Mrs. BOLTON. We don't stop trade to Hanoi.

Mr. STOESSEL. I think we do. We do not have trade with Hanoi. Mrs. BOLTON. We don't have trade with Hanoi, but all our allies do. Mr. STOESSEL. We would also on the other hand like to show these Communist countries there is something in their own interest in trying to improve the well-being of their own peoples, and to have better and more constructive relations with the West.

For example, on the Fiat auto plant, we think it is a good idea that the automobile industry develop in the Soviet Union and that they spend their money on automobiles and roads and gasoline stations and motels, rather than on the instruments of war.

Mrs. BOLTON. They are spending them on the instruments of war te a great degree.

Mr. STOESSEL. We think this is a constructive step, that it shows they are beginning to take more interest in the welfare of their own people. We see this particularly in Eastern Europe. These coun tries are very interested in trade and peaceful relations. We feel it is to our interest to encourage this. This will make them less interested then in aggression.

Mrs. BOLTON. Of course the people of those countries have always felt that way.

Mr. STOESSEL. Of course.

Mrs. KELLY. Mr. Selden.

Mr. SELDEN. Thank you, Madam Chairman.

Mr. Stoessel, in line with Mrs. Bolton's questioning, it was pointed out in several statements that credits have been extended since 1963 to several of the Eastern European countries, to wit: Hungary, Poland. and Yugoslavia. What benefits have accrued to the United States as a result of these credits? Could you list any benefits that have ac crued as a result of the credits that have been extended to date?

Mr. STOESSEL. Mr. Selden, I would say particularly with regard to Yugoslavia, that we have tried in various ways to strengthen Yugo slavia's economy. Yugoslavia has followed an independent course in many ways, and has served as an example for the other Eastern European countries.

It has, I think, by its example in its economy and its agriculture served to stimulate the other countries of Eastern Europe to seek more independence. We think this is a useful development and is a justi fication of the aid to Yugoslavia. Similarly, with regard to Rumania. as you know Rumania is following an increasingly independent course. They are stressing Rumanian nationalism. They are very interested in having good relations with the West and with the United States. I think this is obviously to our interest.

Mr. SELDEN. Do you think this is being done without the full knowl edge and consent of Russia?

Mr. STOESSEL. I think it is very difficult for the Soviets to contro this.

Mr. SELDEN. Don't you think perhaps the Soviets are rather happy that we are taking some of the burden off their back as far as those countries are concerned?

Mr. STOESSEL. I think they are rather concerned about this and would rather see these countries more directly under their influence ard control. Khrushchev referred to this once, and said that the satellite

UNIVERSIT VI

countries are too big to spank. It is a situation now where the Soviets simply cannot control them completely.

I think this gives them some concern.

Mr. SELDEN. They didn't hesitate to spank Hungary.

Mr. STOESSEL. That is right. I think a lot of time has passed since Hungary. Whether they could be able to mount such an operation again and would feel this would be advisable and justifiable, I would doubt.

Mr. SELDEN. We don't know this, however.

Mr. STOESSEL. That is right.

Mrs. KELLY. Before Mrs. Bolton leaves, she asked if you would submit for the record an answer to the question whether all of you make recommendations to the President on this policy? Would you answer that question for the record?

Is that correct, Mrs. Bolton? You asked if they advised or assisted, and in what form or manner, the President in reaching these decisions. Is that the question?

Mrs. BOLTON. That is part of it.

Mr. GREENWALD. May I try to answer it now? On the general policy of relations with Eastern Europe or specific problems relating to trade or licensing, these are generally a matter for interdepartmental discussion and recommendation to the President. As you say, the President ultimately makes the findings. He makes the decisions.

It is based, to some extent at least, on recommendations made by the various departments in the administration. I think all our departments are involved in this, depending upon our particular roles and our particular responsibilities-the State Department, Department of Commerce, and so forth.

Mrs. BOLTON. But the Foreign Affairs Committee of the House doesn't have much say about anything.

Mrs. KELLY. It seldom has on issues of trade during the many years of experience that I have had.

Mrs. BOLTON. We are told it is none of our business.

Mrs. KELLY. Mr. Whalley.

Mr. WHALLEY. I was wondering what department of the Russian Government do you talk with concerning United States-Russian trade? Is it the same as over here, the State Department and Foreign Affairs and Commerce, or is it just one department?

Mr. STOESSEL. I think in any negotiations with the Soviets on trade, which, of course, have not come about yet, but if we ever get into this situation, there would be representatives of the Soviet Ministry for Foreign Affairs, that would be our State Department; the Ministry for Foreign Trade, which would have some elements of the Commerce Department, but is not exactly comparable.

