ROBERT MCCLORY,
JOHN BRADEMAS,

LYNN E. STALBAUM,

JOHN O. MARSH,

FRANK A. STUBBLEFIELD.

Mr. KEOGH. Mr. Chairman, I yield 3 minutes to the gentleman from Pennsylvania [Mr. DENT].

Mr. DENT. Mr. Chairman, 3 minutes will not allow very much time to explain the background of this legislation. It is sufficient to state there be no free trade between unlike economies. Your committee of which I am a member has been debating in its hearings the question of the $1.75 minimum wage, the double time for overtime, and other agreements and covenants that cover American production. Your committee as a rule has voted for the $1.75 minimum wage.

Now they say this is not going to be injurious because they write into the bill, as the gentleman from Indiana has already shown, certain kinds of relief for workers or for an industry that is injured by this particular proviso which allows free trade, on which the gentleman and I disagree, between the two nations, not only on automobile parts but on automobiles. Because at this moment, as I stand on this floor, over 2,000 Ford cars are being imported into the United States of America and have been imported into this country since the first 30 days after the signing of the agreement between the Canadian and American Governments.

It is perfectly all right to say that we are doing this because we believe it is going to help Canada. That is perfectly all right. But I have not heard in the 15 years that I have been studying trade relations and trade problems as they affect all nations, where any Canadian Parliament has yet met to pass one piece of legislation that would in any way aid the United States. Because Canada still has in effect one particular import tariff rule that has never been wiped out and the committee has never suggested that it would be wiped out and that, to put it simply, is this that any time a manufacturer or a group of manufacturers in Canada can produce 10 percent of the parts volume required for consumption in Canada, then tariffs automatically go up in order to protect the manufacturer in that country.

Now the word "protectionism" is not a bad word or a bad name. Every person here tries to protect not only his home and his homeland but tries to protect his industry and his job. If you did not do that, you would not run for office. Just let somebody run against you, and you run on a platform where you are not trying to protect the homes and the jobs and the industry of your workers and see what would happen.

There is no place where the people of a community or country having an economy that allows them to pay less CXI-1412

wages and where the people are paying wages and where the people are paying less taxes per capita into the Government for defense and other necessary governmental operations can live together in the same room. There cannot gether in the same room. There cannot be. You talk about Canada and I heard the gentlewoman for whom I have a great deal of respect say that she wanted to see Central America and Latin America come under this particular proviso. Let me tell you, if you want to go to Peru where workers are paid 12 cents an hour to produce cars to ship into the United States, I am sure that Ford, General Motors, and Chrysler would be happy to make a deal. I would predict that within 1 year after the signing of that agreement, the countries producing automobiles for export into the United States would demand the application of the favored nation clause as provided in the Trade Agreement Act so that that particular country could receive the same deal.

That is why you are here today-you are here for a trade policy agreement because Fiat, Simca, Volkswagon, Opal— because Fiat, Simca, Volkswagon, Opalall four car manufacturers, in the main controlled by American manufacturers controlled by American manufacturers or owners of corporations overseas, are demanding under the Trade Agreements Act passed in 1962 the invocation of the favored nation clause. From now on, believe me, when you pass this today, you will have opened up the favored-nation proviso which would allow all cars to come into the United States from any country-and incidentally 1 out of every 13 automobiles being sold in the United States today is an imported car and over 550,000 cars a year will be imported if 550,000 cars a year will be imported if they keep on coming in at the rate they they keep on coming in at the rate they have been coming into this country.

Mr. BYRNES of Wisconsin. Mr. Chairman, I yield such time as he may require to the gentleman from Virginia [Mr. BROYHILL).

Mr. BROYHILL of of Virginia. Mr. Chairman, we are faced with an accomplished fact. By executive proclamation, as of January 18, 1965 the duty on automotive products between motive products between the United States and Canada were reduced to zero. The President did not have the authority to do this. to do this. The bill will grant this authority to the President. Meanwhile, however, the automotive industry has proceeded on the assumption that all automobiles and parts shipped between the United States and Canada are free of duty. As I view the situation, the Congress has no practical alternative except to enact this bill. I wish that it were otherwise. I will vote for this bill were otherwise. I will vote for this bill with great reluctance, and I am certain that many other Members of this body share my views.

