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Day, Frank S., president, Condamatic Co., Warren, Mich., ac-
Eberle, William D., president and chief executive officer, Motor
elle, Patrick J., president, APMA (Canada), Toronto, Canada, letter to
ller, John V., manager, International Affairs Department, Motor
. International Trade Commission, additional information submitted___
OVERSIGHT HEARINGS ON THE IMPACT OF THE CANADIAN-AMERICAN AUTOMOTIVE AGREEMENT ON EMPLOYMENT IN THE UNITED STATES
WEDNESDAY, APRIL 14, 1976
HOUSE OF REPRESENTATIVES,
COMMITTEE ON EDUCATION AND LABOR,
The subcommittee met at 9:12 a.m., pursuant to notice, in room 2261, Rayburn House Office Building, Hon. John H. Dent (chairman of the subcommittee) presiding.
Members present: Representatives Dent, Cornell, Simon, Erlenborn, and Sarasin.
Also present: Representatives O'Hara and Ford.
Staff present: Julie Domenick, research assistant; Charles Sheerin, minority counsel; and Cindy Fox, secretary.
Mr. DENT. Good morning. The Subcommittee on Labor Standards will now come to order for the purpose of taking testimony and discussing the problems surrounding the Canadian-American Automotive Agreement.
These hearings are very important and come at a time of great interest.
Prepared statement of Hon. John H. Dent follows:]
PREPARED STATEMENT OF HON. JOHN H. DENT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF PENNSYLVANIA
In the year interim since the Subcommittee's series of oversight hearings on the impact of automotive imports on employment in the United States, a considerable mount of activity has surrounded this issue: the Department of the Treasury, at 12s Subcommittee's request, is conducting an antidumping investigation of unrecedented scope, and will issue a final finding by May 11 of this year; the Intersticnal Trade Commission has just completed its report to the Congress on the adian-American Automotive Agreement, wherein the arrangement between the Lited States, Canada, and its auto manufacturers is the subject of considerable riting; the UAW has filed for trade adjustment assistance for nearly 100,000 workers whose jobs have been lost as a consequence of imported cars; additionally, Le Department of the Treasury is pursuing, although somewhat less diligently, The possible restructuring of the duty valuation methods used for automotive perts; they are likewise in the process of reexamining various tariff schedule Cassifications accorded cabs, chassis, and trucks.
From an economic standpoint, at this time a year ago, very few people publicly ognized the potential impact of auto imports. The industry was confident that the import penetration of the market was merely an aberration and that the record igh share of the market held by imports would fall quickly for one reason or nother. Unfortunately, such was not the case as imports took record shares of the arket. At a time later than expected, but which I welcome in any event, the port share of the market finally declined, and now rests at 13.8%, as opposed to
22 percent of the market at this time last year. (This percentage exclude dian imports which reflect a different trend. Adjusted for inclusion of C imports, I expect that total import penetration in this country is close to cent.) I would suggest that at least two reasons for the decline in the impo of the market include the rise in the price of imports, in part attribu manufacturer response to the antidumping investigation, coupled w American industry's ability to produce a car at comparable price and ficiency, when trade in the marketplace is more fair.
It is the purpose of this series of hearings to focus on the Canadian-Ar Automobile Agreement and its impact on employment in the U.S. since its mentation in 1965. In doing so, it will be necessary to look at the effects aspects of the Agreement, and for that reason witnesses before this Subcon will necessarily discuss trade regulations, balance of payments, transfer industry rationalization, and similar topics. The subject is a complicated or of course, one of a sensitive nature.
The nature of U.S.-Canadian Automotive trade has changed considerabl last ten or fifteen years, largely as a consequence of the Canadian-American ment, but also because of the pre-Agreement duty remission plan institu Canada in 1962. For example in 1960, Canada represented 9 percent of t North American population (U.S. 91 percent), consumed 6.4 percent of passenger automobiles in North America, and produced 4.6 percent of thes mobiles. In 1974, Canada represented 9.6 percent of the North American tion, consumed 9.1 percent of the cars, but produced 13.8 percent of t Virtually all of the excess production, or that production not consumed in is destined for the U.S. market. In 1975, that amounted to the following per for each of the manufacturers:
Presently one in ten cars bought in the U.S. is made in Canada. In 197 represented 802,000 cars. The U.S. market in 1974 received 94 percent of Canada's automotive exports up from 6.3 percent in 1964. In that same ye in three cars imported into the country came from Canada. The U.S. has n an export market in cars to speak of since the 1950's but over 80 percent of w did export in 1974 (485,000 units) went to Canada (compared to 7.6 perc 1964). These U.S. exports represent 79 percent of all Canadian auto imports pared to 18.5 percent in 1964).
Just what effect these changes have had on employment in the U.S. is th of these hearings.
Mr. DENT. I hope we can get information required and neede this committee to make some decisions in the very near future.
I have the pleasure of welcoming this morning as a witness W Leonard, chairman of the International Trade Commission.
Mr. Leonard, will you please proceed to give us your comments and, if you wish, your recommendation?
STATEMENT OF WILL E. LEONARD, CHAIRMAN, U.S. INTERNATIONAL TRADE COMMISSION, ACCOMPANIED BY COMMODITY ANALYST JOHN MacHATTON, ATTORNEY WARREN DEAN, AND COMMODITY ANALYST GEORGE WHITNEY
Mr. LEONARD. Thank you, Mr. Chairman.
Members of the Subcommittee on Labor Standards, ladies and gentlemen, I wish to present my views regarding the United StatesCanadian Automotive Agreement. In appearing here today I will be presenting my own views as one member of a six-member Commission. My views may or may not be in accord with the views of the majority of the U.S. International Trade Commission or with the individual views of other members of the Commission. The Commission is not a policymaking body, but rather serves to provide information and advice on matters of international trade to both Congress and the executive branch; therefore I will attempt to provide information and some judgments as to economic impact of the automotive agreement to the extent that I am able. My statement concentrates on the background of the investigation of the United States-Canadian Automotive Agreement that the United States International Trade Commission recently concluded and upon certain aspects of the agreement and of the trade to which such agreement relates.
With your permission, Mr. Chairman and members of the committee, I have with me available for questioning three stalwarts of the Commission staff that worked in this particular investigation. To my left is Commodity Analyst John MacHatton
To my right is Attorney Warren Dean.
We also have with us seated behind me to my left, Commodity Analyst George Whitney.
Mr. DENT. They are certainly welcome. We are happy to have hem.
Mr. LEONARD. Thank you.
On July 9, 1975, the Committee on Finance of the U.S. Senate equested that the U.S. International Trade Commission undertake a horough study of the history, terms, and economic impact of the nited States-Canadian Automotive Agreement. The committee reested that special emphasis be placed on the so-called transitional rovisions imposed on the automotive industry by the Government of anada and the impact of the post-1973 decline in motor vehicle les in the United States and Canada on the motor vehicle industries the two countries.
As a result of the Finance Committee request the Commission concted an exhaustive survey of the United States and Canadian autootive industries and the impact of the United States-Canadian tomotive Agreement and its predecessor arrangements on those dustries. Among the Commission's investigative methods used in thering information were questionnaries, a public hearing held in etroit, Mich., on December 11, 1975, solicitation of written reonses from interested parties, and compilation of data presented in de and other publications.