Page National Cattlemen's Association, Sam Washburn, letter... Preyer, Hon. Richardson, a Representative in Congress from the State of 228 208 Rose, Hon. Charles, a Representative in Congress from the State of North 209 Tanners' Council of America, Inc., Eugene L. Kilik, letter 228 TRADE WITH JAPAN TUESDAY, AUGUST 26, 1980* U.S. HOUSE OF REPRESENTATIVES, The subcommittee met at 10 a.m. pursuant to notice, in room 1100, Longworth House Office Building, Hon. Charles A. Vanik (chairman of the subcommittee) presiding. [Press release announcing the hearing follows:] [Press release of Aug. 19, 1980] CHAIRMAN CHARLES A. VANIK, (D., OHIO), SUBCOMMITTEE ON TRADE, COMMITTEE ON WAYS AND MEANS ANNOUNCES HEARING ON H. CON. RES. 376 RELATIVE TO JAPANUNITED STATES TRADE; ON H. CON. RES. 383, DISAPPROVING THE PRESIDENT'S DETERMINATION TO DENY IMPORT RELIEF ON LEATHER WEARING APPAREL; AND ON CERTAIN TARIFF AND TRADE BILLS, TUESDAY, AUGUST 26, 1980 The Honorable Charles A. Vanik (D., Ohio), Chairman, Subcommittee on Trade, U.S. House of Representatives, today announced that the Subcommittee on Trade will hold a public hearing on Tuesday, August 26 on H. Con. Res. 376, introduced by Mr. Vanik, relative to Japan-United States trade. Administration and private sector appearances on H. Con. Res. 376 will be limited to witnesses specifically invited by the subcommittee. In addition to the nontariff barrier and investment issues mentioned in the resolution, the subcommittee is especially interested in receiving information on the United States-Japanese negotiations relating to the MTN agreement on Government procurement (NTT-issue), recent trends in Japanese auto exports, and ideas for long-range improvement in United States-Japan trade relations (such as the work of the Wise Men's Group). Following testimony on H. Con. Res. 376, the subcommittee will receive testimony, on H. Con. Res. 383, introduced by Mr. Shannon, to disapprove the determination by the President not to provide import relief for the leather wearing apparel industry. On January 24, 1980, the U.S. International Trade Commission unanimously reported to the President that coats and jackets of leather were being imported in such increased quantities as to be a substantial cause of serious injury, or the threat thereof, to the domestic industry and recommended an increase in the rate of duty on such imports (not valued over $150 each) to 25 percent ad valorem in the 1st year; 20 percent ad valorem in the 2d year; and 15 percent ad valorem in the 3d year. On March 24, the President decided to deny import relief to the industry as not in the national economic interest. Passage of the disapproval resolution would implement the ITC's original recommendation. Finally, testimony will be heard on the following four tariff and trade bills: H.R. 6750, (Mr. Edgar). "The Hovercraft Skirt Tariff Act." H.R. 7660, (Mr. Jenkins). To extend duty-free treatment to certain freight contain ers. H.R. 7709, (Mr. Jones of Oklahoma; Mr. Evans of the Virgin Islands). To amend the tariff schedules of the United States to increase the quantity of cigarettes that may be accorded duty-free treatment if acquired in insular possessions and entered by returning U.S residents. * The August 26 hearing covered a number of issues (as per the press release). The Japan portion of the hearing is printed here. Other issues discussed on the 26th are printed elsewhere. (1) H.R. 7802, (Mr. Downey and others). To amend the tariff schedules of the United States with respect to the rates of duty on ephedrine, racephedrine, and their salts. The hearing will be held at 10 a.m. in the main Committee on Ways and Means hearing room, 1100 Longworth House Office Building. Officials from interested executive branch agencies will testify first, followed by testimony from the interested public. Given the limited time available and in order to maximize time for questioning and discussions, witnesses will be asked to summarize their statements. The full statement will be included in the printed record. Also, in lieu of a personal appearance, any interested person or organization may file a written statement for inclusion in the printed record. Requests to be heard must be received by the committee by noon Monday, August 25. The request should be addressed to John M. Martin, Jr., chief counsel, Committee on Ways and Means, U.S. House of Representatives, room 1102 Longworth House Office Building, Washington, D.C. 20515; telephone (202) 225-3625. Notification to those scheduled to appear and testify will be made by telephone as soon as possible. In this instance, it is requested that persons scheduled to appear and testify submit 30 copies of their prepared statements to the committee office, room 1102, Longworth House Office Building, by the close of business, Monday, August 25. Persons submitting a written statement in lieu of a personal appearance should submit at least three copies of their statement by the close of business, Friday, August 29, 1980. If those filing statements for the record of the printed hearing wish to have their statements distributed to the press and the interested public, they may submit 50 additional copies for this purpose if provided to the committee during the course of the public hearing. Each statement to be presented to the subcommittee or any written statement submitted for the record must contain the following information: 1. The name, full address, and capacity in which the witness will appear; 2. The list of persons or organizations the witness represents, and in the case of associations and organizations, their address or addresses, their total membership, and where possible, a membership list; 3. The bill or bills on which the witness will be testifying and whether the testimony will be in support of or opposition to it; and 4. A topical outline or summary of the comments and recommendations in the full statement. Mr. VANIK. The subcommittee will be in order. The first bill before the subcommittee today is House Concurrent Resolution 376, relating to United States-Japan bilateral trade relations. This resolution has been sponsored by 80 Members of the House, including 15 members of the subcommittee and 21 members of the full committee. We will hear first from our colleague, Mr. Brodhead, and then from Congressman Don Pease of Ohio and a panel of administration witnesses. We have asked the panel not to read statements but to be prepared to respond to questions concerning the current range of U.S.Japan bilateral trade problems. At about 11:15 or so we will receive testimony on House Concurrent Resolution 383, a resolution disapproving the President's decision not to provide import