fact in the Commonwealth's tax revenues-contributing in 1973 a total of $94.1 millions to the Government's recurrent revenue.

TSUS 685.10, 685.20, 685.23, 685.25, 685.30, 685.32, 685.40, 685.42, 685.50, 685.80, 685.90, 686.10, 686.22, 686.24, 686.30, 686.40, 686.50, 686.60, 687.50, 687.60, 688.04, 688.05, 688.06, 688.10, 688.12, 688.15, 688.20, 688.25, 688.30, 688.35, 688.40

ELECTRICAL MACHINERY AND EQUIPMENT

Electrical and electronic equipment represented 10.1% of total shipments in 1972 to the United States, providing thousands of employment opportunities. Electrical equipment of the type of radios, phonographs and communication equipment provided 2,521 jobs, and electronic equipment and components 3,000 jobs, as of October 1972.

Retaining present tariff structures could result in attracting to Puerto Rico foreign firms (Japan and Germany) which manufacture electrical and electronic products, or could result in the continued growth of existing firms of this nature on the Island.

Lowering of tariff barriers would result in the loss to Puerto Rico of domestic manufacturing operations involving products in these categories.

TSUS 700.20-FOOTWEAR OF LEATHER

Puerto Rico is seriously concerned with the loss of ten leather footwear manufacturing plants during the past three years, attributable principally to foreign competition, local wage increases, and scarcity of raw materials. This industry has been a substantial provider of employment, and Puerto Rico can ill afford with its high 12% over-all rate of unemployment to continue losing jobs for any of the approximately 3,500 workers still employed in the industry. This industry currently ships to the United States leather footwear with a dollar value of $38,097,000.00.

TSUS 706.05-LEATHER BILLFOLDS, WALLETS, AND PORTFOLIOS

TSUS 705.35-LEATHER GLOVES

Puerto Rico ships to the United States leather items in the above categories valued at $53,338,000.00. Approximately 2,484 employees are engaged in this work. Preliminary studies indicate that most of the Companies engaged in manufacturing of leather items in these categories could not with-stand a tariff cut without incurring losses.

IMPACT ON PUERTO RICAN AGRICULTURAL PRODUCTION

Tariff reductions could adversely affect a number of farm commodities of some current or potential importance to the Puerto Rican economy. Local production of the following commodities could be seriously affected by removal of tariffs which now protect the local farmer from low-priced competitive items from abroad:

A major effort is under-way in Puerto Rico to stimulate the re-growth of the agricultural industry which has been in a continuing decline during the past twenty years. Every possible assistance is required to assure that the Government's plans have a reasonable opportunity to success.

TSUS-125.60, 125.70, 125.80-LIVE PLANTS

Puerto Rico has been successful in the past several years in developing an increasing trade in the shipment of live plants. This is one step in the over-all effort to give impetus to a serious lag in agricultural activity. There is considerable competition from other tropical countries, and it is essential that adequate tariff protection be accorded to permit this trade to remain competitive in the United States market.

TSUS 148.90, 148.93, 148.96

PINEAPPLE

The pineapple crop is a significant source of employment and export revenue for Puerto Rico. The United States is the primary market for Puerto Rico's fresh pineapple. Both production and harvesting are highly labor-intensive and together represent 45 percent of total crop costs. Additional employment opportunities are generated by the pineapple canning and processing industries.

Preliminary studies made show that the profit margin in pineapple production in Puerto Rico has been very limited, despite continuing efforts to increase yields per acre. The need for continued tariff protection is evident.

APPENDIX C

EXPORT EXPERIENCE

It is desired that the attention of involved authorities be directed toward the positive efforts being made by the Commonwealth of Puerto Rico to increase its export trade with foreign countries, thereby contributing measurably to improvement in the trade balance of the United States and attesting to the declared intention of the Commonwealth Government to comply with the spirit of the call to increase foreign trade.

Puerto Rico in 1972 exported to foreign countries items with a total value of $149 millions. Exports to foreign countries increased in 1973 to a total value of $202 millions, principally as a result of the promotional activities of the Commonwealth Government directed toward countries of the Caribbean and Central and South America.

In 1972, Puerto Rico exported abroad $27 millions of chemical elements and compounds, such as benzine, cyclohexane, ethylbenzene, and vinyl chloride Monomer. Over $7 millions of ortho Xylene, para xylene and Crude Tar Oils were shipped abroad. Medicinal and pharmaceutical products valued at $13,505,000 were exported in 1972 to foreign countries.

Our foreign trade in 1972 included $5 millions in paper, paperboard and paper products; radio and TV parts and accessories and TV chassis and unassembled TV kits valued at over $4 millions; carbon and graphite electrodes worth $5 millions; manufactured goods of textile yarn fabrics, clothing, brassiers and accessories valued at $8 and one-half millions.

