authorization of appropriations for and on oversight of the US

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AUTHORIZATION OF APPROPRIATIONS
FOR AND ON OVERSIGHT OF THE U.S.
INTERNATIONAL TRADE COMMISSION
HEARING
BEFORE THE
SUBCOMMITTEE ON TRADE
OF THE
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
NINETY-FOURTH CONGRESS
SECOND SESSION
FEBRUARY 19, 1976
Printed for the use of the Committee on Ways and Means
U.S. GOVERNMENT PRINTING OFFICE
67-60 WASHINGTON : 1976
010
COMMITTEE ON WAYS AND MEANS
AL ULLMAN, Oregon, Chairmans
WILBUR D. MILLS, Arkansas HERMAN T. SCHNEEBELI, Pennsylvania
JAMES A. BURKE, Massachusetts BARBER B. CONABLE, JR., New York
DAN ROSTENKOWSKI, Illinois JOHN J. DUNCAN, Tennessee
PHIL M. LANDRUM, Georgia DONALD D. CLANCY, Ohio
CHARLES A. VANIK, Ohio BILL ARCHER, Texas
OMAR BURLESON, Texas GUY VANDER JAGT, Michigan
JAMES C. CORMAN, California WILLIAM A. STEIGER, Wisconsin
WILLIAM J. GREEN, Pennsylvania PHILIP M. CRANE, Illinois
SAM M. GIBBONS, Florida BILL FRENZEL, Minnesota
JOE D. WAGGONNER, Js., Louisiana JAMES G. MARTIN, North Carolina
JOSEPH E. KARTII, Minnesota L. A. (SKIP) BAFALIS, Florida
OTIS G. PIKE, New York WILLIAM KETCHUM, California
RICHARD F. VANDER VEEN, Michigan
J. J. PICKLE, Texas
HENRY IIELSTOSKI, New Jersey
CHARLES B. RANGEL, New York
WILLIAM R. COTTER, Connecticut
FORTNEY H. (PETE) STARK, California
JAMES R. JONES, Oklahoma
ANDY JACOBS, Ja., Indiana
ABNER J. MIKVA, Illinois
MARTHA KEYS, Kansas
JOSEPH L. FISHER, Virginia
HAROLD FORD, Tennessee
JOHN M. MARTIN, Jr., Chief Coun el
J. P. BAKER, Assistant Chief Counsel
JOHN K. MEAGHER, Minority Counsel
SUBCOMMITrEE ON TRADE
WILLIAM J. GREEN, Pennsylvania, Chairman
PHIL M. LANDRUM,-Georgia BARBER B. CONABLE, Ja., New York
SAM M. GIBBONS, Florida BILL ARCHER, Texas
JOSEPH E. KARTH, Minnesota GUY VANDER JAGT, Michigan
RICHARD F. VANDER VEEN, Michigan BILL FRENZEL, Minnesota
DAN ROSTENKOWSKI, Illinois JOHN J. DUNCAN, Tennessee
JAMES R. JONES, Oklahoma
ABNER J. MIKVA, Illinois
JOSEPH L. FISHER, Virginia
OTIS 0. PIKE, New York
HENRY HELSTOSKI, New Jersey
HAROLD T. LAMAR, Professional Staff
DAVID B. ROHR, Professional Staff
MARY JANE WIoNoT, Professional Staff
TixoMAs IENDERSHOT, Professional Staff
(11)
CONTENTS
Press release of Monday, February 9, 1976, announcing hearing on the
authorization of appropriations for and on oversight of the U.S. Interna- -Page
tional Trade Commission ----------------------------------------- 1
WITNESSES
U.S. International Trade Commission:
Commissioner Will E. Leonard, Chairman, accompanied by Edward C.
