Mr. HORAN. On the face of it, this New Zealand cream businessthere is a letter already typed that I haven't got yet, and somebody saw it and said it wasn't very satisfying, I wouldn't enjoy it muchbut on the face of it, our dairy product situations, you would think that you would put on an injunction against the importation of things that add to our surpluses. The United States is where our taxpayers live. And we had the same thing with lumber, except that we can't use section 22, because lumber isn't an agricultural product. And yet it comes from plant life. But right now we know that we are being badly hurt in the lumber industry two ways. We have over 11 billion board feet of lumber that has to be salvaged out on the Pacific Coast because of the blowdown last fall. And yet our imports from Canada on softwoods have risen 300 or 400 percent in the last 3 years. And yet we have got to legislate and, to petition the President to act. And I thought that under the new legislation he had the more immediate power in case of any danger to domestic industry. At least that was the assurance given to us on the floor by Chairman Mills of the Ways and Means Committee when we passed this Trade Expansion Act. So actually, while we have section 22, it takes about 6 months to get action on it. Mr. RENNE. Well, it varies with the commodity, of course, it is more complex in some cases than others. It doesn't have to take that long, as Mr. Ioanes pointed out. Mr. HORAN. It does have to go through the Tariff Commission. Mr. HORAN. And a study has to be made? Mr. RENNE. That is right. Mr. IOANES. May I say, I know of nobody in the Department of Agriculture that doesn't have great concern about this very import problem that we have been speaking about. The urgency of the problem that has been coming to your attention, is one where our own dairy producers are looking down the road to what may happen if the door stays open indefinitely. The volume of stuff coming in at the present time that is not controlled is not huge in relation to our own domestic production, but it is growing. The concern that you have heard and we have heard is the fact that these imports are circumventions of existing import controls, and I repeat, although not a large percentage of our production, are loophole kinds of items that ought to be closed. Mr. HORAN. Well, I don't think the dairy industry is threatened as much as our softwood and lumber industry is threatened. But certainly if we are going to be competitive with other nations, and they have greater facilities for protection of their home industries than we do from the standpoint of tariffs, it is about time that we found a quicker way to protect domestic production, don't you think? Mr. IOANES. Well, I would say in the long run, if we are going to have liberal trade rules, everybody has got to apply it. Mr. HORAN. Wait a minute. We have already agreed that we are more liberal in our trade rules Mr. IOANES. I agree with you, sir. Mr. HORAN. The Secretary is very adamant about it. And I think in light of the fact that these other countries are not so gen Mr. IOANES. I am sorry, Mr. Congressman, I can't answer you exactly. The only two actions Mr. HORAN. Maybe Secretary Renne can. Mr. IOANES. Perhaps he can. Mr. HORAN. I would like to understand, and the members of the subcommittee would like to understand-and Secretary Freeman was quite adamant in his statement that we were probably the lowest tariff nation in the world, we were the closest to free trade of anybody. We don't have that reputation traditionally, England does. But it is no longer true. It has always been my understanding that Canada can put on their special duty almost overnight. Mr. IOANES. Mr. Congressman, I do know this much about it. They did recently impose surcharges almost overnight. Mr. HORAN. That is along the line I am thinking about now. Mr. IOANES. On a wide series of products. That was done under a balance-of-payments clause in the GATT, because, as you know, they have run their dollar reserves way down. Mr. HORAN. It was done, though, and there was no danger of injury to some of their local industries, wasn't it? Mr. IOANES. No. Mr. HORAN. Why did they put on this surcharge, then, to raise revenues? Mr. IOANES. No, to reduce imports, to reduce the outflow of gold and dollars from Canada, whose reserves had reached a dangerously low level. Now that her external position has improved, the surcharges are being decreased gradually, and are almost eliminated. Mr. HORAN. Isn't it also true that they can put on charges when there is danger of injury to their industries? Mr. IOANES. There is an equalization law on the books which I think you are talking about which can be put on seasonally by one of their ministers, I am not sure which, but I believe it does apply to horticultural items. Mr. HORAN. I am sure it applies to pears, because we have sold them. Mr. IOANES. The only one they put it on that I know about is potatoes, and we took them to GATT on the fee, and they eliminated the fee. There is a law on the books which does permit them to do exactly what you say on horticultural crops, but they haven't exercised the law except with respect to potatoes. Mr. HORAN. They haven't used it. Mr. IOANES. It could be that in earlier years they did. USE OF SECTION 22 REGULATING IMPORTS Mr. HORAN. Now, in the application of the mechanism of section 22. if the Secretary feels that there is a danger of injury to domestic