.-Paragraph (12) defines "unem-
ployment insurance" as unemployment insurance payable to a worker
under any State law or Federal unemployment insurance law, includ-
ing title XV of the Social Security Act, the Railroad Unemployment
Insurance Act, and the Temporary Extended Unemployment Com-
pensation Act of 1961.
(13) Week.-Paragraph (13) defines "week" as a week as defined
in the applicable State law.
(14) Week of unemployment.-Paragraph (14) defines "week of
unemployment" as a week for which the individual's remuneration
for services performed during such week is less than 75 percent of his
average weekly wage, and in which, because of lack of work (A) if
he has been totally separated, he worked less than the full-time week
in his current occupation, or (B) if he has been partially separated, he
worked 80 percent or less of his average weekly hours.
Section 361. Authority
Section 351(a) (1) provides that after receiving an affirmative finding
of the Tariff Commission under section 301(b) with respect to an in-
dustry, the President may proclaim such increase in, or imposition of,
any duty or other import restriction on the article causing or threaten-
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TRADE EXPANSION ACT OF 1962 65
ing to cause serious injury to such industry as the President determines
to be necessary to prevent or remedy serious injury to such industry.
The term "duty or other import restriction" is defined in paragraph
(2) of section 405. Accordingly, tariff adjustment which the President
is authorized to provide for an industry includes the increase in or
imposition of a limitation, prohibition, charge, or exaction other than
duty, imposed on importation or for the regulation of imports of the
article involved. The President is not bound by the Tariff Com-
mission's affirmative finding of injury under section 301(b), nor by
the Commission's finding under section 301(e) as to the action neces-
sary to prevent or remedy injury.
Section 351(a) (2) provides that if the President does not within 60
days after the date on which he receives such affirmative finding, pro-
claim that increase in, or imposition of, any duty or other import
restriction on such article which was found and reported by the Tariff
Commission pursuant to section 301(e)-
(A) The President shall immediately submit a report to the
House of Representatives and to the Senate stating why he has
not proclaimed such increase or imposition; and
(B) Such increase or imposition found and reported by the
Tariff Commission shall take effect upon the adoption by both
Houses of the Congress, by the yeas and nays by the affirmative
vote of a majority of the authorized membership of each House,
of a concurrent resolution stating in effect that the Senate and
House of Representatives approve the increase in, or imposition
of, any duty or other import restriction on the article found and
reported by the Tariff Commission.
The adoption of the concurrent resolution must occur within the 60-
day period following the date on which the President submits his
report to the House of Representatives and the Senate, referred to
in subparagraph (A). In computing the 60-day period., days on which
either House is not in session because of an adjournment of more
than 3 days to a day certain or an adjournment of the Congress
sine die are to be excluded.
Section 351 (a) (3) provides, in effect, that, if a concurrent resolution
is adopted by both Houses of the Congress, as provided in sub-
section (a) (2), the President is required, within 15 days after the
adoption of the resolution, to proclaim the particular action found
and reported to be necessary by the Tariff Commission.
Section 351(a) (4) provides that the President may, within 60 days
after the date on which he receives an affirmative finding of the
Tariff Commission under section 301(b) with respect to an industry,
request additional information from the Tariff Commission. The
Tariff Commission is required, as soon as practicable but in no event
more than 120 days after the date on which it receives the President's
request, to furnish additional information with respect to such
industry in a supplemental report. The date on which the President
receives such supplemental report is to be treated as though it were
the date on which the President received an affirmative finding of the
Tariff Commission, for purposes of computing the time periods speci-
fied in subsection (a)(2).
Section 351(b) prescribes the limits on increases or impositions of
duties which the President may proclaim in providing tariff adjust-
ment pursuant to subsection (a). No proclamation may be made
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66 TRADE EXPANSION ACT OF 1962
increasing any rate of duty to a rate more than 50 percent above the
rate existing on July 1, 1934; or, in the case of an article not subject to
duty, imposing a duty in excess of 50 percent ad valorem. The term
"existing on July 1, 1934" as used here is defined in paragraph (5) of
section 256.
Section 351(c) relates to the reduction or termination, or the exten-
sion, of any increase in or imposition of any duty or other import
restriction proclaimed pursuant to section 351 or section 7 of the Trade
Agreements Extension Act of 1951.
Paragraph (1) (A) authorizes the President to reduce or terminate
such a duty or other import restriction whenever he determines that
such a reduction or termination is in the national interest. The
President is required before making such a determination to take into
account the advice received from the Tariff Commission under sub-
section (d)(2) and to seek the advice of both the Secretary of Com-
merce and the Secretary of Labor.
Paragraph (1)(B) provides for a termination date of any duty or
other import restriction proclaimed under section 351 or section 7 of
the 1951 act, unless extended as provided under paragraph (2) of
section 351(c). Such duty or other import restriction is to terminate
not later than the close of the date which is 4 years after the effective
date of the initial proclamation or the date of enactment of the bill,
whichever date is the later.
Paragraph (2) provides that the duty or other import restriction
proclaimed under section 351 or under section 7 of the 1951 act may
be extended in whole or in part by the President for such periods as
he may designate, but not in excess of 4 years at any one time, if he
,determines that such extension is in the national interest. Before
making such a determination, he is required to take into account the
advice received from the Tariff Commission under subsection (d) (3)
and to seek the advice of both the Secretary of Commerce and the
Secretary of Labor.
Section 351(d) (1) provides that the Tariff Commission is to keep
under review developments with respect to the industry concerned,
so long as any increase in, or imposition of, any duty or other import
restriction proclaimed pursuant to section 351 or section 7 of the
Trade Agreements Extension Act of 1951 remains in force. The
Tariff Commission is further required to make periodic reports to the
President concerning such developments.
Section 351(d) (2) provides for submission by the Tariff Commission,
upon the President's request, of the advice referred to in subparagraph
(A) of subsection (c) (1), of its judgment as to the probable economic
effect on the industry concerned of the reduction or termination of
the increase or imposition which has been proclaimed under section
351 or section 7 of the 1951 act.
Section 351(d) (3) provides that the Tariff Commission will advise
the President of its judgment as to the probable economic effect on the
industry concerned of the termination of any increase or imposition
if a petition is filed on behalf of the industry concerned with the Tariff
Commission not earlier than 9 months and not later than 6 months
before such termination is to occur.
Section 351(d) (4) provides that in advising the President under
section 351(d) the Tariff Commission is to take into account all
economic factors which it considers relevant, including idling of
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TRADE EXPANSION ACT OF 1962 67
productive facilities, inability to operate at a profit, and unemployment
or underemployment.
Section 351(d) (5) provides that advice by the Tariff Commission
under section 351(d) is to be given on the basis of an investigation
during the course of which the Commission is to hold a hearing at
which interested persons are to be given a reasonable opportunity to
be present, to produce evidence, and to be heard.
Section 351(e) provides that as soon as practicable the President
is to take such action as he determines to be necessary to bring trade
agreements entered into under section 350 of the Tariff Act of 1930
into conformity with the provisions of section 351 of the bill. No
trade agreement may be entered into under section 201 (a) unless such
agreement permits action in conformity with the provisions of section
351.
CHAPTER 5-ADVISORY BOARD
Section 361. Adjustment Assistance Advisory Board
Section 361 (a) creates the Adjustment Assistance Advisory Board,
which shall consist of the Secretary of Commerce, as Chairman, and
the Secretaries of the Treasury, Agriculture, Labor, Interior, and
Health, Education, and Welfare, the Administrator of the Small Busi-
ness Administration, and such other officers as the President deems
appropriate.
Section 361(b) provides that, at the request of the President, the
Board is to advise him and the Departments of Commerce and Labor,
as well as the other Federal agencies furnishing adjustment assistance
to firms and workers, on the development of coordinated programs for
such assistance.
Section 361(c) provides that the Chairman may appoint for any
industry an industry committee composed of members representing
employers, workers, and the public, for the purpose of advising the
Adjustment Assistance Advisory Board. It also makes applicable to
members of such committees the provisions of section 1003 of the
National Defense Education Act, which provide certain exemptions
from the operation of conflict-of-interest laws.
TITLE ,IV-GENERAL PROVISIONS
Section 401. Authorities
Section 401 gives certain authorities to the head of any Federal
agency performing functions under the bill. He may authorize the
head of any other agency to perform any of his functions, he may
prescribe rules and regulations, and he may procure and pay for the
temporary or intermittent services of experts or consultants, subject to
certain conditions.
Section 402. Reports
Section 402 (a) requires the President to transmit annually to Con-
gress a report on the trade agreements program and on tariff adjust-
ment and other adjustment assistance under the bill. Specifically, the
report is to include information regarding new negotiations, changes
made in duties and other import restrictions of the United States,
reciprocal concessions obtained, changes in trade agreements which
were made in order to effectuate more fully the purposes of the trade
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agreements program (including the incorporation in existing agree-
ments of escape clauses), the results of action taken to obtain removal
of unjustifiable foreign trade restrictions (including discriminatory
restrictions) against U.S. exports, remaining restrictions, and the
measures available to seek their removal in accordance with the pur-
poses of the bill, and other information relating to the trade agree-
ments program in general and specifically to the agreements entered
into thereunder.
Section 402(b) provides that the Tariff Commission is to submit to
the Congress at least once each year a factual report on the operation
of the trade agreements program.
Section 403. Tariff Commission
Section 403 (a) provides that the Tariff Commission may conduct
preliminary investigations, determine the scope and manner of its
proceedings, and consolidate proceedings.
Section 403(b) provides that, in performing functions under the
bill, the Tariff Commission may exercise any authority granted to it
under any other act.
Section 403(c) provides that the Tariff Commission is to keep
informed at all times concerning the operation and effect of provisions
relating to duties or other import restrictions of the United States
contained in trade agreements entered into under the trade agreements
program.
Section 404. Separability
Section 404 is a separability provision, designed to ensure that the
invalidity of one provision of the bill will not render the whole bill
invalid.
Section 405. Definitions
Section 405 defines a number of terms used in the bill.
Paragraph (1) provides that the term "agency" includes any agency,
department, board, wholly or partly owned corporation, instru-
mentality, commission, or establishment of the United States.
Paragraph (2) defines the term "duty or other import restriction"
as including (A) the rate and form of any import duty, and (B) a
limitation, prohibition, charge, and exaction other than duty, imposed
on importation or imposed for the regulation of imports. Where the
modification of a rate of duty requires the subdivision of an existing
classification, such subdivision is to be regarded as part of the act of
modification.
Paragraph (3) in effect provides that the term "firm" includes any
kind of legal entity, and provides for treating a firm and its predecessor,
successor, or affiliate as one firm where it is necessary to do so in order
to prevent unjustifiable benefits. This definition is concerned with
the legal form of "firm" and does not relate to the kind of activity in
which the firm may be engaged. Thus a "firm" may be engaged in
manufacturing, farming, fishing, mining, or any other kind of com-
mercial activity.
Paragraph (4) is intended to suggest a somewhat broader interpre-
tation of "directly competitive with" than has been applied to like
words in existing law, by defining the phrase to embrace the compe-
tition presented by an article at an earlier or later stage of processing
as well as by a like article in the same stage of processing. The
definition makes clear that an unprocessed article may be regarded as
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an article at an earlier stage of processing. The term "earlier or later
stage of processing" contemplates that the article remains substantially
the same during such stages of processing, and is not wholly trans-
formed into a different article.
Paragraph (5) provides that a product of a country is an article
which is the growth, produce, or manufacture of such country.
Paragraph (6) is intended to make clear that the term "modifica-
tion", as applied to any duty or other import restriction, includes the
elimination of any duty, as well as an increase in, or reduction of, any
duty or other import restriction.