We have before us today another example where the executive branch-and particularly our representatives from the State Department-have entered into State Department-have entered into negotiations, not with the thought of negotiating, but in order to achieve a result sought by the other party to those negotiations. With this attitude, no one should be surprised that our negotiators always come out second best.

The United States-Canadian automotive agreement, which makes necessary this legislation, was hailed by the admin

istration as a great step forward in trade negotiations. The facts do not support these claims. All you need do is look to the committee report on this bill under the section entitled "Benefits of the Agreement" on page 6. This might better be addressed to the Canadian Parliament for justification for its action. Canada got everything she wanted, the United States got nothing, and, incidentally, the automobile manufacturers will save $50 million a year in Canadian duties and a much larger amount through integration of Canadian and United States production of automobiles and parts.

There should be no misunderstanding about the facts in this case. Canada wanted to increase the value of its automotive production. The Government of Canada adopted a duty rebate scheme which was designed to bring about that result. This scheme ran afoul of section 303 of the Tariff Act of 1930, because it constituted a subsidization of exports. Faced with a complaint by an American parts manufacturer, retaliatory action by our Government against Canada was imminent. The administration took the position that such action would be extremely harmful to our trade relations with Canada. Other means were sought in order to achieve the same result, that is to increase Canadian production. This is what the United States-Canadian automotive agreement is designed to accomplish.

The United States-Canadian automotive agreement-when coupled with the collateral commitments which must be given to the Government of Canada by any company seeking to avail itself of the right to import U.S. automotive products duty-free into Canadaguarantees to Canada precisely the result that Canada sought to achieve through other means, namely, to increase the value of automotive production in Canada over and beyond the normal growth in Canadian demand. Our negotiators reached an agreement with Canada-and avoided a showdown-by giving Canada precisely what she wanted. I do not call this negotiating.

On its face, the agreement would appear to liberalize trade. All duties on automotive products were eliminated. However, a manufacturer exporting to Canada is not entitled to duty-free treatment unless that manufacturer has first entered into a collateral undertaking with the Government of Canada to increase Canadian automotive production by a specified dollar amount. For all practical purposes, a parts manufacturer who does not presently have facilities in Canada will be foreclosed from the Canadian market unless the automobile manufacturer wishes to purchase the parts and act as importer. Thus, instead of liberalizing trade, the effect is to restrict trade to a select few who have entered into the required undertakings with the Government of Canada. Your constituent and my constituent cannot export to Canada without the payment of the old duty.

I do not know how this can help the economy of the United States, because through separate undertakings made

with the Canadian Government, the automobile manufacturers guarantee that Canada will not lose anything. In fact, they guarantee that by the model year 1968 Canada will benefit to the tune of additional production of $241 million annually over and beyond the growth of the Canadian market.

Who gains as a result of this agreement? The Government of Canada is assured of the production gains which it sought to achieve through the duty rebate scheme. The latter might not have worked. The value of automotive production in Canada must necessarily be increased by $241 million over the next 3 years. From the standpoint of the Canadian Government, all risk has been eliminated by the result of this agreement.

The major automobile manufacturers, and perhaps one or two major parts manufacturers with Canadian plants, will also stand to gain. These manufacturers save more than $50 million annually in Canadian duties. In addition, these manfacturers can concentrate the production of certain items in Canada in order to make up the required dollar value in Canadian output. Other items can be made in the United States and shipped to Canada free of duty. This is described as a "rationalization" of the automotive industry.

I am told that one of the first results will be that the Canadian automotive plants, presently operating well below capacity, will be brought up to full capacity. What cannot be sold in Canada will be shipped to the United States. The automotive industry will save many millions in production costs. The small independent parts manufacturer and the American auto worker will suffer the loss.

Our negotiators made a disadvantageous deal. The Congress is stuck with it. Once the agreement was executed and the Presidential proclamation issued reducing to zero the duty on automotive parts, there was no possibility of retracing our steps in this negotiation. In recognition of this. I am reconciled to voting for this bill. I do it with great reluctance.

