I think Commerce and all the rest ought to stop putting out these fraudulent good news announcements about phony trade surpluses when, in fact, we are losing our shirt and can't keep it up.

If we start out by putting our trade books on a basis where somebody can understand them, we then have a starting point from which you could negotiate and tell these people that we are, in fact, losing a great deal of money. If we would quit deceiving our own people and quit putting out the wrong figures and start putting ou the right figures and insisting on those, we could get somewhere negotiating with those people.

Do you think that will help?

Mr. EBERLE. It certainly helps because I have the same problem in negotiating to convince our partners that on that same basis we do have a deficit in our trade accounts. It is very difficult to explain this to them. But I do think the fact that we are publishing it both ways now will be extremely helpful.

I might also add that some of our trading partners have taken a look at this new and decided maybe they should report more along our way so you have two problems on your hands.

The CHAIRMAN. I might say if they want to report it the way the Commerce Department has been reporting they are in for a real nightmare of wandering around in the fog because they will wake up someday and find out what they have been living in a dream world which has no relationship to fact and truth whatever. So that if we reallyI would think since we are one of the very few people, one of the very few nations that reports it the strong way we ought to report it the same way the others do. Of course, I was pleased to see the International Monetary Fund, they don't keep these trade figures anyhow, they keep a balance of payments set of figures, so that on that basis we are not deceiving anybody, even ourselves, but unfortunately, while they are deceiving, not we, but while this Government, this administration, has had this bipartisan deception going on directed at the American people, I cannot conclude other than it has done a great deal to prejudice our interests in trying to find and to put into effect the kind of answers toward which you have been directing yourself. Senator Talmadge.

TOBACCO TARIFF DISCRIMINATION AGAINST THE U.S.

Senator TALMADGE. Thank you, Mr. Chairman.

Mr. Ambassador, as you know, the GATT requires any nation such as those in the European Economic Community when it expanded from six to nine countries last January to negotiate concessions to compensate for losses in third countries.

Currently all tobacco selling above a $1.27 a pound must face a special 15 percent value added tax. This specifically discriminates against American tobacco since it is of a higher quality and therefore higher value than most other tobacco entering the European Community. So far the European Community has not agreed to change their tobacco tariff policy. Is the United States prepared to stand firm on our position that the European Community should eliminate the so-called wrapper leaf tariff which discriminates against exports of high quality American tobacco?

Mr. EBERLE. Senator, that is one of the products that has been of high priority in our negotiations. It is one we recognize as of trade importance, along with a number of others.

As I said in my opening statement, we are in a very sensitive area now of the wrap-up, hopefully, of the Common Market enlargement compensation negotiations, and I would be delighted to brief you in executive session on all the details of it.

Senator TALMADGE. I would appreciate it. As you know, tobacco is very important to my State, and a number of others, and it is one of our principal dollar earners insofar as exports of agricultural commodities is concerned.

Mr. EBERLE. I can assure you it is one of the items which has been right at the top of our list in our discussions.

INDUSTRY REPRESENTATION SEEN NEEDED DURING NEGOTIATIONS

Senator TALMADGE. I want to get into another area that I feel I have some familiarity with. You remember the Trade Act of 1962 provided for representatives of the Ways and Means Committee and also the Finance Committee to be advisers to our trade negotiators. Of course, we had our legislative duties here. Many of us went over there a time or two and rushed back. Consequently, we didn't find out much. We got to eat some very delightful lunches and dinners and attend a few receptions at some of the embassies. That was about the extent of it.

Now while the American business people who had some knowledge of international trade were excluded totally from our negotiations, the Japanese, the Germans, and the French, and the European Economic Community had the best industrial team that was available at the hands of the negotiators day and night to give expert advice.

Don't you think it would be far better rather than having a few politicians from the Ways and Means Committee and Finance Committee who had no expertise in international trade, to have representatives from American industry who were competent to advise you as the negotiations proceed?

Mr. EBERLE. The answer is yes on both counts. And let me say that we have urged that members of Congress find a way to work also directly with us. whether it be through their staffs as part of the team, or as members, and I can assure you that you will be kept fully up to date on our negotiations. It is only a matter of your telling us how you want us to do it. I have a personal commitment to see that that is done.