VII-CHANGES IN EXISTING LAw MADE. BY THE BILL, As REPORTED
In compliance with clause 3 of rule XIII of the Rules of the House
of Representatives, changes in existing law made by the bill, as
reported, are shown as follows (existing law proposed to be omitted
is enclosed in black brackets, new matter is printed in italic, existing
law in which no change is proposed is shown in roman):
SECTION 350 OF THE TARIFF ACT OF 1930
PART III-PROMOTION OF FOREIGN TRADE
SEC. 350. (a) (1) For the purpose of expanding foreign markets for the
products of the United States (as a means of assisting in establish-
ing and maintaining a better relationship among various branches of
American agriculture, industry, mining, and commerce) by regulating
the admission of foreign goods into the United States in accordance
with the characteristics and needs of various branches of American
production so that foreign markets will be made available to those
branches of American production which require and are capable of
developing such outlets by affording corresponding market oppor-
tunities for foreign products in the United States, the President,
whenever he finds as a fact that any existing duties or other import
restrictions of the United States or any foreign country are unduly bur-
dening and restricting the Foreign trade of the United States and that
the purpose above declared will be promoted by the means hereinafter
specified, is authorized from time to tune-
(A) To enter into foreign trade agreements with foreign
governments or instrumentalities thereof: Provided, That the
enactment of the Trade Agreements Extension Act of 1955 shall
not be construed to determine or indicate the approval or dis-
approval by the Congress of the executive agreement known as
the General Agreement on Tariffs and Trade.
(B) To proclaim such modifications of existing duties and
other import restrictions, or such additional import restrictions,
or such continuance, and for such minimum periods,. of existing
customs or excise treatment of any article covered by foreign
trade agreements, as are required or:appropriate to carry out any
foreign trade agreement that the President has entered, into
hereunder.
(2) No proclamation pursuant to paragraph (1) (B) of this sub-
section shall be made-
(A) Increasing by more than 50 per centum any rate of duty
existing on July 1, 1934; except that a specific rate of duty
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RA EXPANSION
existing on July 1, 1934, may be converted to its ad valorem
equivalent based on the value of imports of the article concerned
during the calendar year 1934 (determined in the same manner as
provided in subparagraph (D)(ii)) and the proclamation may
provide an ad valorem rate of duty not in excess of 50 per centum
above such ad valorem equivalent.
(B) Transferring any article between the dutiable and free
lists.
(C) In order to carry out a foreign trade agreement entered
into by the President before June 12, 1955, or with respect to
which notice of intention to negotiate was published in the
Federal Register on November 16, 1954, decreasing by more
than 50 per centum any rate of duty existing on January 1, 1945.
(D) In order to carry out a foreign trade agreement entered
into by the President on or after June 12, 1955, and before
July 1, 1958, decreasing (except as provided in subparagraph (C)
of this paragraph) any rate of duty below the lowest of the
following rates:
(i) The rate 15 per centum below the rate existing on
January 1, 1955
(ii) In the case of any article subject to an ad valorem
rate of duty above 50 per centum (or a combination of ad
valorem rates aggregating more than 50 per centum), the
rate 50 per centum ad valorem (or a combination of ad
valorem rates aggregating 50 per centum). In the case of
any article subject to a specific rate of duty (or a combination
of rates including a specific rate) the ad valorem equivalent
of which has been determined by the President to have been
above 50 per centum during a period determined by the
President to be a representative period, the rate 50 per
centum ad valorem or the rate (or a combination of rates),
however stated, the ad valorem equivalent of which the
President determines would have been 50 per centum
during such period. The standards of valuation contained
in section 402 or 402a of this Act (as in effect, with respect
to the article concerned, during the representative period)
shall be utilized by the President, to the maximum extent he
finds such utilization practicable, in making the determina-
tions under the preceding sentence.
(E) In order to carry out a foreign trade agreement entered
into by the President on or after July 1, 1958, decreasing any
rate of duty below the lowest of the rates provided for in para-
graph (4) (A) of this subsection.
(3) (A) Subject to the provisions of subparagraphs (B) and (C)
of this paragraph and of subparagraph (B) of paragraph (4) of this
subsection, the provisions of any proclamation made under paragraph
(1) (B) of this subsection, and the provisions of any proclamation of
suspension under paragraph (5) of this subsection, shall be in effect
from and after such time as is specified in the proclamation.
(B) In the case of any decrease in duty to which paragraph (2) (D)
of this subsection applies-
(i) if the total amount of the decrease under the foreign trade
agreement does not exceed 15 per centum of the rate existing on
January 1, 1955, the amount of decrease becoming initially effec-
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Live at one time shall not exceed 5 per centum of the rate existing
on January 1, 1955;
(ii) except as provided in clause (i), not more than one-third
of the total amount of the decrease under the foreign trade agree-
ment shall become initially effective at one time; and
(iii) no part of the decrease after the first part shall become
initially effective until the immediately previous part shall have
been in effect for a period or periods aggregating not less than
one year.
(C) No part of any decrease in duty to which the alternative
specified in paragraph (2) (D) (i) of this subsection applies shall become
initially effective after the expiration of the three-year period which
begins on July 1, 1955. If any part of such decrease has become
effective, then for purposes of this subparagraph any time thereafter
during which such part of the decrease is not in effect by reason of
legislation of the United States or action thereunder shall be excluded
in determining when the three-year period expires.
(D) If (in order to carry out a foreign trade agreement entered
into by the President on or after June 12, 1955) the President deter-
mines that such action will simplify the computation of the amount
of duty imposed with respect to an article, he may exceed any limita-
tion specified in paragraph (2) (C) or (D) or paragraph (4) (A) or (B)
of this subsection or subparagraph (B) of this paragraph by not more
than whichever of the following is lesser:
(i) The difference between the limitation and the next lower
whole number, or
(ii) One-half of 1 per centum ad valorem.
In the case of a specific rate (or of a combination of rates which
includes a specific rate), the one-half of 1 per centum specified in
clause (ii) of the preceding sentence shall be determined in the same
manner as the ad valorem equivalent of rates not stated wholly in ad
valorem terms is determined for the purposes of paragraph (2) (D) (ii)
of this subsection.
(4) (A) No proclamation pursuant to paragraph (1) (B) of this
subsection shall be made, in order to carry out a foreign trade agree-
ment entered into by the President on or after July 1, 1958, decreasing
any rate of duty below the lowest of the following rates:
(i) The rate which would result from decreasing the rate
existing on July 1, 1958, by 20 per centum of such rate.
(ii) Subject to paragraph (2)(B) of this subsection, the rate
2 per centum ad valorem below the rate existing on July 1, 1958.
(iii) The rate 50 per centum ad valorem or, in the case of any
article subject to a specific rate of duty or to a combination of
rates including a specific rate, any rate (or combination of rates),
however stated, the ad valorem equivalent of which has been
determined as 50 per centum ad valorem.
The provisions of clauses (ii) and (iii) of this subparagraph and of
subparagraph (B) (ii) of this paragraph shall, in the case of any
article subject to a combination of ad valorem rates of duty, apply
to the aggregate of such rates; and, in the case of any article subject
to a specific rate of duty or to a combination of rates including a
specific rate, such provisions shall apply on the basis of the ad valorem
equivalent of such rate or rates, during a representative period
(whether or not such period includes July 1, 1958), determined in the
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72 TRADE EXPANSION ACT OF 1962
same manner as the ad valorem equivalent of rates not stated wholly
in ad valorem terms is determined for the purpose of paragraph
(2) (D) (ii) of this subsection.
(B) (i) In the case of any decrease in duty to which clause (i) of
subparagraph (A) of this paragraph applies, such decrease shall be-
come initially effective in not more than four annual stages, and no
amount of decrease becoming initially effective at one time shall exceed
10 per centum of the rate of duty existing on July 1, 1958, or, in any
case in which the rate has been increased since that date, exceed such
10 per centum or one-third of the total amount of the decrease under
the foreign trade agreement, whichever is the greater.
(ii) In the case of any decrease in duty to which clause (ii) of sub-
paragraph (A) of this paragraph applies, such decrease shall become
initially effective in not more than four annual stages, and no amount
of decrease becoming initially effective at one time shall exceed 1 per
centum ad valorem or, in any case in which the rate has been increased
since July 1, 1958, exceed such 1 per centum or one-third of the total
amount of the decrease under the foreign trade agreement, whichever
is the greater.
(iii) In the case of any decrease in duty to which clause (iii) of sub-
paragraph (A) of this paragraph applies, such decrease shall become
initially effective in not more than four annual stages, and no amount
of decrease becoming initially effective at one time shall exceed one-
third of the total amount of the decrease under the foreign trade agree-
ment.
(C) In the case of any decrease in duty to which subparagraph
(A) of this paragraph applies (i) no part of a decrease after the first
part shall become initially effective until the immediately previous
part shall have been in effect for a period or periods aggregating not
less than one year, nor after the first part shall have been in effect for
a period or periods aggregating more than three years, and (ii) no part
of a decrease shall become initially effective after the expiration of
the four-year period which begins on July 1, 1962. If any part of a
decrease has become effective, then for the purposes of clauses (i) and
(ii) of the preceding sentence any time thereafter during which such
part of the decrease is not in effect by reason of legislation of the
United States or action thereunder shall be excluded in determining
when the three-year period or the four-year period, as the case may be,
expires.
[(5) Subject to the provisions of section 5 of the Trade Agreements
Extension Net of 1951 (19 U.S.C., sec. 1362), duties and other import
restrictions proclaimed pursuant to this section shall apply to articles
the growth, produce, or manufacture of all foreign countries, whether
imported directly or indirectly: Provided, That the President shall, as
soon as practicable, suspend the application to articles the growth,
produce, or manufacture of any country because of its discriminatory
treatment of American commerce or because of other acts (including
the operations of international cartels) or policies which in his opinion
tend to defeat the purpose of this section.]
(6) The President may at any time terminate, in whole or in part,
any proclamation made pursuant to this section.
(b) Nothing in this section or the Trade Expansion Act of 1962 shall
be construed to prevent the application, with respect to rates of duty
established under this section or the Trade Expansion Act of 1962
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TRADE EXPANSION ACT OF 1962 73
pursuant to agreements with countries other than Cuba, of the provi-
sions of the treaty of commercial. reciprocity concluded between the
United States and the Republic of Cuba on December 11, 1902, or to
preclude giving effect to an agreement with Cuba concluded under
this section, modifying the existing preferential customs treatment
of any article the growth, produce, or manufacture of Cuba. Nothing
in this Act or the Trade Expansion Act of 1962 shall be construed to
precludethe :application to any product of Cuba (including products
preferentially free, of duty) of a rate of duty not higher than the rate
applicable "to the like products of other foreign countries (except the
Philippines), whether or not the application of such rate involves any
preferential customs treatment. No rate of duty on products of
Cuba shall be decreased----
(1) In order to carry out a foreign trade agreement entered into
by the President before June 12, 1955, by more than 50 per centum
of the rate of duty existing on January 1, 1945, with respect to
products of Cuba.
(2) In order to carry out a foreign trade agreement entered into
by the President on or after June 12, 1955, and before July 1, 1962,
below the applicable alternative specified in subsection (a) (2) (C)
or (D) or (4)(A) (subject to the applicable provisions of subsec-
tion (a) (3) (B), (C), and (D) and (4) (B) and (C)), each such
alternative to be read for the purposes of this paragraph as re-
lating to the rate of duty applicable to products of Cuba. With
respect to products of Cuba, the limitation of subsection
(a) (2) (D) (ii) or (4) (A) (iii) may be exceeded to such extent as
may be required to maintain an absolute margin of preference to
which such products are entitled.
(3) In order to carry out a foreign trade agreement entered into
after June 30, 1962, and before July 1, 1967, below the lowest rate
permissible by applying title II of the Trade Expansion Act of 1962
to the rate of duty (however established, and even though temporarily
suspended by Act of Congress or otherwise) existing on July 1, 1962,
with respect to such product.
(c) (1) As used in this section, the term "duties and other import
restrictions" includes (A) rate and form of import duties and classifi-
cation of articles, and (B) limitations, prohibitions, charges, and ex-
actions other than duties, imposed on importation or imposed for the
regulation of imports.
(2) For purposes of this section-
(A) Except as provided in subsection (d), the terms "existing
on July 1, 1934", "existing on January 1, 1945", "existing on
January 1, 1955", and "existing on July 1, 1958" refer to rates of
duty (however established, and even though temporarily sus-
pended by Act of Congress or otherwise) existing on the date
specified, except rates in effect by reason of action taken pursuant
to section 5 of the Trade Agreements Extension Act of 1951 (19
U.S.C., sec. 1362).
(B) The term "existing" without the specification of any date,
when used with respect to any matter relating to the conclusion
of, or proclamation to carry out, a foreign trade agreement, means
existing on the day on which that trade agreement is entered into.
