Suggestion #6: We encouraged the Congress to continue to provide firm leadership in addressing service industry needs in reorganization, just as it did in 1974 when recognition of services was placed in the negotiating authorities in the Trade Act of 1974. Status: Several committees of the Congress and numerous congressional leaders have expressed support for our suggestions to the Services, which in balance of payments terms, constitute one third of our earnings from trade, should not suffer further neglect. With the few, but important, adjustments I have cited, the administration's reorganization plan would vastly improve upon the existing situation. T Mr. BROOKS. I have always felt that the services were critical and were probably the best example of trade-oriented people who needed help. We received a letter from a man with Pan Am Airlines. The airlines compete in the United States. We have three or four flying abroad, and they compete with countries. They don't compete with private entities; they compete with countries. I have used it as my best example of why the State Department should be helping American industry-airlines and others because they are at somewhat of a disadvantage. Regardless of what you say, the landing rights are different. You unload your passengers way down at the end of the runway, and they have to walk a mile and a half to get to the terminal. There are many little ways in which they just keep the heat on all of our competitors in their own national interest. You can be sure the service industries are included as a part of this reorganization plan. I think it will be a vital part. I don't know if it is necessary to put in the report. I think if you put one thing in the report, where do you stop. But I think it is fully included, in my judgment. Mr. Horton? Mr. HORTON. Thank you, Mr. Chairman. I certainly want to agree with you on that. I certainly agree with the testimony, especially with regard to services. I also want to refer to the letter, a copy of which I received also, from John Krimsky of Pan Am. He says: Within the context of services, we urge also that your committee establish that international air transport services are among those service industries included. Pan Am favors the current U.S. aviation policy which encourages competition in the air transport field. We believe that as the office of the trade representative in the Department of Commerce develops the means of supporting U.S. service exports, these activities can be supportive of the U.S. flying airlines. We wish to make certain that the U.S. flying airlines will be able to take full advantage of these activities and receive the full support of our Government, which is intended in the President's Reorganization Plan. I would certainly agree that services should be included in the context of what we are talking about here when we talk about the word trade. I certainly want to concur in the testimony you have given. Mr. Chairman, I think it would be appropriate to include this letter in the record. Mr. BROOKS. Without objection, it is so ordered. Hon JACK BROOKS, PAN AM, Washington, D.C., October 15, 1979. Chairman, Committee on Government Operations, U.S. House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN: I understand that the Subcommittee on Legislation and National Security will hold hearings on the President's Reorganization Plan No. 3 of 1979, to consolidate trade functions of the U.S. Government. As a U.S. flag international airline, we endorse efforts now underway by the Ad 57-408 0 - 80 - 15 ministration and the Congress to strengthen the role of the U.S. Government in support of the U.S. trade activities. We are concerned, however, that Reorganization Plan No. 3 does not specifically define "trade" as including trade in services. We urge that the Plan be amended to make this inclusion clear. Within the context of "services," we urge also that your Committee establish that international air transport services are among those service industries included. Pan Am favors the current U.S. aviation policy which encourages competition in the air transport field. For such competition to be effective and to serve the interests of the American people and the U.S. flag airlines, it is essential that our Government do everything in its power to reduce discriminatory business practices now engaged in by foreign governments which are designed to provide competitive advantage to their own national flag airlines. We believe that as the Office of the Trade Representative and the Department of Commerce develop the means of supporting U.S. service exports that these activities can be supportative [sic] of the U.S. flag airlines. We wish to make certain that the U.S. flag airlines will be able to take full advantage of these activities and receive the full support of our Government which is intended in the President's Reorganization Plan. I am addressing an identical letter to Congressman Horton. Sincerely, Mr. HORTON. Thank you very much. Mr. BROOKS. The gentleman from Illinois, Mr. Erlenborn. I would echo what my two colleagues have said. I couldn't help but think when the witness was testifying that one could reach a different conclusion from his testimony, since he said that the one bright spot in our balance of payments is the service industry and then ticked off a whole long list of governmental trade promotional activities the service industry is not included in. One might reach the conclusion that you do better if you don't have the Government promotion. [Laughter.] But I didn't reach that conclusion. I toyed with it for awhile. Instead, I will join my colleagues. Thank you, Mr. Chairman. Mr. BROOKS. The gentleman from Minnesota, Mr. Stangeland. Mr. BROOKS. I have one other question. Do you feel that the adoption of Reorganization Plan No. 3 would contribute to an increase in the U.S. share of the international services market? Mr. SHELP. I think so, Mr. Chairman, especially if it is clearly spelled out that services are included. As you have implied, it is certainly spelled out implicitly but it is time for the U.S. Government to be aggressive. Our belief that it should