industry, then he does what? Mr. IOANES. Then he is required by law to make a recommendation to the President for remedial action. In effect he recommends that the President request the Tariff Commission to investigate the situation and to make a finding. Mr. HORAN. And that usually takes 3 months to a half a year? Mr. IOANES. It could take 3 to 6 months, yes, sir. It doesn't have to. but it could. Mr. HORAN. On the face of it, this New Zealand cream businessthere is a letter already typed that I haven't got yet, and somebody saw it and said it wasn't very satisfying, I wouldn't enjoy it muchbut on the face of it, our dairy product situations, you would think that you would put on an injunction against the importation of things that add to our surpluses. The United States is where our taxpayers live. And we had the same thing with lumber, except that we can't use section 22, because lumber isn't an agricultural product. And yet it comes from plant life. But right now we know that we are being badly hurt in the lumber industry two ways. We have over 11 billion board feet of lumber that has to be salvaged out on the Pacific Coast because of the blowdown last fall. And yet our imports from Canada on softwoods have risen 300 or 400 percent in the last 3 years. And yet we have got to legislate and, to petition the President to act. And I thought that under the new legislation he had the more immediate power in case of any danger to domestic industry. At least that was the assurance given to us on the floor by Chairman Mills of the Ways and Means Committee when we passed this Trade Expansion Act. So actually, while we have section 22, it takes about 6 months to get action on it. Mr. RENNE. Well, it varies with the commodity, of course, it is more complex in some cases than others. It doesn't have to take that long, as Mr. Ioanes pointed out. Mr. HORAN. It does have to go through the Tariff Commission. Mr. RENNE. That is right. Mr. HORAN. And a study has to be made? Mr. RENNE. That is right. Mr. IOANES. May I say, I know of nobody in the Department of Agriculture that doesn't have great concern about this very import problem that we have been speaking about. The urgency of the problem that has been coming to your attention, is one where our own dairy producers are looking down the road to what may happen if the door stays open indefinitely. The volume of stuff coming in at the present time that is not controlled is not huge in relation to our own domestic production, but it is growing. The concern that you have heard and we have heard is the fact that these imports are circumventions of existing import controls, and I repeat, although not a large percentage of our production, are loophole kinds of items that ought to be closed. Mr. HORAN. Well, I don't think the dairy industry is threatened as much as our softwood and lumber industry is threatened. But certainly if we are going to be competitive with other nations, and they have greater facilities for protection of their home industries. than we do from the standpoint of tariffs, it is about time that we found a quicker way to protect domestic production, don't you think? Mr. IOANES. Well, I would say in the long run, if we are going to have liberal trade rules, everybody has got to apply it. Mr. HORAN. Wait a minute. We have already agreed that we are more liberal in our trade rules Mr. IOANES. I agree with you, sir. Mr. HORAN. The Secretary is very adamant about it. And I think in light of the fact that these other countries are not so gen erous, we should almost demand that we change some of our ground rules here, shouldn't we? Mr. IOANES. Mr. Congressman, I am not arguing with you at all Is Canada the country we are talking about? Mr. HORAN. In lumber, and New Zealand in cream. Mr. IOANES. Canada happens to be one of our real good customers for a wide sector of American agriculture. And in general Canada has a reasonably liberal import policy. Mr. HORAN. Well, for your information, we are not asking that they be excluded from our American market. We already have ar informal agreement that works with Canada on apples whereby we share our market for a third of their production. We have asked the President to impose a 6-percent restriction or quota on their lumber exports to us. And they have definite advantage laborwise and transportationwise, and on the exchange of money, of about 711⁄2 percent. We proposed a 6-percent quota based upon the last 3 years which encompass 3 of the years that have seen this huge rise in the exporting of lumber to the United States. AGRICULTURE TRADE POLICY Mr. WHITTEN. In connection with this azalea business, in too many instances it looks like under this present pressure that they are asking us to lighten up existing restrictions, and in consideration they will just be half as restrictive as they threatened to be. And they threat- I ened to be terribly restrictive, so they want us to loosen what has been in existence all along, and they in turn tightened theirs up, but only half as much as they first threatened to. And I say for the record again that there are many things about the farm price-support program which I think are essential that are dependent upon proper action under section 22. If you don't do that and leave that part out, it leaves the other part where it can't work. Mr. RENNE. Mr. Chairman, as a newcomer I do want to say that I am impressed with the fact that the Department is not only alert, but very anxious to