(d) (1) When any rate of duty has been increased or decreased for
the duration of war or an emergency, by agreement or otherwise, any
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74 TRADE EXPANSION ACT OF 1962
further increase or decrease shall be computed upon the basis of the
post-war or post-emergency rate carried in such agreement or other-
wise.
(2) Where under a foreign trade agreement the United States has
reserved the unqualified right to withdraw or modify, after the
termination of war or an emergency, a rate on a specific commodity,
the rate on such commodity to be considered as "existing on January 1,
1945" for the purpose of this section shall be the rate which would
have existed if the agreement had not been entered into.
(3) No proclamation shall be made pursuant to this section for the
the purpose of carrying out any foreign trade agreement the proclama-
tion with respect to which has been terminated in whole by the Presi-
dent prior to the date this subsection is enacted.
[(e) (1) The President shall submit to the Congress an annual
report on the operation of the trade agreements program, including
information regarding new negotiations, modifications made in duties
and import restrictions of the United States, reciprocal concessions
obtained, modifications of existing trade agreements in order to
effectuate more fully the purposes of the trade agreements legislation
(including the incorporation therein of escape clauses), the results of
action taken to obtain removal of foreign trade restrictions (including
discriminatory restrictions) against United States exports, remaining
restrictions, and the measures available to seek their removal in
accordance with the objectives of this section, and other information
relating to that program and to the agreements entered into there-
under.
[(2) The Tariff Commission shall at all times keep informed con-
cerning the operation and effect of provisions relating to duties or other
import restrictions of the United States contained in trade agreements
heretofore or hereafter entered into by the President under the
authority of this section. The Tariff Commission, at least once a
year, shall submit to the Congress a factual report on the operation of
the trade-agreements program.]
(f) It is hereby declared to be the sense of the Congress that the
President, during the course of negotiating any foreign trade agree-
ment under this section, should seek information and advice with
respect to such agreement from representatives of industry, agricul-
ture, and labor.
SECTION 2(a) OF THE ACT OF JUNE 12, 1934 (19 U.S.C., SEC.
1352(a))
SEC. 2. (a) Subparagraph (d) of paragraph 369, the last sentence of
paragraph 1402, and the provisos to paragraphs 371, 401, 1650, 1687
and 1803 (1) of the Tariff Act of 1930 are repealed. The provisions of
section 336 of the Tariff Act of 1930 shall not apply to any article
with respect to the importation of which into the United States a
foreign trade agreement has been concluded pursuant to this Act or
the Trade Expansion Act of 1962, or to any provision of any such
agreement. The third paragraph of section 311 of the Tariff Act of
1930 shall apply to any agreement concluded pursuant to this Act or
the Trade Expansion Act of 1962 to the extent only that such agree-
ment assures to the United States a rate of duty on wheat flour
produced in the United States which is preferential in respect to the
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TRADE EXPANSION ACT OF 1962 75
lowest rate of duty imposed by the country with which such agree-
ment has been concluded on like flour produced in any other country;
and upon the withdrawal of wheat flour from bonded manufacturing
warehouses for exportation to the country with which such agreement
has been concluded, there shall be levied collected, and paid on the
imported wheat used, a duty equal to to amount of such assured
preference.
SECTIONS 5, 6, 7, AND 8(a) OF THE TRADE AGREEMENTS
EXTENSION ACT OF 1951
[SEc. 5. As soon as practicable, the President shall take such action
as is necessary to suspend, withdraw or prevent the application of
any reduction in any rate of duty, or binding of any existing customs
or excise treatment, or other concession contained in any trade agree-
ment entered into under the authority of section 350 of the Tariff
Act of 1930, as amended and extended, to imports from the Union
of Soviet Socialist Republics and to imports from any nation or area
dominated or controlled by the foreign government or foreign organ-
ization .controlling the world Communist movements.
[SE, c. 6. (a) No reduction in any rate. of duty, or binding of any
eistix~g, customs or excise treatment, or other concession hereafter
proclaimed under section 350 of the Tariff Act of 1930, as amended,
shall be permitted to continue in effect when the product on which
the concession has been granted is, as a result in whole or in part, of
the duty or other customs treatment reflecting such concession, being
imported into the United States in such increased quantities, either
actual or relative, as to cause or threaten serious injury to the domestic
industry producing like or directly competitive products..
[(b) The President, as soon as practicable, shall take such action
as may be necessary to bring trade agreements . heretofore entered
into under section 350 of the Tariff Act of 1930, as amended, into
conformity with the policy established in subsection (a) of this section.
[Sac. 7. (a) Upon the request of the President, upon resolution of
either House of Congress, upon resolution of either the Committee
on Finance of the Senate or the Committee on Ways and Means of
the House of Representatives, upon its own. motion, or upon applica-
tion of any interested party (including any organization or group of
employees), the United States Tariff Commission shall promptly
make an investigation and make a report thereon not later than six
months after the application is made to determine whether any prod-
uct upon which a concession has been granted under a trade agreement
'is, as a result, in whole or in part, of the duty or other customs treat-
ment reflecting such concession, being imported into the United States
in such increased quantities, either actual or relative, as to cause or
threaten serious injury to the domestic industry producing like or
directly competitive products.
[In the course of any such investigation, whenever it finds evidence
of serious injury or threat of serious injury or whenever so directed
by resolution of either the Committee on Finance of the Senate or
the Committee on Ways and Means of the House of Representatives,
the Tariff Commission shall hold hearings giving reasonable public
notice thereof and shall afford reasonable opportunity for interested
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76 TRADE EXPANSION ACT OF 1962
parties to .be present, to produce evidence, and to be heard at such
hearings.
[Should the Tariff Commission find, as the result of its investigation
and hearings, that a product on which a concession has been granted
is, as a result, in whole or in part, of the duty or other customs treat-
ment reflecting such concession, being imported in such increased
quantities, either actual or relative as to cause or threaten serious
injury to the domestic industry producing like or directly competitive
products, it shall recommend to the President the withdrawal or modi-
fication of the concession, its suspension in whole or in part, or the
establishment of import quotas, to the extent and for the time neces-
sary to prevent or remedy such injury. The Tariff Commission shall
immediately make public its findings and recommendations to the
President, including any dissenting' or separate findings and recom-
mendations, and shall cause it summary thereof to be published in
the Federal Register.
[(b) In arriving at a determination in the foregoing procedure the
Tariff Commission, without excluding other factors, shall take into
consideration a downward trend of production, employment, prices,
profits, or wages in the domestic industry concerned, or a decline in
sales, an increase in imports, either actual or relative to domestic
production, a higher or growing inventory, or a decline in the pro-
portion of the domestic market supplied by domestic producers.
[Increased imports, either actual or relative, shall be considered
as the cause or threat of serious injury to the domestic industry pro-
ducing like or directly competitive products when the Commission
finds that such increased imports have contributed substantially
towards causing or threatening serious injury to such industry.
[(c) (1) Upon receipt of the Tariff Commission's report of its
investigation and hearings, the President may make such adjust-
ments in the rates of duty, impose such quotas, or make such other
modifications as are found and reported by the Commission to be
necessary to prevent or remedy serious injury to the respective do-
mestic industry. If the President does not take such action within
sixty days he shall immediately submit a report to the Committee on
Ways and Means of the House and to the Committee on Finance of
the Senate stating why he has not made such adjustments or modifi-
fications, or imposed such quotas.
[(2) The action so found and reported by the Commission to be
necessary shall take effect (as provided in the first sentence of para-
graph (1) or in paragraph (3), as the case may be)-
[(A) if approved by the President, or
[(B) if disapproved by the President in whole or in part,
.upon the adoption by both Houses of the Congress (within the
60-day period following the date on which the report referred to
in the second sentence of paragraph (1) is submitted to such com-
mittees), by the yeas and nays by a two-thirds vote of each
House, of a concurrent resolution stating in effect that the Senate
and House of Representatives approve the action so found and
reported by the Commission to be necessary.
For the purposes of subparagraph (B), in the computation of the
60-day period there shall be excluded the days on which either House
is not in session because of an adjournment of more than 3 days to a
day certain or an adjournment of the Congress sine die.
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[(3) In any case in which the contingency set forth in paragraph
(2) (B) occurs, the President shall (within 15 days after the adoption
of such resolution) take such action as may be necessary to make the
adjustments, impose the quotas, or make such other modifications as
were found and reported by the Commission to be necessary.
[(d) When in the judgment of: the Tariff Commission no sufficient
reason exists for a recommendation to the President that a concession
should be withdrawn or modified or it quota established, it shall make
and publish a report stating its findings and conclusions.
[(e) As used in this Act, the terms "domestic industry producing
like or directly competitive products" and "domestic industry pro-
ducing like or directly competitive articles" mean that portion or
subdivision of the producing organizations manufacturing, assembling,
processing, extracting, growing, or otherwise producing like or directly
competitive products or articles in commercial quantities. In apply-
ing the preceding sentence, the Commission shall (so far as practicable)
distinguish or separate the operations of the producing organizations
involving the like or directly competitive products or articles referred
to in such sentence from the operations of such organizations involving
other products or articles.
[(f) In carrying out the provisions of this section the President
may, notwithstanding section 350(a)(2) of the Tariff Act of 1930, as
amended, impose a duty not in excess of 50 per centumad valorem on
any article not otherwise subject to duty.
[SEC. S. (a) In any case whore the Secretary of Agriculture deter-
mines and reports to the President and to the Tariff Commission with
regard to any agricultural commodity that due to the perishability
of the commodity a condition exists requiring emergency treatment,
the Tariff Commission shall make an immediate investigation * * *
under the provisions of section 7 of this Act to determine the facts and
make recommendations to the President for such relief under those
provisions as may be appropriate. The President may take immedi-
ate action however, without awaiting the recommendations of the
Tariff Commission if in his judgment the emergency requires such
action. In any case the report and findings of the Tariff Commission
and the decision of the President shall be made at the earliest possible
date and in any event not more than 25 calendar days after the sub-
mission of the case to the Tariff Commission.]
SECTION 2 OF THE ACT OF JULY 1, 1954
[SEC. 2. (a) No action shall be taken pursuant to section 350 of
the Tariff Act of 1930, as amended (19 U.S.C., sec. 1351), to decrease
the duty on any article if the President finds that such reduction would
threaten to impair the national security.
[(b) Upon request of the head of any Department or Agency, upon
application of an interested party, or upon his own motion, the Direc-
tor of the Office of Defense and Civilian Mobilization (hereinafter in
this section referred to as the "Director") shall immediately make an
appropriate investigation, in the course of which he shall seek infor-
mation and advice from other appropriate Departments and Agencies,
to determine the effects on the national security of imports of the
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78 TRADE EXPANSION ACT OF 1962
article which is, .the, subject of such request, application, or motion.
If, as a result of such investigation, the Director is of the opinion that
the said article is being imported into the United States in such quan-
tities or under such circumstances as to threaten to impair the national
security, he shall promptly so advise the President, and, unless the
President determines that the article is not being imported into the
United States in such quantities or under such circumstances as to
threaten to impair the national security as set forth in this section,
he shall take such action, and for such time, as he deems necessary
to adjust the imports of such article and its derivatives so that such
imports will not so threaten to impair the national security.
[(c) For the purposes of this section, the Director and the President
shall 1, in the light of the requirements of national security and without
excluding other relevant factors, give consideration to domestic
production needed for projected national defense requirements, the
capacity of domestic industries to meet such requirements, existing
and anticipated availabilities of the human resources, products, raw
materials, and other supplies and services essential to the national
defense, the requirements of growth of such industries and such sup-
plies and services including the investment, exploration, and develop-
ment necessary to assure such growth, and the importation of goods
in terms of..their quantities, availabilities, character, and use as those
affect such industries and the capacity of the United States to meet
national security requirements. In the administration of this section,
the Director and the President shall further recognize the close rela-
tion of the economic welfare of the Nation to our national security,
and shall take into consideration the impact of foreign competition on
the economic welfare of individual domestic industries; and and sub-
stantial unemployment, decrease in revenues of government, loss of
skills or investment, or other serious effects resulting from the dis-
placement of any domestic products by excessive imports shall be
considered, without excluding other factors, in determining whether
such weakening of our internal economy may impair the national
security.