I would also like to add a note of caution to our negotiators at Geneva in the so-called Kennedy round of trade negotiations authorized by the Trade Expansion Act of 1962. I hope that they will be prepared to "negotiate" with all that the term implies, including the risk of failure to agree. It takes no great skill to give in to the demands of other parties in a negotiation. If the United States-Canadian automotive agreement is symptomatic of our posture in trade negotiations—and tions and it certainly is an example of what we have been doing in the past-I am greatly concerned over what will be forthcoming from the negotiations at Geneva.

Mr. BYRNES of Wisconsin. Mr. Chairman, I yield 7 minutes to the gentleman from Michigan [Mr. BROOMFIELD].

Mr. BROOMFIELD. Mr. Chairman, I wish to add my unqualified support for the bill implementing the CanadianUnited States Automotive Products

Trade Agreement. My district is vitally affected by this agreement. In Oakland County, Mich., and particularly in the eastern portion of the county which comprises my district, and in Wayne County which adjoins us to the south where many of my constituents work, there is the largest concentration of manufacturing plants for automobiles, trucks, and their constituent subassemblies and parts of any area of similar size in the world.

To make plain to the Members of this body the tremendous interest of my constituents in this bill, I call attention to the fact that in 1960, of the 154,000 persons in my district in the civilian labor force, 59,000-or 38 percent were employed in manufacturing establishments. The largest number of these were employed in the production of automobiles, trucks, and automotive parts.

In Oakland County in the first quarter of 1962, there were 30,000 workers employed by the motor vehicles and parts industry, and 108,000 in Wayne County. Together these two counties in 1962 accounted for more than half of the employment in motor vehicle and parts plants in the entire State of Michigan.

In the Greater Detroit area in 1963, there were 204,000 persons employed in the production of motor vehicles and parts out of a total employment in these industries in the entire State of 338,000. In the entire United States in 1963, there were 745,000 persons employed in the motor vehicles and equipment industries--so Michigan alone accounted for 45 percent of the Nation's employment in these basic industries; and Oakland and Wayne Counties, where my constituents live and earn their living, accounted for about one-third of the State's total. To illustrate the sheer economic impact of motor vehicle manufacturing in my district, and State, it is only necesmy district, and State, it is only necessary for me to point out that the weekly payroll of this industry in the State in 1963 was $45 million-and it is even more 1963 was $45 million—and it is even more today.

Of course, the legislation must be evaluated not solely in terms of the local interest in Michigan, but also that of the Nation as a whole. But the importance of the motor vehicle and parts industry to the Nation as a whole is no less dramatic than its vital role in Michigan. According to the Census of Manufactures, the motor vehicles and parts industry had shipments valued at $37 billion in 1963. In producing these vehicles lion in 1963. In producing these vehicles and parts, the industry purchased materials and services from others worth $242 billion and paid out more than $5 billion in wages and salaries. An addibillion in wages and salaries. An additional $700 million was spent for capital tional $700 million was spent for capital improvements. So the motor vehicle and improvements. So the motor vehicle and parts industry contributed nearly $70 billion in these various ways to the national income in 1963. This combined activity was equal to 14 percent of the total national income that year.

The health and vigor of the automobile industry is obviously of the foremost importance to the Nation. Auspiciously, motor vehicle sales are on a sharply rising trend-giving extra zing sharply rising trend-giving extra zing to the whole economy. U.S. production

of new cars rose from 5.4 million in 1961 to about 8.5 million vehicles in the model year just ended-a 57-percent rise. By the 1969 model year, according to conservative estimates, U.S. auto production is expected to rise to at least 11 million automobiles—a further rise of 25 percent over the very large plateau reached this year.

To sustain this growth, all of the automobile companies are making unprecedented commitments for capital expenditures in the United States-to say nothing of their commitments for investment abroad. abroad. The four major producers together will spend about $5 billion for new plants and equipment in the United States during the next 3 years.

With the powerful thrust provided by this surge in investment and output, employment in the motor vehicle and equipment industry has been soaring. In June of 1961 the industry had an average of 657,000 employees. By June of 1964 this had grown to 782,000 employees. Now, a year later in June 1965-the latest month for which the data are availableemployment in the motor vehicles and equipment industry stood at 893,000 workers-a whopping 236,000 new jobs having been created in the four-year period.

The rate of increase in employment in this industry has averaged 8 percent per year for the past 4 years.