Wallington, Jr., Chief, Financial Management ------------------ 3
Commissioner Daniel Minchew, Vice Chairman -------------------- 6
Steinberg, David J., U.S. Council for an Open World Economy ----------- 74
Stewart, Eugene L., Hand Tools Institute ---------------------------- 78
MATERIAL SUBMITTED FOR THE RECORD
U.S. International Trade Commission, Budget Estimates, fiscal year 1977- 103
America-Europe Conferences, Howard A. Levy, letter and enclosures- ---- 140
Electronic Industries Association statement ------------------------- 147
Far East Conference, Gerald J. lynn, and D. D. Day, Jr., Pacific West-
bound Conference, joint letter ------------------------------------ 149
Industrial Fasteners Institute, Clyde F. Roberts, Jr., statement --------- 153
Pacific Westbound Conference, D. D. Day, Jr., and Gerald J. Flynn, Far
East Conference, joint letter ------------------------------------- 149
AUTHORIZATION OF APPROPRIATIONS FOR AND
ON OVERSIGHT OF THE U.S. INTERNATIONAL
TRADE COMMISSION
THURSDAY, FEBRUARY 19, 1976
U.S. IlOUSE OF REPRFESNTATIVES,
SumoCOmiIrrEF, ON TRAmD,
COUMI'EE ON WAYS AN) MEANS ,
Washington, D.C.
The committee met at 9:30 a.m., pursuant to notice, in the committee
hearing room, Lon,worth I1ou:e Office Building, lion. William J.
(h'een (chairman of the S1lucommittee) presiding.
Mr. Gm.Ir~;. This hearing will come to order.
First. I ask unanimous consent to place tie notice of this hearing in
the record at this Point.
[The notice follows:]
[Press release of Monday, February 9, 19761
CHAIRMAN WILLIAM J. (GREEN ()., PA.). SUBCOMMITTEE ON TRADE. COMMITTEE
ON WAYS AND MEANS, U.S. HOUsE OF REPRESENTATIVES, ANNOUNCES IIARINO
ON THtURSDAY FEBRUARY 19. 1970. BE.INNINO AT 9:30 A.M. ON THE: AUTIORIZA-
TION OF APPROPRIATIONS FOR AND ON OVERSIGHT OF TIlE U.S. INTERNATIONAl.
TRADE COM M ISSIO.N
The Ilonorable William J. Green, (D., Pa.), ChairmAn of the Su1bcommittee
on Trade of the Committee on Ways and Means, U.S. house of Representatives,
today announced that the Subconinitee on Trade will conduct a pIblic hearing
on Thursday, February 19, 1976. beginning at 9:30 a.m. on the authorization of
appropriatIons for and on oversight of the United States International Trade
Commission.
In announcing this hearing, Chairman Green noted that section 175 of the
Trade Act of 1974 established independent budget procedures and separate al-
thorization of appropriations for the U.S. International Trade Commission,
which places its budget and expenditures directly under the control of the
Congress.
Chairman Green further noted that the Trade Act of 1974 placed increased
responsibilities on the U.S. International Trade Commission and that this hear-
ing will provide the Subcomnittee on Trnde with the opportunity to review the
manner in which the Commission Is carrying out Its responsibilities.
Chairman Will E. Leonard and other Colnmissioners and other staff officers
who wis h to testify will be the first witnesses. Testimony will be received by the
Subcommittee from the interested public following the appearance of the Com-
l1liqiol witilesos.
Witnesses from tile Interested public will be allotted time for verbal joresenta-
tiolmb ased on the total time available to the Subcommittee. The full statement
will be included il the record. Also In lieu of personal appearances, any inter-
ested person or organization may file a written statement for Inclusion in the
printed record.
(I)
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Requests to be heard must be received by the Committee by the close of
business Tuesday, February 17. 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
te.stlfy will be made by telephone or telegraph as soon as possible after the filing
deadline.
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 the day prior to the date of
appearance.
