Mr. COLLINS. This is an appropriation request to enable us to start a new program of adjustment assistance to firms which are injured by imports resulting from trade agreements.

Mr. THOMAS. I read that carefully in your justifications last night. Our distinguished Secretary of Agriculture has said the European Common Market had raised the tariff on poultry 100 percent and that it will cost our producers $25 or $50 million a year, and thus everybody is unhappy.

Mr. COLLINS. This program in part is addressed to that problem. In the past the United States has only had tariff protection and quota protection

Mr. THOMAS. Do you not think we had better back out of this thing before we get started good? The next thing we know it will be wheat and corn. Maybe we are anticipating the bad rather than the good. Mr. COLLINS. The difficulty is that we require a market for our agricultural products in Western Europe and to get this market we must conduct tariff negotiations with European countries.

Mr. THOMAS. We must negotiate them downward, but they are putting them up in the case of poultry and our Secretary of Agriculture was complaining about it.

Mr. Bow. So are my poultry raisers.

Mr. COLLINS. If we are permitted to implement this program, Mr. Chairman, we will have an opportunity to show the European countries that with their own domestic adjustment assistance programs they will be able to travel our route and provide adjustment assistance rather than tariff or quota protection.

PROGRAM ADMINISTRATION

Mr. THOMAS. All right, you have 16 jobs at an average grade of 11.4 Will you put any on the poultry situation?

Mr. COLLINS. None on poultry. We would put no one on a particular industry. We are required to assist individual firms judged injured by the Tariff Commission.

Mr. THOMAS. Specifically, why do you want this $200,000? Put it in your own language. You say:

The Office of Trade Adjustment must be prepared to accept applications for adjustment assistance and be in a position to perform rapid evaluations in order to make available to eligible injured firms, the loan, technical, and tax assistance authorized by the Trade Act.

What about these firms that are complaining? You say:

In addition, the Tariff Commission is currently conducting three industry investigations instituted under the old Trade Act, one of which could result in an affirmative injury determination requiring the administration of adjustment assistance to individual firms in the industry so designated.

PROFESSIONAL QUALIFICATIONS OF STAFF

What is the background and experience of these 16 employees? Mr. COLLINS. Mr. Chairman, we could not possibly hope to staff this office with project managers with experience in every industry we

would deal with. We would however require a certain orientation. I suppose you might call this a financial orientation.

I will briefly describe the background of some of the project managers we hope to employ.

We have one individual from Connecticut in his late fifties, who was a vice president and controller of a middle-sized manufacturing company. He will be one of our project managers.

We have another man with over 20 years of Government experience who will come to us from the General Accounting Office. He has a degree in accounting and a law degree.

We have two men in their thirties with degrees in finance from Harvard Business School and several years of industry experience. Mr. THOMAS. What are they going to do? (1) You will look at the question of loans; (2) technical assistance; and (3) tax assistance to firms.

Are individuals included in this too?

Mr. COLLINS. The definition of "firm" in the Trade Act covers all producers. It does not cover service industries. It covers growers of tree fruit, poultry raisers, and livestock producers.

Mr. THOMAS. It covers individual raisers of chickens and tree fruit?

Mr. COLLINS. Yes, sir.

PERMANENT NATURE OF ORGANIZATION

Mr. THOMAS. This is a permanent organization, is it not?

Mr. COLLINS. This program is not intended to continue forever, Mr. Chairman. I think it will cease when the injury attributable to trade agreements is not significant.

Mr. THOMAS. You are quite optimistic. We have had a tariff problem in this country, since when?

Mr. COLLINS. We have had a problem probably since back in the thirties.

Mr. THOMAS. The thirties? We have had a tariff problem with us since we got started in Government, and has it been settled yet? Every year probably the biggest issue in Congress is tariff.

Mr. Bow. The first bill passed by the First Congress was a tariff

act.

Mr. THOMAS. What is your best guess of what your personnel load will grow to over the next 5 or 6 years?

Mr. COLLINS. We have requested a total of 16 personnel in this office, including 9 professional people for fiscal 1963.

Mr. THOMAS. If you start making loans and go into tax assistance and technical assistance, nine will not cover the first bureau and you will have a dozen under each head.