protect U.S. agriculture's interest in the light of our overall trade policy. Mr. HORAN. Mr. Chairman, in the past we have put in the record some of the roadblocks to commerce, as you well know. And you in FAS prepared them. And it was quite a job. I would like to know just what you have that is available now that is up to date in that regard. Or is it possible always to put into the record some of the roadblocks, the restrictions, the price-support programs that we have in some of these well, let's be specific, about the Common Market countries, because that seems to be a magical word now, everybody is talking about it, and want someway to get into it. Mr. IOANES. Why don't we do this for you this time- COMMON MARKET AGRICULTURAL SUPPORT AND TRADE POLICIES Mr. IOANES. Why don't we center it this time on the Common Market countries and give you a pretty good description there of their price-support programs and their import policies and of the level of tariffs on the important items, whether they have quotas, the size of the quotas if they have them, and where they have fixed prices, and do that for the Common Market countries in particular. (The material requested follows:) PRICE SUPPORT PROGRAMS IN EUROPEAN ECONOMIC COMMUNITY COUNTRIES A common agricultural policy (CAP), including a program of uniform price supports, that will replace existing policies and programs in member states is gradually being created by the European Economic Community (EEC). A sizable share of farm output-wheat and wheat flour, feed grains, poultry, eggs, certain fruits and vegetables, wine, live hogs and hog carcasses-is already subject to specific regulations which became effective for those commodities on July 30, 1962. And it is expected that all major farm products will be subject to common EEC policies by December 31, 1969, the end of the presently scheduled transition period to a common market for agriculture. This summary paper, therefore, is divided into two parts. One describes the workings of the CAP in the major sectors where it now operates-grain (excluding rice), poultry, wheat flour, and fruits and vegetables. The proposed system for rice and vegetable oils is also discussed. The second part briefly describes member country price support programs for commodities not yet affected by the CAP. Grain (excluding rice) COMMON AGRICULTURAL POLICY The wheat and feed grains regulations of the European Economic Community (EEC) call for changes in the price support systems and methods of protecting local producers from foreign competition now existing in member states. The grain regulation became effective on July 30, 1962. Its aim is to replace ultimately the grain policies of each member state with an EEC grain policy. This new policy could increase the producer incentives for maintaining and expanding production levels attained under the previous national grain policies of individual members states during the past decade. There are many details to the complete regulation, but two features are of greatest importance. These are the grain price structure and the related import levy system. In general, the EEC program for wheat is also in operation for feed grains, but in the description that follows, wheat will be used as an example. The key price in the Common Market's grain price structure is the "target" price. This is the level member governments want wholesale wheat market prices to approximate. It is the basis for all other prices. Each member country is free, for the time being, to set its own wheat target prices between the maximum price, which is in Germany, and the minimum price, which is in France. The "threshold" price is the price of normal-quality wheat at each country's border. This is, for all practical purposes, the minimum import price at the border and will reflect the country's internal target price. The difference, of several cents per bushel, between threshold and target prices represents the net effect of three factors—a lump sum, giving a preference to EEC producers, and adjustments for quality and freight. The intervention price, or as we call it in the United States, the support price, is the level at which the Government makes purchases, if necessary, in the wholesale market. The intervention price is set at a level between 5 and 10 percent under the target price. It should be noted that the target, threshold, and intervention prices move up at the rate of 3 cents a month during the marketing year, to allow for storage, interest, and other carrying costs. Actual market prices reflect bids and offers of buyers and sellers. In determining the variable import levy, the Common Market determines daily the "adjusted c.i.f." (cost, insurance, freight-to-destination) price. In selecting the adjusted price, actual landed prices of wheat from various non-EEC supplying countries are put on an equal quality basis by subtracting quality differentials. The lowest of these becomes the adjusted c.i.f. price. The levy for a given day is then the difference between the threshold and the adjusted c.i.f. price. Recent adjusted c.i.f. prices in Germany; e.g., were $1.65 a bushel. Assuming a threshold price of $3.35, the variable import levy was $1.70. That levy applied equally to all imports of wheat from countries outside the Common Market, not just to U.S. grain. Recent market prices of $3.10 for West German wheat of normal quality, compared with $3.62 for imported U.S. No. 2 Hard Red Winter wheat. The price of |