The Commonwealth of Puerto Rico is fully cognizant of the provisions of the Trade Reform Act directed toward the adoption of measures which will facilitate a greater and easier flow of trade between the countries of the world. We subscribe to all efforts contemplated to improve international trade, and it is for that reason we include this short exposition of our own intensive efforts to engage successfully in foreign trade efforts.

STATEMENT OF THE BICYCLE MANUFACTURERS ASSOCIATION, INC., NEW YORK, N.Y.

The question is immediately raised: Why should an industry that has been described by many as one of the most "dynamic growth" industries of the Twentieth Century be concerned with imports? The American public has been buying bicycles at an expanded rate. The bicycle has been described by enthusiasts as a great nonpolluting means of transportation and exercise and offers unique opportunities to conserve energy. The American public has demanded better and more bikeways and Congress is responding by appropriating money for such bikeways. This is an industry where sales to the retailer have gone from approximately 5 million units in 1964 to 15 million units in 1973.

The following table illustrates quickly and succinctly why the United States bicycle manufacturers are deeply concerned about the import problem in the domestic market.

With the increasing development of a large bicycle market has come a deluge of imported bicycles into the United States which has increased imports from 1,000,000 units in 1964 or 19.8 percent of our market to 5,156,000 units in 1972 or 37.1 percent of our market. While domestic sales were more than doubling; imports were growing five-fold.

Most of these bicycles come in at a low duty rate of approximately 5 percent and come from over 40 countries, including such diverse places as Japan, Korea, Taiwan, Poland, India and the China mainland. Is it fair that these foreign producers should completely overrun a market that we have developed in the United States? It is difficult for an industry like this to prosper while a large part of our growth is being taken by imports.

Perhaps no other industry is affected by international trade in as many ways as bicycle manufacturing. Imports of bicycles from low-wage countries have created severe hardships for American producers; yet imported parts from some of these same countries are essential to our industry because many parts are simply unavailable from domestic sources.

At first glance, our position with regard to imports may appear inconsistent: restrain imports of bicycles while allowing a free flow of parts. This apparent inconsistency evaporates, however, upon close examination.

While American bicycle manufacturers prefer to buy domestically, unfortunately many components are simply not manufactured here; others are not available in the quantities demanded. Faced with stiff competition from imported bicycles, and lack of domestic supply for parts, American manufacturers have gone abroad for a source of supply. The Bicycle Manufacturers Association would support legislation permitting free importation of any product so long as such unrestricted importation did not cause dislocation in the market. or substantially injure American manufacturers.

Import relief:

It has become increasingly popular to brand individuals and organizations as either "protectionist" or "free trade." This is unfortunate. The issues involved in international commercal policy are much too complex for these simplistic labels. The Bicycle Manufacturers Association supports a program of open borders, tempered with an internationally recognized system of orderly marketing arrangements.

The current status of the American bicycle industry vividly demonstrates the basis of our position. American bicycle producers are faced with a vast array of escalating costs and decreasing freedom to make economic decisions.

In the past ten years, our labor costs have gone up 75 percent; our average fixed overhead has increased 64 percent; our raw materials costs have escalated 43 percent. On the other hand, various levels of government have established increasingly restrictive regulations regarding such matters as workmen's compensation, minimum wage, in-plant safety, pollution control and a vast array of social legislation. All of this adding to the cost of doing business. This is not

30-229 O 74 - pt. 6-18

penalize American business by placing it at a disadvantage with respect to its foreign competitors."

BROADENING OF INTERNATIONAL TRADE

As a business enterprise operating in a multipolar world, Cyanamid has traditionally supported appropriate bilateral and multilateral governmental efforts toward international negotiation and cooperation, rapprochement and equilibrium. We have always believed that man's best hope for prosperity remains a stable world in which nations seek peace and accommodation. Such a climate can broaden internationl commerce and permit industry to accomplish what it does best innovate, create, manufacture, market and distribute. This activity, we feel, stimulates social progress and engenders prosperity, both here and abroad.

The proposed authority for the President to extend most-favored-nation (MFN) treatment to Communist nations represents, to us, a step toward achieving a stable and peaceful world. Moreover, it presents U.S. business with new markets, enabling us to increase production and employment, meet foreign competition more effectively, and contribute to the domestic economy.

We would support the safeguards in the proposed legislation that (1) provide for import relief measures to be imposed by the President resulting from Tariff Commission findings of "marketing disruption and material injury;" (2) protect industrial rights and manufacturing processes, trademarks and copyrights; (3) arrange for the settlements of commercial differences; and (4) promote trade, Moreover, we note that the national interest is further protected by the provisions, which we support, of a three-year limit on the initial extension of MFN treatment and suspension at any time for national security reasons.

Cyanamid recognizes that Congressional failure to pass this legislation places the government of the United States in the position of abrogating international agreements already negotiated, thus weakening the premises on which world trade is conducted, and denies U.S. companies business opportunities currently available to their foreign competitors.