[(d) A report shall be made and published upon the disposition of
each request, application, or motion under subsection (b). The
Director shall publish procedural regulations to give effect to the
authority conferred on him by subsection (b).
[(e) The Director, with the advice and consultation of other
appropriate Departments and Agencies and with the approval of the
President, shall by February. 1, 1959, submit to the Congress a report
on the administration of this section. In preparing such a report, an
analysis should be made of the nature of projected national defense
requirements, the character of emergencies that may give rise to such
requirements, the manner in which the capacity of the economy to
satisfy, such requirements can be judged, the alternative means of
assuring such capacity and related matters.]
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TRADE EXPANSION ACT OF 1962 79
INTERNAL REVENUE CODE OF 1954
SEC. 172. NET OPERATING LOSS DEDUCTION.
(a) DEDUCTION ALLOWED.-There shall be allowed as a deduction
for the taxable year an amount equal to the aggregate of (1) the net
operating loss carryovers to such year, plus (2) this net operating loss
carrybacks to such year. For purposes of the subtitle, the term "net
operating loss deduction" means the deduction allowed by this sub-
section.
(b) NET OPERATING Loss CARRYBACKS AND CARRYOVERS.
(1) YEARS TO WHICH LOSS MAY BE CARRIED.-A net operating
loss for any taxable year ending after December 31, 1957, shall
be-
(A) except as provided in subparagraph (B), a net operating
loss carryback to each of the 3 taxable years preceding the
taxable year of such loss, [and]
(B) in the case of a taxpayer with respect to a taxable year
ending on or after December 31, 1962, for which a certification
has been issued under section 317 of the Trade Expansion Act of
1962, a net operating loss carryback to each of the 5 taxable
years preceding the taxable year of such loss, and
[(B)] (C) a net operating loss carryover to each of the
5 taxable years following the taxable year of such loss.
(2) AMOUNT OF CARRYBACKS AND CARRYOVERS.-Except as
provided in subsection (i), the entire amount of the net operating
loss for any taxable year (hereinafter in this section referred to
as the "loss year") shall be carried to the earliest of the [8] tax-
able years to which (by reason of [subparagraphs (A) and (B)
of] paragraph (1)) such loss may be carried. The portion of
such loss which shall be carried to each of the other [7] taxable
years shall be the excess, if any, of the amount of such loss over
the sum of the taxable income for each of the prior taxable years
to which such loss may be carried. For purposes of the preceding
sentence, the taxable income for any such prior taxable year shall
be computed-
(A) with the modifications specified in subsection (d)
other than paragraphs (1), (4), and (6) thereof; and
(B) by determining the amount of the net operating loss
deduction without regard to the net operating loss for the
loss year or for any taxable year thereafter,
and the taxable income so computed shall not be considered to
be less than zero.
(3) SPECIAL RULES.-
(A) Paragraph (1) (B) shall apply only if-
(i) there has been filed, at such time and in such
manner as may be prescribed by the Secretary or his
delegate, a notice of filing of the application under sec-
tion 317 of the Trade Expansion Act of 1962 for tax
assistance, and, after its issuance, a copy of the certifi-
cation under such section, and
(ii) the taxpayer consents in writing to the assess-
ment, within such period as may be agreed upon with
the Secretary or his delegate, of any deficiency for any
year to the extent attributable to the disallowance of a
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80 TRADE EXPANSION ACT OF 1962
deduction previously allowed with respect to such net
operating loss, even though at the time of filing such
consent the assessment of such deficiency would other-
wise be prevented by the operation of any law or rule
of law.
(B) In the case of---
(i) a partnership and its partners, or
(ii) an electing small business corporation under sub-
chapter S and its shareholders,
paragraph (1) (B) shall apply as determined under regula-
tions prescribed by the Secretary or his delegate. Such
paragraph shall apply to a net operating loss of a partner
or such a shareholder only if it arose predominantly from
losses in respect of which certifications under section 317 of
the Trade Expansion Act of 1962 were filed under this section.
* * * * *
*
CHAPTER 66-LIMITATIONS
* * * * * * *
Subchapter A-Limitations on Assessment and Collection
SEC. 6501. LIMITATIONS ON ASSESSMENT AND COLLECTION.
(a) GENERAL RULE.-Except as otherwise provided in this section,
the amount of any tax imposed by this title shall be assessed within
3 years after the return was filed (whether or not such return was filed
on or after the date prescribed) or, if the tax is payable by stamp, at
any time after such tax became due and before the expiration of
3 years after the date on which any part of such tax was paid, and no
proceeding in court without assessment for the collection of such tax
shall be begun after the expiration of such period.
(h) NET OPERATING Loss CARRYBACKS.-In the case of a deficiency
attributable to the application to the taxpayer of a net operating loss
carryback (including deficiencies which may be assessed pursuant to
the provisions of section 6213(b)(2)), such deficiency may be assessed
at any time before the expiration of the period within which a defi-
ciency for the taxable year of the net operating loss which results in
such carryback may be assessed, or within 18 months after the date on
which the taxpayer files in accordance with section 17,2(b) (3) a copy of
the certification (with respect to such taxable year) issued under section 317
of the Trade Expansion Act of 1962, whichever is later.
* *
Subchapter B-Limitations on Credit or Refund
* *
SEC. 6511. LIMITATIONS ON CREDIT OR REFUND.
(a) PERIOD OF LIMITATION ON FILING CLAIM.--Claim for credit or
refund of an overpayment of any tax imposed by this title in respect
of which tax the taxpayer is required to file a return shall be filed by
the taxpayer within 3 years from the time the return was filed or 2
years from the time the tax was paid, whichever of such periods ex-
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pires the later, or if no return was filed by the taxpayer, within 2 years
from the time the tax was paid. Claim for credit or refund of an
overpayment of any tax imposed by this title which is required to be
paid by means of a stamp shall be filed by the taxpayer within 3 years
from the time the tax was paid.
(d) SPECIAL RULES APPLICABLE TO INCOME TAXES.-
(2) SPECIAL PERIOD OF LIMITATION WITH RESPECT TO NET
OPERATING LOSS CARRYBACKS.-
(A) PERIOD OF LIMITATION.-If the claim for credit or
refund relates to an overpayment attributable to a net
operating loss carryback, in lieu of the 3-year period of
limitation prescribed in subsection (a), the period shall be
that period which ends with the expiration of the 15th day
of the 40th month (or the 39th month, in the case of a cor-
poration) following the end of the taxable year of the net
operating loss which results in such carryback, or the period
prescribed in subsection (c) in respect of such taxable year,
whichever expires later; except that [,]-
(i) with respect to an overpayment attributable to a net
operating loss carryback to any year on account of a cer-
tification issued to the taxpayer under section 317 of the
Trade Expansion Act of 1962, the period shall not expire
before the expiration of the sixth month following the month
in which such certification is issued to the taxpayer, and
(ii) with respect to an overpayment attributable to
the creation of, or an increase in, a net operating loss
carryback as a result of the elimination of excessive profits
by a renegotiation (as defined in section 1481 (a) (1) (A)),
the period shall not expire before September 1, 1959, or
the expiration of the twelfth month following the
month in which the agreement or order for the elimina-
tion of such excessive profits becomes final, whichever
is the later.
In the case of such a claim, the amount of the credit or
refund may exceed the portion of the tax paid within the
period provided in subsection (b) (2) or (c), whichever is
applicable, to the extent of the amount of the overpayment
attributable to such carryback.
*
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SEPARATE VIEWS OF HON. BURR P. HARRISON AND
HON. A. S. HERLONG, JR.
We think the provisions of chapters 2 and 3 of title III add nothing
to this measure, are unnecessary, create unjustified expense and dis-
criminations and, therefore, should be eliminated.
Otherwise, the measure has our support.
BURR P. HARRISON.
A. S. HERLONG, Jr.
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SEPARATE VIEWS OF THE REPUBLICANS ON H.R. 11070
The undersigned members of the committee regret the manner in
which this trade legislation (H.R. 11970) has been hailed by the Ken-
nedy administration as providing the solution for all of the prob-
lems confronting the Nation. We fully support the objective of
expanding "free and fair" trade between the nations of the free world.
Unfortunately, the Kennedy administration apparently fails to recog-
nize that that objective will not be attained merely by propagandizing
the American people. Our opposition to these tactics does not mean
that we are opposed to legislation which is soundly conceived and might
reasonably be expected to produce a lowering of the trade barriers
between ourselves and the European Economic Community. We
must have a "trade bill" in order to attain that objective. We have
made every effort to produce a bill which will enable the Kennedy
administration to negotiate realistically with the Common Market.
The effectiveness of such a bill will, however, depend upon the atti-
tude of the administration in exercising its authority. Because of
our misgivings in regard to that attitude, we must express our concern
over the problems faced by the United States in its future trade
negotiations.
The bill abandons the philosophy underlying our trade negotiations
in the past-that our negotiators refrain from agreeing to a reduction
in duties which will bring about serious injury to the domestic indus-
try. We are opposed to this change in the basic philosophy of our
trade laws as being contrary to the best interests of the United States,
and as imposing upon American industry and workers hardships which
the industry and workers of the Common Market will not accept.
Except for the abandonment of the "no serious injury" policy-in
favor of a policy of "adjustment assistance"-H.R. 11970 contains
improvements over existing law.
The extension of the authority of the President to enter into trade
negotiations-an authority which the President has had for more than
25 years-if not used judiciously, may result in irreparable injury to
American agriculture, industry, and workers unless we first adopt
other economic measures to prepare for more direct competition with
the European industrial nations and Japan. A policy which seeks to
expand foreign trade at the expense of domestic industry may in itself
be destructive of a continuing growth of such international trade.
For an expanding trade program to be effective, proper safeguards
must be maintained so as not to subject domestic industry to unfair
competition from foreign-based industry utilizing low-cost labor be-
hind a protective trade barrier.
The stated objective of the administration is to promote the un-
restricted flow of goods between the nations of the free world. For
any trade negotiation authority to be effective, we must be prepared
to negotiate from strength., It is becoming more, and more apparent
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tt33 TRADE EXPANSION ACT OF 1962
that the real objective of the Common Market is to establish a "third
power" behind a "common bond" of a protective external tariff.
Remove that bond and there will be no Common Market. As one
of the ministers of the Common Market member nations recently
stated, they are not interested in the complete elimination of duties
as the United States proposes to do under section 211 of the bill.
In promoting the trade bill as the ultimate "panacea", the Kennedy
administration has unfortunately obscured the real issue. The real
issue confronting the United States today in its economic relationship
in the world is not whether we should have tariff reductions. The real
issue is whether we should have tariff reduction with, or without, in-
ternal fiscal, monetary, and economic reforms. Until we accomplish
the latter, we are not in a position to benefit from tariff reductions.
Unilateral tariff reduction by the United States will not assure a more
favorable trade balance.
A reduction in U.S. tariffs can produce an increase in imports, which
will provide the exporting nations with additional "dollar" exchange.
For this dollar exchange to result in an increasing expansion of U.S.
trade, not only must their markets be open to us, but there must be a
demand which American products can meet on competitive terms.
Otherwise, the additional "dollar" exchange which will result from
increased imports into the United States will merely aggravate our
balance-of-payments deficit. Furthermore, the United States no longer
has available sufficient gold to meet the dollar obligations which the
exporting nations will hold as a result of this "one-way" trade.
This bill does not even assure that the other countries will be pre-
pared to accept American products on a reciprocal basis. In fact,
there is every indication to the contrary. The external tariff wall of
the Common Market is arrived at by taking the arithmetical average
of the existing tariffs of the participating nations. In many cases,
this will result in an increase in the rate of duty on U.S. trade because
the bulk of our export trade went to those nations whose tariffs were
below the Common Market average. After reducing the U.S. tariffs
between 70 and 80 percent as a result of prior negotiations, we are
told that further reductions will be necessary in order to obtain from
the Common Market reductions in the new external tariff wall.
While H.R. 11970 deals with tariffs, these are not the only impedi-
ment to the flow of trade between nations. In fact, tariffs are a very
minor impediment. More regressive measures have been used in the
past and will unquestionably continue to be used. In fact, the so-
called "textile agreement," recently negotaited by the Kennedy
administration which placed quotas on the import of textiles into the
United States, is a classic example of such measures. This agreement
was concluded outside the framework of existing reciprocal trade
legislation.
