Mr. HILL. I think that is the impression everyone would get from reading that language. It refers to tariff duties or any kind of duties that constitute an import restriction and that could be defined as tariff duties, or might possibly be excise taxes in name, which, in fact, are import duties. But it certainly could not go to purely excise taxes or internal taxes. We have agreements with many of the nations of the world for favored-nation treatment in the matter of tariff rates. You stated a number, how many was it, Mr. Secretary? Mr. HULL. Forty-eight, as I recall. Mr. HILL. What would be the effect of the operation of a trade agreement negotiated under the authority of this proposed legislation on nations with whom we have agreements for favored-nation treatment? For instance, suppose under this legislation the President should negotiate a trade agreement with Great Britain wherein certain adjustments were made of tariff duties to that country charged to imports from that country-what would be the effect as to those rates upon the duties to be charged to other countries with whom we have agreements as to favored-nation treatment? Mr. HULL. Our Government during recent years, I think, beginning with a statement by President Harding in 1923, adopted the policy of favored-nation treatment in its unconditional form. Some people construe that policy of equality of treatment to extend only to those nations with which we have favored-nation relations. Others construe it to relate to all countries; that is, when you enter into a treaty with one country involving mutual concessions and proceed to generalize them, the favors would extend to all countries. Under this bill that matter is left open so that it can be administered with unlimited application to all countries, or as applying only to those countries with which this country has favored-nation relations. Naturally, in entering upon negotiations under such authority as is proposed here, our Government would be very careful and very particular to see what would be the result of including a main item or items in any particular arrangement. Its disposition naturally would be to contact primarily with those countries which are the chief suppliers of one or more commodities, and I think there are 25 or 30 of them, so that we would see what would be the effect of generalizing the advantages we might extend to a country in return for certain advantages it would extend to us, both as between us and between other countries, and that would include the wider opportunity to us to bargain with other countries and it would encourage other countries to want to bargain with us. Mr. HILL. Now, I want to get as clearly as I can the effect on the countries with whom we have favored-nation treaty agreements. We will enter into a trade agreement under this proposed legislation with Germany whereby we may reduce the tariff duties on certain specific commodities coming into this country from Germany. Now, would the effect of such an agreement automatically give the same modified rate under the trade agreement with Germany to Great Britain or any other government with which we have a favorednation treaty? Mr. HULL. Yes; and if I may illustrate, take, for instance, France. We know France is the chief supplier to this country of champagne. We would not hesitate to enter into mutually agreeable relations with France and generalize whatever advantage we should grant. France would always be the chief beneficiary, because we would know there would be no danger of injuring anybody else. Mr. HILL. Any other country that might be a producer of champagne or wines would have the same rate of duty into this country as France might have under those circumstances that is, I mean any country with whom we have a favored nation agreement? Mr. HULL. Yes. The whole tendency of this would be to encourage other countries from the standpoint of self-interest to want to negotiate and come in with us on definite things where it would be mutually agreeable and profitable, and as a general policy to cease all of the tendencies to obstruct more and more the process of international finance and commerce. Mr. HILL. It would have a tendency to bring all countries to a point where they would be willing to negotiate for favored nation agreements? Mr. HULL. It would develop that spirit. Mr. HILL. And would tend toward uniform tariff treatment to all nations as the result of creating that spirit? Mr. HULL. I think that is one of the beneficial phases of it; another is the fact that selfish interests of different countries would be obliged somewhat to face in this direction instead of the opposite direction. Mr. HILL. I think it is probably accurate to say that about once every 10 years we have a general tariff revision, and it requires about 1 year in which to effect such a revision. That is the rigidity of our present tariff system. In other words, it is not flexible, it is cumbersome, it is unwieldy. It cannot be utilized through any agency we now have upon which we now have conferred power, to readily adjust itself to conditions such as now exist, in order that these trade