May 19, 1975
Page 14933
MAINE COMMENTS ON INTERNATIONAL TRADE NEGOTIATIONS
Mr. MUSKIE. Mr. President, the U.S. International Trade Commission held hearings in Augusta, Maine, on May 9 and 10 to receive testimony on the economic impact of tariff concessions or preferential treatment. Over 60 witnesses attended the 2 days of hearings representing textiles, fishing, canning, lumber, shoes, metal works, boat building, and sporting goods.
The hearings this year are unique in that for the first time the Commission held hearings outside of Washington and outside of regional metropolitan centers. The hearings this year extended into localities accessible to workers and industries directly affected by our trade policy. The report which the Trade Commission prepares will guide formulation of the Nation's position at international trade negotiations next fall in Geneva. It is my feeling that these local hearings will provide a basis for Chairman-designate Leonard's statement that–
The report to the President will be a lot more honest, blunt and direct about what the U.S. negotiators should do.
To assist the Trade Commission in their hearings and to assure the representation of Maine interests, I wrote to a number of industry and labor leaders to urge their participation in the hearings and to solicit their views. I received an impressive response from a number of Maine leaders. Most expressed grave concern with the impact of foreign imports on jobs in Maine, but a number of responses recognized as well the importance of expanding our export trade and protecting consumer interests.
The questionnaire which I sent out contained the following questions:
1. All things considered, does Maine benefit or suffer from lower tariffs on imported products? Benefit __ Suffer __.
2. How much benefit do you think Maine industries and workers would receive if foreign countries lowered their tariffs on U.S. exports? A great deal __ Some __ Not at all __.
3. Even if it meant paying higher prices for some goods, do you feel the U.S. should keep high import tariffs to protect our industries? Yes __ No __.
4. Do you feel that enough is being done to help workers and businesses deal with the problems created by changes in import tariffs? Enough __ Not Enough __.
Three out of four responses expressed concern that Maine would suffer from lower tariffs on imported goods. Many of these same people, however, recognized the benefits which U.S. workers would receive if foreign countries lowered their tariffs on U.S. exports. A surprisingly high percentage, over 60 percent of the respondents, were willing to pay higher prices to avoid damage to domestic industries. Nearly all respondents agreed no efforts were needed to assist affected industries and improve our competition position.
This rough analysis cannot fully portray the different views of Maine citizens on trade problems. Some of the comments attached to the questionnaires provide added insight and merit the review of my colleagues. I ask unanimous consent that these comments and the text of my remarks to the Trade Commission be printed in the RECORD.
There being no objection, the material was ordered to be printed in the RECORD, as follows:
COMMENTS OF MAINE CITIZENS ON TRADE POLICY
PORTLAND, MAINE.
The feeling apparently is that the economic loss to the Maine shoe industry far outweighs the small savings per pair which low cost foreign shoes offer to the consumer.
SUMNER T. BERNSTEIN, Esq.
DEAR SENATOR MUSKIE: Thank you for informing me on the upcoming hearing in Augusta, Maine to evaluate our trade policy. I am unable to attend, and therefore I am in hopes that you take what I have to say into consideration.
As you know, here in Maine leather and textile industries have been hardest hit by imports. This new trade law gives the President the authority to negotiate a more rapid reduction in protective tariffs. With unemployment in Maine close to 13 percent, I do not have to tell you what this would do to our jobs on top of what has already been lost to foreign competition.
I am very much concerned with the number of industries that are being allowed to go abroad. The combination of lower tariffs and runaway industry spells disaster to me.
Dear Senator! The American worker needs a job and not welfare.
Thank you.
JOSEPH PENNA, President, Portland Central Labor Council.
BROOKWAY-SMITH Co.,
Portland, Maine, May 6, 1975.
Senator EDMUND S. MUSKIE,
U.S. Senate,
Washington, D.C.
DEAR SENATOR MUSKIE: I wish to thank you for your recent invitation to attend the hearings in Augusta being held by the United States International Trade Commission.
Unfortunately, due to a previous commitment, I will be unable to attend. I have, as you will note, completed the brief questionnaire at the bottom of your letter, but in addition, I do have a few comments to make on the matter.
Having lived in Maine all of my life, I, too, have witnessed the disastrous effects of our open door trade policies in the State of Maine. Being associated with the building industry we, too, have felt many of the distasteful effects of our National Government's open hand.
During the early part of the post war period I could understand and accept some of the reasoning in lowering import tariffs so as to allow those Countries on the verge of economic collapse to rebuild and accumulate assets. But now I feel the time has come for the United States to recognize that we have not only allowed these Countries to rebuild but have allowed them in some instances, to partially surpass us economically at the expense of our people.
