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to Canadian softwood lumber producers whose exportations to the east coast of the United States, largely by tramp vessels at rates lower than rail rates from the U.S. Pacific Northwest to U.S. Atlantic ports, have had a severe competitive impact upon lumber producers of the Northwest. Lumber processors and producers in other parts of the world could be similarly benefitted at the expense of domestic producers, in the Northwest and elsewhere in the United States.

Thus it would appear that the legislation would benefit only the shipping conferences transporting the lumber by enhancing their already substantial powers. We are of the view that adoption of the legislation would make it difficult to resist further erosion of the safeguards provided by the tariff filing requirement at the behest of other groups similarly motivated. We do not favor the legislation. In any event, if such legislation is to be enacted it is our view that it ought to be amended so as to exclude lumber from the coverage of dual-rate contracts. This would assure that conferences could not require exclusive patronage from lumber shippers to whom they would have no duty to disclose their rates.

In the testimony and other data which are available to us in connection with this proposed legislation we have found no indication that other alternatives to this legislation have been fully explored. For example, there is no indication that any serious efforts have been made looking to the formation of shippers' cooperatives which would permit the assembling of cargoes into units of sufficient size to permit these shippers to obtain the charter rates which full shipload movements would make possible.

The Bureau of the Budget has advised that there is no objection to the submission of this report from the standpoint of the administration's program. Sincerely yours,

Hon. HERBERT C. BONNER,

NICHOLAS DEB. KATZENBACH,

Deputy Attorney General. DEPARTMENT OF STATE, Washington, April 17, 1963.

Chairman, Committee on Merchant Marine and Fisheries,
House of Representatives.

DEAR MR. CHAIRMAN: Thank you for your letter of February 14, 1963, request. ing the comments of the Department of State on H.R. 1157, a bill to exclude cargo which is lumber from certain tariff-filing requirements under the Shipping Act, 1916.

The Department of State has no objection to the enactment of this proposed legislation.

The Bureau of the Budget advises that from the standpoint of the administration's program there is no objection to the submission of this report.

Sincerely yours,

FREDERICK G. DUTTON, Assistant Secretary (For the Secretary of State). The CHAIRMAN. The first witness will be the Honorable Mrs. Julia Hansen. Mrs. Hansen?

STATEMENT OF HON. JULIA BUTLER HANSEN, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF WASHINGTON

Mrs. HANSEN. Mr. Chairman and members of the committee, first may I express my deepest appreciation for the opportunity to appear this morning in support of Congressman Tollefson's, Congressman Horan's, and my own bill.

It is a great pleasure to have the opportunity. I represent the Third District of the State of Washington and because lumber is the backbone of the economy of my district I am deeply interested in all facets of the difficulty and troublesome problems with which this industry has been confronted during the past several years, and any attempt at solution of any one of these problems is of tremendous importance.

Therefore, I appear wholeheartedly in support of the proposed legislation which is identical, I understand, with S. 1032 which passed the Senate on Monday of this week. One of the major problems that the Northwest finds is that of retention of markets due to severe competition by Canadian mills.

The pending legislation is designed to correct an inequality existing in the assessment of freight charges in reaching foreign countries. This is occasioned by the fact that there is no regulation of any kind of rates in the conference of steamship lines which operates from British Columbia to foreign countries.

Public Law 87-346 which became effective January 1, 1962, imposes the requirement that steamship companies operated between U.S. ports and foreign countries must file their rates with the Federal Maritime Commission.

While the Federal Maritime Commission has endeavored to make the rules for filing as simple as possible, the fact still remains that an exporter in British Columbia can call up, get a rate quotation from a steamship line, complete his arrangements, while he cannot do this in the United States.

While the Federal Maritime filing requirements may seem simple, they do act as a deterrent, and when steamship companies have space to offer on an emergency basis and are willing to grant a reduced rate, they offer it to the Canadian mills and not to mills in the United States. Bulk commodities were exempted in the original legislation to which we have referred. Lumber is a bulk commodity but not legally so considered, hence it is important that Congress take action to amend the present Public Law so that equal opportunity will be afforded American shippers in competition with the mills in British Columbia who ship on the same vessels but under entirely different countries.

