Mr. BROOKS. I now call our first business witness, Mr. Robert L. McNeill. Mr. McNeill is the executive vice chairman of the Emergency Committee for American Trade. Among his many activities prior to his present position, he was Deputy Assistant Secretary of Commerce for trade policy, Executive Director of the President's Trade Policy Committee, and served on the staff of the Bureau of the Budget as a senior international economist. We are delighted to have you, Mr. McNeill. You may proceed with your statement. STATEMENT OF ROBERT L. MCNEILL, EXECUTIVE VICE CHAIRMAN, EMERGENCY COMMITTEE FOR AMERICAN TRADE Mr. MCNEILL. Thank you, Mr. Chairman. I am delighted to be here. I am pleased to express the support of the Emergency Committee for American Trade, better known as ECAT, for President Carter's trade reorganization plan. ECAT is an organization of 63 business leaders devoted to expansionary U.S. trade and investment policies. Our members represent large American companies with substantial overseas business interests. Their worldwide sales in 1978 were nearly $400 billion, and they employed about 5 million workers in that year. ECAT has a deep and abiding interest in U.S. trade policy. We have worked hard for passage of the Trade Act of 1974 and followed very closely the course of the successfully concluded multilateral trade negotiations that the Trade Act of 1974 authorized. ECAT strongly supported the recently passed Trade Agreement Act of 1979 that implements the rights and obligations agreed to by the United States in the Geneva trade pacts. Now we are pleased to support the administration's proposal to consolidate international trade functions in the office of the U.S. Trade Representative and in the Commerce Department. The course of U.S. trade policy in the years to come will be profoundly affected and determined by the manner in which the new international trade codes are administered, both in this country and abroad. The four principal codes deal with countervailing duties and subsidies, Government procurement, standards, and import valuation. Each code treats fundamental issues bearing on international trade and each is designed to alleviate or remove unfair trade practices. Because the codes represent internationally negotiated settlements, they are not always precise in defining issues, rights, and obligations. The true meaning and value of the codes, therefore, will be determined by their interpretation and administration by ourselves and our major trading partners. Reorganization Plan No. 3 will be instrumental in helping the United States respond effectively and efficiently to the challenges and opportunities of the codes, as well as to other international trade and investment problems. We applaud the centralization of authority for the development, coordination, and negotiation of international trade matters in the office of the U.S. Trade Representative. His location in the Executive Office of the President, together with the authorities the President proposes to confer on him, should lead to effective trade policy administration in our country. We also support the strengthening of the Commerce Department's international trade functions, as proposed by the President. Many businessmen have long felt that the foreign commercial service properly belonged in Commerce rather than in the State Department. We hope that its proposed transfer to the Commerce Department will result in more effective overseas representation of American business interests. A pivotal element of the President's reorganization proposal is the switching from Treasury to Commerce of basic responsibilities for administration of the United States countervailing duty and the antidumping statute. These are the key domestic statutes dealing with unfair trade practices, and they implement the U.S. rights and obligations of the international subsidies code. This code is intended to discourage governments from using subsidies to provide unfair trade advantages to their producers. When subsidies are used for unfair competitive advantage, the code authorizes the imposition of countervailing duties which are special dutiés set at a rate that will neutralize the foreign subsidy. Thus, a 10-percent subsidy would be answered by a 10-percent countervailing duty. The subsidies code is also similarly addressed to dumping, which is the selling of a product in another country at a lesser price than in the home country. ECAT's hope and expectation is that Commerce will administer its new responsibilities in the countervailing and dumping areas in an even-handed manner. We expect the same of the Trade Representative ..who will have responsibility for international negotiations involving foreign subsidies. It is a sensitive area that must be handled with considerable care, both here and abroad, if we are to avoid competitive international subsidization and the consequent retaliatory actions that would follow. We are also encouraged with those provisions of the reorganization proposal providing the Trade Representative with the lead policy responsibility for international investment issues. We hope that this will result in more consistency in U.S. international economic policies, including international tax and antitrust policies, than at present. It is, for example, confusing and frustrating to be exhorted by the Government to export at the same time that the Government is imrosing barriers and disincentives to exporting. Hopefully, the Trade Representative will use his authorities to bring trade and investment policies into harmony. Thank you, Mr. Chairman. Mr. BROOKS. Thank you very much for an informative statement. We appreciate your testimony this morning, and we appreciate your evaluating this subject so carefully from your standpoint because it is helpful. You have dealt in just the kind of area we are working on, and you are aware of the complexity of the problems that such an agency and activity faces. Do you feel that American businessmen generally support the transfer of the foreign commercial service from the State Department to the Department of Commerce? Mr. MCNEILL. Yes; I do. I also think there is a good deal of skepticism as to the effectiveness of the proposal in the initial year or two. Most foreign commercial slots in embassies are filled presently by Foreign Service officers. There is going to have to be a transition period where these people either opt to go into the Commerce Department's commercial service or opt out of it. If large numbers opt out, we are quite concerned that the Commerce Department may have some difficulty in filling those slots. There are large numbers of persons involved. It is our hope and expectation that Commerce will find appropriate personnel. If they do, we would anticipate greater emphasis being placed on business concerns abroad. Over the years, business has been rather disappointed that the commercial function in any given embassy has usually been at the bottom of the embassy's priorities. Mr. BROOKS. Thank you very much. The gentleman from New York, Mr. Horton. Do you feel that switching the commercial attachés from State to Mr. MCNEILL. We certainly hope so. It is expected it will, Mr. Horton. Mr. HORTON. Do