Therefore, we recommend enactment of the MFN provisions of the original Trade Reform Act of 1973 as proposed by the Administration and containing the safeguards previously discussed. We would also recommend that Congress suggest additional trade and financial criteria to the President concerning the initial extension of MFN treatment and either its renewal or withdrawal through the Advisory Committee on Trade Negotiations.

Currently, Cyanamid is also concerned by proposals to restrict American exports of raw materials. Restrictions imposed by the United States would be counterproductive, we feel, because they would inevitably lead to retaliation by other countries. We recommend that Congress make a separate study of this situation to determine if special legislation is warranted, and we caution against sweeping and precipitate measures which could exacerbate rather than remedy the problem.

ENVIRONMENTAL CONTROL STANDARDS A FACTOR

Cyanamid believes that until international standards are developed with regard to environmental control related to manufacturing processes, individual nations will impose varying degrees of restrictions on local industry.

Pollution control has received heavy emphasis in the United States during the past few years and U.S. industrial organizations are having to bear greater financial burdens than many of their overseas competitors. Higher capital investment and production costs resulting from required pollution controls are becoming definite factors in competitive trade. For example, Cyanamid through 1972 made capital expenditures for pollution control equipment on a cumulative basis of $69 million and we expect to commit $34 million more through 1974. The annual costs of operating this equipment and of Cyanamid's pollution-control research were $11 million. And, large expenditures for pollution control will continue. These factors will become more significant during the life of the trade agreements to be negotiated at the next GATT round. As some nations place more emphasis on this facet of the quality of life than others, there will be differences between production processes and costs of companies operating in different countries.

We believe that in drafting trade legislation, Congress should indicate that marked disparities between pollution control standards and resultant costs should be considered and allowances therefor made to bring about comparative equity between the foreign and domestic producers. We believe that this will also encourage other countries to upgrade their own pollution control standards.

BUSINESS/GOVERNMENT COOPERATION

Cooperation between industry and government within the member nations of the GATT demonstrated clearly the effectiveness of the foreign negotiating teams in past sessions of the GATT. This was in contrast with the lack of such a relationship on the part of the United States.

This mistake cannot be repeated. Government agencies concerned with the negotiations and preparation therefor should be required under the proposed Act to actively seek and use the advice of expert representatives from business, labor and agriculture on the several tariff and trade subjects and products to be considered for negotiation at the GATT. Certainly the kind of body envisioned in the proposed Advisory Committee on Trade Negotiations would be a most useful mechanism for this purpose.

Until now, U.S. government responsibility in foreign commerce has been widely spread among a number of government agencies: the Departments of State, Commerce and Agriculture, the President's Special Trade Representative and others. Federal effort is aimed largely at promoting exports with little attention to foreign investment except for restrictions.

Government policy, attitudes and mechanisms are for the most part still tuned to the world of trade as it was 25 years ago.

The need for a change is becoming critical. Foreign governments, economic blocs and international agencies and forums are beginning to study the multinational company. U.S. multinationals are increasingly finding themselves in a defensive position, because international forums have every appearance of becoming a tug of war between nations with the MNC's in the middle. Unfair, unwarranted restrictions will not only be detrimental to the MNC's, but also threaten negative economic consequences for the U.S. economy.

U.S. government delegates to these agencies and forums must be supported by a firm U.S. policy which recognizes that the export of capital and technology in exchange for profits is equally as important to our economic well-being as the export and import of products.

In summary, Cyanamid appreciates the opportunity of submitting its views and recommendations to the Finance Committee. The central philosophy underpinning our comments is a belief in the efficacy of the private enterprise system in promoting material and social benefits. We are keenly interested in continuing our business overseas, and desire only equity in our dealings with our own government and the governments of the nations in which we operate. We are ever mindful that our success in delivering essential products for human, animal and plant health on a global basis depends on our ability to compete with foreign companies. The record shows, we believe, that our success yields manifold benefits to the United States and the world community. It is for this reason that we trust the Committee will give due consideration to this subject which is of vital concern to our economy and our company.

COMMONWEALTH OF PUERTO RICO, DEPARTMENT OF COMMERCE,
San Juan, P.R., April 4, 1974.

Hon. RUSSELL LONG,

Chairman, Senate Committee on Finance, U. S. Senate,
Washington, D.C.

DEAR MR. CHAIRMAN: In lieu of a personal appearance, I respectfully submit the attached materials as written testimony to your Committee's public hearings on HR 10710, the Trade Reform Act of 1973.

The Commonwealth of Puerto Rico is seriously concerned about the anticipated negative impact on its economy due to the tariff and nontariff trade concessions of HR 10710. It should be noted that this impact is of a graver nature and magnitude than that which can be expected to affect specific sectors of the mainland economy.