The rates from the United States have varied as much as $14 per thousand in excess of the rates from British Columbia. This condition should be corrected.

Under existing law the water carrier must file his rates with the Federal Maritime Commission. Under present procedure the water carrier when he files a reduction in rate with the Commission, that rate takes effect immediately. But under the law a rate increase cannot take effect until 30 days after the rate increase has been filed with the Commission, unless the Commission grants permission to file on shorter notice.

A carrier is reluctant to file a low rate and be bound with that rate

in later cargoes. For he may enter a port with a less-than-full load and may find that he can top the load with lumber at a rate less than that which has been filed.

The next trip, however, he may find that he can't economically carry the lumber at that rate. A water carrier must be free to bargain with the shipper of U.S. lumber just as he is free to bargain with shippers of Canadian lumber.

Employment in sawmills and planing mills has decreased from a total of 492,000 in 1947 to 432,000 in 1949, to 473,000 in 1951, to 416,000 in 1954, to 393,000 in 1955, 332,000 in 1957, and to 309,000 in 1960.

The conclusion is obvious. Employment in sawmills and planing mills in the United States has declined by over 40 percent since 1947.

One of the principal reasons for this marked decline in employment in our domestic lumber industry is the importation of Canadian lumber. According to a report of the U.S. Department of Commerce imports of softwood lumber from Canada increased from 2,748 million board feet in 1954 to 3,941 million board feet in 1961. That is about 13.7 percent of our domestic production and current estimates indicate that Canadian imports exceed 17 percent of domestic production.

We find in the Northwest and particularly in southwest Washington that a decline in lumber employment is a major factor in an unemployment situation which has reached serious proportions.

I feel that these identical bills before the committee will be one step, and I emphasize it is only one step, toward solving part of this unemployment problem and removing a barrier which lumber shippers now find to be restrictive.

On the back page is a table which I would present for the committee's information, and again my appreciation for the courtesy of appearing at the hearing, Mr. Chairman.

(The table referred to follows:)

Exports of softwood to United Kingdom and Common Market

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The CHAIRMAN. Do you happen to know whether any of this decline in employment is due to automation in the lumber mills?

Mrs. HANSEN. Not to a large extent, Mr. Chairman; some, but not to the extent that the competition has been and the inability to get into the world markets.

The thing that has happened in the Northwest is that we have not been able to get into as many world markets as we would like because of the competition from our northwest neighbor.

About 4 years ago, I was in Vancouver, British Columbia, and on the way there, I passed through the ports of Seattle, Everett, and Bellingham.

Ordinarily, as Congressman Tollefson knows, these are all tremendous lumber shipping areas. There were no ships in our ports loading. Yet in Vancouver the Fraser River was full of shipping, which indicated to me that a tremendous amount of commerce was going out through the Canadian port of Vancouver.

The CHAIRMAN. To what extent has the standing timber been cut out in this area?

Mrs. HANSEN. We have had a lot cut out, but, of course, the major sources of standing timber now are the State lands, which operate on a sustained-yield basis, the Federal lands, which operate under the Forest Service and they are also on a sustained-yield basis, and the private lands.

Particularly in southwest Washington, we have a sustained-yield program, so that for every tree that is cut from the land, there is a replacement of timber. I think you will remember that the national Christmas tree 2 years ago came from the first tree farm in the United States, which is in our district in Grays Harbor County, so although cutting has gone on, there is a constant replacement due to tree farming.

The CHAIRMAN. We are delighted to have you. Mr. Tollefson? Mr. TOLLEFSON. Mrs. Hansen, I have read your statement, which is a most excellent one. I have one thought in connection with it that I think the record should comment upon.

On page 3 you say that the U.S. Department of Commerce figures reveal that Canadian imports exceed 17 percent of domestic production. That includes lumber that is shipped out of Canada by both rail and ship?