Mr. WHALLEY. You say that the Sino-Soviet bloc no longer exists as a monolith. What do you mean by that?

Mr. STOESSEL. Basically there is this very obvious split now between China and the Soviet Union. They are no longer on the same track. So the Sino-Soviet bloc, I think, is broken. To take it a step further, we formerly referred, and still do out of habit, to the Soviet bloc. But think that is no longer a bloc because of the reasons I referred to. I think there are increasing moves toward independence on the part of the East European countries. Yugoslavia, of course, took the step

many years ago. Rumania is moving in that direct that it is a misnomer to call this collection of countri

Mr. WHALLEY. You say we have better relations rope. What has brought this about? Is it a 50-50 we making the advances, or are they meeting us hal Mr. STOESSEL. They are certainly making adva trade side, I think they are very interested in incr with Western Europe, which they have done to a gr with the United States to the extent possible. Part that they have been unable to get what they nee Union. The Common Market in Western Euro strong.

Mr. WHALLEY. Do they want to trade with us p they can't get these things some other place?

Mr. STOESSEL. It is not just that. I think they sense they would like to be less dependent on the So Mr. WHALLEY. Thank you, Madam Chairman. Mrs. KELLY. Thank you, Mr. Whalley.

Mr. Fulton.

Mr. FULTON. Where did the President make hi Mr. GREENWALD. It was made in New York to ference of Editorial Writers at the Carnegie End New York.

Mr. FULTON. Has legislation been sent up to th ment the proposal for most-favored-nation treatm munist nations?

Mr. GREENWALD. It was submitted by the Secr instruction of the President last spring. It was Mr. FULTON. What is the legislation? Give us Mr. GREENWALD. It is H.R. 15212, entitled "1 Relations Act of 1966."

Mr. FULTON. Is it before the Banking and Cu where is it?

Mr. GREENWALD. The House Ways and Mear responsibility. Representative Keogh introdu Senator Magnuson, for himself and on behalf and Javits, in the Senate.

Mr. FULTON. And Mansfield in the Senate? Mr. GREENWALD. Mansfield and Magnuson. there that day, and Magnuson introduced it and

Mr. FULTON. We want to follow down and provisions are so that I would ask, with the c that we have an explanation of the administratio put in the record at this point.

Mr. GREENWALD. I would be glad to leave a proposed legislation with an explanation of th Mr. FULTON. I would like an explanation real Mrs. KELLY. For the record, Mr. Fulton? Mr. FULTON. For the record. Whatever the its proper numbers of the Senate and the Hou put in the committees that it is referred to a short explanation made of the proposal at this

(The material referred to follows:)

[State Department press release 107 dated May 11, 1966]

EAST-WEST TRADE RELATIONS ACT OF 1966

DEPARTMENT ANNOUNCEMENT

Secretary Rusk on May 11 transmitted to the Congress proposed legislation to provide the President with the authority necessary to negotiate commercial agreements with the Soviet Union and other nations of Eastern Europe to increase United States trade in peaceful goods with these countries.

The proposed East-West Trade Relations Act of 1966 was sent with identical letters from the Secretary to Speaker of the House John W. McCormack and Vice President Hubert H. Humphrey, President of the Senate.

Secretary Rusk's action today was taken pursuant to instructions of President Johnson on May 3.1 At that time, the President recalled that he had promised in his state of the Union message to request the proposed authority. The President added:

"The intimate engagement of peaceful trade, over a period of time, can influence Eastern European societies to develop along paths that are favorable to world peace.

"After years of careful study, the time has now come for us to act, and act we should and act we must.

"With these steps, we can help gradually to create a community of interest, a community of trust, and a community of effort. Thus will the tide of human hope rise again."

LETTER OF TRANSMITTAL?

MAY 11, 1966.

DEAR MR. SPEAKER: At the direction of the President, I am sending to the Congress proposed legislation to provide the President with the authority necessary to negotiate commercial agreements with the Soviet Union and other nations of Eastern Europe to widen our trade in peaceful goods, when such agreements will serve the interests of the United States.

This authority is needed so that we may grasp opportunities that are opening up to us in our relations with the Soviet Union and the countries of Eastern Europe. It is needed, at a time when we are opposing Communist aggression in Viet-Nam, in order to carry forward the balanced strategy for peace which under four Presidents, our country has been pursuing toward the Communist nations. It is needed to play our part with the NATO nations in reducing tensions and establishing normal and lasting peaceful relations between the West and East in Europe.