An industry that can make this kind of contribution to the U.S. economy commands our respect. It is doing its part to make America strong and her people prosperous. When Lynn Townsend, the president of Chrysler, stated as he did in Boston last week-August 18-that the next 10 years have all of the potential to be the "golden age" of the automobile industry, he was eniphasizing the point that the brilliant performance of the industry in the recent past will be overshadowed by the vigor of its activity in the years ahead. I am inclined to believe him.

The growth in auto production and sales which has so richly benefited the U.S. economy can also be a source of greater strength for our neighbor to the north, Canada. The motor vehicle industry there, because of a market less than one-tenth the size of the U.S. market, is markedly less efficient than the U.S. industry.

Moreover, the presence of an industry ten times its size on its border has compelled the Canadian automobile industry in its own self-interest to ask its Government to maintain relatively high tariffs on motor vehicles and parts. Because large-scale economies are impossible in the plants of the four major auto companies producing motor vehicles in Canada, each plant, being required to produce a broad range of different models and styles, really carries forward automobile output on a semicustom basis. Further, it is necessary for the Canadian plants to import a large volume of parts, subassemblies, and stampings for use in their production operations. Motor vehicle parts are subject to duties ranging up to 25 percent.

As a result, Canadian consumers pay an average of 17 percent more for their new cars than U.S. consumers, and the Canadian nation has a balance-of-payments deficit in motor vehicle trade with the United States of a half a billion dollars a year. In 1964, Canada's total deficit with the United States was $1% billion, so the motor vehicle trade accounted for nearly one-third of this total deficit.

Without any sacrifice of U.S. interests, the genius of the Canadian-United States Automotive Products Agreement is that it strips away the trade barriers that have compartmented the industry on both sides of the border and permits an efficient integration of the two into one North American industry. Obviously, Obviously, the geographical orientation of this industry will be predetermined by the capital investment already in place in both countries, and the nearness of existing plants to the preponderant population centers to be served. The United States, therefore, has nothing to fear from the agreement.

It would be economically illogical for any significant shift in plants, facilities, or jobs to take place because of the implementation of the agreement. Rather, the Canadian plants can now become efficient producers in their markets by being able to concentrate on the mass production of a relatively few models, thus achieving economies of scale, lower production costs, and eventually lower consumer prices.

The models which will no longer be produced in Canada will be exported from the U.S. duty free. In a return movement, Canada's surplus production of the few models it will now produce in volume will be sent into the United States duty free to provide a small part of the rapidly increasing supply of all models of automobiles needed to satisfy the continuing strong U.S. demand.

The increased trade in motor vehicles and parts between the United States and Canada will roughly come into balance by the end of the 3-year transition period. The total number of motor vehicles and parts moved between the countries will not achieve a balance, of course, as Canada will continue after 1968 to have a net deficit in motor vehicle trade with the United States of about a half billion dollars. Canada will, however, gain lower-cost autos and a 3-year standstill on the motor vehicle component of its trade deficit with the United States. The United States, on its part, will gain duty-free access to the Canadian motor vehicle market for its auto parts manufacturers, in addition to substantial indirect benefits which I shall shortly describe.

Most important of all, the reduction in costs and prices in Canada will Canada will strengthen demand in that country for new automobiles. Canada's gross national product, which in recent years has been rising at an average rate of 4 percent per year, will increase even more rapidly, at the rate of 5 percent per year, as a result of the increased economic activity stimulated by the reduction in

automobile prices anticipated by the end of the transition period, 1968. Increased consumer disposable income in Canada will be spent in large part on the purchase of goods made in the United States.

Here is where my State and district will gain an additional benefit from the implementation of the automotive agreement. Let me put this just as graphically as possible, Mr. Speaker. In my district there is substantial activity in established manufacturing plants in the following industries, in addition to transportation equipment: food and kindred products; apparel; lumber and wood products; furniture and fixtures; paper and allied products; printing and publishing; chemicals and allied products; petroleum and coal products; rubber and petroleum and coal products; rubber and plastics; stone, clay, and glass products; primary metal and fabricated metal products; machinery, both electrical and nonelectrical; and instruments and related products.

In 1964, there were exported to Canada through the customs district of Michigan-principally Detroit-the following values of goods produced by these industries:

Transportation equipment--
Machinery, except electrical_
Food and kindred products.
Electrical machinery-----
Chemicals and allied prod-
ucts-----

Primary metal products----
Stone, clay, and glass prod-

ucts..