Persons submitting a written statement in lieu of a personal appearance
should submit at least three (3) copies of their statements by the close of busi-
ness February 27. If those filing written statements for the record of the printed
hearing wish to have their statements distributed to the press and the interested
public. they may submit 30 additional copies for this purpose if provided to the
Committee (luring 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 mem-
bership and where possible, a membership list ; and
3. A topical outline or summary of the comments and recommendations in the
full statement.
Mr. GREFN. I would like to open this hearing by welcoming the
Chairman and other members of the U.S. International Trade Com-
mission and staff. I am informed that it has been a number of years
since the members of the Commission have appeared officially before
the Committee on Ways and Means. In years past the former U.S.
Tariff Commission andits staff have played an important role in the
deliberations of the Committee on Ways and Means in the area of
tariff and trade legislation.
The committee has appreciated the responsiveness of the Commis-
sion and its staff to its many requests for information and advice.
Individually. we may from time to time disagree with your decisions,
but then I understand you sometimes disagree among yourselves.
I believe I can speak for most members of the Siibcommittee on
Trade when I ieemphasize-the importance of the-change made by the
Trade Act of 1974, in reaffirming the role of the Conmnission as an
independent agency, advising both the Congress and the executive
branch on trade and tariff matters, and in its semijudicial role of
decisionmaking under the various statutes affecting U.S. commerce.
The Commission has been and will be making decisions as a result
of a number of investigations under the import relief and other provi-
sions of the Trade Act of 1974, the Anti-Dumping Act, and other trade
statutes-decisions which are vitally important to industry and work-
ers in the United States and to the entire trade community. It has been
advising and will continue to advise the President, on multilateral
trade negotiations authorized by the Trade Act and the Commission
has important new responsibilities in the area of improving our trade
statistics, so that we may better assess the impact of trade on the econ-
oniy and work toward a more sound international system of reporting
trale flows.
The immediate occasion of this hearing is the requirement of see-
tion 175 of the Trade Act of 1974-that the authorization of appro-
3
priations for the U.S. International Trade Commission shall be estab-
lished by law. This hearing also provides the opportunity for the
Subcommittee on Trade to discharge its responsibility to review how
well the Commission is carrying out those responsibilities assigned to
it under the basic statutory authority as amended in the Trade Act
of 1974.
In this regard there have been numerous stories in the press recently
concerning U.S. International Trade Commission. This subcommittee
must be concerned with how those developments impact on the effec-
tiveness of the Commission. The Congress in taking away from the
lPresident the authority to designate the Chairman and Vice Chairman
of the. Commission, placed added responsibilities on all members of
the Commission to manage affairs of the agency in a manner com-
mensurate with both its historical role of the entire Commission as an
independent agency advising both the Congress and the President and
as a decisionmaking body carrying out the statutory intent of the
Congress under the various trade and tariff laws.
Since we are operating under stringent time constraint I ask without
objection that Chairman Leonard be allowed to make a statement with
1-'egard to the activities of the Commission and to permit other mem-
bers of the Commission, if they so desire, to make statements with
regard to the budget and operating aspects of the Commission and
then to open the hearing to questions bi' members of the subcommittee.
Chairman Leonard, Vice Chairman Miuchew, Mr. Wallington, wel-
come this morning.
Chairman Leonard, proceed as you will.
STATEMENT OF COMMISSIONER WILL E. LEONARD, CHAIRMAN,
U.S. INTERNATIONAL TRADE COMMISSION; ACCOMPANIED BY
COMMISSIONER DANIEL MINCHEW, VICE CHAIRMAN; AND
EDWARD C. WALLINGTON, JR., CHIEF, FINANCIAL MANAGEMENT
Mr. LuonARD. Thank you, Mr. Chairman.
Members of the subcommittee, I am pleased to meet with you today.
f represent the U.S. International Trade Commission in its'first hear-
ing concerning an annual authorization bill, in accordance with the
requirements of the Trade Act of 1974, and concerning your commit-
tee s oversight of the Commission.
