Senator SALTONSTALL. Why do you want $1,300,000 put back?

PREPARED STATEMENT

Mr. S. ANDERSON. Mr. Chairman, I have filed a fairly lengthy statement which, with your permission, I will not attempt to read at this session, but I would like the privilege of spending_a few minutes going over some charts to explain the work of the Bureau of Foreign Commerce in this field outside of export control.

May I proceed with that?

Senator SALTONSTALL. Your statement will be made part of the record, and you may proceed.

(The statement referred to follows:)

STATEMENT OF ASSISTANT SECRETARY ANDERSON BEFORE SENATE COMMITTEE ON APPROPRIATIONS

The first thing I learned when I took office as Assistant Secretary of Commerce for International Affairs was that the segment of the Department for which I was made responsible was not doing and was, in fact, not able to do the job for which it was established. I was visited, and Secretary Weeks was called upon, by quite a number of businessmen who sought to impress upon us the necessity of restoring and strengthening the services of the Department to business, especially the services relating to foreign commerce.

It is obvious that businessmen dealing in international trade have to have reliable factual information upon which to proceed. This is true whether they are interested in exporting or importing, whether they are only buying and selling, or whether they are operating or investing abroad. They need to know as much as possible about the factors affecting business in the country or countries in which they are doing or hope to do business.

In foreign commerce the facts that are needed are hard to come by. To a very large extent they are not available from private sources or through private channels. They must be assembled and made available by the Government. It is for this kind of service particularly that businessmen look to the Department of Commerce. But at the present time the Bureau of Foreign Commerce, which is the unit within the Department established to deal with foreign trade matters, is not in a position to do the job at all adequately. I have examined very carefully every phase of the work of the Bureau of Foreign Commerce to see whether the faults and weaknesses about which businessmen complain could not be corrected by realinement of programs and by shifts of personnel. It did not take me long to discover that this was not the solution. The fact is that we do not have personnel enough to assemble essential foreign information and prepare it for distribution. We do not have even the resources necessary for an adequate program of publications. The difficulty that has to be corrected is not a waste of resources but a lack of resources.

It is hardly necessary for me to emphasize how important foreign trade is as a factor affecting the position of the United States both economically and politically. In 1952 our exports of goods and services came to nearly $20.6 billion while our imports of goods and services came to nearly $15.8 billion. A third of our exports is accounted for by products which rely upon foreign markets for more than 25 percent of their sales. For machine tools, tractors, construction and mining equipment, oil field machinery, and textile machinery, exports constitute 20 percent of the market. Everyone is familar with the fact that export markets are of critical importance for some of our major agricultural products such as cotton, wheat, and tobacco. Normally, between one-quarter and one-third of these crops are sold overseas. The importance of this country as an importer scarcely needs the emphasis of figures. We are the great consuming nation of the world and the great importer of raw materials.

There is, however, something more fundamental about the international commerce of the United States than quantities and markets. People in many parts of the world today look to the United States to help them gain the economic improvement upon which in so many places continued independence and freedom depend. It is clear that as a matter of national policy we cannot continue indefinitely giving economic aid to other countries on a government-to-government

basis. The only other way is through international commerce carried on by private interests.

In preparing our budget request, accordingly, we have had two main purposes in view. The first of these purposes is to strengthen the basic geographic and commercial intelligence work of the Bureau. The proposed budget provides for expansion of staff in the Office of Economic Affairs in which foreign economic and commercial information is assembled on a country-by-country basis and in the Office of Intelligence and Services which assembles information about foreign firms and foreign marketing channels and sources of supply.

In

The second main purpose is to put some real effort into a few carefully selected programs, especially promotional programs directly based upon the present international economic position of the United States. There are several of these, such as the programs for international trade fairs, foreign trade zones, and promotion of international travel which need only a very small staff to accomplish the intended purpose of giving needed support to the efforts of private groups and organizations. By far the most significant of these programs, however, is one in which the main burden of promotional effort must necessarily be carried by the Government. This is the promotion of private foreign investment, a project which clearly in these days should be given the greatest possible strength. The Bureau of Foreign Commerce already has made a significant start. accordance with section 516 of the Mutual Security Act of 1952 the Bureau undertook a study of the factors limiting American private investment abroad and has published a summary of the results and a country-by-country survey of investment conditions. These reports have attracted wide attention in business and financial circles. They are notable for their businesslike approach and their candor and they are very realistic in their appraisal of the problem as a whole. The Bureau also has made detailed surveys of investment conditions in a number of countries and has published so-called investment manuals for Colombia, for Venezuela, and for India. These manuals attempt to present in compact form the information concerning those countries and their resources and institutions which is of interest to all classes of investors, no matter what might be the particular branch of business or industry in which they are interested. These manuals have found a more than eager market and they have met with nothing but praise.