The subsidization of exports through tax concessions-a common
practice in West Germany-is another means of restricting competi-
tion from imports. Industry cartels operate to foreclose the European
market to American industry. While such cartels are given a "slap
on the wrist" under the Treaty of Rome, they will not be abolished
overnight. It is indeed exceedingly naive to assume that with the
adoption of this trade bill the other industrial nations of the world
will simultaneously adopt increasing measures to permit the free flow
of goods from the United States to those nations.
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TRADE EXPANSION ACT OF 1962 85
ABANDONMENT OF "NO INJURY" POLICY
We express grave concern over the. apparent determination of the
Kennedy administration to abandon completely the policy of pro-
tecting American industry from unfair competition abroad resulting
from low labor rates, through. compensating duties on imports into
the United States. In a speech to, the German Society for Foreign
Affairs, at Bonn, Germany, on April 2, 1962, Mr. George Ball, Under
Secretary of State, stated the policy of the Now. Frontier with respect
to "escape-clause" relief. He said:
The course of liberal trade is not always smooth. Within
the past fortnight, the President of the United States felt
compelled to approve recommendations to raise import
duties on certain kinds of carpets, and on flat glass. These
recommendations were based on findings of the Tariff
Commission, made following public hearings open to all
interested parties. This action has excited comment in
Europe, and questions have been raised about its longrun
implications for United States trade policy. Let me tell
you precisely what those implications are.
At the present moment, and until a new law is enacted,
the President's powers to. change United States tariffs are
based upon the existing Trade Agreements Act.. The
philosophy and approach of that act are clear: When an
American industry is suffering from serious injury that can
be attributed to imports, the law provides for the restoration
of import restrictions. Under that law, the President
raised the tariffs on carpets and glass.
This was the only form of relief which the President could
provide under existing law. That will no longer be the case
if Congress enacts the proposed Trade Expansion Act.
That act provides a different approach to the problems of
adjustment created by imports. Reflecting the experience
of the EEC itself, the act proposes to rely upon domestic
adjustments as the first response to such problems. Indus-
tries finding difficulties in adjusting to lower tariffs will be
given various types of financial and tax aid to enable them
to shift to new lines of production; workers will be helped
through retraining and by other means. Import restrictions
may be resorted to only as an exceptional procedure and
then only for a limited period.
Statements have been made by the proponents of, "free trade"
that any escape-clause procedure should be eliminated-that when
the United States makes an agreement to reduce tariffs, we should
stand by that agreement. The critics of "escape-clause" action on
the part of the United States fail to state that the GATT agreements
specifically provide for "escape-clause" procedures, and what is more
significant, that the other parties to the GATT agreements, includ-
ing the members of the Common Market, have relied on "escape-
clause" procedures in many more instances than the United States.
In the same speech-which was not for U.S. audiences-Mr. Ball
also pointed out :
But even apart from the proposed change in U.S. escape-
clause policy, the recent tariff actions assume smaller di-
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86
mensions if put in proper perspective. In all the years
in which escape clauses have been the prescribed mechanism,
the President has found it necessary to apply such clauses
only to 17 cases. This has been a creditable record. Few
other countries of the world have exercised such restraint;
in fact some of the nations-although not all-that have ex-
pressed the strongest views with respect to the President's
recent action have on past occasions seen fit to restore pro-
tection to many domestic industries. Some have done this
by availing themselves of procedures under article XXVIII
of the GATT, raising hundreds of their tariff rates in the
process. Others have occasionally applied quotas in viola-
tion of the agreement. Such actions have frequently
caused severe hardships-especially in other parts of the free
world, such as Japan.
As contrasted with our tolerant attitude, in the few cases in which
the United States did rely upon the escape clause to increase duties,
very severe retaliation was invoked by the European Economic Com-
munity. In retaliation for our action as a result of the escape-clause
proceedings involving carpets and glass, the Common Market is
reported to have increased duties on polyester, polyethlyne, synthetic
cloth, artificial cloth, varnishes, and water paints. On the first four
products the Common Market's still incomplete external tariff wall
will be raised from a present tariff level of 20 percent to a flat 40
percent. On varnishes and water paints it will go up from 16 to 19
percent. It is estimated that these increased duties will apply to
about $27 million of U.S. exports, and will increase the cost by about
$5 million.
The Belgians who were responsible for this retaliatory action on the
part of the Common Market sought to assist the Belgian carpet and
glass industries by prompt retaliation. In contrast to what has
apparently been the U.S. attitude, the Belgians did not "turn the
other cheek." Unless the United States adopts a similar "hard-
boiled attitude." we will be "bested" in any trade negotiations. In
this respect H.R. 11970 represents an improvement over existing law.
The bill embodies a "direction" to the President to take retaliatory
action where the other country does not "live up" to its agreements,
or otherwise unjustifiably discriminates against U.S. trade.
There is'no evidence that the Common Market intends to abandon
its policy of protecting European industry from injury on account of
American competition. If we abandon a similar policy of protecting
American industry, the results will be catastrophic. Adjustment
assistance is no substitute for sales and jobs.
COMMON MARKET IS "PROTECTIONIST" IN CONCEPT
The trade bill is heralded by the Kennedy administration as the
"magic formula" for the removal of restrictions on world trade. If
we were to accept this at face value, the administration is moving
toward further negotiations with the Common Market under the
wholly unrealistic assumption that the Common Market is also
interested in the removal of trade restrictions. In the same speech
at Bonn, Germany, on April 2, 1962, Under Secretary Ball said:
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87
But Americans have recognized that the commercial mani-
festation of the Community-the Common Market-im-
plies a substantial degree of discrimination against American
trade. Of necessity it will require adjustments for the
industry, agriculture, and labor of the United States and of
nonmember third countries. [Italic added.]
Do Americans recognize this? Certainly the Kennedy adminis-
tration in its "Madison Avenue" approach to trade legislation has
done much to obscure this issue. The Common Market is openly
"protectionist" in concept. In negotiating with the Common Market,
the United States must recognize this fact.
The Common Market was created as a "customs union" of the
participating nations. Efforts are being made toward a political
union as well. At present, however, the only common bond which
can be relied upon to hold together the member nations of the Com-
mon Market is an external trade wall (tariffs and a system of quotas)
which will protect both industry and agriculture from fragmentation
by outside competition. In recognition of this, American businesses
have been moving rapidly toward the establishment of controlled
production behind this tariff barrier. It is not a tax incentive that
has induced American industry to go abroad. It is the recognition
of the fact-which the administration attempts to minimize-that
the Common Market will afford protection to those industries within
that market.
An outstanding example of the protectionist attitude on the part
of the Common Market is exemplified in the terms upon which Great
Britain would be permitted to become a member. It is not pro-
posed to meet the problem of the British Commonwealth preferences
by reducing external tariffs. On the contrary, the conditions which
are imposed upon Great Britain are that over the transitionary period
the tariffs on products from the Commonwealth nations be increased
to the level of the Common Market.
The Common Market and Great Britain have not been able to
come to an agreement with respect to agricultural imports from the
British Commonwealth. As reported in the Wall Street Journal on
May 31, 1962, the situation is as follows:
One of the major problems still being negotiated by Britain
and the Common Market is Britain's import of agricultural
goods from the three Commonwealth nations. The six have
notified Britain they are willing to adopt transitional arrange-
ments for these agricultural imports until 1970, and there-
after take the initiative to discuss with the major world
producers of cereals and wheat, including the United States
and Argentina, "worldwide agreements" based on control of
prices, production, subsidies, and surpluses.
The U.S. coal industry has suffered from conversion of the railroads
to diesel oil, from increased use of natural gas and heating oils, and
more recently from increased imports of residual oil. For a time, the
resulting decline in domestic coal consumption was offset by exports.
For example, in 1957, the United States shipped 16 million tons of
coal to West Germany. With the exception of Italy, the Common
Market countries have since imposed tariffs or quotas on the importa-
tion of coal from the United States. Despite efforts by our State
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88 TRADE EXPANSION ACT OF 1962
Department to have these restrictions removed or liberalized, West
Germany recently announced that its coal tariffs and quotas would
remain in effect. France is negotiating with Russia for the importa-
tion of coal, in preference to coal from the United States. Although
Great Britain is not yet a member of the Common Market, Britain
allows no U.S. coal to be imported. There are no tariffs or duty as
such, but U.S. coal is barred through a licensing system.
Our negotiators have recently been rebuffed in an effort to remove
restrictions on the importation of coal from the United States to the
Common Market. The Common Market proposes to set up a single
purchasing agreement for coal, which will permit even greater dis-
crimination against imports from the United States. Price is not a
factor. U.S. coal producers, despite high labor costs, can deliver coal
to Europe cheaper than coal can be mined on the Continent. It is
strictly a question of protecting a domestic industry, irrespective
whether other sources can more efficiently produce the same product.
The failure of these negotiations should be ample warning to the
administration of the "protectionist" policy of the Common Market.
It is highly doubtful whether there is any intention to permit the
importation of American-made products on a basis which will seriously
affect existing industries within the Common Market, or impede the
efforts of the Common Market to develop new industry. The
administration's optimism in this respect is the product of wishful
thinking.
REEVALUATING OF PRIOR GATT CONCESSIONS
As a result of prior negotiations, the U.S. tariffs on dutiable imports
have been reduced by about 80 percent since the President was first
granted authority to conduct reciprocal trade negotiations. Our
tariffs will be substantially below the proposed Common Market
external tariff. Since that tariff will be based upon an arithmetical
average of the tariffs of the participating countries, the effective rate
on U.S. imports will be substantially increased. It would be expected
that we might properly require some concessions for such increase.
However, our negotiators agreed to permit this type of averaging
within the General Agreement on Tariffs and Trade, irrespective of
the result on the effective rate of duty. To a large degree this error
on the part of our negotiators has contributed to the necessity for
granting the President additional authority to negotiate with the
Common Market.
For example, the bulk of our automobile exports were shipped to
Germany and to the Benelux countries where there was a tariff of 18
percent. The initial external tariff for the EEC was 29 percent.
Only as a result of further concessions on our part was this reduced
to 22 percent. The U.S. automobile exporters are still faced with a
higher rate of duty than is presently applicable to the bulk of their
exports.
The negotiating posture of the United States has deteriorated
because of the "averaging" effect of the Common Market. Our
negotiators are being called upon to grant further concessions merely
to recapture the ground which was lost. The relatively high tariff
members of the Common Market, to which our exports were not
significant, are included in the average. This raises the duty above
the level which is presently applicable in the countries (such as West
Germany) which take the bulk of U.S. exports.
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The Kennedy administration may be correct in stating that the
President (or his negotiators) have very little to offer in any negotia-
tions. If our negotiators had done a good job in the past, it would be
logical to assume that the Common Market would find itself in the
same position. However, the Common Market is apparently able to
avoid that dilemma through the increases in the effective rates which
will result from the "averaging" processes. In view of the effect of
that process, we should reevaluate the concessions which the United
States has granted in the light of the new rates on articles on which
concessions were received from the Common Market in exchange.
In an effort to protect agricultural products within the Common
Market, an external tariff wall will be set up under a system of variable
import duties, the effect of which will be to discriminate against
American agriculture. In the trade agreement just concluded with
the Common Market, at least $400 million of agricultural exports will
be subject to such variable import fees. Commodities against which
such fees have been invoked include wheat, feed grains, rice, poultry,
and fruit. The Common Market will determine a "target price,"
and a fee will be levied on imports based upon the difference between
the import price and that target price. This will remove any com-
petitive advantage that U.S. agriculture may have because of its
increased efficiency. In the year 1961, the U.S. exports of poultry
to the Common Market countries were valued at about $35 million.
The United States will lose its position as the principal supplier of
poultry to the European market when these variable export fees go
into effect July 1, 1962.
Other concessions obtained for U.S. agricultural exports in past
negotiations have been and are being impaired by quantitative re-
-strictions, State monopolies, import licensing, mixing regulations,
and skimming fees, as well as the variable import fees. These pro-
tective measures should be sufficient to convince the Kennedy ad-
ministration that "free trade" is not presently the objective of the
Common Market. The tariff concessions which we objective
granted
in the past have not been productive of a spirit of "sacrifice" in the
interest of free trade on the part of the European Community. It is
time for a more realistic approach. Our negotiating posture and
attitude should be reexamined in relation to the trade policy of the
Common Market before American industry, American agriculture,
and American labor are called upon to make any further sacrifices.
