Senator Moss. The next witness is Congressman Walter S. Baring from Nevada. STATEMENT OF HON. WALTER S. BARING, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEVADA Mr. BARING. Mr. Chairman, I have introduced a companion bill to S. 1285, known as H.R. 5332. I consider our domestic fluorspar industry to be of vital importance to the welfare of the United States as, aside from the economic aspect, the volume of use is rapidly increasing and its importance as a component of missile fuels cannot be overestimated. It is my understanding that all the independent fluorspar mines in the country are closed due to foreign competition, which has brought the price down to a point where our producers cannot compete. My State of Nevada has what may well be one of the largest fluorspar deposits in the country, and I certainly should like to see it in operation. Aside from being important for missile fuel, many other industries find fluorspar to be indispensible, many chemical industries being dependent on it, as well as the aluminum and steel industries. We simply cannot afford to be at the mercy of foreign producers. This bill, which would help domestic producers, and reopen our mines, is cleverly designed to do the minimum damage, if any, to foreign producers. It merely gives a fair share of our domestic markets to our domestic producers and I can think of nothing more equitable than that. I trust, Mr. Chairman, that this committee will see fit to report favorably on S. 1285 as soon as it possibly can and that the Senate will also pass it with expedition. It is good legislation. I appreciate very much the opportunity to have my remarks included in the official records. Mr. REDWINE. Mr. Chairman, may the record show that on March 10 the Department of Interior, the Department of Commerce, and the Department of State were requested by the chairman to file their written reports on this bill within 20 days. Within the last 10 minutes the Department of Interior has filed its statement with us. have not as yet received a report from Commerce or State. May the record at this time carry the report of the Department of Interior. Senator Moss. The report of the Department of Interior will be included in the record at this point. (The report referred to follows:) Hon. JAMES E. MURRAY, U.S. DEPARTMENT OF THE INTERIOR, OFFICE OF THE SECRETARY, Washington, D.C., April 6, 1959. Chairman, Committee on Interior and Insular Affairs, DEAR SENATOR MURRAY: This responds to your request for the views of this Department on S. 1285, a bill to provide for the preservation and development of the domestic fluorspar industry. We recommend that S. 1285 not be enacted. This bill would declare it to be necessary "in the interests of national se curity that limitations be placed which will maintain a reasonable balance between domestic production and importation” of the various grades of fluorspar. These limitations would be in the form of both import and domestic production quotas to be established by the Secretary of the Interior and based upon his estimates of the total amount of fiuorspar needed to meet the requirements of consumers of the United States for each calendar year. In our opinion, the national security requirements for this commodity can be met adequately under existing legislative authority. Under present authority, the Office of Civil and Defense Mobilization, with the advice of other interested Federal agencies, estimates the national requirements for strategic and critical materials under various defense emergency conditions. Fluorspar, both acid and metallurgical grades, is classified by the OCDM as a strategic and critical material. The OCDM, with the advice of the Department of the Interior and other interested agencies, also estimates the availability of supply to meet these defense requirements. Sources of supply taken into consideration are domestic production, assured imports, and Government inventories. These estimates of requirements and supply are revised periodically to take into account, among other things, the changes in the productive capability of the fluorspar industry at home and abroad. Where Government action is determined to be necessary to insure an adequate supply of any commodity to meet mobilization requirements, existing legislation provides ample authority to institute such Government programs as may be required to assure supply. Should the national security require an action program of the Government dealing with any commodity, the Office of Civil and Defense Mobilization, under existing authority, can and does institute and carry out a program designed to meet this situation. As a safeguard to insure that trade activities would not destroy our security position in the various commodities, the Congress, by section 8 of the Trade Agreements Extension Act of 1958, provided a special means for determining whether imports of any item threaten national security. This act provides the authority to take whatever action is indicated to limit imports, when it is determined necessary in interests of national security. The American Fluorspar Producers Association has filed a petition with the OCDM, under section 8 of the Trade Agreements Extension Act of 1958. Should a determination be made that imports of fluorspar threaten to impair the national security, there is ample authority to adjust the imports to remedy the situation. Hence, no further legislative authority is required to limit imports. The provisions of section 7 of the Trade Agreements Extension Act of 1951, as amended, the so-called escape clause, is available for those commodities which have been the subject of a trade agreemnt. Pursuant to this type of proceeding, the Tariff Commission may entertain a petition to investigate and report a finding as to whether or not an injury, or threat of injury, has been caused to domestic producers of the commodity because of a concession under a trade agreement. Acid grade fluorspar is subject to a concession. At the present time there is a duty of $7.50 per short ton on metallurgical grade fluorspar which is the equivalent of a 35-40 percent ad valorem based on current prices. The Bureau of the Budget has advised that there is no objection to the submission of this report to your committee. Sincerely yours, FRED A. SEATON, Secretary of the Interior. Mr. REDWINE. Mr. Chairman, I suggest that you recess until 10 o'clock Friday morning, the 10th, at which time departmental witnesses will be here. Senator Moss. This hearing then will be in recess until Friday morning, at 10 a.m., for the taking of further