I am accompanied, as you indicate, by Daniel Minchew. the Commis-
sion's Vice Chairman, who is directly to my right; and by Edward
Wallington, the ('ommission's Chief of Financial Management, who is
directlyto my left.
In (le\'eloping this request for funds for fi:;cal year 1977, the Com-
mission's first, request under the new rules established by the Trade
Act of 1974, thle Commission has examined its needs with special care.
'We have Lriven this budget close scrutiny with two objectives fore-
most in mind: First, to demonstrate to the Congress that we can pre-
pare a responsible budget request without a need for OMB's review;
and second, to do our part to restrain the growth in Government
expenditures about which the whole country is concerned.
See U.S. International Trade Commission Budget Esttmatea, Fiscal Year 1977 on
p. 103.
4
People are our Commission's greatest resource and t-he one for which
most of our dollars go. Yet, we proposed a fiscal year 1977 budget
which would support a yearend staff of 426 people, a cutback from
the number planned for the end of fiscal year 1976. We want to reduce
our staff by four from fiscal year 1976. This, we feel, compares favor-
ably with the increases of 39 in the ceiling for fiscal year 1974, 19
in fiscal year 1975, and 30 in fiscal year 1976.
The Commission's request for'fisical year 1977 funds is all increase
over the fiscal year 1976 dollar total. However, 93 percent of this in-
crease resultsc refarsoem builrte-uinlt s.c,Vos,t1 0i0n creases. ()nly $75,0 'of the alp-
propriation increase is allowed for growth in program-support costs,
anl part of this cost growth results from inflationary forces rather
than from a change in operating levels.
The Commission is deeply appreciative of the cooperation extended
by the Congress in providing funds for the Commission in recent
years. This cooperation has been an essential element in the Commis-
sion's efforts to meet, the expanded responsiilities placed upon tie
Commission, culminat ing in'the special demands included in the Trade
Act, of 1974. The Commission views the current budget. as a change
from one of gr-owth to one of consolidation. Further, since the fiscal
year 1977 budget reduces, rather than increases. planned yearend staff
levels, automatic cost increases in fiscal year 1978 should be signifi-
cantly less than ihose in fiscal year 1977.
As the members of your sinlcommittee will recall, the Trade Act of
1974 had a major iml)act on the Commission in a variety of ways.
In general. it, enlarged the Commission's responsibilities in tie area
of intenational economics amd trade. Spe.ificallv. it authorize1l new
trade negotiations and preferences which 1iv Colmi ission must slip-
port. in varied ways. It chalinged the criteria for escape -k'tioii
qualification by in(histries. It sqtbstantifilly revised the unfair import
trade statutes. It charged the commission . in colnjtiiction with other
agencies, to develop compatible statistical systems for impols. ex-
ports, and prodiuctiomi. It put the ('omimissiol in the forfront of the
U.S. effort to (levelol) a harmonized code, amomg all trading nations
for describing articles in international commerce. It. directed tie
Commission to monitor al rel)ort, on Ea-4-West trade. Finally. it
changed the Commissiion's name. began a new system of rotating
clmirmanshil)s. and called for the Commission's proposed bil,,get to
go directly to the Congress, as it were, without review and revision by
the Office of Manigement and Budget.
The impact of the Trade Act of.1974 6( Comnmission operations
have liien imilmense. Iii fiscal year 1975. about one-third of all Com-
mission re-sources- were devoted to the development of advice to tile
President on the probable economic effect of concessions. Additional
work in this area has been necessary this year andl more is expected
as negotiations proceed. Undoubtedly, we shall be asked to furnish
additional support to I.S. rep resentati ves a, negotiations intensify in
fiscal year 1977. The new escape clause criteria have resulted in a
total of 14 industry investigations in less than 1 year since the "lia de
Act's effective (lat:, compared to a total of only ol'e such investigation
initiated in the previous 21 months. Intensive efforts are being devoted
to completion of unfair import practice investigations mnder the new
rules and time limits established by the Trade Act of 1974. The reports
on statistical comparalhilitv anl the harmonized code required by the
act have been delivered. We continue to work on the development of
compatible import., export, and production statistics and we are ac-
tively paiticipating in the technical sessions on the development of
an internat ional harmonized commodity code.