be spelled out explicitly is because since traditionally there has been such neglect in this trade policy area, we are afraid our negotiating partners will not recognize that the U.S. view has really changed unless it is not specifically included in whatever way possible in the Executive order. Mr. BROOKS. We appreciate very much your testimony. It is a real pleasure for me to be handling a bill that the U.S. Chamber of Commerce is for. I have had real differences with them. We have had knockdowndragouts. For awhile I thought I was never going to have another witness that I was going to sit and listen to from the chamber. On consumer protection, I thought they were going to go into orbit about it. [Laughter.] I started to introduce it again just to get them back and have another round with them. [Laughter.] Mr. SHELP. All I can say is that the chamber is an organization with about 5 million members. Its membership is probably as diverse as the rest of society. Mr. BROOKS. Thank you very much. We enjoyed having you and Mr. Cloney as well. Our next witness is scheduled to be Roger Regelbrugge, who is president of Korf Industries. He is, appropriately, a native of Belgium. He has a mechanical engineering background. Prior to joining Korf in 1974, he worked for several companies in this country. We are pleased to have before us today the attorney for the Korf company, who is associated with Mr. Regelbrugge, Mr. Charles Verrill. Mr. Verrill will present the statement. They have a small operation in my home town. We have found that STATEMENT OF CHARLES VERRILL, COUNSEL, PATTON, BOGGS & Mr. VERRILL. Thank you, Mr. Chairman. I apologize for Mr. Regelbrugge's absence. He has been detained. and I am here to try to take his place. I am the attorney for Korf Industries and with the firm of Patton, Boggs & Blow here in Washington. I would like to request that Mr. Regelbrugge's prepared statement be made a part of the hearing record. Mr. BROOKS. Without objection, it is so ordered. Mr. VERRILL. The focus of Mr. Regelbrugge's testimony, which I will summarize, relates to the issue of the proper role of the Commerce Department in the administration of two specific trade laws; namely, the Antidumping Act and the countervailing duty law. I might state in this regard that Korf is a steel manufacturer which has been long involved with proceedings under the Antidumping Act. It was involved in the establishment of the trigger price mechanism and in support of it. As a result, Korf is most interested and concerned that these laws will be effectively administered in the future when the Trade Act of 1979 goes into effect. The Reorganization Plan No. 3 provides in its introductory provisions that after the reorganization, the Trade Representative will, and I am quoting: Exercise policy oversight of the application of import remedies and will, to the extent legally permissible, establish new precedents, negotiate assurances, and coordinate import remedies with other trade matters. This commentary indicates that the Commerce Department, the administering authority for purpose of the Trade Agreements 1979 Act, may well be limited in its ability to fully and effectively implement the 1979 act by subjecting its interpretations and decisions under the countervailing duty and antidumping laws to overriding decisions by the Trade Representative. In our view, Congress has determined that it is the policy of the United States to effectively enforce import remedies under these laws, and we do not think this policy should be undermined. But if the Trade Representative is literally responsible for establishment of new precedents and interpretations of the countervailing duty and antidumping laws, we fear that the Commerce Department, the agency having actual experience with petitions and the practical problems raised by unfair import practices, will be denied the ability to respond creatively to the congressional mandate to effectively enforce these two laws. Indeed, since no two cases are ever identical, it seems to me that Commerce may well find itself incapable of making final determinations in difficult cases without reviewing the legal interpretations, precedents, and so forth with the Trade Representative. Second, we are concerned that the Trade Representative, in making final determinations under these laws, will be doing so in the broader context of its negotiating functions. Its interpretations and precedents under the countervailing duty and antidumping law could well reflect negotiating biases and objectives. We believe, however, that enforcement and application of remedies under the antidumping and countervailing duty laws should properly remain with the administering authority-the Commerce Department-and should be independent of the influence of foreign governments seeking to limit or terminate privately initiated claims for import remedies through government-to-government initiatives. Third, we think that the apparent ability of the Trade Representative to establish precedents or influence the disposition of pending claims could very likely result in the unwelcome introduction of cific case determinations in trade negotiations. Finally, we are concerned that if it is perceived by the public, that disposition of legitimate private claims may be made in pursuit of other trade objectives. Companies confronting unfair trade practices may avoid pursuing the statutory remedies under the laws that Congress has so carefully amended. Instead, we are concerned that industry may seek broader protectionist measures which would be far more destructive of free trade than the partial enforcement of the existing antidumping and countervailing duty laws. Korf urges that this committee clarify, in whatever way it can, that the Commerce Department in the administration of these laws will be the administering authority in fact, as well as in name only. We have recommended changes that might be made in the President's plan which I realize you have no authority to make but which the President could, and they are set forth in the prepared statement. The final point I would like to make is that Korf has been involved |