you have any view with regard to splitting policy from implementation? Does that create any problem with you? Mr. MCNEILL. No; it does not. The operational day-to-day administration will be in the Commerce Department. Policy development and general policy guidance will come from the U.S. Trade Representative. We see no reason why this should not work well. Mr. HORTON. Secretary Kreps testified that the Commerce Department intends to establish a new Bureau of Industrial Analysis, which would be patterned after the Economic Analysis Bureau. Do you think that this is a good idea? Mr. MCNEILL. Yes; very much so, Mr. Horton. Many years ago the Commerce Department had on the domestic side of its house a very large number of commodity experts who followed particular industries and were knowledgeable about them. When foreign trade persons needed information about the domestic economy or a given industry, they could get that from the appropriate Commerce commodity specialist. Over the years, that function in Commerce has, I think, been rather neglected. Commerce presently, to my understanding, has very few industrial or commodity experts. The intention of Secretary Kreps and of this plan is to rebuild that capacity so that there will be a number of intelligent and wellinformed economists who can advise the Special Trade Representa tive and the foreign people in the Commerce Department as to the likely economic domestic consequences of proposed international trade actions. I think that is a vital thing-perhaps as vital as any part of this reorganization plan. We simply have to know better than we presently do the consequences of foreign actions on our domestic producers. Mr. HORTON. I served as the Chairman of the Paperwork Commission. We made our final report in October of 1977. At that time we felt that the problem of paperwork was about a $100 billion a year problem. About 40 percent of this was a burden on industry. Do you feel-and I guess you are going to have to assume that there are going to be more requests from both the Trade Representative and Commerce for information from your companies-that there is going to be an increase in paperwork? Does this create a problem for you? Mr. MCNEILL. I don't see why there necessarily would have to be an increase in paperwork. I would hope that there would be an increase in the dialog between ourselves and our Government officials with respect to those problems such as you have indicated and those in the paper area or the auto area or any other. But I don't necessarily see why more paperwork should be involved. We would certainly hope that that would not be the case. Mr. HORTON. Thank you very much. Mr. BROOKS. Mr. Fascell? Mr. FASCELL. Thank you, Mr. Chairman. I guess that as long as I have been here and have been connected with some responsibility in the State Department I have heard the constant complaint from American businessmen that if you ever want any help, don't go to the American Embassy. I gather that is a general attitude that your have, based on your experience and not a restatement from other businessmen. Mr. MCNEILL, Yes, Mr. Fascell, very much so. When I was in Government, I recall that if you went to an American Embassy as a Commerce Department official when traveling abroad, you would want to see your own people and personnel in the embassies. You would have to go down into the basement, so to speak, of the building. In a corner, you might find a commercial attaché. Mr. FASCELL. Right next to the consular office. Mr. MONEILL. Yes, sir. Mr. FASCELL. Which is also in the basement. Mr. MCNEILL. Right. We have every reason to expect that with the transfer of the function to Commerce that that will change. Our hope is that commercial service for business will become as effective as the Foreign Agricultural Service has been for our agricultural community. Mr. FASCELL. Are they housed in different facilities? Mr. MCNEILL. No. They are housed in the Embassy. Mr. FASCELL. Would they have the same boss? Mr. MCNEILL. The boss in all instances will still be the U.S. Ambassador. Mr. FASCELL. I'm not sure that is the problem. However, I supported the change in the agricultural attachés and I am going to support this reorganization plan. But I don't think it is going to do what we are talking about. I don't see the commercial representative, or attaché or whatever he is going to be, now that he has a new hat, namely the Secretary of the Department of Commerce, suddenly moving up from the basement to the Ambassador's office. I think he is going to stay in the basement. The priorities will be determined, perhaps not by an ambassador. It is the sheer dynamics of events. I am not sure a new boss will be able to shape the dynamics of events for that commercial representative in that area. But I am for it, and we will try it. Maybe it will be better. I notice in your statement that you support the transfer of the enforcement on countervailing and antidumping from Treasury to Commerce. Is there something inherent or constitutional about Treasury that makes them ineffective? Is that the reason you support the tranfer? Mr. MCNEILL. No. I think that on the whole the Treasury has been very responsible in its administration of these particular statutes. We support the transfer to the Commerce Department because we think that with its new trade responsibilities those particular statutes will be considered in an overall trade context by the trade administering agency. Mr. FASCELL. In other words, it is more logical to put it there. Mr. MCNEILL. Yes, sir. It would fit in with the rest of the President's intentions to make the Commerce Department the international trade department of the Federal Establishment. In that sense, we think it makes a lot of sense. Mr. FASCELL. So you are supporting the transfer, not inherently, because of a policy disagreement on the manner or method by which enforcement has proceeded up to date. Mr. MCNEILL. That is correct, sir. We have no problem with the way Treasury has done it. Treasury has perhaps had a greater workload than the Budget Bureau has been willing to give its staff to handle. Hopefully, that can be corrected in part by this transfer. We had no problem whatsoever with Treasury administration. I think they have done a very good job over the years. Mr. FASCELL. Thank you, Mr. Chairman. Mr. BROOKS. The gentleman from Illinois, Mr. Erlenborn. Mr. ERLENBORN. Thank you, Mr. Chairman. Mr. McNeill, I confess to having some of the same reservations as the gentleman from Florida about the commercial attachés. Do you see any career opportunities for people who take these jobs? At the present time they are State Department people. They move from one position in the State Department to another. The kind of job they do, while they are either full-time or part-time commercial attachés, will determine their advancement in the career service. It just occurs to me that when you have a commercial attaché who is not in the career service of the State Department but rather the Commerce Department the same incentives may not be there. Mr. MCNEILL. I think that there will be greater incentive; because presently-I can't say presently. But based on my experience, which |