$485, 679, 630 392,855, 311 143, 322, 676 97, 411, 695

91, 518, 239 68, 808, 362

36, 458, 512 35, 107, 059 33, 723, 406 28, 214, 562 16, 334, 200

16, 214, 470 15, 868, 577 14, 872, 124 3,733, 199 718, 681

1,480, 840, 703

Altogether the manufactured products exported to Canada through the Michigan customs district in 1964 were valued at $1.4 billion.

At the average output per worker in these industries in 1963, as derived from census of manufacturers data, these exports accounted for roughly 57,000 jobs and a goodly share of these jobs were in my district.

consumer

Mr. Chairman, a 1-percent rise in the rate of increase in Canada's gross national product may not sound impressive, but translated into disposable income available for the purchase of goods in Michigan, it represents a potential 25-percent increase. The Canadian-United States Automotive Products Agreement will contribute that increased purchasing power to Canadian consumers and enable them to step up their very considerable purchases of Michigan products. This, in turn, will produce the increased employment to which I have referred.

At the same time, by 1968 it is anticipated that employment in the United States in motor vehicle and parts plants States in motor vehicle and parts plants will increase by from 165,000 to 214,000

jobs, depending upon whether the rate of increase is 6 or 8 percent per year. As I have pointed out, employment has increased at the average rate of 8 percent per year for the past 4 years. Forty-five percent of this increased employment will take place in Michigan." So my State will benefit directly by some 74,000 to 96,000 new jobs in motor vehicle and parts production. At least a third of these new jobs will either be located in my district, in Oakland County, or in Wayne County where many of my constituents normally seek employment.

This job-producing aspect of the agreement necessarily commands my interest. The people of my district, my State, and of the Nation have so much to gain from the implementation of this Canadian-United States Automotive Agreement that I must give it my wholehearted support.

Mr. Chairman, the situation may be summarized as follows:

The President of the United States has pledged the word of this Nation to Canada through the execution of the agreement.

The best brains in the executive departments of the Government have enthusiastically endorsed this agreement and its benefits to the United States.

The responsible officials of the major motor vehicle producing companies in the United States-the big four-have enthusiastically voiced their support for the agreement and this legislation, stressing the benefits to this Nation.

The leadership of organized labor in behalf of the auto workers has also indicated its support of the legislation.

My own analysis convinces me that the agreement when implemented will lead to outstanding economic benefits to the people of the United States as well as those of Canada.

The negotiation of this agreement was entirely in the spirit of the principles for partnership between Canada and the United States recently enunciated by Ambassadors Livingston T. Merchant of the United States and A. D. P. Heeney of Canada. It is indeed, as they declared, in the abiding interest of both countries to make practical arrangements to keep the totality of our relationships in good and friendly order, and where trade is involved, it is incumbent upon the United States in particular to be especially alert to the potential impact on Canada of U.S. action in the tariff area. Canada

is indeed vulnerable to U.S. economic policy. It must in its own interest and in ours be vigilant in dealing with its persistent deficit in international payments.

Specifically, the two distingished Ambassadors observed that:

The economies of scale in production and the potential of larger markets justify continuing efforts on both sides to minimize barriers to trade between the two countries.

I agree with them that the arrangement achieved by the two Governments with respect to automobiles and automotive parts is to the mutual advantage of the two countries in this context.

The action taken here to mitigate the growing erosion of Canada's trading account with the United States and the achievement of a balancing of our mutual interest in such a way as both countries benefit, as in the case of the automotive agreement, is a proud moment in the history of our relationships with Canada and deserves the support of every Member of this body.

Mr. Chairman, I cite the following sources from which I compiled my statement:

"Canada and the United StatesPrinciples for Partnership," by Livingston T. Merchant and A. D. P. Heeney, June 28, 1965.

Bureau of the Census, Department of Commerce, "Summary Series: General Statistics for Industry Groups and Industries," 1963 Census of Manufactures, preliminary report MC63 (P)-3.

Bureau of the Census, Department of Commerce, 1964 Annual Machine Tabulation EA 6663.

Securities and Exchange Commission, statistical series No. 2055, "Plant and Equipment Expenditures To Rise Throughout 1965," June 7, 1965.