In addition, in part because of the Trade Act of 1974 and in part
because of the feeling that a truly comprehensive aild thoroughgoing
international trade agency is one versed in all aspects of the subject
and attentive to all segments of the public, the Commission hopes to
improve its capability on export matters and with respect to the trade
of other countries, to take account of the effects on consumers of inter-
national trade policies and revisions of law, and to anticipate foreign
trade issues rather than to respond to foreign trade crises.
We believe that the Commissions present efforts, such as its recent
advice to the President on the probable effect of tariff concessions and
the generalized system of preferences, its reports on East-West trade,
its studies of international commodity agreements and the United
States-Canadian automotive agreement, and its series on the competi-
tiveness of the United States and other major trading countries, are
earning the Commission added respect throughout the international
trade community.
Despite the growth in demands omi the Commission for services, we
have made the decision not to request further growth in our basic
resources at this time. The Commission intends to concentrate its
fiscal year 1977 efforts on improvements in the utilization of its re-
sources, which in large part means its personnel. rather than on con-
tinued expansion. 'We believe that through improved management we
shall be able. to finance effective fiscal year 1977 operations with the
funds we requested.
It is my midele tanding that your committee may wisi to authorize
fiscal year 1977 appropriations with a sl)ecific dollar limit rather than
for an open amount as proposed in the Commission's draft bill. If so,
I have two requests to make here. First, in view'nf the strong possi-
bilitv that the Commission may have to vacate its deteriorating
building and seek )etter. but more expensive space, I request an au-
thorization of 1,4250.(00 above the al))rol)riation we have so far re-
quested. making tle total $11.789.000. This would allow a later
a)p)ropriation request when rental plans are^ firmed, without the need
for reharinigs by this committee. Second, we ask inclusion of a clause
like that in last year's I)epartment of State authorization legislation
permitting automatic increases for compulsory cost. increases such as
statutory pay raises.
I shall, of course, be pleased to try to respond to your questions.
With your permission, as I think you indicated in your opening
statement, Mr. Chailan. I would request that the Vice Chairman of
the Commission be permitted at this point to add any remarks he
"mav wish to make.
Mr. (Ci'F F.-. Thank you.
Mr. Vi'ce Chairmai, please proceed.
63
STATEMENT OF COMMISSIONER DANIEL MINCHEW
Mr. MINCiEW. Mr. Chairman, members of the committee, my name
is Daniel Minchew. I simply want to associate myself with the re-
marks made by our chairman and add that in my years working on
the Hill for, first the late Senator Richard B. Russell, and later for
Senator Herman E. Talmadge, I had many occasions to observe au-
thorization and oversight proceedings as far as authorization requests.
I have seldom seen all agency come forward, an agency that. had been
given additional responsibilties. and ask for less, rather than more
manpower to (1o its job. I think that the reason we are able to do this
is that the six commissioners have themselves personally spent a lot
of time on our budget and themselves acting as a body tried to devise.
a budget which will enable us to do our job, hopefully, do it better
and do it with slightly fewer people.' I'll be prepared to respond to
any questions that the committee might have.
M r. GREEN. Thank you, Commissioner.
Mr. Wallington, did you -
Mr. WALLYNGTON. I have nothing to add, sir.
Mr. GREEN. OK. Thank you.
You have recommended' in your submitted budget for the phasing
out by the end of this Septenber of the monthly and annual reports
published by the Commission on the production, sales and imports of
chemicals.
I have received a letter from Clayton Yuetter, who is our l)eputy
Special Replesentative for Trade, i'equesting that this information,
this study that is made, be continued. I understand there are also seven
other agencies that have recommended a contimation of this work.