Senator TALMADGE. I think we ought to be informed, and I will give you an illustration. Of course, being from Georgia I had some interest in textiles, as you might imagine. We could find out virtually nothing as to what was going on in textiles at the negotiating conference, but some of my constituents could call their friends in France and their friends in Germany and their friends in Britain. Their friends were in Geneva being advised every step of the way and advising the negotiators, our adversaries, in the negotiations. It was utterly ridiculous. The other side had the best brains available and our people who have to bear the burden of whatever came out of the negotiations were kept completely in the dark.

Mr. EBERLE. Let me go to the business and agricultural and labor communities now. As I have publicly said on many occasions, we are prepared to have these interests fully represented, and we have already

started by asking industry, agriculture and labor to sit down and tell us how they want to work with us. We started forming advisory groups ahead of the time, because we can't wait for passage of the trade bill. We think it is that important, and we think they ought to continue not only just during large multilateral negotiations but on a regular basis. Senator TALMADGE. I couldn't agree more, but I would hope when you get down to negotiating you would have the best brains of American industry in Geneva 24 hours a day so when any subject comes up you can get expert advice in the area.

Mr. EBERLE. We are hopeful that can be done and we have also given them a commitment that they can go up to the negotiating door with us and when we come out we will tell them where we stand. They cannot go into the negotiating room but we are prepared to go as far as we can in two-way communication. We want their advice and we are prepared to tell them where we agree or disagree with them, and the same thing goes for the members of the Congress.

There are going to be times, I am sure, when there will be broader interests but everybody is entitled to know this and we are prepared to explain that kind of situation. We are, incidentally, also prepared to review those provisions in this trade bill with you if you feel they are not strong enough as they now read.

The CHAIRMAN. May I interrupt? I would like to applaud both the question and the answer. It seems to me that it is completely unfair that foreign negotiators represent foreign business people, but that the American businessman is not represented by his government to the same extent the other fellow is represented by his government.

Now if they do let their businessmen come inside that room I think you ought to allow our businessmen to come in, too. I think it would be, ought to be, both ways but I think you ought not to keep them out of the room.

Mr. EBERLE. Senator, I hope you have good reports from the textile industry sitting in with us at Geneva last November and December as we worked out the textile agreement.

Senator TALMADGE. I congratulate you. You did a very fine job in that regard but it was utterly inconceivable to me how our negotiators could go to a negotiating table completely unarmed while those they were negotiating with had the best brains by their side day and night to advise them.

NEW PROCEDURES SEEN NEEDED FOR FINDING UNFAIR TRADE PRACTICES

Let me bring up one other matter that I think gives the world some cause for concern. As I recall Napoleon Bonaparte once made the statement about China, "Let the sleeping giant sleep. When he awakens the world will tremble."

Now you recall how the Japanese, with their expertise, their scientific achievement, and their work habits, have sorely disrupted markets primarily in this country but in other countries as well to some degree. Our unfavorable balance of payments with the Japanese, I believe, in 1972 was $4,200 million. I think that was on an FOB basis, not CIF. What is going to happen when the Peoples Republic of China with 800 million hard working people gets geared up to take over any market in the world it wants to.

Mr. EBERLE. We have recognized that there is a problem with such a "sleeping giant" particularly where it is a nonmarket economy and we have special provisions where there can be prompt decision by our Government if an expanding country should elect to segment a U.S. market and try to move in on it and disrupt it.

Senator TALMADGE. We have had provisions like that in previous trade acts and no President had the courage to invoke them, as you know.

Mr. EBERLE. That is why we are providing for an oversight by Congress on some of these provisions.

Senator TALMADGE. Who is going to trigger it, the President?

Mr. EBERLE. First of all, it depends on what the provision is, but the one on the nonmarket economy would be the Tariff Commission through a complaint, and a complaint could be raised by the Congress, could be raised by my office, it could be raised by a company, or by the

President.

