Crude oil imports into the United States (excluding west coast) by company Crude oil imports into the United States (excluding west coast) by company Mr. BROWN. On the opening day of the hearing, Dr. Flemming, Director of the Office of Defense Mobilization, stated he was dissatisfied with the failure of the members of MEEC to divert to Europe Caribbean oil that is being imported into the United States in increased quantities. This failure on the part of MEEC companies involves the national security of the United States. As stated by Assistant Secretary of Interior Wormser in his press release of January 27, 1957, the national security is here involved. In that release he said: Our relationships with Western Europe are of fundamental importance to us. Our NATO associations are basic to our security. Both are likely to be seriously undermined unless the economic effects of the oil shortages on vital industries of Western Europe are mitigated. The supply of oil to the civil economy of Europe is of major importance to our own Armed Forces. As a result of these increases in imports into the United States, total imports of crude oil are today in excess of the level which has been found to endanger the national security. As Director Flemming testified the President's Cabinet Advisory Committee on Energy Supplies and Resources Policy, after careful study, in February 1955, found that oil imports in excess of the relationship that imports bore to the production of domestic crude oil in 1954, would endanger the national security by retarding the domestic industry. Senator O'MAHONEY. May I interrupt you, Mr. Brown, to say it may be appropriate to point out here that when Mr. Moline of the State Department was on the stand the other day, he told the committee of having served as economic attaché of the State Department for some 5 or 6 years in Europe and being fully aware of the methods used by our Western allies in Europe to take advantage of the Marshall plan and the distribution of the economic aid we were extending. He testified that OEEC, which is the European governmental body which undertakes to determine where the beneficial aid should go, is advised by another committee known as the OPEG, which is similar to our MEEC, in that it is made up of petroleum companies. These companies include American companies, British, Dutch and French companies; they represent the consortium, or the joint action of British, Dutch, French Governments and major companies in handling Middle East oil. Mr. Moline told us that this committee reported to the Government committee on available sources of oil, including sources of oil in the United States, that we have observers at the meetings of OPEG and that OPEG in turn has observers at the meetings of MEEC. Now, it is a notable fact that the chairman of MEEC is an important executive of Standard Oil of New Jersey, which is also represented on OPEG in Europe. So that we have a combination of major companies which arrange for the distribution of the worldwide production of oil and they are in no case representative of the independent oil producers in the United States. Is that not right? Mr. BROWN. That is correct, and that is one of the principal points of our appearance here. And I am glad it has the understanding of the committee because we think it is very important. Senator O'MAHONEY. I am glad it has the understanding of the representative of the State Department. Mr. BROWN. That is true. The President has recognized the soundness of this finding of the Cabinet Committee that oil imports in excess of the 1954 relationships would endanger the national security. In a memorandum dated October 12, 1956, to ODM Director Flemming concerning a study of a possible Government oil tanker construction program, the President said, and I quote from the President's press release: The study should proceed, of course, on the assumption that plans which are developed are to be consistent with the requests that you have made to oil importers to voluntarily keep imports of crude oil into this country at a level where they do not exceed significantly the proportion that imports bore to the production of domestic crude oil in 1954. Yet today imports exceed the 1954 relationship. Crude oil imports alone-not considering products-currently continue at a rate of 100,000 barrels daily or more over the 1954 relationship. Mr. MCHUGH. Mr. Brown, it is noteworthy that in the President's memo, he uses the adjective "significant," "a significant increase." Is it your position today that imports do significantly exceed the proportion that imports bore to the production of domestic crude oil in 1954? Mr. BROWN. Yes, it is, and that is supported by the testimony before this committee of Dr. Flemming in which he indicated that he, but for Suez, was prepared to submit to the President a recommendation for action based on the fact that there was a significant excess, and the condition has continued almost up to what it was then, not quite. It is reduced very little as a result of some Middle East oil being taken out. But I think with the view of all of them, any increase from Venezuela alone of this amount would be a significant one. The national security being involved, and in the absence of voluntary action on the part of MEEC members, the question is presented as to whether or not the Government has authority to curtail imports and thereby divert them to Europe. It is our opinion that the Government has ample authority under section 7 of the Trade Agreements Extension Act of 1955 to take action which would compel the diversion of Caribbean oil to the European shortage area. That section of the law, aimed specifically at protecting the national security, provides as follows: In order to further the policy and purpose of this section whenever the Director of the Office of Defense Mobilization has reason to believe that any article is being imported into the United States in such quantities as to threaten to impair the national security, he shall so advise the President, and if the President agrees that there is reason for such belief, the President shall cause an immediate investigation to be made to determine the facts. If, on the basis of such investigation, and the report to him of the findings and recommendations made in connection therewith, the President finds that the article is being imported into the United States in such quantities as to threaten to impair the national security, he shall take such action as he deems necessary to adjust the imports of such articles to a level that will not threaten to impair the national security. In his testimony before this committee, Dr. Flemming stated that prior to the Suez crisis he had reached the conclusion that oil imports into the United States were at such high levels as to threaten to impair the national security and that had it not been for Suez, he would have taken action under section 7 by certifying to the President that the national security was endangered. He also pointed out that his efforts, over a long period of time, to persuade the importing companies to voluntarily limit imports had failed. He further testified, as pointed out above, that he was dissatisfied with the failure of MEEC to divert to Europe Caribbean oil. This suggests that so far as Director Flemming is concerned, he would |