relief to the leather wearing apparel industry. Testimony on that resolution may take an 12 to 2 hours. We will then receive testimony on four tariff bills listed in the press release. Following all of the testimony, it is my hope that if a quorum is present we will mark up the United States-Japan resolution and the new MTN Agreement, the Customs Valuation Protocol, H.R. 7942. Time permitting, we will also mark up the noncontroversial tariff bills. House Concurrent Resolution 376 is a sense-of-the-Congress resolution calling for additional efforts by Japan, with the United States, to narrow the unacceptable trade imbalance between our two nations. For the past 2 years, and this year, our deficit with Japan has averaged $10 billion annually. The administration has predicted an increase in the deficit for the next year of about $1 to $2 billion, while some private analysts have predicted a $15 to $16 billion imbalance. Actions to reduce the deficits could include Japanese investments in this country, particularly in the automotive field, in auto parts manufacture and for the auto replacement parts market. Also, while Japan has made progress in liberalizing its markets, there are a number of areas in which the United States is highly competitive, yet the Japanese block our products. Japan's remaining trade barriers reduce our exports by at least several billion dollars a year. These barriers are totally inexcusable in light of our enormous, long-standing trade deficits with that country. New efforts must be made to dismantle those barriers. In April, Congressmen Jones and Frenzel and I visited Japan. We have prepared a detailed report on that visit. The report discusses at length our various trade problems; it raises some ideas for the long-range solutions to our cycle of trade disputes; and it stresses the urgent necessity for changes in policies and attitude in this country so that American goods will become more competitive in Japan and in world markets. That report will be completed and released next week. Today, however, we are not discussing the internal steps the United States needs to take or long-range trade issues. We are interested in receiving testimony on the current areas of dispute and controversy. During the current economic downturn more and more Americans have turned away from support of trade and have been questioning the merit of continuing our half-century policy of open trade. The sight of Japan's remaining trade barriers and the extraordinary one-sided nature of our bilateral trade has been the single biggest cause for the erosion of good will and support of trade in the United States. We do not care how Japan helps narrow the trade imbalance, as long as something is done. This resolution is only a sense of the Congress; it does not change any laws. But I believe that it should be viewed seriously, as a last appeal to Japan before the American public begins demanding legislation to narrow the trade imbalance, particularly in the automobile sector. I expect that this resolution, if adopted, will spur new efforts by both Governments to find solutions to the unacceptable imbalances. It is meant to be a clear signal to the Japanese of America's deep concern about these continuing, unacceptable balance-of-trade deficits. In the past, one of our problems in dealing with the Japanese has been the fact that we have been giving them mixed signals on how to deal with specific commodity problems. These mixed signals have created confusion in Japan. But on the issue of the size of the deficit and the need to do something about it, there is no mixed signal or divided concern in the Congress. This resolution is a clear statement to the Government of Japan, which requires some reaction and response from them on specific ways in which the trade imbalance can be narrowed. Before I proceed, I would like, first of all, to call on our colleague on the Ways and Means Committee, Mr. Brodhead, who wants to make a brief statement. Mr. Brodhead, we will be glad to hear your statement. STATEMENT OF HON. WILLIAM M. BRODHEAD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN Mr. BRODHEAD. Thank you, Mr. Chairman. I commend you for your interest in this problem and your continuing concern and your leadership in trying to find solutions. I thank you for the opportunity to appear before the subcommittee to express my views. It seems to me, Mr. Chairman, that many of us in Congressand, I think, in the Administration-do not understand the full extent of the problem with respect to automobiles. The difficulty we are in arose primarily because of the whole change in the American automobile market which occurred in March 1979 with the cutoff of Iranian oil. At that point the American market in which vans, and big cars were selling very strongly, and small cars, foreign and domestic, were moving very slowly, overnight shifted to the point where it has been very hard to give away a new or used full-sized car. It became a situation where the demand for small cars is greater than the American companies can meet and where the Japanese companies, which were there with good quality small cars, have been racking up record numbers of sales. The American industry is struggling to catch up with new programs to try to meet the competition, but in the meantime America is suffering great damage as a result of this situation, as a result of the acceleration in the sales of the imports. First of all, of course, it was estimated this morning by Douglas Fraser, the president of the United Auto Workers, that there are 1 million Americans in the auto industry out of work right now. He says about 250,000 directly working for the Big Four automobile companies and another 750,000 in parts and supplier industries. So we are talking about 1 million Americans out of work. In a social welfare state such as we have, we know these people who are out of work are being supported one way or the other. There is a huge cost to supporting 1 million families in this country who are doing no productive work. Second, the loss of revenues to our Federal, State, and local governments is very, very substantial. Third, what we are finding is large numbers of these people exhausting the benefits that they have either under contract with their employers or their unemployment compensation benefits and becoming a social welfare client. More importantly, I think, Mr. Chairman, something that we are neglecting to understand here, is that there is going to be a permanent loss to our industrial capacity. That is, we are losing capacity in steel, in steel fabrication, in electronics, in rubber, in glass, in textiles and all the things that go into American cars. |