disers and retailers who might handle those products. As I recall, a month after the Hamburg Fair, the distributors in that particular area reported that they increased their sales of the brands of merchandise we had at the fair by $1.6 million.

My brief answer to you is, we have been in this hard sell business in agriculture for a considerable period, and we intend to stay in it. Mr. WHITTEN. Mr. Ioanes, I want to congratulate you and Mr. Le Roux for the forthright manner in which you have presented these

matters to us.

And we are proud to see many of the developments. I repeat, I recognize as a Member of Congress that any nation must have a common policy, and within the realm of deciding what it is, the contest will aways go on between the State Department, which has certain responsibilities and which in turn receives certain types of complaints, and the Commerce Department, where they naturally have the industrial problems, and agriculture, and all of that. And whether you like a particular decision or not, the contest must go on, and as we have tried to do on this committee, you must not condemn the efforts of the other, but you must insist that this angle of it is accorded equal treatment.

And I have mentioned several illustrations of where we found this when we first started.

I recall very well, without recalling names, the first contact I had with the Foreign Agricultural Service as it is now known. And one of the representatives who was here had learned to talk in a Foreign Service officer tone. He could wear striped pants, and he was marking time until he could get into the Foreign Service under the State Department where he could sit at the head table.

That was a common experience. I am probably exaggerating a little in my description. I did have that experience in Paris. And I am glad to see that with time this problem in the Government has been recognized until now I think we are on the road to having an equal chance to have our say and an equal opportunity to present our cause. I am glad to know that it is in the hands of folks like you.

I could spend a little more time on the details of the cause of this, that, and the other, but I think it well enough, particularly at this time, to point these things out.

And I would leave you with one or two words of caution, and that is that in connection with any more promotions of the Common Market, that at the outset we set out to recognize and learn a little lesson in addition to the one we have, so that as we go along these things would be provided, rather than having it done after the fact. Mr. Natcher?

RECORD DOLLAR EXPORTS OF AGRICULTURAL PRODUCTS

Mr. NATCHER. How do you account for the fact that we established an alltime record in 1962 of $3,500 million in our agriculture exports for dollars?

Mr. IOANES. Why did it happen?

Mr. NATCHER. Yes.

Mr. IOANES. It came about, Mr. Natcher, for a number of reasons.

With respect to one big factor, whereas the Common Market is s thing that I talk about and many of us talk about as something down the road that may hurt us in a big way, for most of 1961-62 we got the trade benefits of the Common Market without suffering from the protective effects.

The tremendous economic growth that they had of 5 or 6 percent a year, which increased demand, resulted in a substantial increase in our exports for a long string of years, including 1961-62. That is one big factor.

Another big factor in those exports was an unusually good export year for certain products. We had a record export year for wheat in 1961-62. And, quite frankly, one of the strongest factors in our increase was the large purchases of wheat made by Communist China, which scoured the world market for grain in countries other than the United States, which meant that there was a greater market de mand and a greater demand for wheat from all sources, including the United States.

Another factor that I would mention that helped our exports in the last year, and progressively, is that we are increasingly getting more liberal access to markets in the world for our products, not as much as we would like, but there were a couple of places in the world that took down their bars to certain of our exports, which meant that the discrimination against us was removed.

I would say these are three of the biggest factors that led to that export year, plus another one, which is that a large range of our commodities are competitive in world markets.

TOBACCO EXPORTS

You take your product, for example, tobacco. In my experience over the years, the one big thing that keeps our tobacco so strong in world markets is its quality. We produce very good quality tobacco. And last year, for example, with burley we had, I think, one of the biggest export years we have had in a decade. It reflects the quality advantage you have in your burley, and the fact, as I recall, that some blenders of cigarettes, some blenders of tobacco are increasing their percentage of burley in relation to other tobaccos.

It came back, I would say, to your State directly in the form of increased exports.

Mr. NATCHER. This past year, as you know, they have had considerable difficulty in a number of countries that produce tobacco from the standpoint of blue mold.

Mr. IOANES. Yes.