Bureau of Labor Statistics, Department of Labor, "Employment and Earnings Statistics for the United States 1909-64," bulletin No. 1312-2, issued December 1964; "Employment and Earnings," July 1965; "Employment and Earnings Statistics for States and Areas 1939-63," bulletin No. 1370-1, issued 1964.

Bureau of the Census, Department of Commerce, "County Business Patterns, First Quarter 1962, Part 4A, East North Central States."

Bureau of the Census, Department of Commerce, "Congressional District Data Book-Districts of the 88th CongressA Statistical Abstract Supplement," 1963; "Supplement to Congressional District Data Book-Redistricted States: Michigan," January 1965, CDDB supplement No. 7.

Mr. KEOGH. Mr. Chairman, I yield 2 minutes to the gentleman from Virginia [Mr. MARSH].

district. Although this particular industrial facility does not produce automotive parts, nevertheless, it seems likely that the impact of this agreement on other production facilities which they operate in this country, could have a operate in this country, could have a slackening of production of related prodslackening of production of related products brought about by a shifting of production to plants that might be idle or seriously affected by the Canadian agreement.

The most serious question is whether this is a free trade agreement, and I submit to you that it is not-for the following reasons:

That Canada imposed certain conditions on major American producers of automobiles which, in effect, relate to first, the history of production in Canada; second, maintenance of certain levels of production; third the proportionate increases; and, fourth, expansion of production over a period of 3 years by the major manufacturers in a total amount of $240 million.

This is the price that is being paid for this free trade. As the Under Secretary of State, Mr. Thomas C. Mann, in tary of State, Mr. Thomas C. Mann, in his testimony said:

Its purpose is to make possible a single North American automotive industry, and it goes far beyond a typical reduction of tariffs in a trade negotiation.

It is, therefore, apparent that this is a sweeping experiment in our trade relations with Canada.

To those who argue that there shall not be any economic displacement, I simply point out the clear anticipation that there shall be loss of jobs by the request to amend those sections of the Trade Expansion Act that provides for adjustment assistance arising out of such dislocation.

It is significant to note that this bill also provides, in establishing this adjust ment assistance, that the determining authority, as provided under the act for its implementation, is shifted from the Tariff Commission to the President or those to whom he delegates it.

Mr. Chairman, I rise in opposition to H.R. 9042, which, as the Members know, has been designated the United StatesCanada automotive products agreement, and has been described as creating a free trade situation between the United States and our great neighbor to the north, Canada. However, how free is free trade?

I submit that this is really not a free trade agreement for the export of American automotive products to the Canadian market, but is really a Canadian industrial development program for the export of American jobs to Montreal and Windsor. Actually, the Canadians are to be congratulated on their highly successful efforts for the economic development of their country, which has occurred, however, I fear at the expense of the producers of automobiles and automotive parts in this country.

A substantial producer of automobile parts has a plant in my congressional

ably adjust the balance of payments, we will see American investment flowing north of the border in the next 3 years in an amount of nearly one-fourth of a billion dollars.

Testimony in the hearings and other economic surveys show that in the market sense Canada heretofore has not had the capacity to absorb large-scale automotive production through purchases by Canadians. Where, then, can we expect the automobiles to be sold that will be produced by the plans for expansion of the facilities in Canada in the next 3 years? It appears certain that this market will have to be the United States.

Because this is a far-reaching obligation in the field of trade which will only enable the American automobile producer and parts manufacturer to gain access to the Canadian market at the cost of serious conditions, I cannot support H.R. 9042.

Mr. KEOGH. Mr. Chairman, I yield 2 minutes to the very able and distin

guished gentleman from New York [Mr. MCCARTHY).

Mr. MCCARTHY. Mr. Chairman, I would like to address a question to the distinguished chairman of the Committee on Ways and Means. As the chairman knows, I represent a district on the Canadian-United States border with a very susbtantial and huge automotive industry, both parts manufacturers and assembly plants. I wonder if the distinguished chairman could indicate what he would expect the impact of this agreement would be on the automotive industry in a border area such as the Buffalo area.

Mr. MILLS. Mr. Chairman, will the gentleman yield?

Mr. McCARTHY. I yield to the gentleman.