It is my contention that to a certain degree we must continue to maintain sound economic trade agreements, but these agreements must be a two-way street.
If a Nation expects to export her products to ours at reasonable tariff rates then they too should expect to import our products at a comparable rate. It is my firm opinion that the time has now come for the United States to take care of its own.
I realize the above remarks have not been as specific as they should be, but they are the opinion of a concerned citizen and businessman.
Very truly yours,
BROCKWAY-SMITH Co.,
RODOLPH P. GAGNON,
Manager.
HUSSEY MANUFACTURING CO., INC.,
North Berwick, Maine,
May 8, 1975.
Senator EDMUND S. MUSKIE,
Senate Office Building,
Washington, D.C.
DEAR SENATOR MUSKIE: This letter is in response to yours of May 1 concerning foreign trade. In response to your questions my answers are as follows:
1. Considering everything, I believe that Maine benefits from lower tariffs on imported products.
2. If foreign countries reduced their tariffs, I believe that Maine industries and their employees would receive substantial benefit from such actions.
3. If not, I do not feel that the United States should keep high import tariffs to protect domestic industries.
4. I feel that enough is presently being done to help impacted employees and employers deal with changes created by reduced import tariffs.
In summary, I am in substantial favor of lowered tariff barriers to create a greater flow of international trade both from an export and import standpoint.
I trust that this information will be helpful to you.
Sincerely yours,
HUSSEY MANUFACTURING Co., INC.
P. W. HUSSEY, Jr., President.
SUN FEDERAL SAVINGS,
Portland, Maine,
May 6, 1975.
Senator EDMUND S. MUSKIE,
U.S. Senate,
Washington, D.C.
DEAR ED: Reference is made to your request to attend a hearing on May 9th and 10th regarding the testimony on impact of imports.
As a general overview, it is my impression that the creation of trade barriers for the sole protection of jobs is exactly the wrong thing to do. As far as the consumer is concerned, in many instances he loses his ability to purchase goods at the lowest reasonable prices.
My overall concern, however, is addressed to the fact that trade barriers from one country are only responded to by trade barriers from the other country. The free interchange of goods made this county strong. We would do well to remember that lesson on a worldwide basis. The effort should be made, not in keeping foreign goods out, but in assisting the Maine businessman in reaching foreign markets.
Cordially,
PHILLIPS F. LEWIS.
CAMDEN & ROCKLAND CO.,
Rockland, Maine,
May 7, 1975.
To Senator Muskie.
From: Robert H. Varney.
Subject: Reply to your May 1 letter on Imports.
I feel that we should promote fewer trade barriers, and reciprocal reduction of trade barriers wherever possible. (with free countries)
Please stop trying to control prices, and let the laws of supply and demand work. Shortages, inflation and family unemployment, are caused (I believe) when our government tries to control prices and wages.
Please vote to discontinue controls on all domestically produced petroleum product prices, so that our U.S. oil companies can acquire the necessary capital to expand exploration and production. This applies to natural gas also.
I would certainly appreciate hearing from you regarding your apparent disagreement with this philosophy.
REMARKS of SENATOR EDMUND S. MUSKIE
I congratulate the International Trade Commission on the hearings which you have held around the country and commend you particularly for your decision to extend these hearings beyond regional metropolitan centers into local communities where industries and workers affected by our trade policy can directly participate. When I first suggested to Chairman Bedell that these hearings be extended into Maine, I expressed my conviction that a hearing such as this would provide commission members particular insight into the special problems which confront businessmen, workers and consumers in Maine communities. From the schedule of witnesses which you have before you and from the turnout, it appears that my convictions will be confirmed. I hope that the testimony here today will focus particularly on the differences between rural areas of northern New England and the large urban areas of our metropolitan neighbors to the south.
I understand that the purpose of your hearings and this meeting here today is to gather information on the economic effects of tariff concessions. The report which you compile will provide a basis for decisions by the President and his representatives during upcoming international trade negotiations under the Trade Reform Act of 1974. It is crucial that our negotiators fully appreciate, as we enter those discussions, the immediate and continuing impact on Maine communities of loosening particular trade restraints for granting preferential trade arrangements.
I recognize, as do the other witnesses who will present testimony here, that our national economy and we as citizens and consumers have much to gain from expanded international trade.
Important sectors in our Maine economy benefit from our export trade and look for opportunities to increase their export market. Other sectors of our economy depend on the free flow of goods and material from abroad and could not operate if that flow were interrupted. Maine consumers enjoy and rely on certain reasonably priced articles imported from abroad. You will hear, I suspect, from people expressing these very legitimate concerns which affect broad areas of our economy.
You will also head ironic reports from several Maine industries which suffer both as consumers and producers in the international market.