Mrs. HANSEN. That is right.

Mr. TOLLEFSON. So far as the waterborne lumber cargo is concerned, isn't it true that Canadians have now captured about 70 percent of our former waterborne commerce going to the eastern seaboard of the United States?

Mrs. HANSEN. I am sure this is true, Congressman. As you well know, their waterborne commerce has grown tremendously.

Mr. TOLLEFSON. This is because they use foreign-flag ships?
Mrs. HANSEN. That is right.

Mr. TOLLEFSON. Which charge a lower rate than do American-flag ships, and our domestic lumber producers shipping lumber from the Pacific Northwest to the eastern seaboard must under the Jones Act, use American-flag ships?

Mrs. HANSEN. That is correct.

Mr. TOLLEFSON. However, this bill that we have before us today does not in any way seek to amend the Jones Act?

Mrs. HANSEN. Not at all, not at all. This is the one of the bills on which in the Northwest there is no disagreement between any groups of the lumber industry, and like any other industry, there are many segments of the industry.

There are also many portions of labor in the lumbering industry. This is one bill where I know of no antagonism or any difference of opinion on this bill or the necessity for it.

Mr. TOLLEFSON. I agree with you, Mrs. Hanson. I know of no Opposition back there. This bill seeks to deal with the competition in the shipment of softwood lumber to the United Kingdom primarily.

The Canadians, as I understand it, have an open rate on lumber products to the United Kingdom. In other words, they can come to an agreement with the foreign-flag ship operator on any rate that they can agree upon.

It can fluctuate from day to day, and during the day several times as far as that is concerned. The American shipping to the United Kingdom on a foreign-flag ship must use the rate that has been approved by the Maritime Commission. Is that not right?

Mrs. HANSEN. That is right.

Mr. TOLLEFSON. And that rate is several dollars per thousand board feet higher than the Canadian producer has to pay to ship his lumber over to the United Kingdom. Isn't it true, Mrs. Hansen, that on the same foreign-flag ship it is not unusual to find Canadian lumber and American produced lumber with the American produced lumber paying a freight rate of from $8 or $9 per thousand board feet to $13 or $14 per thousand board feet?

Mrs. HANSEN. That I understand is true. I know you have a list of very distinguished and very able witnesses from many facets of industry who will testify on various phases of this thing. I might mention in passing that about a month ago the trade mission, and this was a self-financed mission by all groups of the industry in the Northwest, left for Europe and visited several nations there, and one of their major purposes-they were sponsored by the Department of Commerce and through the effort of the U.S. Government-was to get the United States into the export market, and one of their major problems encountered, they tell me, is the shipping, and they will testify on some of this later, I am sure.

I am sorry that I didn't bring the letter this morning from one of the very distinguished men who accompanied the trade mission relative to this. I think the important thing, Mr. Tollefson, that you and I in the Northwest, and I am sure the people throughout the United States, be they on the west coast, east coast, or the Southeast, are interested in is to keep America's place in the export market.

We have always been a Nation of trade and we continue to be s Nation of trade, and this is important to the economy of the United States. I think it has a deeper meaning, too. For every board foot of timber that we sell in the markets of the world, certainly that will be one less board foot that the Soviet countries will sell in the markets of the world, and I think this is of great importance now as we try to move into an export situation.

Mr. TOLLEFSON. I have no more questions, Mr. Chairman.
The CHAIRMAN. Thank you.

In connection with the questions I was asking you as to why this employment had decreased, you state, Mrs. Hansen, on page 2, after you give the figures showing the decline:

One of the principal reasons for this marked decline in employment in our domestic lumber industry is the importation of Canadian lumber.

Mrs. HANSEN. That is right. I thought I might as well state it. The CHAIRMAN. That is a matter of tariff, or is it a free product? Mrs. HANSEN. They are shipping on their boats out of Vancouver, British Columbia, to points on the east coast.

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