statements. (Thereupon, at 11:20 a.m., a recess was taken until Friday, April 10, 1959, at 10 a.m.) PRESERVATION OF THE DOMESTIC FLUORSPAR INDUSTRY FRIDAY, APRIL 10, 1959 U.S. SENATE, MINERALS, MATERIALS, AND FUELS SUBCOMMITTEE OF THE COMMITTEE ON INTERIOR AND INSULAR AFFAIRS, Washington, D.C. The subcommittee met pursuant to recess, at 10:05 a.m. Senator Frank E. Moss (acting chairman) presiding. Present: Senator Moss. Also present: Robert W. Redwine, professional staff member; William Broadgate, mineral consultant to Senator James E. Murray, and Bob Dwyer, professional staff member. Senator Moss. This hearing will come to order. Mr. REDWINE. Mr. Chairman, may the report of the Department of State on the bill appear at this point in the record? Senator Moss. Yes. (The report referred to is as follows:) Hon. JAMES E. MURRAY, DEPARTMENT OF STATE, Washington, D.C., April 7, 1959. Chairman, Committee on Interior and Insular Affairs, DEAR SENATOR MURRAY: Further reference is made to your letter of March 10, 1959, requesting a report on S. 1285, a bill to provide for the preservation and development of the domestic fluorspar industry. This bill would institute quotas for domestic production and imports. The basic formula would provide an annual quota for the domestic industry of 200,000 tons for fluorspar containing more than 97 percent calcium fluoride and 125,000 tons for lower grade fluorspar; the import quotas would be equivalent to the difference between the domestic quotas and estimates of annual domestic consumption. The effect of the bill would be to restrict imports, in the interest of national security. The Department is strongly opposed to the enactment of the proposed legislation. The Congress established a standard procedure, under section 8 of the Trade Agreements Extension Act of 1958, for the investigation of the effects on the national security of imports and for the imposition of import restrictions if it is determined that they are necessary to prevent a threat of impairment to the national security. At the present time the Office of Civil and Defense Mobilization is conducting such an investigation regarding imports of fluorspar under this procedure. We consider that this is the best method presently available for a thorough, objective evaluation of the complicated issues involved in this type of problem. In addition to the above-mentioned method of dealing with the national security aspects of imports, there is also a procedure established by law which provides safeguards to domestic industries against injury from increased imports resulting in whole or in part from trade agreement concessions. 40360-59-3 31 Under the escape-clause provisions of the trade agreements legislation, the domestic industry producing fluorspar containing more than 97 percent calcium fluoride may apply to the Tariff Commission to institute an investigation. If the Commission determines, on the basis of such an investigation, that increased imports are causing or threatening serious injury to a domestic industry it recommends to the President increased duties or other import restrictions. He has the authority to decide what action should be taken in the national interest. The restriction of imports that would result from the enactment of the proposed bill, in the absence of clear evidence that it is necessary in the interest of national security or to prevent serious injury to the domestic industry, would be directly contrary to the administration's policy of expending the international trade of the United States so as to increase our economic strength and that of our allies. The extent of the potential trade restriction is illustrated by the fact that if the legislation had been in effect during 1956-57 our average annual imports of fluorspar for commercial uses would have been approximately 308,000 tons as against the actual figure of 441,000 tons. This would have adversely affected exports from Mexico, Italy, West Germany, and other countries and substantially reduced their ability to buy from the United States. There are a number of other points about the proposed legislation which concern us. It appears that it would be necessary to allocate the domestic production quotas to the various producers so as to provide equitable treatment of the companies concerned. Thus the production of individual companies would be controlled by Government fiat rather than the free play of market influence. This artificial restriction of competition between domestic companies, as well as the curtailment of imports resulting from the legislation, would tend to increase prices. Consequently, the competitive position of American industries which use fluorspar products as important raw materials would be impaired. In The price increases would also have a general inflationary influence. summary, the basic features of the bill appear to be directly contrary to the principles of our free enterprise system, upon the strength and vitality of which we are relying to meet the Soviet economic challenge. It might be mentioned also that the provisions of the bill relating to the barter of surplus agricultural products under Public Law 480 in exchange for fluorspar from abroad would serve no useful purpose. Statutory authority already exists for the acquisition of fluorspar under the barter program, and significant quantities of fluorspar have actually been so acquired. Furthermore, although such acquisitions could be increased under existing legislation, it is the judgment of the Department of State that an enlargement of the barter program would have the effect of displacing ordinary commercial exports of farm products by the United States and by certain foreign countries whose economic strength is important to the United States. Finally, any acquisition of additional supplies of fluorspar by the Government under the barter program would tend to aggravate the future problem of disposing of the Government's surplus holdings without causing injury to domestic and foreign producers. The Department has been informed by the Bureau of the Budget that there is no objection to the submission of this report. Sincerely yours, WILLIAM B. MACOMBER, Jr., (For the Acting Secretary of State). Senator Moss. We have three departmental witnesses to be heard. We are going to hear first from Thomas C. Mann, Assistant Secretary of State, who is here to testify on this bill, S. 1285, which is now before this subcommittee. Mr. Mann, are you ready to proceed? Mr. MANN. Yes, sir, I am, sir. Senator Moss. I have two or three questions to ask before you begin your testimony if I could. |