Jnless there is some overriding reason that the Commission (.an find
for phasing out this activity, I'm inclined to let it continue in light of
these recommendations for my part. I dont know what the coninlit-
tee's inclination will be. Do you want to comment on that whole area,
please ?
Mr. LEONARD. Yes, sir. Mr. ('Ihairman.
We have received a letter front Ambassador l)ent of the Special
Trade Representative's Office, a number of letters from Government
agencies, and many letters from Congressmen and Senators and private
individuals and companies with respect to the decision that the ('om-
mission did make to phase out the collection and publication of certain
production statistics with respect to certain chemicals. synthetic. or-
ganic chemicals, and with respect to the collection of Vertain import
statistics on some of these heuzanoid chemicals. The Commission's (li-
cision was prompted by continuing concern bv the Commission over a
number of years as toww hether there was anyjustitication in )erforIll-
ing this respoz)sibility with respect to one segment of one industry
when the Commission did not perform the same responsibility with
respect to other segments of the same chemical industry or with respect
to any other industries in the United States.
Tie Colnnission is not presently charged with tile. responsibility of
collecting production statistics on other products generally, or col-
lecting specific import statistics generally. These are matteisnormally
7
before the Census Bureau of the Department of Commerce and the
Customs Bureau of the Department of the Treasury.
However, it has been a longstanding, traditional job of the Commis-
sion to do this in this particular chemical area. r11e concern of the
commissioners registered over a period of yearns was brought into sharp
focus, though, by a report of the Gener al Accounting Office on the
organization of the Commission iin which it devoted a rather significant
l)ortion of that. report to tile Commission's work on chemical reports
and questioned whether tile Commission should continue to (to this
work. )articularly whien it appeared that much of the work was for
the benefit of particular livate interests, withot.t reillhli-se wzilt 1)y
those particular private interests.-
In that light, the omissionin did decide to do the pha;icng out that
you have indicated. As a result, the omissionn is open for suggestions
and for direction in this resl)ect. It. is my feeling that I would like to
(et specific authorization to (1o this work, either in an authorization
Eill, in an aPl)rol)riations lill or perhaps under the provisions of exist-
ing law, section 332 of the Taril" Act of 1930, whereby the House Ways
and .Means committeee , among others. can make a specific request of
the Commission. I would like to get statutory authorization to continue
this work, if the Congress feels that such work is necessary.
Mr. GREE.N. I understand no one else does this work; is that correct?
M\r. Lxo. xRD. No, sir, that's right, at this time it. is my understand-
ing no one else does this particular work, to this refined level on
iml)orts an( domestic production.
Mr. GrEE Nx. I understand it is not simply important to industries
who may be getting some information withmut paying for it. but to
the Departnient of Labor, to the Census Burau. to Special Trade Rep-
resentatives and many more who utilize this information and ind it
very valuable. Is thatcorrect
Mr. LroNARD. Those departments have indicated that it is valuable to
them, yes, sir.
Mr.'GREEN. The largest single activity of the Commission in-terms of
budget estimates for fiscal 1977 is over $2 million and also the largest
increase which requests over fiscal year 1976, in the amount of $530,000,
is for investigations 'vnder section 332 of the Trade Act of 1930,
pursuant to Presidential requests, congressional resolution and the
Commission's own motion, roughly half of that budget is allotted to
studies at congressional request. Page 16 of the budget submission that
you submitted states that a "master list of topics for study has been
prepared for the Commission to initiate on its own motions."
What subjects does the Commission expect to study in the coming
fiscal year either on its own motion or at the request of the President;
namely, the Office of Special Representatives for Trade Negotations.
Mr.'LEoINARD. Section 332, as you indicate, provide for investigations
at the request of the President, at the request of the House Ways and
Means Committee, the Senate Finance Committee, or on the Commis-
sion's own motion. The Commission has performed a number of these
studies within the past few years, both for the President and for the
Congress, such requests as the multivolume report requested by the