Senator TALMADGE. I am informed that it is harder to find unfair trade practices on the part of the Communist countries than it is the free world countries, and we haven't been able to find much insofar as free world countries are concerned.

Mr. EBERLE. There are two different parts of the law. You are correct in the anti-dumping countervailing duty provisions. On the other hand, in the escape clause it is a great deal more easy and those are the provisions that we would expect to move under because we simply have an absolute right to move under those.

Senator TALMADGE. Would you have any objections of Congress putting some provisions automatically triggering the law without having to rely on an Executive who heretofore has not been willing to invoke the law?

Mr. EBERLE. We would object, I think, to absolute percentage or quotas at this time because there are many areas in which there are not problems, and many areas in which you do get products in that are reasonable and cause no injury. But we are certainly prepared to work with you where there is an injury, to find ways that you would be satisfied with.

Senator TALMADGE. I would like to put some mechanism in the law where we wouldn't have to rely on an Executive who may not invoke the law. Couldn't we come up with some system? I am not an all out protectionist but, at the same time, I don't want our country's labor force and our own domestic industry destroyed by a flood of foreign imports. It seems to me that with all the brains you have at your disposal and all the brains that the committee has at its disposal we could come up with some device which would automatically trigger the law when some particular peril point was reached.

Mr. EBERLE. Let me put it this way: The Tariff Commission makes a recommendation. We have provided even when there are tie votes such as the shoe case on which the Senator from Connesticut raised questions.

Senator TALMADGE. How many recommendations has the Tariff Commission made in the past 12 years, Mr. Ambassador?

Mr. EBERLE. That is the point I want to get to. We have proposed a change in the law so the Commission does not have to tie injury to previous tariff concessions, and two, that the President must have the

same time limitation in tie votes as he does whether he takes positive or negative action. Now he must report, and if he takes action and imposes import relief, Congress has a veto procedure on that. If he refuses to take import relief he must report to Congress precisely why he didn't do it.

Now I recognize that you have a veto on the one side and you have only the information so that Congress could act on the other. But if there is no provision or no program under which to act we have provided that Congress must get the information if the President refuses to act and, therefore, is able to act on its own once it has that information.

Senator RIBICOFF. May I ask you to yield? I am in the process of drafting an amendment to carry out just what you suggested. I would be pleased to submit it to you and I would hope you could cosponsor it Senator TALMADGE. Thank you, sir. It seems to me we must do that. When the staff was briefing us on the House-passed bill the other day it was pointed out that under one provision in the bill importers can complain but the poor fellow who is trying to pay taxes and keep his plant going and give jobs to his employees in the face of these imports can't complain. We can't have that.

I believe my time has expired, Mr. Chairman, and I yield at this point.

CIF vs. FOB

The CHAIRMAN. Senator Bennett.

Senator BENNETT. Thank you very much, Mr. Chairman.

Like all the rest of the committee I have enjoyed the discussion of the difference between CIF and FOB but I would like the record to be very clear that our use of FOB has gone back to the beginning of the time, and if there has been any movement away from it, at least so far as records are concerned, it is this administration that has made this movement, and I wouldn't like the record to indicate that this administration is not responsible for the FOB situation.

The CHAIRMAN. If the Senator will yield, you understand I didn't just start raising the devil about this when this administration came into office. I have been complaining about it for a long time.

Senator BENNETT. In the course of your statement you said this administration should do it and hadn't done it and I just want the record to be straight on that.

The CHAIRMAN. I think I referred to it as a bipartisan deception, and I am satisfied that is just what it has been.

Senator BENNETT. We will have to blame the men who wrote the Constitution.

The CHAIRMAN. No, just blame those who keep the figures. [Laughter.]

PRESENT STATUS OF TRADE NEGOTIATIONS

Senator BENNETT. Mr. Eberle, just what is the present status of trade negotiations in a general sense? Where are we? Are we at the beginning of a situation, at the end, in the middle?

Mr. EBERLE. We are, Senator Bennett, we are really at the beginning because the United States has really no authority or at least any credibility with which to enter into negotiations and, therefore, we are at the