The President recently announced the appointment of a "task
force" to study the fiscal and economic policy of Western Europe in
order to determine the reasons for the relatively high employment and
rapid economic growth in those countries. In this respect, the experi-
ence of Western Europe, and the reforms which made possible the
formation of a "common market" are well-known. It should not
necessitate a special "task force" to learn from that experience.
During the past decade, West Germany consciously pursued a.
disciplined anti-inflationary policy, rejecting Government spending
and deficit financing, even though recommended by the same econo-
mists who now comprise the White House "inner circle." Simul-
taneously Great Britain, France, and the Scandinavian countries,
pursued a policy diametrically opposed to that of West Germany,
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relying upon inflation for the promotion of full employment and the
objectives of the welfare state.
While the other European countries were faced with chronic balance-
of-payments deficits, the West German policy produced export sur-
pluses. The German mark became the most sought-after European
currency. A balance was not restored until 1957, when Great Britain
abandoned its "cheap money" policy (the British central bank raised
its rediscount rate in that year to an alitime high of 7 percent).
France later followed the example of Great Britain, by devaluing the
franc and adopting drastic internal reforms.
It is generally recognized that if France had not adjusted its internal
fiscal policies to more nearly conform to those of West Germany, the
modest tariff reductions which were adopted on January 1, 1959, as
the first step toward a "common market" would have disrupted the
French economy. Without such internal reforms, the French with
their inflated prices would have rushed to buy German goods, while
the Germans with their relatively lower prices would have no particular
incentive to purchase French goods. Within ternal fiscal reform, there
was a reversal in the balance-of-payments deficit which periodically
confronted France. This made a "common market" possible.
It was not the establishment of a "common market" with the
lowering of tariffs that brought economic prosperity to Western
Europe. It was the monetary and economic discipline of the par-
ticipating countries, in adjusting to the standard of its most disciplined
member, that made possible the reduction of tariffs without economic
dislocation. Tariff reductions and reciprocal trade are but the logical
products of prior monetary and fiscal responsibility.
If American industry is to be competitive in the Common Market,
consideration must be given to reducing the heavy burden of Federal
spending. No effort is being made by the Kennedy administration to
control excessive spending. In fact, Dr. Walter W. Heller, the
President's economic adviser, recently boasted that Government
spending in the fourth calendar quarter of 1962 will be $10 billion
above the same calendar quarter of 1961. By fiscal 1963, the Kennedy
administration will have added more than 100,000 Federal employees.
The budget for fiscal 1963, as supplemented, proposes new obligational
authority in excess of $100 million. Experience has shown that the
level of obligational authority forecasts future budgets. By the end
of fiscal year 1963, unless checked, the administration will be spending
at the rate of about $100 billion per year. The fiscal irresponsibility
of the administration is one of the factors which will defeat the very
objectives which the trade bill ostensibly seeks to accomplish. Re-
gardless of the form of exaction of the tax, Government spending
ultimately shows up as an additional cost to be borne by the American
taxpayer.
The United States unfortunately has preempted the deficit position
once held by Great Britain and France. In their experience, we
might well find the solution for the balance-of-payments deficit.
Internal fiscal and economic reforms should precede any further
reduction in our tariff levels. The Federal budget should be balanced
in order to give stability to the dollar in the world markets. The
tax structure should be overhauled in order to provide greater in-
centives for the modernization of American plant and equipment.
In this respect, the Kennedy administration should have urged a
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liberalization of depreciation allowances, rather than the so-called
"investment credit" in H.R. 10650.
The resulting gains on the part of U.S. industry should be used to
extend our markets at home and abroad, and not preempted by wage
increases. In part, our problem is attributable to the fact that any
increase in productivity has been absorbed by wage increases. If
we are to meet the competition of the Common Market, we must be
prepared to devote future productivity gains to a reduction in prices
rather than an increase in wages. A policy of holding the line is not
sufficient.
Even a guarantee of "free trade" by the Common Market will not
assure the sale of American-made goods in that market. It is not
primarily foreign tariffs which are keeping many of these goods out
of foreign markets. Large categories of American goods are non-
competitive in the world's markets, even where they have no tariffs
or other trade barriers to hurdle. In the production of these com-
modities, other countries simply have lower unit costs, primarily due
to their substantially lower wage costs. And in those commodity
areas where superior American capital endowment and productivity
still give the American producer an edge, in spite of higher wage
scales, the trends indicate that this advantage is diminishing. Euro-
pean capital investments in equipment are increasing substantially.
With the emergence of a "mass market" in Europe, the savings in
production costs which will flow from the increase in capital invest-
ment will further intensify the price squeeze on American products
in the Common Market.
The argument that foreign wage levels will rise and thus make U.S.
goods more competitive is at once unrealistic and cynical. It is
unrealistic because wages in Germany, for example, are already at
inflationary levels, causing great concern to the authorities there, and
because the amount of increase in German wages (which are now
about 27 percent of average earnings in U.S. industry) needed to bring
about equality would be enormous and completely unacceptable to
the Germans. During the year 1961, German labor costs increased
about 10 percent while U.S. labor costs increased only 5 percent. But
a 10-percent increase of a 75-cent wage is only 7% cents an hour while
a 5-percent increase of a $3 wage is 15 cents an hour. The "wage ggap"
may be closed over a period of years, but it certainly will not be closed
in the near future. The hope placed in foreign wage rate increases is
cynical because the assumption is that other countries should have
wage inflation merely because the United States had not had the
fortitude or the determination to put an end to it.
ADJUSTMENT ASSISTANCE FOR FIRMS
The bill provides for "adjustment assistance" to firms adversely
affected by imports, to be used either in lieu of or in conjunction with
tariff adjustment (sec. 311-320). This is one of the much-heralded
"new tools" which the Kennedy administration claims is needed for
future trade negotiations. These provisions are a hoax.
The adjustment assistance for firms is intended not so much to
assist a firm injured by imports, as to provide the U.S. negotiators
with an "escape hatch," in lowering tariffs to a level at which serious
injury will inevitably result. The provisions are designed to "cover
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up" for the deficiencies in the negotiations rather than to promote
the interest of American industry. It adds nothing except "redtape"
to the existing provisions of the Small Business Act, as amended
(15 U.S.C. 631), and the Small Business Investment Act of 1958
(15 U.S.C. 661). The adjustment assistance scheme is it "mirage."
A firm seeking adjustment assistance under the trade bill must
first obtain a favorable finding from the Tariff Commission that the
firm has been injured by imports as a result of trade concessions.
The firm must then file an application for adjustment assistance with
the Secretary of Commerce, setting forth a plan or program which
the firm intends to adopt if the assistance is granted. The Secretary
of Commerce then has his "experts"-including outside management
consulting firms--review and modify the plan to conform with the
Secretary's views as to a desirable future for the firm. Certain
criteria are set forth in the bill. The plan must be certified (1) to
be reasonably calculated to materially contribute to the economic
adjustment of the firm, (2) to give adequate consideration to the
interests of the workers, and (3) to demonstrate that the firm will
make all reasonable efforts to use its own resources for economic
development. Thus, since the workers are also involved, the Secre-
tary of Commerce submits the plan to the Secretary of Labor for his
approval, together with any other agency which Commerce determines
to be appropriate. If the plan survives all of these hurdles, the firm
will become entitled to a loan. In addition, if the Secretary of Com-
merce so certifies, the firm will also be permitted to carryback a
net operating loss resulting from the impact of imports for an addi-
tional 2-year period.
Except for the extension of the net operating loss carryback, the
so-called "tool" gives no relief beyond that provided under the existing
statute for small business. Presumable, the carryback extension
was necessary to take care of the lapse of time which will ensue while
a firm goes through the procedure required to qualify for adjustment
assistance under the trade bill. Although it may be argued that
large firms do not come under the "small business" definition, it is
not the large firms, with diversified product lines, which will require
adjustment assistance. There are adequate provisions in existing
law for assisting small business to obtain proper financing where
financing is not otherwise available. Due to the fact that the overall
operations of it firm affected by imports must be taken into account
in granting adjustment assistance, it is extremely unlikely that any
firm would qualify which would not also meet the qualification of a
"small business." It is only the small firm, which the Small Business
Administration was created especially to assist, which would normally
qualify for adjustment assistance under the trade bill. For this
reason, it is clear that the adjustment assistance provisions in the
trade bill are intended to relieve the negotiators from responsibility
for their acts, and not to help the firms which may be affected by the
negotiations.
The Small Business Administration, operating under the Small
Business Act, as amended, and the Small Business Investment Act
of 1958, is empowered to give fina'tcial assistance to all qualifying
small business concerns. The Small Business Administration has the
authority to make loans to finance such items as plant construction,
conversion, and expansion, including the acquisition of land. Loans
can be made to facilitate the acquisition of equipment, facilities,
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machinery, supplies, and materials as well as to supply working cap-
ital. Beyond these specified items the agency can make such loans
as may be necessary to insure a well-balanced national economy.
There are many types of loans available beyond the normal direct
loans and deferred participation loans.
In view of the broad scope of authority granted to the Small:
Business Administration, and the successful operation of that agency,,
we see no need for any separate adjustment assistance program in the
trade bill. Instead, the responsibility for avoiding serious injury of
any major scope should rest squarely on the shoulders of our
negotiators.
It also may be argued that a similar adjustment assistance program
was successfully adopted by the Common Market in alleviating the
hardship which resulted from the elimination of duties between
member nations. In this respect, however, the situation is not
analogous. The Common Market does not, to our knowledge, intent
to substitute adjustment assistance for protective tariffs where an
industry within the Common Market will. be injured by imports from
outside the Common Market. On the contrary, the external tariff
wall and quotas of the Common Market are designed to protect its
domestic industries.
ADJUSTMENT ASSISTANCE FOR WORKERS
The. bill also provides for adjustment assistance to workers adversely
affected by imports to be used in lieu of or in conjunction with tariff
adjustment (sec. 321-328). These provisions establish a special
program of unemployment compensation and training for workers
found to have been adversely affected by imports, differing in its terms
and benefits from State unemployment compensation programs and
the Manpower Development and Training Act of 1962 (Public Law
87-415), signed into law March 15, 1962.
A worker who loses his job on account of imports is placed in a
special category from a worker who may lose his job on account of
technological changes, the closing of defense plants, shifts in defense
production, changes in buying habits of the consumer, exhaustion of
mineral resources, or for any other cause. In justification for this
"preferred" status, the specious argument is advanced that the worker
adversely affected by imports is injured as a result of governmental
action-the removal of trade restrictions. There are a myriad of
other governmental actions which displace workers. It is doubtful,
whether the ultimate responsibility for the loss of a job can ever be
attributed to any single factor or act of Government. The displace-
ment of a group of workers of the firm producing an article affected by
imports, also affects the jobs of workers of other firms supplying
services or components to the firm producing the article. The latter
receive no special consideration under this bill, although equally
affected by the same governmental act.
The lack of employment for a worker seeking a job, or the loss of a.
job in an industry in which a worker has spent the better part of his
productive life, should be avoided, if at all possible. The cause of the
worker's misfortune-whether foreign competition, increased automa-
tion, technological changes, or product obsolescence-is not a con-
trolling factor. Every effort should be made-particularly at the
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State level-to assist the worker to recover from his misfortune..
After careful consideration, upon the recommendation of the Com-
mittee on Labor and Public Welfare of the Senate and the Committee
of Education and Labor of the House, the Congress in this session
enacted the Manpower Development and Training Act of 1962 to,
meet this need. In reporting this act, the Senate Committee on
Labor and Public Welfare, said:
The more rapidly our economy advances, the more rapidly
do skills become obsolete. With the growth of automation,
we can anticipate that the need for continuous retraining of
the labor force will become more and more pressing. Much
of this retraining is now carried on by public educational
authorities, assisted by the Federal Government's vocational
education program, and much is done by private schools.
But it is clear that this combined Federal, State, local, and
private effort falls far short of the total need, and that with-
out an intensive nationwide program to provide opportuni
ties for retraining, tens of thousands of worthy men and
women will never be able to obtain the skills which will
enable them to be self-supporting and to make their maxi-
mum contribution to the Nation's productivity.
