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agreement on the part of the United States. The doubt that has been raised over this question, plus the delay in implementing the wheat agreement, is causing the United States to lose business in wheat and wheat flour every day. It is building up ill will against United States agricultural commodities, thus harming the interests of United States farmers.
We endorse the proposal of the farm groups that an independent fund be provided for subsidy payments. If adopted, we think it important (a) that Commodity Credit Corporation be designated as the administering agency, and (b) that, when and to the extent this fund is not available or sufficient to carry out our obligations under the wheat agreement, the Corporation be authorized to use section-32 and other funds available to it; and that such other funds later shall be restored by appropriations from the Congress. In this suggestion we have in mind the initial delay in providing such a special fund, well as the subsequent impossibility of predicting the exact amount needed for subsidy payments.
We further recommend that, in view of the permissive rather than mandatory language of section 2 of S. 2383, the report of this committee set forth clearly the intent of the Congress in respect to payment of subsidy requirements by CCC.
Lastly, we recommend that the legislation be made effective August 1, 1949, in order that the United States may honor conditional purchases already made by several nations against their international wheat-agreement quotas.
II. CONTROLS AND PENALTIES
Section 3 of S. 2383 contains a broad grant of authority to the President to issue regulations; to impose controls and to require reports and the keeping of records. The section further establishes penalties for violations, and would permit almost unlimited examination by the Government into the affairs of any person who exported or imported wheat or wheat flour, whether or not in relation to the international wheat agreement.
Such a broad grant of unlimited authority appears unnecessary and undesirable. It far exceeds what Secretary Brannan envisioned in testifying before the subcommittee of the Senate Committee on Foreign Relations that considered the wheat agreement last May.
Mr. Brannan, in speaking of legislation to implement the wheat agreement, referred to "limited export controls.” He stated that implementing “legislation will also need to include a licensing procedure to control the destination of our wheat exports and a requirement for reporting quantities, prices, and related information in order that the Government can meet its obligation to report such information to the council. These regulations need not be difficult, however, and will only be imposed to the extent necessary to carry out our obligations under the agreement."
We think that the draftsman delegated the task of spelling out these limited controls simply short cut his job by writing a blanket provision.
We do not think the Congress should be casual about accepting whatever is written. The committee should examine carefully the controls actually needed to implement the international wheat agree
ment. These should be provided. Unnecessary blanket grants of authority should be denied. To this end, we should like to discuss the provisions in detail, as follows:
Section 3 (a) reads:
The President is hereby further authorized to take such other action, including prohibiting or restricting the importation or exportation of wheat or wheat flour and to issue such rules or regulations which shall have the force and effect of law, as may be necessary in his judgment in the implementation of the international wheat agreement.
It appears that this subsection can be interpreted to mean, by omitting the central clause between commas:
The President is hereby further authorized to take such other action as may be necessary in his judgment in the implementation of the international wheat agreement.
Such a provision certainly simplifies draftsmanship. It saves the trouble of thinking through the type of controls actually needed to implement the agreement.
Does the central clause, “including prohibiting or restricting the importation or exportation of wheat or wheat flour, etc." mean "including, but not limited to”? Or does it limit the “such other action” to prohibiting and restricting imports and exports?
If not so limited, then why confuse the meaning by naming only two or three of the unlimited actions therein authorized? We believe, however, that this is completely contrary to the report of the Committee on Foreign Relations to the Senate. There is even a possible doubt that the treaty would have been ratified if the Senate had expected blanket powers of a permanent nature to be requested.
If the language of section 3 (a) is interpreted to limit controls to those mentioned in the central clause, then the vague and general authority “to take such other action” should be deleted. Would this phrase permit the promulgation of "set-aside orders”? Would it enable the Government to require, by way of condemnation or otherwise, producers, handlers, or processors of wheat or wheat flour to deliver those commodities to the Government? If this phrase would permit such action we believe it should be stricken from any legislation enacted to implement the wheat agreement.
We should examine also, in an agreement in which the United States is an exporting Nation, why authority is needed to prohibit or restrict imports. We should examine carefully under what circumstances authority is needed to prohibit or restrict exports. We should narrow down the authority to these precise points, rather than use the wheat agreement as a vehicle to convey permanent extensions of wartime control powers. We are reminded of the facetious, but unfortunately sometimes too nearly true, remark current around Washington, that "The Government needs controls to keep business from falling into private hands."