New Opportunities

It is the normal and traditional practice of the United States to encourage peaceful trade with other countries even those with which we have serious differences. Yet for nearly two decades, we have put major restrictions on our trade with the Soviet Union and Eastern Europe. We applied these restrictions only when the Soviet Union extended control over its Eastern European neighbors and embarked on a course of aggressive expansionism. They properly signified our moral protest against the subjugation of half a continent and gave our protest practical economic effect. Now, however, the hopes that guided our policy have begun to be realized.

In recent years, there have been substantial changes among the Communist nations, within themselves, and in their relations to the nations of Western Europe. Windows in Eastern Europe are being gradually opened to the winds of change. Most of the countries of Eastern Europe have shown signs of increasing independence in guiding their own economic and political courses. They have shown greater concern for the needs of their citizens as consumers. A growing trade in peaceful goods has sprung up between Eastern Europe and the Western world. The Soviet Union itself has recognized this need for more responsive action in its own country as well as in Eastern Europe.

1 [State Department] BULLETIN of May 23, 1966, p. 794.
2 An identical letter was sent to the President of the Senate.

This process of change is continuing. It presents growing opportunities for the United States and for the cause of freedom. But we are not now able to take full advantage of these opportunities. Our trade policies which once served our national interest no longer do so adequately.

What then is needed?

The weakness in our position is the outdated, inflexible requirement of law that we impose discriminatory tariffs on the import of goods from Communist cour tries. All imports from the Soviet Union and Eastern Europe, excepting Poland and Yugoslavia, are subject to the original rates of duty in the United States Tariff Act of 1930. The President has no authority to negotiate with any of these countries for the advantages that we can gain from offering them the more favorable rates that have been negotiated under reciprocal trade agreements over the last thirty years and that now apply to imports from all other nations with whom we trade. We alone of all the major Free World countries have so tied our hands.

The inability of the President to negotiate on this matter sharply reduces his power to use the great economic power of our trade as a bargaining instrument. In the light of this situation, the President said in his 1965 State of the Union Message:

"In Eastern Europe restless nations are slowly beginning to assert their identity. Your government, assisted by leaders in labor and business, is explor ing ways to increase peaceful trade with these countries and with the Soviet Union. I will report our conclusions to the Congress."

Accordingly, to supplement the studies being made in the Government, on February 16, 1965, the President appointed a Special Committee on U.S. Trade Relations with Eastern European Countries and the Soviet Union under the Chair manship of Mr. J. Irwin Miller. Each member was a widely respected and experi enced leader from business, labor or the academic world.

The Special Committee made its report to the President on April 29, 1965. That report provides a searching and balanced analysis of this complex and important subject. It deserves careful study by all citizens and members of the Congress interested in this subject and in this proposed legislation.

The Special Committee concluded that to accomplish our purposes in Eastern Europe we must be able to use our trade policies flexibly and purposefully. The Committee recommended, specifically, that the President should be given discretionary authority to negotiate commercial agreements with individual Communist countries when he determines any such agreement to be in the national interest and to grant them in such agreements the tariff treatment we apply to all our other trading partners.

The Administration agrees with this recommendation of the Special Committee and this is the principal authority asked in the proposed legislation. Benefits of the Legislation

We must consider the potential benefits and liabilities that may flow from enacting or failing to enact the proposed legislation.

There is abundant evidence that without the authority this legislation would provide, we are losing and will continue to lose significant opportunities to ind ence the course of events in Eastern Europe. By denying ourselves the ability to enter into meaningful commercial agreements with these nations, we deprive ourselves of the economic benefits that will come to us from increasing trade. More important, we deprive ourselves of a bargaining tool of considerable strength and utility. We unnnecessarily limit our influence in Eastern Europe relative to the influence of other nations engaged in or opening wider trade there The enactment of the proposed legislation would not weaken or injure the posi tion of the United States in any way. The legislation does not in itself make any grant or concession of any kind to the Soviet Union or any Eastern European country. It would not weaken our legislation, our policy or our controls on ex ports of strategic goods to Communist countries. Its sole effect would be to give the President added strength to negotiate with these Communist countries to obtain concessions and benefits that will serve the national interest of our country in return for granting the same tariff arrangements already available to other countries.

The benefits of the legislation could be numerous and valuable.

* For text, see BULLETIN of Jan. 25, 1965, p. 94.

4 See BULLETIN of May 30, 1966, p. 845.