S. 1991 establishes such a program. It directs the Sec-
retary of Labor to take the lead in determining the training
needs of the Nation, in consultation with local authorities.
It provides funds for establishing training programs, pri-
marily through the existing public educational authorities.
It authorizes the payment of subsistence allowances to un-
employed persons, who have had 3 years work experience
and who are heads of families, during the time they are
enrolled in training. It provides that the Secretary of
Labor shall report annually on the Nation's manpower re-
quirements and resources, and that the President shall report
annually to the Congress (S. Rept. 651, 87th Cong., 1st
sess., p. 2).
We fully realize that regardless of the skills or intentions of our
negotiators, there is no assurance that some workers may not be
adversely affected by increased imports. This may be unavoidable.
It should, however, always be held to a minimum. If this does occur,
the Manpower Development and Training Act should be adequate to
meet the needs of such workers. Their situation is no different than
that of other displaced workers for whom this legislation was enacted.
There is no justification for setting up legislative preferences as be-
tween unemployed workers who are unable to find employment
through no fault of their own.
In proposing the Manpower and Training Act, the appropriate
committees took into account the level of benefits and the period of
time which would be required to retrain a displaced worker. In
describing the causes of the unemployment which the act sought to
cure, the Senate committee further said:
The unemployed person whose skills suddenly become
obsolete faces special hardships. He may have spent a
number of years in hi: old job and become accustomed to
better than average pay, bringing with it a high standard
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of living for himself and his family. He will find diffi-
culty in finding a now employer because many companies
have age limitations in hiring. He probably has made
commitments for payments on his home, life insurance, and
other household goods. He may have prepared his chil-
dren for a college education.
His hopes and his self-respect are in jeopardy-in jeopardy
not because of his own shortcomings or because of a tempo-
rary recession, but because his employment relationship
has been severed permanently. If lie is a coal miner, the,
consumer's need for coal may have been met by other fuels;
if a semiskilled factory hand, his firm may have failed or
may have been relocated many miles away. Foreign com-
petition displaces domestic producers. Machinery and auto-
mated equipment eliminate whole employee classifications.
These are examples of structural unemployment-unemploy-
ment caused by some structural change in the economy-
and studies have shown that such unemployment is likely
to be of long duration (S. Rept. 651, 87th Cong., 1st sess.,,
p. 11). [Italic added.]
The problem of the worker displaced by foreign competition was
thus specifically considered in the enactment of the Manpower De-
velopment and Training Act. His needs were deemed to have been
adequately provided for in that act. Without professing any extraor-
dinary knowledge in this field, the Ways and Means Committee in
reporting out the trade bill proposes a different and more liberal scale
of unemployment compensation and training allowances, for a longer
period of time, and irrespective of State unemployment compensation
standards.
ADJUSTMENT ASSISTANCE PROVISIONS SHOULD BE STRICKEN FROM
THE BILL
The undersigned members of the committee are opposed to the,
adjustment assistance provisions-whether for firms or for workers-
irrespective of the preferential treatment provided for workers
qualifying for relief under the trade bill. Adjustment assistance'
insures that the U.S. negotiators will do a poor job of negotiating.
Unemployment compensation and retraining, no matter how liberal,
are a poor substitute for a job. The removal of the responsibility of
the U.S.. negotiators in their trade negotiations to protect the job of
the American worker represents a basic change of policy which we-
and the American worker-should be unwilling to accept. His?
fellow worker in the Common Market certainly will not be called
upon for similar sacrifices.
CONCLUSION
The trade bill (H.R. 11970) as reported by the Ways and Means,
Committee is an immeasurable improvement over the bill (H.R. 9900)
which the Kennedy administration sent to the Congress. The role
of the Tariff Commission in determining the economic effect of
possible tariff reductions has been reinstated. The escape clause,
has been strengthened. It is no longer to be regarded as "extraor-
dinary relief". Restrictions have been imposed upon extending the-
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most-favored-nation principle indiscriminately to other nations
regardless whether such nations might be adopting restrictive meas-
ures against the United States. Responsibility for the negotiations
will be vested in a Special Representative for Trade Negotiations,
appointed by and with the advice and consent of the Senate. The
staging requirements have been strengthened by striking the provi-
sion permitting a reduction in tariffs of up to 5 percent ad valorem
in any one year, irrespective of the existing rate of duty. An Inter-
agency Trade Committee has been established to provide a forum
for hearings on alleged unfair trade practices in violation of our
international agreements. This agency can become an important
part of our trade policies and practices. Not only do many of these
changes constitute an improvement over the bill as submitted by the
administration, but some go beyond existing law.
If it were not for the fact that the Kennedy administration publi-
cized the trade bill as being the means whereby we might obtain eco-
nomic utopia, we would not have been constrained to sound a note
of caution in these separate views. According to the administration,
the bill will bring about:
An increase in consumer welfare.
An increase in employment.
An acceleration in the growth of the domestic economy.
Maintenance of our economic leadership in the free world.
An end to Communist economic penetration.
Assistance to developing and emerging nations.
The arresting of our balance-of-payments deficits.
And, to clinch the sale, an end to the drain of our gold reserves.
According to the Kennedy administration, this is all going to be
accomplished by the enactment of 12 pages of authority for the Presi-
dent to enter into agreements with the Common Market and other
free world nations to lower or remove our tariffs in exchange for re-
ductions in their tariffs or duties. In the face of these extravagant
claims, we would be remiss in our duty to the American people if we
remained silent. In sounding a note of caution, it is not our intention
to express opposition, as such, to legislation for the promotion of
reciprocal trade among the nations of the free world.
NOAH M. MASON.
JOHN W. BYRNES.
THOMAS B. CURTIS.
JAMES B. UTT.
JACKSON E. BETTS.
BRUCE ALGER.
STEVEN B. DEROUNIAN.
HERMAN T. SCHNEEBELI.
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SEPARATE VIEWS OF HON. THOMAS B, CURTIS ON
H.R. 11970
As one of the five Republican members of the Committee on Ways
and Means who voted to report II.R. 11.970, I wish to take this
opportunity to point out what I feel is the need for legislation of this
nature and, at the same time, to indicate those provisions of this
measure which I believe are undesirable and even dangerous. Both
the committee report and the separate Republican views, including
the dissents, do an excellent job of bringing into focus the ideas which
are embodied in this bill. There are points in each with which I
agree, and points in each with which I disagree, as I shall set forth
to some degree in this statement.
These views are submitted with the underlying belief that the needs
of our time require that the Congress delegate additional authority
to the Executive in order to stimulate international trade on a fair
and reciprocal basis through entering into further trade agreements
with foreign nations.
The primary issue in this area now, as it has been in the past, is not
whether we should delegate authority to the President. Our experi-
ence in the delegation of these powers under the reciprocal trade
agreement program, the delegation of powers over interstate commerce
to various agencies under similar constitutional authority and the
experience of the Smoot-Hawley Tariff Act of 1930, when Congress
last attempted to write the details of tariff legislation, has led to a
unanimity of opinion that the Congress should delegate much of this
authority either to a tribunal or to the Executive, or both. The pri-
mary issue that the Congress must face is that of setting guidelines
within which the President may exercise his delegated authority.
On the positive side, this proposal contains new and important
guidelines for the exercise of Executive power in the trade field, guide-
lines vastly improving the manner in which the President may utilize
his authority. They consist mainly of procedures, procedures which
have been badly needed in our trade program. These procedures,
used with wisdom, can be developed into an efficient mechanism
establishing certainty, promptness, and justice in matters which touch
upon our citizens' property rights and job rights, as affected by our
trade agreements.
These new procedures fall into two categories.
First, there are the prenegotiation and negotiating procedures. The
great innovation in this area is in the negotiating team. This.team
will be given greater responsibility and will be no longer a faceless,
anonymous group. Together with this responsibility, the negotiating
team is to be given greater status. The Chief Negotiator will bear
the rank of Ambassador Plenipotentiary and he and his deputy will
be appointed by the President subject to confirmation by the Senate.
This enhanced status and responsibility will put our negotiating team
on a par with those of foreign nations, whose negotiating teams are
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Second, there are the enforcement procedures. At present there is
no established body before which American business and labor can
present allegations of unfair trade practices which are in violation of
international commercial agreement. This bill establishes such pro-
cedures. The Interagency Trade Organization is created as a forum
where interested persons can establish the truth of alleged unfair
foreign trade restrictions in violation of trade agreements. If the
Executive carries out the intent of the Congress when a violation of
a trade agreement is established he may withdraw concessions. This
can become an important part of our foreign trade policies and prac-
tices. It should be pointed out that the Interagency Trade Organiza-
tion is not set up to hear only the complaints of our domestic industry
and labor. It will' be available as well for our importers to register
complaints of alleged unfair practices by our domestic industry
against foreign imports. The importance of this device should not
be played down. It can be an effective force in the effort to establish
the type of fair trade practices in international commerce which are
essential to the stimulation of increased foreign trade.
The escape clause, the national security clause and the peril-point
procedure remain, although the unrealistic requirement of specific
peril points is eliminated. Commonsense dictates that a good
negotiating procedure include the finding of peril points, whether
required by Congress or not. It is important for the negotiating
team to know what effect concessions would have upon American
'business and jobs, upon the economy overall. The Committee for
Reciprocity Information and the Tariff Commission will continue
their previous functions in this area, and the Chief Negotiator will
'have the responsibility for seeing that this groundwork is accomplished.
In essence, H.R. 11970 is not a new approach to negotiating trade
agreements. It is really a refinement of the existing procedure, the
last step to be taken under the Smoot-Hawley Tariff Act. After the
powers granted by H.R. 11970 have been exercised, we will have little
'or no trading material left. We will have traded it all away.
There are two dangerous innovations in this bill.
The first is that it may not turn out to be, as the Kennedy admin-
istration so vociferously proclaims it to be, a free trading bill. Rather
it might well be a measure laying the groundwork for substituting a
system of licenses, quotas, Government subsidies, cartels, and other
governmental regulations of trade for the tariff mechanism. So em-
ployed, it would establish Government control through the exercise
,of discretionary power in the imposition of these trade limitations and
substitute bureaucratic decision for the operation of the marketplace
in international trade. Free trade is based upon fair trade and a sys-
tem of trade regulation which has no basic concept of what consti-
tutes fair and reciprocal trade cannot produce either free or increased
trade in the long run.
Western European countries, and most other countries of the world
?except the United States, have long used these more restrictive and
bureaucratic devices for regulating international trade. A trade
policy based upon tariffs, if regulation is to be presumed, on the other
hand, is more progressive and liberal in that it retains a basic portion
of the decision-making function in the marketplace.
It may be that the present administration, under the cloak of free
trade, is seeking to substitute these more regressive trade regulators
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TRADE EXPANSION ACT OF 1962 99
for the tariff system. It denies that this is the case, but it utilized
section 201 of the Agriculture Act in order to bring about an inter-
national cartel in textiles at the Geneva Conference in January. The
Kennedy administration has opposed attempts to repeal section 201
and has requested, in fact, that this broad section be further broad-
ened so that agreements setting quotas and licenses under it would
have application to nations not parties to the agreement. This course
of action indicates that there is an intent to utilize this power further.
So long as section 201 remains on the books, the beneficial procedures
of H.R. 11970, establishing rights in our citizens as opposed to privi-
leges, to be handed out at will by the Executive bureaucracy, become
almost meaningless.
The second dangerous innovation is the concept of relief provided
in the trade adjustment sections of the bill. Relief is not limited to
governmental aid so a business can move out of a field in which it
cannot efficiently compete with foreign concerns, relief may be a
subsidy to enable a business to become sufficiently "efficient" to
compete.
The difference can be illustrated by an actual case. Our west coast
tuna fishermen were having a difficult time competing with the
Japanese tuna fishermen. Tariff increases were requested and denied.
Instead, the Government, because private bankers would not, lent
money to certain of the tuna fishermen to "modernize" their boats.
Note: The net result is the same, the fishermen stayed in business.