USE OF EXISTING AGENCIES

Mr. COLLINS. The act requires us to use existing agencies whenever possible the Internal Revenue Service for tax problems; the Farmers Home Administration of the Department of Agriculture for agri

cultural problems; SBA for problems of manufacturers; and the Bureau of Commercial Fisheries for problems of fishing enterprises. Mr. THOMAS. Why do you need this, then?

Mr. COLLINS. Because I understand it was the will of the Congress that the Secretary of Commerce carry out this program utilizing all these existing Federal programs.

Mr. THOMAS. It is true you will have all the assistance from every Government agency that is needed. You will have funds by transfer and build up staffs in each bureau-Treasury, Small Business, Commerce, Agriculture, Tariff Commission, or is it going to be deposited right here?

Mr. COLLINS. There may be slight additions to staff by the other agencies, but excluding Commerce, Labor, and SBA, none of the other agencies has authority under the act to request additional funds for staff for the administration of this program.

Mr. THOMAS. You say they have no authority? Have you had contacts with the bureaus?

DURATION OF TRADE ADJUSTMENT ASSISTANCE PROGRAM

Mr. COLLINS. Under the Trade Expansion Act this program was intended to be a 5-year program. I cannot say at this point whether the program would be extended at the end of 5 years. But this program was projected

Mr. THOMAS. That is part of your trade and your tariff problem? Mr. COLLINS. That is right.

Mr. THOMAS. I do not know how in the world you will project this program for 5 years or any future date. It will be here from here on out. The Government has been in operation a few years and we have not settled the problem of tariff up to this very minute and you will not settle it in the next 50 years. There will always be two sides to this argument.

Mr. COLLINS. I agree. However, to answer your other question, we do not intend to build up a large office in the Department of Commerce. The Secretary of Commerce has testified that the maximum use of existing agencies will be made and a very small staff will be required to do the work the Department of Commerce will do.

JUSTIFICATION OF THE ESTIMATES

Mr. THOMAS. Mr. Reporter, put pages 6, 7, and 8 in the record. (The pages referred to follow :)

OFFICE OF TRADE ADJUSTMENT-TRADE ADJUSTMENT ASSISTANCE

JUSTIFICATION

On October 11, 1962, President Kennedy signed into law the Trade Expansion Act of 1962 which authorizes the negotiation of international trade agreements and establishes programs for the provision of adjustment assistance to firms and groups of workers injured by imports resulting from trade agreements. This bill authorizes firms eligible to apply for adjustment assistance to make application to the Secretary of Commerce for such assistance. To administer the adjustment assistance program it is necessary that the Department of Commerce establish and adequately staff an Office of Trade Adjustment.

Under this program three types of adjustment assistance are authorized for eligible firms. These include (1) financial assistance in the form of loans. (2) guarantees and participations, (3) technical assistance, and (4) tax assist

ance.

Loans. Many of the loans and loan guarantees will be made through the Small Business Administration whose lending authority has been revised for this purpose. In addition, loans will be made under existing programs of other Government agencies. For example, a firm in the field of agriculture may receive a loan from the Farmers Home Administration in the Department of Agriculture. A firm in the fisheries industry may obtain a loan from the Bureau of Commercial Fisheries in the Department of Interior. If these agencies lack requisite funds for adjustment assistance loans and guarantees, such funds will be made available to them by the Department of Commerce.

Technical assistance.-Federal agencies with relevant staffs and experience will provide technical assistance to import-injured firms. Such agencies would include Commerce, Interior, Agriculture, and SBA. The Office of Trade Adjustment will be expected to provide funds for these purposes whenever agencies rendering technical assistance cannot provide such assistance through existing programs. When appropriate technical assistance cannot be obtained through Federal agencies, management consulting firms or individuals with specific industry skills will be employed to assist eligible firms in the development of programs for their economic adjustment.

Technical assistance may be provided to firms prior to the submission of an adjustment proposal acceptable to the Secretary of Commerce. In many cases, it is assumed that firms preparing such a proposal will require technical assistance to assist them in the development of sound proposals.

Tax assistance.-The Treasury will administer tax assistance to eligible firms upon recommendation by the Secretary of Commerce that such assistance in the form of net operating loss carrybacks over a 5-year period will contribute to the economic adjustment of the firms.