Mr. NATCHER. I certainly agree with you that the EEC duty that is on tobacco at the present time is too high. What are you doing about it, Mr. Ioanes?

Mr. IOANES. Well, I can say a couple of things on the record, ard one off the record.

The first thing we have done was that before the last round of tariff negotiations was closed, a commitment was obtained from the EEC that they would negotiate a reduction in the tariff on tobacco. I think I had that in my prepared statement. That was a commitment made to the U.S. Government by the EEC Commission.

Secondly, in between times, preceding this next negotiation, which I assume will be early in 1964, we are trying to drum up support among the users of tobacco in the Common Market countries so that they will support the demands we make, so that we will have trade support for what we want to do.

Mr. NATCHER. Our chairman, Mr. Whitten, has mentioned the fact that several years ago, in making an inspection tour in Russia and other countries, he received certain information concerning our agricultural commodities which was to me of great importance. In his report back to our committee, Mr. Ioanes, he made the statement that information gathered at a number of the meetings raised serious question about the present U.S. policy of offering tobacco in world trade channels at 90 percent of parity levels.

Now, as you know, tobacco is under its own program from the standpoint of support price. Do you find that the system that we now have conflicts considerably with the sale of tobacco abroad under our present tobacco program from the standpoint of what can be done and the sale of our surplus tobacco?

Mr. IOANES. No, not in the way the program is set up, with the cooperatives handling the mechanics of the program, I think that is all right.

I think over the years that the thing that has sold our tobacco in world markets more than any other factor has been our quality. I find, for example, that as you travel around the world there is an advantage for a cigarette manufacturer to be able to say, "There is American tobacco in my blend," even if there is just 2 percent or 3 percent, they want it there.

I would say this, Mr. Chairman, that in recent years the quality margin we have had is not as great as it used to be. I am not going to say that we have lost it entirely, because that isn't true. But we must pay attention to the question of the quality of our tobacco. And we are trying to do just that.

Thirty percent of our flue-cured, and I think about 10 or 15 percent of our burley is exported annually. It is very important. It is literally all commercial sales. Production is growing in other countries. They are improving their quality. And we have to keep on improving

ours.

Mr. NATCHER. Do you know about the sale of some 82 million pounds of flue-cured tobacco recently?

Mr. IOANES. I know that as a result of the recent announcements bids have been accepted-I thought it was 72 million, but perhaps it is 82 million by now.

Mr. NATCHER. 72 up through February 11, probably.

Mr. IOANES. Right.

Mr. NATCHER. Was this matter discussed with you at all before this tobacco was sold?

Mr. IOANES. The policy under which that tobacco was sold, the policy leading to the sale was a process that we participated in. The responsibility for the sales is in the Commodity Stabilization Corporation. This is not one of the activities that was transferred to FAS. Mr. NATCHER. I understand.

I think that is all, Mr. Chairman.
Mr. WHITTEN. Mr. Addabbo?

95910-63-pt. 3-64

INCREASE FOR ADDITIONAL ATTACHÉ POSTS

Mr. ADDABBO. In speaking of the three additional attaché posts there was mentioned the sum of $412,000. What will that actually cover? Is that all for salaries?

Mr. IOANES. No, sir. This is the cost of all the things that go along with it, the secretary, the local assistant, the cost of housing for the attachés, if he is in a country where an educational allowance is required, the cost of that, and a living allowance-it includes all those

costs.

And the $112,000, Mr. Congressman, is not just for those three new posts, it also includes several assistant attachés in other locations. It includes one marketing specialist that I mentioned we thought might go into Hong Kong. And it includes some local assistants in other posts as well, not just the three new posts.

Mr. ADDABBO. Will any of these new posts be in the super grades? Mr. IOANES. None of them will, no sir. We wouldn't mind, but it happens that we don't have them.

Mr. ADDABBO. I thought you would check that with Mr. Grant. Mr. IOANES. Yes. Mr. Grant, we solicit your help.