Or at least the objective was the same. The difference, however, is
quite marked when one realizes that if the tariff had been used to help
the west coast tuna fishermen, then all tuna fishermen would have had
an equal opportunity of modernizing their boats and the ones who
proved to be the most efficient would have been successful. When a
Government loan, which is a subsidy, is used, the tuna fishermen who
had the ability to persuade the Federal bureaucrats to grant a loan
were the ones who survived. Thus the survivors could be the less
efficient fishermen, but the more proficient persuaders.
I join in the views expressed by my colleagues which more fully
criticize the trade adjustment sections of this bill. I wish to empha-
size, however, that the reason we oppose them, and seek to eliminate
them, is because we are concerned about the damage that unfair
foreign trade competition can do to our workers and our industries,
and the inadequacies of these provisions for repairing the damage done.
The best thing to do is to avoid the wound, not bare our breast to it
and concentrate on the first aid treatment of it.
If the wound does come about we already have mechanisms for the
assistance of small businesses to enter fields in which they can compete.
We recently passed the Manpower Training Act for the retraining of
workers, if the overreaching reasons of national policy requires that
tariffs be lowered to the point at which these workers and businesses
sustain economic injury. It is shameful that the administration
ignores the mechanisms that already exist and seeks to impose upon
them new systems, conflicting and competing with them. Following
this path will damage the good programs we have, including the unem-
ployment insurance program, and will fail to produce the results
sought.
It is also unfortunate that administration spokesmen have, in their
appearances before the committee, been so irresponsible in responding
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100
to questions about how the powers granted in H.R. 11970 would be
carried out with respect to the GATT, section 4 of NATO, the OECD
and the, U.N. If thought had been given to the integration of H.R.
11970 into these important international organizations, the adminis-
tration officials were not sharing them with the committee. It is
difficult to decide whether lack of candor is more ominous for the
future of our country than is ignorance.
In conclusion I would like, once again, to note the inconsistency
of the goals established for this bill and the effects of the foreign tax
provisions of H.R. 10650, passed by this body and now under study
by the Senate Finance Committee. We are asked by passing this bill
to help build a stronger international community through the ties of
commerce; the foreign tax provisions of the tax revision bill, on the
other hand, hobble the operation of American companies working
abroad in the market they serve and go far toward severing an im-
portant part of the commercial ties which can help strengthen the
ntcrnational community of nations.
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ADDITIONAL VIEWS OF HON. STEVEN B. DEROTJNIAN ON
H.R. 11970
While I share the views of the other Republican members of the'
committee with respect to the deficiencies in H.R. 11970, as well as
the attitude of the Kennedy administration in its approach to trade
negotiations, I am constrained to support the bill.
I3.R. 9900, as presented by the Kennedy administration, provided;
for a complete surrender of the Congress to the Executive of all'
congressional authority over trade matters without an opportunity
for those adversely affected to be heard except at the discretion of
the Executive. I was unalterably opposed to that bill.
Fortunately, however, the bill reported out by the committee is
more nearly in conformity with existing law. H.R. 11970 retains the
concept of the "peril-point" function of the Tariff Commission. The
escape-clause procedure has been reinstated, not as "extraordinary
relief," but on an equal basis with the so-called "adjustment assist-
ance" provisions. The vote of a majority of the Congress can
institute escape clause relief. The bill now provides for the appoint-
ment of a Chief Negotiator, subject to confirmation by the Senate,
thereby fixing the responsibility for trade negotiations. The bill
provides for retaliatory action where other nations discriminate
against U.S. imports. In many respects, H.R. 11970 is an improve-
ment over existing law.
While I will vote in support of the bill, I would still favor eliminat-
ing those provisions relating to "adjustment assistance." A Federal
"dole" is no substitute for sales and jobs.
I am also very much concerned over the attitude of the Kennedy
administration in negotiations with the European Economic Com-
munity, and particularly the failure of the administration to realize
that trade is a weapon being used by the Communists in the cold
war. When the United States, or the other free nations, trade with
the Communists, we are helping them to destroy us. The so-called
"Ball report," prepared by Under Secretary of State George W. Ball
for the President, recommended a defeatist attitude toward Com-
munist trade, which I am. not willing to accept. Trading with the
Communists does not advance the cause of the free world. The
Kennedy administration must make greater efforts to curtail trade
between our allies and the Communist world.
STEVEN B. DEROUNIAN.
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ADDITIONAL VIEWS OF MESSRS. MASON, KNOX, UTT,
BETTS, AND ALGER IN OPPOSITION TO H.R. 11970
The undersigned generally support the separate views of our
Republican colleagues. We feel they contain statements, however,
which tend to oversimplify the problems and objectives of the bill.
We differ because we believe that the bill as a whole is not an improve-
ment over existing law.
Since we oppose H.R. 11970, we feel compelled to express our own
views in addition to those set forth by our colleagues in their separate
views.
In our opinion H.R. 11970 has the following further specific major
defects:
(1) It licenses the President to cause injury to domestic industries
and workers; intends that this be done; and provides for a Federal
dole to workers and subsidies to business to deal with the anticipated
distress.
(2) It transforms the trade agreements program from an instrument
for the expansion of U.S. exports into a kind of foreign-aid or diplo-
matic currency for use in accomplishing nontrade objectives, such as
strengthening economic relations with foreign countries, assisting in
the progress of less developed countries, and preventing Communist
penetration; this is the necessary effect of the multiple statement of
purposes (sec. 102) and the words empowering the President to make
agreements and proclaim reductions or eliminations of duty whenever
he determines "that any of the purposes" stated in section 102 "will be
promoted." This has nothing to do with expansion of U.S. exports,
or strengthening the U.S. economy; we are spending enough of our
treasure for foreign aid without throwing our domestic market onto
the pile as well.
(3) It assumes, illogically we believe, that total elimination of U.S.
duties on industrial and agricultural products (and, as it happens, of
any fishery products, through the 5-percent duty elimination author-
ity of sec. 202), made ostensibly for Europe's benefit, but extended to
Japan and all the free world under our most favored-nation policy,
will benefit rather than harm our internal domestic economy. The
history of trade agreements authority is that authority once given
never lapses; it is fully used. To empower the President to eliminate
duties, as H.R. 11970 does under a variety of headings, will result in
5 years in agreements transferring on masse our vitally important
protective duties on industrial, agricultural, fishery, and mineral prod-
ucts to the free list. Without meaningful safeguards, this courts
disaster with an open hand.
(4) By providing the President with the appealing largess of the
Federal Treasury for exercises in magnanimity with the displaced
workers of the new trade program as an alternative to the stern tasks
of diplomacy implied by the recent Common Market retaliation
against our carpet and glass tariff adjustments, escape-clause relief
in the form of tariff action to preserve the strength of our domestic
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industries against unfair low-cost foreign competition will quickly
become part of the forgotten lore of the past. This bill, H.R. 11970,
will put an end to tariff adjustment by the Executive. Congress has
already put an end to such adjustment by legislative initiative. We
refuse to believe that the exigencies of this or any age require that we
in the Congress make a dead letter of article I, section 8, of the Con-
stitution; hence, we must out of a decent respect for our oath to uphold
and defend that Constitution cast our vote against H.R. 11970.
Our concern is the strength of our domestic economy. We refuse
to believe that the present emulation by Western Europe of our 173-
year demonstration of a common market requires us to dismantle in
haste the external tariff policy which has served to knit our strength.
We reject the notion that the imbalance in payments our defense of
Europe entails requires that we throw overboard the means for
balance in our regulation of imports. We will not take a hand in
sewing cockle in our rich American economic fields. If the adminis-
tration would discover the secret of European economic growth, let us
suggest that the integrity of the Common Market achieved by the
external tariff and the lightened load of governmental budgets eased
by our own generosity in assuming their military defense and foreign
aid responsibilities toward others are not inconsiderable factors.
Instead of dismantling our, external tariff (modest though it is at
today's 12-percent level) and adding to the burden of our foreign
military and economic aid, we might experiment with the reverse
situation: Preserve our external economic tariff belt, expedite de-
preciation allowance tax reform, and lighten the tax load of foreign
aid dollars resting so heavily on our business organizations.'
For more than 4 years unemployment in the United States has been
running at the rate of 6 percent or more of the labor force. The latest
available figures show that it is still in that range.' In seven countries
of Western Europe, unemployment is below 2 percent, in two countries,
below 5 percent.' In Japan, unemployment is less than 1 percent.4
Labor shortages are known to be "fairly general" in the northern areas
of the Common Market.' So unemployment is becoming uniquely
our problem, not that of our trading partners. Their economies are.
growing at a rate at least twice (Europe) to three times (Japan),
ours.6 At present rates of duty, we are told by the Secretary of the
Treasury to expect a "sharp increase in imports" over 1961's level,"
and these rates are to be further reduced 20 percent as a result of the
recently concluded "Dillon round" of tariff negotiations. We must
therefore recognize that it is upon this rising volume of imports that
the effects of still further duty reductions or eliminations under H.R.
11970 would be based. The intensified rise in volume is obviously
unnecessary to sustain full employment abroad. What consequences
can possibly flow for our own labor force from such an accelerated
1 See "Keeping Competitive," Wall Street Journal, June 5, 1962, Congressional Record, June 8, 1962
P. 0292.
2 U.S. Department of Labor Employment and Earnings, May 1962.
s OEEC, Twelfth Annual Economic Review; of. International Labor Review, Statistical Supplemon4
May 1962.
4 International Labor Review, Statistical Supplement, May 1962.
A EEC, Information Memo. p. 8119, April 1962.
1 OEEC, Twelfth Annual Economic Review, p. 146; Business Cycle Developments, U.S. Department
Mar. 26, 1982, p. 12 Economic Advisers, table 11.
Payments, President's
7
of CoP rtrto the President on the Balance of Reort of the
Report
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increase in imports, but more unemployment?8 The administration's
proposal, now seconded by the majority of this committee, to create a
preferred class of unemployed with a special claim on state unemploy-
ment compensation payments will solve nothing. Indeed, it will
create an mequity as between classes of unemployed in the States
today which will provide tomorrow's argument for increasing all other
unemployment benefits to correct the inequity. This is a familiar
technique in labor negotiations, but scarcely amounts to the order
of economic statesmanship needed to get America on the move.
Wages for a growing labor force paid out of wealth generated by
increased production is the need-not benefit payments for a growing
unemployed force paid out of the tax burden of a retarded industrial
economy.
We recommend that the matter of trade agreement authority be
deferred for 1 or 2 years, while more study and attention are given to
developments in the Common Market, and the impact of further tariff
reductions on the strength of our domestic economy. If and when
new authority is given to the President, it should be done, as in the
past, under the framework of our traditional trade agreements legis-
lation, with strengthened peril-point and escape-clause provisions.
NOAH M. MASON.
VICTOR A. KNOX.
JAMES B. UTT.
JACKSON E. BETTS.
BRUCE ALGER. rusluent catesl 'will in generaebegefjt our most efficient and jexstates pandin that
" But l thtrade ese industries odo not
appear to create new jobs as they expand. The "efficient and expanding industries" are those which are
characterized by technological change and increased productivity. In an article "Technological Change
and Employment," to appear in the Monthly Labor Review, July 1962, top officials of the Bureau of Labor
Statistics? oint out that decrease8 in employment associated with increased productivity amounted to an
~yerage pfp200,000 jobs per year during the period 1953-59. And, they estimate that durinq the next decade
it does not appear unreasonable that gains in output per man-hour in many industries will be associated
with decreases in employment amounting to at least 100,000 workers per year, on the average." The authors
point out that at the current level of civilian employment, if output per man-hour in the total economy
were to increase at the rate of 3 percent a year, output of goods and services "would have to increase fast
enough to provide about 2 million jobs per year in order to retain the same level of employment." [Emphasis
added.] This is on top of the new jobs which must be provided for over 1 million net additions to the labor
force each year. In the face of this evaluation, we cannot be sanguine as to the employment benefits which
might occur as our "most efficient" industries expand their exports. We cannot be complacent about the
absolute displacement of employment which is occurring now, and which will occur on an accelerated basis
as a resul s
t of shrply increased reports, if the deep tariff reductions or duty eliminations authorized by H it
1190 occur. As the CEn Observed, "The rates that now remain after a generation of reciprocal reductions
are the hard cases, the rates that have been difficult to reduce because they protect industries that are sensi-
tive to import competition" ("A New Trade Policy for the United States," April 1902, p. 6).
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