Mr. MILLS. Let me call the gentleman's attention to this, in answering his questions. The gentleman has within his congressional district the city of Buffalo, as I understand it.

Mr. MCCARTHY. Part of it.

Mr. MILLS. Buffalo is very near the Canadian border, as I remember my geography. The gentleman's producers of parts in Buffalo prior to this agreement would be faced with Canadian duties as high as 25 percent each that would average 17 percent. The Canadian Government says that the licensed automobile manufacturers and parts manufacturers and jobbers in Canada will be permitted to import into Canada parts produced in the gentleman's district free of that 17 percent for use as original equipment. I have all of the confidence in the world in the ingenuity and knowhow of American business and American labor. I would think that undoubtedly the export of parts from a place as near the Canadian border as Buffalo is would mean it would share in the growth of the automobile industry in Canada and a share would be in the gentleman's district.

Mr. Chairman, I yield 3 minutes to the gentleman from Wisconsin [Mr. STALBAUM].

Mr. STALBAUM. Mr. Chairman and Members of the Committee, I rise in opposition to bill H.R. 9042, because I, too, in line with other speakers, state that it is not a free-trade agreement. I feel in the course of the debate so far this afternoon not enough attention has been paid to the letters of undertaking by the Canadian subsidiaries of the U.S. auto companies.

Basically what we have here is a situation where the Canadian subsidiaries said, "We will agree through these letters of undertaking to buy in the next 3 years $241 million more parts in Canada than we have bought previously."

I submit to you, representing an industry that supplies automotive parts, that this is putting my company at a disadvantage in this foot race, if you please, to the tune of this $241 million which has been agreed to by these Canadian auto subsidiaries of U.S. companies.

I recognize the value of the statement of the gentlewoman from Michigan that

these are not part of the agreement itself, but they were precursors of the agreement and the Canadian Government, I am satisfied, would not have entered into the agreement if they had not had these assurances from these companies.

I would like to point out in this connection that this is the very item that makes this other than a free trade agreement, and the committee itself has so recognized it by its statement on page 6 of the report where they state:

In the view of the committee, although these letters limit the free trade of the new arrangements

And then they go on to say they feel they are desirable, but they are admitting in the report that this is not a free trade agreement as a result of the letters of undertaking that were written by the

Canadian companies and which we are sure will have to be honored, although there are no penalties in the act itself if they do not honor them.

I do not accept the argument that these are a part of the agreement, because to say this is to say that we are implying that these companies would not keep their word. I am satisfied that the Canadian Government fully expects that these companies will keep their word, that in the next 3 years they will buy the $241 million of additional parts in Canada and that the agreement would not have been acceptable to the Canadian Government if these letters of undertaking had not been there in the first place.

Mr. BYRNES of Wisconsin. Mr. Chairman, I yield 5 minutes to the gentleman from Illinois [Mr. McCLORY].

Mr. McCLORY. Mr. Chairman, I come to this well with mixed emotions, I suppose, insofar as representation of my constituents is concerned, since I am informed that on Monday, September 13, the large Chrysler Corp. is going to open in my district a plant where they intend to employ 5,000 individuals in the manufacture of new automobiles.

At the same time I am reminded that there are various automotive parts manufacturers in my district, small independent concerns, which are going to be affected by this legislation one way or the other; some may benefit, and I am inclined to feel that many more may suffer some detriment if the bill is passed.

We debated here recently an immigration bill and we were persuaded to reject a certain amendment because we were told that foreign policy was being made by the Executive and we should follow that foreign policy. That bill had hardly left this Chamber when the policy of the Executive was changed, in order to follow the policy which had been proposed in this Chamber by the amendment.

Now we are urged to support this legislation as a fait accompli on the basis that it represents part of our foreign policy and we have to support that foreign policy. I question that this is good foreign policy. In addition, we have a right, as Members of this legislative body, in the enactment of legislation, to decide

for ourselves whether we are promoting the best interests of our Nation internationally. With respect to the bill before us I do not think we are. I do not think we are acting wisely when we favor one group of automotive products manufacturers over another.

I do not think we are promoting the best interests of our Nation insofar as our international relations are concerned, when we provide that automocerned, when we provide that automotive parts which are going into a new product are going to be exported dutyfree whereas those which are replacement parts are going to have to pay duty.