I am sure that this is not the intention of the Congress. We should like to discuss, therefore, the specific needs for controlling imports and exports of wheat.
At no time during hearings on the agreement in either 1948 or 1949 was there a suggestion made by Government witnesses that the United States would be required to impose import controls to carry out our obligations under the wheat agreement. It is difficult to foresee a situation where it would be necessary to exercise import
controls. In the absence of a clear showing that imports into the United States of wheat or wheat flour need be controlled beyond the extent now permitted by law--that amounts to 800,000,000 bushels of wheat per year for human use, and I believe it is 400,000 pounds of flour-we trust that this grant of additional authority will not be recommended by this committee.
The need of exporters to qualify for subsidy payments provides automatic control of exports at all normal times. The only time exports of wheat or wheat flour need be prohibited or restricted by specific authority will be when supplies are scarce, and world prices exceed the domestic support level or the maximum price set in the wheat agreement, whichever is higher. At such a time export sales can be made easily without subsidy payments outside the wheat agreement. Then and only then will it be necessary, through a strict licensing procedure, to channel United States wheat exports to make sure we can fulfill our quota obligations under the wheat agreement.
I am thinking, gentlemen, about a time like during 1947 and 1948 when supplies were very scarce all over the world, and sales could be made for export at any price anyone cared to ask.
You will recall that our prices went up to as high as three and a quarter a bushel; Argentina at the same time was getting over $5, and so on. Well, at that time we would certainly need the export controls to protect the supplies in this country.
Senator Young. What is the real objection to import controls?
Mr. SANFORD. What is the purpose of import controls? Why write in a provision unless some showing has been made on the need for import controls that we know nothing about.
Senator Young. It may not be appropriate in this bill, but if you have a price support program
Mr. SANFORD. You have that under the AAA Act of 1948.
Senator HOLLAND. Can it be possible what they have in mind is the reimportation of exported wheat under the international wheat agreement?
Mr. SANFORD. Well, it would still have to come under the quota, I think, of the AAA Act of 1938 which permits 800,000 bushels a year.
Senator HOLLAND. We do not want any of it to come back, do we, after we have paid a subsidy and shipped it out.
Mr. SANFORD. Well, the plain fact is that wheat shipped to Europe and sold is not
going to be shipped back again. If wheat comes in, it will be from Canada which is right next door.
You are not going to pay freight across the ocean and freight back. I cannot see any connection between this agreement and the necessity to control imports. Possibly there is. Whoever put that in the legislation may have had a very logical reason for it. I have tried to figure out wbat it could be, and have been unable to.
Senator Young. Well, I believe I could see a reason. Supposing the cash price of wheat was down to $1.50, as it well may be in another year. We subsidized, say, 70,000,000 bushels of exports under the international wheat agreement, and at the same time the Argentine, which may not be cooperating in the program, could be dumping their wheat here.
Mr. SANFORD. Well, how can they dump their wheat here, Senator?
Senator Young. Well, if the tariff is low and the world price is down to $1 a bushel, of course then you would not be subsidizing exports, I can see that.
Mr. SANFORD. You might, but you might not. We do not know. That will depend on the relationship between the support price and the international wheat agreement price. I would think if the Congress feels it is necessary to give a blanket import control on wheat that should be studied by the Senate Committee on Agriculture and considered on its own merits.
I do not think it has anything to do with the international wheat agreement, and I think the authority exists already. I do not know why it would be needed again.
Senator YOUNG. Mr. Chairman, I think afterward we might call the Commodity Credit Corporation back to explain that.
Mr. SANFORD. Well, it is not a vital point as far as we are concerned. I am simply pointing out that we should not throw everything but the kitchen sink into the regulation just to save the trouble of thinking what you really need in it. As I say, I do not think it is of importance because you already have it in connection with the price-support program.
At all other times it will be in the interest of United States wheat producers to stimulate wheat exports by removing impediments to a free export trade.
