76. Statement by Secretary of State Rogers Before the Senate Finance Committee1

Mr. Chairman2 and members of the committee, I welcome the opportunity to discuss with your committee the pending Trade Act. My comments will be made against the background of our relations with friendly countries and in the light of our position in world affairs.

Last year the President sent to the Congress a proposed Trade Act3 which followed in the tradition of American trade legislation designed to increase trade and prosperity by reducing barriers and obstacles to peaceful commerce in the world. In major part because of vigorous American leadership, international trade since World War II has been substantially relieved of the restrictions and distortions that we had inherited from the 1930’s.

I would remind the committee that in the 25 years since the end of the Second World War the world has had the longest period of sustained and rapid income growth in history, thanks in very important part to the unblocking of the channels of trade. The American people, along with peoples everywhere, have been the beneficiaries of this unprecedented period of prosperity.

The legislation before you incorporates many of the provisions that the President requested in his initial proposal to the Congress, including limited tariff cutting authority, liberalization of adjustment assistant provisions of the present Trade Expansion Act, and authority to eliminate the “American Selling Price” system of valuation.

It includes also a provision for the establishment of domestic international sales corporations, intended to assist our exports, which the administration subsequently had requested. The President has also indicated his willingness to accept a provision for restrictions on certain textile imports because our efforts to find other solutions to problems in our textile trade have thus far been unsuccessful.

The administration recognizes that the world environment is changing, that new economic, trade, and investment problems are [Page 267] appearing and that new approaches may be necessary. The President, therefore, has commissioned a group of distinguished Americans under the leadership of Albert Williams to study the emerging situation and to recommend a comprehensive set of foreign trade and investment policies for the 1970’s.

In the meantime, a bill limited to the provisions I have just enumerated would be a positive factor in our relations with the rest of the world. It would be accepted by our trading partners as evidence of American intention to continue along the broad lines of the post-war commercial policy that has served us all so well. It would be taken as a signal that the United States will maintain its place of leadership in the development of the world economy.

It would put us in a favorable position to achieve further reductions in barriers to our exports. It would permit us, I believe, to deal with the difficult problems in our textile trade in a manner calculated to minimize difficulties with supplying nations.

Unfortunately, the bill before you includes a number of additional provisions which the President did not request and which the administration considers to be contrary to the national interest. Primary among these are, first, provisions for quotas on individual items apart from textiles and, second, the potential extension of restrictions, including quotas, to many other products through an excessive loosening of the escape clause.

Additionally, the proposed bill would depart from past escape-clause procedure by setting an arbitrary arithmetic formula to be used in assessing injury. I must tell you that if other countries were to apply this approach to our own exports, there would be grave damage to the sales of hundreds of American firms and to the jobs of hundreds of thousands of American firms and to the jobs of hundreds of thousands of American workers.

I urge this committee, therefore, to recommend to the Senate the elimination of these undesired and potentially damaging features of the legislation.

We have made a careful assessment of the impact of this bill, not only upon our economic interests, but also upon our international interests. We are convinced that it would cause serious harm to the United States.

Naturally, we have heard from other countries about their views of the legislation as it now stands. The President and I heard some of these views at firsthand during our recent journey to Europe. The reactions abroad to the pending bill are those of deep concern and even alarm at the apparent direction of American policy.

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Our trading partners fear that the United States is about to make an historic turn in its foreign trade policy. Just as we have led the trading world on the way to a steady reduction of trade barriers, it is now feared that our example could drive the trading world back to the kind of bilateralism and restrictionism that crippled international commerce, including our own, in the 1930’s, and contributed to the disastrous consequences that we all know.

It may be said that these fears are unjustified, that the proposed legislation merely seeks to deal with certain special and urgent problems of the United States, and that other nations too have restrictions on imports. The fact is, however, that the legislation before you could lead to restrictions on a very large volume of U.S. trade, as much as $3 billion or more, and other nations are acutely aware of this.

It is also a fact that the very size of the United States in the world economy lends special weight and emphasis to everything we do and that our actions do set an example, for good, or bad, for everyone else. Obviously, other nations have trade restrictions, as of course we do. But we and the rest of the world recognize that the way to a reduction of the remaining obstacles to trade in the world is through hard, reciprocal bargaining, not by adding new and unnecessary obstacles.

Considering the potential damage to trade and the amount of public attention that has been and will be given to this matter, it must be expected that other governments would not be able to accept passively increased trade restrictions by the United States.

There is widespread fear of an impending trade war that no one wishes, neither we nor our trading partners. But we must realize that the political pressures on other governments could be so great as to lead to retaliatory actions against our trade. We are a very large exporter and in some fields the volume of our more dynamic export items already gives rise to foreign concern.

I hope that the Congress will give us a trade bill which will preclude any possibility of serious retaliation. I think it is my duty, nevertheless, to tell you what easily might happen, and it would be wrong for us to minimize the travesty of the situation that we might come to face.

Let me add that a liberal trade policy is essential if the developing countries are to achieve the self-reliance that the Nixon doctrine seeks to encourage. If we are going to foster self-reliance by the developing countries of the world, we must not deny to them the possibility of earning their own way. If we do that, we shall undermine the very processes that generate self-confidence and growth. The consequence will be that we will hurt them and ourselves as well.

The legislation before you appears in some respects to give the President a wide degree of flexibility in the application of the provisions [Page 269] of the legislation. Some may argue that this will enable the President to avoid the application of the worst features of the bill. But in many instances, this flexibility could not be used.

Specifically, it would be extremely costly to discriminate among countries in order to moderate the impact of the legislation. We are solemnly committed, in the General Agreement on Tariffs and Trade and in many bilateral treaties, to treat other countries on a nondiscriminatory, most-favored-nation basis. To do otherwise would be to dishonor our obligations.

We have economic and trading interests everywhere. We do not want to become a victim of a world fragmented into trading blocs and bilateral arrangements. It would ill serve our Nation to take the lead in restricting trade and damaging or destroying the principle of most-favored-nation treatment that is now written in our own basic trade law.

Mr. Chairman, I have spoken out of deep concern for the potential damage to our industry and agriculture of certain features of the legislation that you are considering. It is possible for this committee to propose to the Senate a bill that will advance our economic interests, not retard them, that will uphold our status and position in world affairs and that will still enable the administration to deal effectively and constructively with the pressing problems of specific firms and industries in our domestic economy.

A statute that is limited to the provisions recommended or supported by the administration will do that. A statute with additional and restrictive features, such as are contained in H.R. 18970, on the other hand, would threaten our economic interests and would undermine our position in the world, without meeting the true nature of our particular problems at home.

I earnestly invite you to look upon our trade legislation as part and parcel if our total national interests and in the framework of a coherent political and economic policy that takes into account our domestic needs and our world responsibilities.

I urge this committee, therefore, and the Senate to remove from the bill these unneeded and dangerous features and to send to the President trade legislation consistent with our tradition of leadership and with our national interests.

Thank you, Mr. Chairman.

  1. Source: Trade Act of 1970: Amendments 925 and 1009 to H.R. 17550, Social Security Amendments of 1970: Hearings and Informal Proceedings Before the Committee on Finance, United States Senate, Ninety-First Congress, Second Session (Washington, 1971), pp. 266-269.
  2. Senator Clinton P. Anderson of New Mexico was Acting Chairman in the absence of Senator Russell B. Long of Louisiana.
  3. See Document 44.