Mr. Chairman, insofar as I know we have never made any distinction heretofore in the application of our tariff laws in which the imposition of tariff depended upon the end result of a product which was imported or exported.

We know that this legislation is a refinement or a new development of the

so-called Canadian remission of duty order which has now been abandoned. This was a form of subsidy of Canadian exported products which was under scrutiny by the Tariff Commission at the time it was abandoned and replaced by this legislation.

to offer an amendment, if the rule were Now, Mr. Chairman, I had intended an open rule and if we had the opporan open rule and if we had the opportunity to offer such an amendment.

However, I do ask leave to attach at the conclusion of my remarks the amendment that I would offer if I had the opportunity to do so at the appro

priate time.

This amendment would merely do this: It would provide that this act should become effective only if it should apply to all automotive parts and to all new automobiles. It would eliminate the duty on all automotive parts, regardless of their final destination, regardless of whether they are intended for new automobiles, or as replacement parts.

In such a way we would be treating the automotive manufacturers equally and equitably and we would be promoting friendly trade as between our Nation, something which I believe we all want to encourage and which we all desire.

Mr. Chairman, as I said before, I am fearful that this legislation and the agreement this bill authenticates are going to result in misunderstanding, dissension, and disagreement. The agreement is being promoted in Canada as a means of aiding Canadian national interests and not its international relations. The promotion of these national interests is a part of the philosophy of the political party and administration in authority in Canada at the present time. Passage of this bill will give encouragement to that administration, but the measure will not advance the longrange good relations between Canada and the United States, and I doubt that the bill will promote cooperation, harmony, and free trade as between our nations.

Therefore, Mr. Chairman, I ask unanimous consent to attach my proposed amendment as a part of my remarks.

The CHAIRMAN. The Chair wishes to inquire if the statement is the gentleman's own statement?

Mr. McCLORY. Yes; it is my own statement. It relates to an amendment that I would offer if I had an opportunity to offer it. It merely qualifies the acquiescence of the Congress with respect to this legislation, with the proviso that is contained in the proposed amendment, which I have explained.

The CHAIRMAN. Is there objection to the request of the gentleman from Illinois?

There was no objection.

The matter referred to follows:

Page 2, line 17, strike out "Act." and insert the following: "Act, but only if the Agreement is amended to provide for the mutual reduction or elimination of the duties applicable to automotive products (hereinafter referred to as 'automotive replacement parts') other than motor vehicles and fabricated components intended for use as original equipment in the manufacture of such vehicles. Such proclamation shall include such further modifications of the Tariff Schedules of the United States as the President determines to be required to carry out the Agreement with respect to automotive replacement parts."

Page 2, line 24, after "subsection (a))" insert the following: "or which is an automotive replacement part".

Page 3, strike out line 4 and all that follows through line 3 on page 4, and insert the following:

"SEC. 202. (a) Whenever, after determining that such an agreement will afford mutual trade benefits, the President enters into an agreement with the government of a country providing for

"(1) the mutual elimination of the duties applicable to products of their respective countries which are motor vehicles and fabricated components intended for use as original equipment in the manufacture of such vehicles, and

"(2) the mutual reduction or elimination of the duties applicable to products of their respective countries which are automotive replacement parts,

the President (in accordance with subsection (c)) is authorized to proclaim such modifications of the Tariff Schedules of the United States as he determines to be required to carry out such agreement."

Page 4, line 4, strike out "(c)" and insert the following: "(b)".

Page 4, line 5, strike out "or (b)". Page 4, line 23, strike out "(d) (1)" and insert the following: "(c) (1)".

Page 4, line 25, strike out "or (b)".

Mr. MILLS. Mr. Chairman, I yield such time as he may consume to the gentleman from Kentucky [Mr. STUBBLEFIELD).

Mr. STUBBLEFIELD. Mr. Chairman, I rise in opposition to this bill.

My principal objection to the passage of this bill is that the United States has undertaken, in the so-called trade agreement with Canada, to grant duty-free treatment to motor vehicles and original equipment parts imported by anyone from Canada. Canada in return has undertaken nothing. Canada "promises" to give duty-free status to automotive products imports only if they are imported by "qualified" Canadian vehicle producers. But a qualified Canadian producer is one who has entered into a private agreement with the Canadian