Except under scarcity conditions and high world prices, therefore, we believe the only statutory control necessary to implement the wheat agreement is the statutory authority to pay a subsidy and a statutory requirement to report sales.
We recommend, therefore, that section 3 (a) be amended to read:
The President is hereby further authorized to prohibit or restrict the exportation of wheat or wheat flour whenever and to the extent that it is determined and declared by the Secretary of Agriculture that such prohibition or restriction is necessary to maintain supplies of wheat in the United States sufficient to meet all domestic requirements, to meet obligations to supply occupied areas, and to carry out the United States quota obligations of the International Wheat Agreement. The President is further authorized to issue such rules or regulations as may be necessary in his judgment in the implementation of the International Wheat Agreement.
Senator JOHNSON. That is in case of a scarcity of wheat in the United States?
Mr. SANFORD. That is the only circumstance I can think of under which our hope would not rather be to maximize exports rather than to put on any controls or limitations on them. When wheat is surplus and in abundance, I think it is in the interest of the United States farmer to remove all of the restrictions we can.
Senator Young. I would agree with you. I think the grain trade might find new markets that, say, the Commodity Credit Corporation could not.
Mr. SANFORD. Well, I have a section on that later, Senator Young.
Senator Young. May I ask you this question? You are in the grain business. Supposing the Army contracted with you to buy 5,000,000 bushels of rye. Do you suppose you could find it?
Mr. SANFORD. I can find it in Canada.
You will say, of course, “Why do they not raise their price to the point that would bring out the rye?" because you and I know that rye is at a very low price as compared to wheat. The relationship is cockeyed.
Unfortunately there is no power that I am aware of to restrict the imports of rye into the United States as there is in the case of wheat, so the Secretary of Agriculture has been caught in this unhappy position that if he puts the price of rye up high enough to buy rye in the United States, Canada moves in on it, the umbrella collapses and down comes the Canadian rye.
That is illustrated by the fact that during the last year we exported 4,500,000 bushels of rye, and the imports were 6,900,000. My figures may be a little off.
Senator YOUNG. I would not see any objection to buying Canadian rye in the United States if we buy it in Canada with United States dollars.
Mr. SANFORD. Well, if you persuade the Secretary of Agriculture to take rye off of the surplus list, then probably ECA would be very happy to buy it. I think there is no authority for offshore procurement of rye.
Senator JOHNSTON. You did not mean to say that the ECA does not want to buy anything that is surplus?
Mr. SANFORD. ECA is not allowed to under the Economic Cooperation Act under section 112 (d).
Senator Young. They are not allowed to buy unless there is surplus.
Mr. SANFORD. No; if there is surplus, they are not allowed to buy offshore from countries other than the United States.
Senator Young. They can get around that. They did it the other day, around $175,000,000 worth.
Mr. SANFORD. This rye thing is rather interesting, Senator, and I know you are interested in it. Perhaps the answer would have been to clean up that little dab of Canadian rye. After all, there are 10 or 15 million bushels, and for the Germans to have rye is really a great bargain for them. Up to a certain percentage they would rather have rye than wheat. Let them have it and perhaps head off some of the Polish rye that comes flooding in there anyway.
Senator JOHNSTON. Do you think if the Government starts messing with rye and just let the countries buy what they wanted to buy, do you not think they would buy the rye right now?
Senator YOUNG. That is what I was getting at a while ago. I think sometimes limiting just the Commodity Credit Corporation in the export field limits the exports. I believe these grain trade boys sometimes may be able to find a market that the Commodity Credit Corporation cannot.
Mr. SANFORD. The Commodity Credit has trouble finding a market for rye at the going price because they have a standing order from the Army to buy rye all winter, and they have bought a halfmillion bushels in the last week or so, but your complaint on this rye situation is not whether Commodity Credit bought it or not; it is the price.
You do not like to see rye at 50 or 60 percent of parity. Well, parity is way low on rye, too. In the eyes of the Germans, rye, if we have to buy it, the price is as much as wheat, or close to it. We do not let them have it, so what happens? We sell some corn to Germany and Poland sells some rye to England, and they make a swap, which is beneficial to both of them.
The British get corn that they want, and the Germans get rye that they want, but we are unhappy because we have got a dab of