The budget request for 1955 reflects accurately my own convictions as to exactly the things that should be done toward the promotion of private foreign investment and as to the value of those activities. It is already clear from experience to date that the assembly and dissemination of information as to investment conditions abroad is an indispensable part of an effective program. Certainly for those foreign countries in which there is real indication of a fairly wide interest on the part of American investors, manuals similar to the ones already published should be compiled. We tentatively plan to do eight countries in addition to those already covered by the end of the fiscal year 1955, including among others Pakistan, the Union of South Africa, the Philippine Republic, and Turkey. The Bureau of Foreign Commerce is regularly being called upon, of course, for information considerably more detailed and specific than it is possible to set forth within the space limitations of an investment manual. It is being called upon also for information concerning virtually every country in the free world. important that the Bureau be in a position to accommodate these requests. It must, therefore, have the staff to assemble the pertinent data in a properly organized fashion and the facilities to make the information available to those who need it.

It is

This informational work has an importance which does not depend merely upon its specific value to American investors. It frequently serves to bring to the attention of influential people in foreign governments, as well as the foreign business and financial community, some of the things which a country must do if it is to offer an attractive field of investment for foreign capital. There is general agreement that the main impediment in the way of a larger inflow of foreign capital, especially in the less developed countries, is the failure on the part of the governments of those countries to recognize the importance of establishing conditions attractive to foreign capital, particularly sophisticated capital. If we in the United States propose to promote the export of private capital from this country on a sound basis, it is important that we should thus help foreign countries in which there is a ground for it.

The few carefully selected programs upon which we have sought to place emphasis in preparing the program of the Bureau of Foreign Commerce for the fiscal year 1955 are the ones which, in our judgment, are best calculated to advance

the foreign economic objectives of the United States in the present position of our international trade and payments. The position, as you know, is one in which our exports of goods and services greatly exceed our imports of goods and services. It is important that our exports be maintained at as high a level as possible, not only because of the favorable effects upon domestic economic activity, but also because of the importance of supplies from the United States to people abroad and the constructive effects upon general economic development which our exports tend to bring. It is hardly likely that in any short period of time we can look for large increases in our imports. It is essential, however, that the availability of dollars to foreign countries for purchases in the United States should be maintained and, if possible, increased. The avenues which appear to provide the most promising approach to this objective are those about which I have been speaking. It is to these avenues that we must look at the present time in our effort to accomplish our aims through the work of private enterprise The budget request for export control represents our best estimate of what it will cost to operate an effective export control program in the fiscal year 1955. The budget is based on the assumption that we will be receiving an average intake of applications for export license of about 1,500 a day. This compares with an average application intake of about 2,200 a day during the fiscal year 1953 and about 1,600 applications a day in November, the latest month for which figures are available.

I can assure the committee that the export licensing operations are being carried out competently and efficiently. Over 78 percent of the license applications are disposed of within a week after their receipt and less than 3 percent remain outstanding for more than 2 weeks, and then only for good reasons. There is very little complaint from the export community about the way the export controls are handled. On the contrary, the exporters have commended many times the efficiency and the impartiality of the operation. It has not been easy, especially during this past year, to maintain such a sound record. During the course of the year there has been a drastic reduction in export control personnel. Employment was reduced from 1,070 on January 1, 1953, to 703 on October 31, 1953. These figures include customs, Advisory Committee on Export Policy and Field Service. This reduction, however, which was brought about by a curtailment in the scope of our export controls was managed skillfully and did not impair the efficiency of the remaining licensing operations.

Under the terms of the Export Control Act the control authority is rather broadly drawn so as to leave a wide area of judgment and discretion to the administering agency. Controls are authorized to be used for three principal purposes, namely, to protect the domestic economy against an undue drain of materials in short supply, to aid in carrying out the foreign policy of the United States, and to screen exports from the standpoint of the national security. At the present time controls are directed preponderantly to the third of these purposes, that is, we are controlling verv few commodities except those of a strategic character. All exports to the European Soviet bloc, of course, are subject to licenses whether or not they involve strategic commodities and all exports to Communist China and North Korea are at the present time embargoed. The few commodities that remain subject to control for reasons of supply constitute only a residual of special cases. During the past year by far the major part of the commodities that were subject to control for supply reasons has been put under general license and may be exported freely to friendly countries and safe destinations. The removal of short supply controls was the major factor in bringing about the reduction in the intake of applications and the factor responsible for the reduction of personnel to which I have referred.

We expect that the export-control program for 1955 will be essentially similar to the one now in effect. It may well be, of course, that other ways will be found to simplify and streamline procedures. Only recently some new techniques of licensing have been developed which reduce the paper workload of exporters and which reduce in some degree the workload of the Bureau of Foreign Commerce as well. We are attempting to make use of any such techniques to as great an extent as possible consistent with the basic responsibility of keeping strategic commodities out of unfriendly hands. It may well be also that we will be able to remove from control some additional commodities for shipment to areas where there is very limited risk of transshipment. However, in the absence of a real change in the general condition of international affairs, there appears to be no prospect of our being able to dispense with the general range of controls now in effect for security reasons.