Department of Commerce responsibility

Four principal responsibilities are assigned to the Commerce Department under the program:

Decide which firms are eligible to apply for adjustment assistance. This will include both the individual cases of injury referred to Commerce by the Tariff Commission, and the direct requests from firms for certifications of eligibility under affirmative industry injury determinations, in accordance with section 302 (a) (2) of the act.

Determine operating problems of eligible firms and develop solutions to be incorporated in adjustment proposals submitted by such firms for certification by the Secretary of Commerce.

Collect and analyze information to serve as background for decisions made by the Secretary of Commerce, and by other Government agencies participating in the program.

Make final determinations whether to provide adjustment assistance through or in lieu of existing programs; then ensure its timely and effective disposition. The overall success of the adjustment assistance program will depend largely upon the worth of the individual adjustment proposal. Many injured firms will not be able to determine the source of their operating problems and a comprehensive investigation of each such firm will be required. Prior to certification of an adjustment proposal by the Secretary of Commerce, a report on the firm will be prepared by a Commerce Department project manager who, in visiting the firm, has evaluated the manufacturing, marketing, and financial capabilities of the company. In some cases, technical assistance from Government agencies or private firms will be required to assist firms in the formulation of adjustment objectives and courses of action to attain objectives.

Each firm will be asked to submit the following information if it is required by the Office of Trade Adjustment:

Detailed balance sheets and operating statements for the past 5 years and for the periods in which injury was sustained.

Employment of capacity during the same periods.

Amount and extent of employment of workers during the same periods. Proposed method of financing to be submitted in the adjustment proposal. Profit projections for future years as presently constituted, and changes in profit projections following financiing under adjustment proposals.

Amounts of collateral available from the firm and from individuals to secure Federal loans.

Other ancillary information requisite to compliance with the act.

Budgetary requirements 1963

This budgetary request proposes funds of $200,000 for the Office of Trade Adjustment for fiscal year 1963. Of this amount, $125,000 represents funds to provide technical assistance, and $75,000 is requested for program administration. Technical assistance, $125,000. Cooperating agencies will be reimbursed by Commerce for expenditures incurred to provide technical assistance to the eligible firms which come within the agencies' area of competence but outside the scope of existing programs. The estimate will provide funds to employ consulting firms whenever necessary to make technical studies which cannot be done by Federal agencies.

Administration, $75,000.

TECHNICAL ASSISTANCE

Mr. THOMAS. Break down this $200,000.

Mr. COLLINS. We have $125,000 for technical assistance and $75,000 for program administration.

Mr. THOMAS. Do you have any consultants in here?

Mr. COLLINS. Yes, sir; we do.

Mr. THOMAS. How many?

Mr. COLLINS. We have an estimate of $125,000 for consultants.

Mr. THOMAS. What are you paying your consultants?

Mr. COLLINS. We have not made contracts with any consultant but we hope, in this program, to use consultants as they have not heretofore been used in Government financial assistance programs.

Mr. THOMAS. Technical assistance. [Reading:]

Federal agencies with relevant staffs and experience will provide technical assistance to import-injured firms.

What do you mean by:

When appropriate technical assistance cannot be obtained through Federal agencies, management consulting firms or individuals with specific industry skills will be employed to assist eligible firms in the development of programs for their economic adjustment.

What is your salary bill for the 16 people?

Mr. COLLINS. For the remainder of this year, approximately $28,000, Mr. Chairman.

Mr. THOMAS. This is not a $200,000 appropriation, then, on an annual basis, is it?

Mr. COLLINS. On an annual basis the salaries would be approximately $168,000, Mr. Chairman.

Mr. THOMAS. What about your technical assistance?

Mr. COLLINS. We cannot annualize that because we do not know what calls there will be for technical assistance. We might in this case however, multiply by 4.

TRADE ADJUSTMENT ASSISTANCE IN 1964

Mr. THOMAS. But in terms of a 12-month basis this is starting off with an $800,000 program?

Mr. COLLINS. I would say that would be fairly accurate. For fiscal year 1964, we are requesting $700,000 for technical assistance and program administration.