agreements may be entered into and our international trade be enhanced with other nations of the world. Mr. HULL. Well, if I would not be criticized for offering my personal opinion based on some observation and experience, I can say I sat in the House through the hearings, the drafting, and the enactment of the Payne-Aldrich bill, a number of acts in 1911, the Underwood law, and different acts through the war, until the people thought so much of me they left me at home two years while the Fordney Act was being enacted; but I kept up with it, and my frank opinion is that we cannot possibly hope to attack this situation that is ahead of us, or make our Nation a real factor in the recovery of international trade, unless we invoke this proposed method of trade arrangements. Mr. HILL. All other countries would be entering into trade agreements among themselves, and we would be standing out here alone without the power conferred upon any agency to enable it to enter into these negotiations and become a part of this general modification of barriers that affect international trade? Mr. HULL. Yes; and, more than that, I think most of our statesmen and leaders of public opinion in this coutnry wholly under estimate the prestige and influence this Nation has among the nations of the world. From my little observation we could serve in a splendid way by taking the initiative with respect to some of these difficult problems that involve us and involve alike many other peoples, instead of sitting back and waiting for some other country to take the lead. I will say that a vast number of them from my observation expect us to take some part in the leadership. Mr. McCORMACK. I understand the President deems this as absolutely necessary as a part of the recovery program? Mr. HULL. Absolutely; otherwise I do not think there would have been the slightest disposition to propose such a measure. Mr. McCORMACK. I think we ought to have that in the record. Mr. McCORMACK. Mr. Hill asked something about the flexible provisions of the tariff Mr. HULL. If you will pardon me, in order to make a full statement, I would like to refer back to my written statement in which I undertook to set out the attitude of the executive branch, which is that certain other countries, probably 25 in number cannot hope to avoid economic annihilation practically, unless international trade is restored; whereas a country like ours, with its surplus-producing capacity, cannot restore full stability and permanent measure of business prosperity that the average citizen is accustomed to, or that would be necessary year in and year out for his comfort. Mr. McCORMACK. In addition to the foreign trade, the purposes are also to preserve the American standard of living and assure adequate protection to American industry, consisting of a foreign trade policy which would be for the general welfare of our people. Mr. HULL. The whole purpose, of course, is to promote primarily our domestic prosperity; that is the primary and paramount purpose. Mr. McCORMACK. Reference was made to the flexible provisions, and it is stated here that the flexible provisions be repeated. Could not we confer upon the President power to carry out this executive trade agreement without going to the full extent of repealing the flexible provisions, but making the flexible provisions not applicable to any trade agreement that may be entered into? Mr. HULL. Yes; that is correct. Mr. McCORMACK. This is a piece of emergency legislation with the primary purpose of confining agreements to a period of 3 years. Mr. HULL. The provision limits the President's authority to negotiate to agreements that would be terminable at the end of 3 years. Mr. McCORMACK. So that the primary purpose is a 3-year limitation? Mr. HULL. In that sense; yes. Mr. McCORMACK. Has this any relation to foreign debts? The CHAIRMAN. Will the gentleman yield? Mr. McCORMACK. I yield to the Chairman. Mr. HULL. If I might conclude my sentence, the only relation this has to foreign debts is the relation it has to any debt, and that is, it is solely intended to promote and restore international trade to nations everywhere and individuals everywhere who have external indebtedness or who are due money in other countries. The CHAIRMAN. I might say that further consideration has been given to the repeal of section 336 of the tariff law, and a tentative amendment has been agreed upon which I would like to submit to the secretary. Mr. HULL. Yes; I am acquainted with that. The amendment reads: The provisions of section 336 of the Tariff Act of 1930 shall not apply to any article with respect to the import of which a trade agreement has been concluded pursuant to this act. Mr. HILL. To get the record straight, that is a suggested amendment to the bill? Mr. HULL. Yes. Mr. COOPER. And it is intended, of course, to take the place of the present provision in the bill relating to section 336? The CHAIRMAN. Relating to the repeal of it; yes. Mr. HULL. That is correct. Mr. TREADWAY. Before asking 1 or 2 questions, I would like to get in my mind a little clearer explanation of 1 or 2 statements you made. I understood