Many industries pay high prices for essential materials while suffering market disadvantages against low priced imports. Our fishing industry is a tragic example of this dilemma. Maine fishermen suffer three ways. They are forced to compete for their catch against foreign vessels heavily outfitted and frequently subsidized. They must pay import duties of 33⅓ percent to outfit their vessels with similar gear which they use without the benefit of any practical government assistance or subsidy. And finally, the prices they earn for their catch are depressed by the glut
of processed fish imported from the same foreign fleets with little or no tariff.
Maine dairy farmers suffer doubly from present trade policy in that prices they pay for grain have skyrocketed following massive export of that commodity while imported dairy products have limited their domestic market.
Poultry farmers and processors likewise suffer from high grain prices following these massive exports but are themselves unable to market poultry and eggs abroad because of prohibitive tariffs.
The problems which these industries face are not peculiar to Maine or the northeast. Southern poultrymen and mid-western dairy farmers experience similar difficulties. Certain cultural, economic, and geographical features of Maine accentuate the impact of these problems on Maine workers and Maine communities. Dramatic examples of these special impacts can be seen if one examines the history of three traditional industries in Maine: wood products, textiles, and shoes.
Even during my lifetime, I have witnessed a considerable evolution in Maine's economy relative to these industries.
I can remember the day when Maine people used to process garden vegetable crops and prosperous communities developed around them. Then big production areas of the Midwest came into the picture and that industry declined.
We also had small woodworking plants which were built around our forests. Maine is about 85 percent forest-covered today, and it has been for a long time. Small wood-turning plants which developed in our towns produced toothpicks, clothes pins, and a large variety of wooden products. The advent of the plastics industry and foreign competition in plastics dramatically affected those plants and forced many to close.
Textile and shoe factories developed in a similar fashion – frequently as the single industrial employer in a community. These two industries experienced a similar decline in the face of foreign competition.
The question Maine people ask as they witness the decline of these industries is "What will replace them?" "Where will we find jobs?"
Clearly, to reply that we've created new jobs in California or Detroit for an expanded export market is no solution for an unemployed Maine worker.
The answers to those questions are very difficult in the context of a small town where 45 % of the working age population is employed at the only industry which may be a wood products plant. There are very few choices and often no local choices.
The economic adjustment provisions of the trade act – even when the difficult standards of the past were met – have been or limited value when there is no future job to adjust to.
During debate in the Senate of the Trade Reform Act of 1974 last December, I cosponsored an amendment by Senator McIntyre to restrict the reduction of duties if imports of a particular grouping exceed one-third of domestic consumption and domestic competitors are adversely affected.
Despite substantial debate and strong support from New England Senators, including Senator Hathaway and myself, the amendment did not withstand the opposition of the Administration and was defeated by a surprisingly close vote. The spirit behind that amendment was prevalent in the Congress, however, and was recognized by the President's special representative for trade when he assured Senator McIntyre in a letter of December 11 of last year that preferential tariffs would not be applied to footwear products and authority to reduce tariffs for products greatly sensitive to imports would be exercised only after very careful consideration and consultation.
I would like to express faith in these assurances, but must express instead a certain skepticism. We have been promised this kind of relief in international negotiations for all of the 16 years I have been in the Senate. We have always found our trade negotiators very reluctant about entering into orderly marketing discussions and when involved in such discussions, less than the ardent advocates that we would have to have to persuade other countries that we mean business.
I ask you to take the message to the president and his negotiators that we in Maine do mean business and are relying on them to recognize the impact of foreign competition in these crucial areas of our economy.
Maine workers are not protectionists seeking to shelter inefficiency or excessive wages behind artificial barriers. To the contrary, Maine is a depressed area in terms of national income statistics. Maine production workers earn an average hourly rate of 18 percent below the national average.
What we possess in Maine are a people dedicated to a certain way of life and willing to work hard to enjoy it. They ask only for minimal disruption, meaningful assistance in adjusting to such disruptions, and a prompt response to incidents of "import dumping" by foreign countries. The spirit of our work force is well demonstrated by the response from a group of Fryeburg employees when the Northern Shoe Company closed its door last winter. The group rallied around their foreman, Francis Lyons, organized a training program to hold the work force together and took steps to advertise their availability to potential employers. They have met with some success and are now receiving assistance in their efforts from local development officials.
I ask you to take note of the story of the Fryeburg shoe workers and the many related occurrences you will hear of today. I ask you to recall, when you formulate your recommendations to the President that Maine workers will not have alternative sources of employment if they are further dislocated and to recall that small Maine communities cannot easily attract new employers if they lose these traditional industries.
I hope your recommendation will urge that vital industries be supported and further tariff reductions in these areas be avoided.
Thank you for this opportunity to appear before you. I wish you well and trust you will enjoy your visit to Maine.