Mr. ROBACK. Does the Treasury have any function relating to import policy that requires a determination of the national security aspects before this plan takes effect?

Mr. SIMON. Yes; the adjudication of countervailing duty laws and antidumping is in the area of national security. And we have been quite active in that area recently, as you know.

Mr. ROBACK. The antidumping is a security matter? Does that not require some economic determination?

Mr. SIMON. Well, it is an economic determination. And I think we can translate there again an economic determination into national security.

Mr. SIMMS. It should be recalled, Mr. Roback, that if you look at the section 232, most of the criteria for determining what affects the national security are economic considerations. In other words, the maintenance of the mobilization base within the United States, the ability to meet future emergencies, and so forth, so that the sectionI think it is "C" of section 232-expressly spells out that you shall take into account the economic impact of imports. So you cannot separate economics from national security. And the Congress has said to consider the economic aspects.

FUTURE OF OIL POLICY COMMITTEE

Mr. ROBACK. Mr. Simon, do you conceive that the Oil Policy Committee is a temporary institution which would be subsumed in an energy policy agency if it were established?

Mr. SIMON. I didn't understand that question.

Mr. ROBACK. Let's assume that the President recommends, and there is established, an energy policy agency. That is one of the options that is kicking around. And if such were established, would that absorb the Oil Policy Committee?

Mr. SIMON. I wouldn't wish to speculate on what the President might determine as far as coordination

Mr. ROBACK. You can speculate on the logic rather than the intent. Mr. SIMON. I am going to go ahead as if the Oil Policy Committee will continue to function in its present form, period. And that is the mandate the President has given me. And until he changes that mandate, I wouldn't speculate on that.

Chairman HOLIFIELD. Thank you for staying over. We didn't expect you to have to stay this long, Mr. Simon.

Mr. SIMON. Thank you, Mr. Chairman.

Chairman HOLIFIELD. The questioning sometimes becomes rather long. And the chairman can't always control the verbosity of the members, or even of himself.

This meeting stands adjourned until 2:30 p.m.

(Whereupon, at 1 p.m., the meeting was adjourned, to reconvene at 2:30 p.m., the same day.)

AFTERNOON SESSION

Chairman HOLIFIELD. Without objection, Congressman Davis' statement will be included in the record at this point.

(Mr. Davis' prepared statement follows:)

PREPARED STATEMENT OF HON. JOHN W. DAVIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA

Mr. Chairman and members of the Subcommittee on Legislation and Military Operations, I am glad to have this opportunity to appear before you and take just a moment to address the subject of Federal science reorganization.

As Chairman of the House Subcommittee on Science, Research and Development, I have, over the years, developed a keen appreciation for the benefits this nation derives from its investment in science and technology. It has been my privilege to take an active role in the strengthening of our technological capabilities through the promotion of science education, healthy government-industry relationships and frank discussion of our needs and goals in terms of science, research and development and technology.

It is, therefore, with some alarm that I view the abolition of the Office of Science and Technology and the centralization of scientific advice for the Executive in the National Science Foundation.

As you know, the Office of Science and Technology was created in response to our lagging scientific effort of the fifties. The offices of Presidential Science Advisor and OST Director were lodged in the White House structure and were intended to give technical advice of the sort not otherwise readily available because of proximity and security considerations.

It is my feeling that these offices offered an important area of counsel to our Presidents and despite my very highest regard for Dr. Guyford Stever and the National Science Foundation, I am reluctant to see Executive science advice confined to the NSF to the exclusion of a voice in the White House.

Various observers in the press and scientific community have stated that Reorganization Plan No. 1 of 1973 is merely a recognition of the de facto situation. The argument is put forth that the influence of scientists has been in decline since the mid-1960's and that it is time to recognize this present state of affairs officially.

One argument on behalf of this persuasion is highly evident-the trend of total U.S. investment in R&D which peaked at slightly over 3% of our GNP in 1964 and has declined to our present rate of about 22% of our GNP. (Table 1)

I make this point simply as an introduction to the remainder of my statement, which will show that our domestic policies related to science and technology do not operate in a vacuum, and instead have a very real and tangible impact on our ability to maintain our society successfully.

We operate in a world marketplace, and an increasingly important part of international trade is represented by technology-intensive manufactured products. It is no secret that we have not done well in world trade in recent years. The U.S. went from $6.1 billion in the black in 1965 to $1.5 billion in the red for 1971. Preliminary figures for 1972 indicate that this deficit has nearly quadrupled to $5.8 billion. (Table 2)

TABLE 2.-STRUCTURAL CHANGES IN U.S. MERCHANDISE TRADE,1 SELECTED YEARS, 1960–71

1 The commodity breakdown in this table slightly differs from that presented in Secretary Stan's testimony of July 27, 1971.