you to say it was the intent this bill should apply only to tariff rates or duties. Is that correct? Mr. HULL. What I tried to say was that we have found that many countries throughout the world have been adopting the most amazing devices, calling them by every sort of name, but the sole purpose of which is to perform the identical function of tariffs at the customhouse, by obstructing imports; hence, in order to make it possible to approach some of these countries and to challenge some things that are out of reason and are provoking bitter controversies among countries, we must have full authority, otherwise, in respect of the things that are declared in purpose and effect and intended as a substitute for the ordinary name and function of tariffs, we would not get anywhere. Mr. TREADWAY. Is that the explanation of paragraph (b) on page 3, line 9, which reads as follows: As used in this section, the term "duties and other import restrictions" includes (1) rate, form, and classification of import duties, and (2) import limitations, prohibitions, charges, and exactions other than duties. That is where I am confused. "Exactions other than duties " seems to be in conflict with a part of the statement you made us. Mr. HULL. That may not be expressed in the most apt way, and while perhaps we have confused it, we were making it more clear, we thought, by using the term "duties " at the end. Mr. TREADWAY. Of course, further up you have duties included, but what would be exactions other than duties; even though it was given some other name, would it not still be some other kind of charge? Mr. HULL. Import license is one, with an allotment of some kind. What they call in some countries import sanitary inspection, which is used in lieu of tariffs, is one. What in some other country would be called an exchange restriction, in an instance where it was not intended primarily to deal with the montetary situation, but was really a restriction imposed to keep imports out by notifying an exporter in some country that he could not get pay if he should sell a bill of goods in that country, is another one. 45571-34- 2 Mr. TREADWAY. It is more or less a subterfuge, and that provision is intended to cover your subterfuges; would that be the definition? Mr. HULL. Yes; to cover a subterfuge, or any indirect but very definite substitute for the functions of a tariff. Mr. TREADWAY. Now, another question in relation to your testimony in regard to the most-favored-nation treaty clause, do you mean that if the rates should be lowered to a country through a trade agreement under the bill that the same agreement lowering the rates would apply to other countries with whom there were mostfavored-nation clauses on that particular subject matter? Mr. HULL. Yes. Mr. TREADWAY. In other words you only negotiate one, and it would apply broadly to all other countries? Mr. HULL. You would negotiate once with one country, but as I said, where we have the favored-nation policy in its unconditional form, there would naturally not be included in one of these trade arrangements anything like the number of commodities that would be included if we did not have that policy of equality. Therefore every government adopting this policy takes particular pains to single out the particular commodity or commodities that it is willing to have generalized and extended over to other countries, when it wants to enter into an arrangement with a given country. Mr. TREADWAY. Suppose, for illustration, there is a most-favorednation treaty with Great Britain in relation to rates on textiles, and we have a most-favored-nation treaty with France, would we then proceed to negotiate a separate reciprocal deal with France on that same subject matter, or would the agreement we had entered into with Great Britain apply to France? Mr. HULL. It probably would not in fact apply to many French goods because of different types of goods that we normally import from France. As I said at the outset, every government pursuing this policy is very particular to ascertain in advance which nation is the chief supplier of a given commodity, and which two or three or a dozen produce, and that enables it to take care of the very thing you are talking about. Mr. TREADWAY. Wherever was the principal source of importation, you would negotiate in that country, and any negotiations concluded with that country on that particular article would apply to the other countries? Mr. HULL. Yes, that is correct; and then other countries negotiating in the same way would throw the doors open to us, and in a little while we would be receiving the full benefits from other countries. Mr. TREADWAY. In that connection, Mr. Secretary, you say you are going to very carefully examine the effect of these procedures, if given this authority? Mr. HULL. That is the way every nation does which follows this policy. Mr. TREADWAY. Would the rates be the same with every country? For instance, let us assume you can manufacture china cheaper in Japan than you can in Great Britain, and we import china in large quantities from both countries. Mr. HULL. We import more from Great Britain. |