TRANSFER FROM COMMODITY CREDIT CORPORATION

Mr. ADDABBO. In the last paragraph on page 8 you say:

The language for 1964 provides that the total of $1,417,000 to be transferred from the Commodity Credit Corporation to be merged with the "salaries and expense" appropriation

and so forth. Would this in any way affect the budget of CCC, or is it included in that budget?

Mr. GRANT. This is included within the total administrative expense limitation set up for the Commodity Credit Corporation, but the language proposes to transfer that amount to the FAS appropriation.

Mr. ADDABBO. Will that in any way result in a shortage in CCC, and will it come in for a supplemental later on?

Mr. GRANT. No, this would not involve a supplemental. This is included in the costs of the Commodity Credit Corporation, and there would be a request for an appropriation 2 years hence to reimburse the Corporation for its capital losses. This would be one element in that capital restoration, along with many other activities and items.

Mr. IOANES. Could I say this, that no more money is being spent for this service because it shows in our budget than there would be if it showed in the CCC budget.

Mr. ADDABBO. Wouldn't it make it simpler bookkeeping if we kent them apart, in other words, what your budget is and what CCC's budget is? All of this duplication of figures could be avoided.

Mr. GRANT. It is not really duplication. The Congress will authorize under our proposal an administrative expense limitation for Commodity Credit Corporation. Of that amount $1,417,000 is to be used by the Foreign Agricultural Service for these activities.

Now, we propose to include it in the language in order that the Congress can exercise control by making a determination on the amount to be made available to the Foreign Agricultural Service. It is not added into the total appropriation for the Foreign Agricultural Service. We merely bring it into their language so that you can see the whole picture of how much they have.

Now, it would be simpler, of course, if I understand your question, to make a direct appropriation to the Foreign Agricultural Service for all of this. But since this $1,417,000 is for carrying out a function which is provided and financed by CCC, this proposal is made in order to show what the total costs of the Corporation's activities really are. It is just like the other activities of the Corporation which are administered by the Agricultural Stabilization Conservation Service. And we have a similar provision in the ASCS appropriation for administrative expenses for the work that ASCS does for CCC.

Mr. ADDABBO. It appears to be a complicated system.

Mr. GRANT. Yes; it is.

Mr. ADDABBO. No further questions, Mr. Chairman.

Mr. WHITTEN. Mr. Horan?

FOREIGN AGRICULTURE SERVICE RELATIONSHIP TO ECONOMIC RESEARCH

SERVICE

Mr. HORAN. Another branch of the Government wanted $3,000 to research Common Market trade. That is an increase. And they also wanted an increase of $110,000 for long-range prospects of supply, demand, and trade in foreign countries. I notice you have an increase of $81,500 to meet the demands in connection with the Common Market.

Mr. IOANES. Yes; that is right, sir.

Mr. HORAN. Well, we thought that we set up the Foreign Agricultural Service to do these things.

Mr. IOANES. You correct me if I am wrong, Mr. Grant, but I think you are talking about the appropriation request for the Economic Research Service, Mr. Horan.

Mr. GRANT. That is right.

Mr. IOANES. And as you probably recall, at the same time that certain functions were transferred to FAS 2 years ago, namely, the sales manager and barter and stockpiling, certain other functions were transferred to the Economic Research Service. Among those things that were transferred were the functions having to do with longer time economic research. And so in accordance with that, certain things that FAS had been undertaking, such as longtime demand supply studies, were transferred to the Economic Research Service.

Now, those studies, Mr. Horan, are becoming available for various countries of the world, and they need to put together the results. That is why the item appears there of $110,000 for the longtime studies. With respect to the Common Market, they now have a responsibility for the longtime economic research. And what they have in mind, I am sure, is the fact that they want to look ahead with respect to what is going to happen to dairy production, or beef production, or wheat production in the Common Market. And that is their function. Ours at the present time is limited to that shorter range economic study and commodity analysis tied to our current problems.

Mr. HORAN. I am glad you told me that, because from your explanation I wouldn't have known that.

Mr. IOANES. I am sorry if I said anything wrong.

If I did, Mr. Grant can correct me.

Mr. GRANT. No, I think that is a good statement of the situation. Mr. HORAN. I think that is all, Mr. Chairman.