In the category of technology-intensive products, those which are sensitive to R&D investments, our trade surplus remained nearly constant between 1965 and 1970, and then declined from $9.6 billion in 1970 to $8.3 billion in 1971. It seems that the 1972 surplus will be about $6.6 billion, a dramatic decrease for one year.

These changes may very well be the result of our decreased R&D effort. The Japanese and West Germans, for example, are spending significantly more than we are for civilian R&D. In fact, if one adds the capitalized value of purchased foreign technology to actual R&D expenditures in order to obtain an estimate of the total effort for civilian R&D, both of these countries, our toughest competitors, are spending about twice as much as we are, expressed as a percentage of GNP. (Table 3)

1 Both sets of estimates are in U.S. cost equivalent values ("official exchange rate dollars" adjusted for the relativepurchasing power of the dcllar across the board-GNP-and in R. & D. in the United States vis-a-vis the other countries). 2 Adding capitalized value of purchased foreign technology.

Our trade pattern with Japan is especially disturbing. In 1970 we had a deficit of $1.0 billion in our trade with Japan in technology-intensive manufactured products, and this had risen to $2.1 billion in 1971. It seems clear that the increase in our trade deficit with Japan is due to that nation's domination of trade in high technology products. (Table 4)

TABLE 4.-TRADE IN TECHNOLOGY-INTENSIVE MANUFACTURED PRODUCTS, BY REGION

One other comment about international trade is appropriate at this point. One of the most technology-intensive sectors of the U.S. economy is agriculture. Here we find a constantly increasing surplus in international trade, reaching $2.9 billion in 1972 according to preliminary figures.

I recognize that the Office of Science and Technology has not been entirely or even predominately responsible for these trends which I discussed above. The policies which originated in OST did, however, contribute to the broad national commitment in both the private and public sectors to fund and utilize R&D to the maximum extent possible. Yet our government seems to penalize our scientists and engineers for their accomplishments. A successful space program has resulted in a drastic reduction of NASA's budget and the abolition of the National Space Council. Huge surpluses in agricultural and technology intensive manufactured products have been followed by significant reductions in government funds for research and development, including agricultural R&D.

We have here a chicken and the egg situation. R&D expenditures result in a high level of sophistication in our products, and permit us to successfully compete in the world marketplace. At the same time, the corporate profits and tax revenues generated by these economically successful products are needed to fund additional R&D. It is difficult to determine which came first-economic prosperity or its undergirding of research and development activities.

One other point which touches on this discussion only tangentially, but is nonetheless of some significance, is a part of the preface to a monograph, Science and Technology as an Instrument of Soviet Policy, published last year by the Center for Advanced International Studies at the University of Miami. The preface begins:

"The purpose of this book is to give a documentary account of the Soviet leaders' views of scientific-technological progress and the present and future role they expect it to play, especially in the sphere of East-West competition.

"At a time when many in the West, particularly in the United States, are seriously questioning the value of pursuing the further development of science and technology, the Soviet leadership avows, in the words of Party General Secretary Leonid Brezhnev, that 'the center of gravity in the competition between the two [world] systems is now to be found precisely in this field.'

R&D is an investment, not an expenditure, and our present policy, symbolized by the abolition of the OST and a downgrading of our science apparatus seems counterproductive.

I come before this Subcommittee, Mr. Chairman, not only as a proponent of science, but also as a believer in science as a tool to be used for the benefit of this nation. I have attempted, in this discussion, to illustrate only one facet, albeit an important one, of the science-society relationship. The impact of science on our lives is obvious, and in most respects is healthy and entitled to be encouraged. I have confidence in this nation that it will not destroy its technical capability, and I submit these remarks in the hope that they may be considered as vital decisions are made regarding this nation's scientific policies. Thank you.

APPENDIX 1

CREATION OF THE OFFICE OF SCIENCE AND TECHNOLOGY

I. REORGANIZATION PLAN NO. 2 OF 1962; ITS ALLEGED ADVANTAGES AND DISADVANTAGES A. Alleged Advantages

1. For the first time, science policies of the executive branch; transcending agency lines, will be effectively coordinated and shaped at the level of the Executive Office of the President. The National Science Foundation (NSF), which it was hoped would perform this function, has been unable to do so, because it is at the same organizational level as other agencies whose work it was expected to coordinate.

2. There is urgent need for an agency with authority in the area of across-theboard forward planning of scientific needs. This function the Office of Science and Technology (OST) will be empowered to perform. The NSF has been reluctant to act in this area, and with their concurrence the OST will become the agency for such planning.

3. The transfer of functions from the NSF to the OST will enable the NSF to devote its efforts more intensively toward promoting its primary objective of furthering basic research and education in science. The OST will look to NSF for studies and information in these areas on which sound national policies in science and technology can be based.