APPENDIX (Under authority previously given the following statements and communications were ordered printed :) STATEMENT OF THE CANADIAN LEAD AND ZINC PRODUCERS BY THE MINING ASSOCIATION OF CANADA The Mining Association of Canada, on behalf of the lead and zine producing industry of Canada, appreciates the opportunity to state its views regarding the import restrictions proposed in Senate Bill 289 and respectfully submits the following statement. 1. The United States is far from self-sufficient in lead and zinc. Imports in 1966 accounted for 56% of zinc consumption and 33% of lead consumption. 2. Canada is the world's largest lead-zinc mine producer and in 1966 supplied 49% of U.S. total imports of zinc and 20% of U.S. total imports of lead. Growing U.S. requirements have been a significant factor in the development of large new Canadian lead and zinc mine production, both by Canadian and U.S. interests, and in the expansion of zinc smelter capacity by 88% including two new plants. 3. Before 1958, when import quotas were last imposed, U.S. consumption had been declining. Both metals had been in surplus for three years and prices had fallen significantly. Since that time, the industry has made substantial progress towards stability. Improved world statistics and related industry studies available under the United Nations Lead/Zinc Study Group have enabled producers to anticipate requirements. Over the past three years, mine production has been expanded to ensure adequate future supplies for the growing demand. 4. Conditions in the Free World lead and zinc industry have completely changed. Price stability has been achieved overseas for zinc, and a majority of zinc producers outside the United States have voluntarily reduced production to avoid excess stocks. The industry has strengthened its international organizations for research, development and promotion of lead and zinc. All these developments will continue to assist in balancing supply and demand and provide greater market stability. 5. Against this background of achievement, the adoption of Bill S. 289 would be a retrograde step, most especially in light of current efforts by the United States and other major trading nations, in the Kennedy Round, to reduce tariff and non-tariff barriers to trade. We wish to register firm opposition to any restrictions on imports of lead and zinc into the United States. U.S. consumers would be denied the security of regular and continuing supplies from logical, long-term foreign sources. Under quotas, alternative trade patterns would become established for foreign supplies which would not then be readily available to the U.S. consumer on removal of the quotas. 6. The immediate effect of quotas would be to divert substantial supplies to other markets, with consequent effects on prices and/or production. Exploration for and development of new mines outside the United States would be discouraged, setting the stage for further shortages, high prices and loss of markets through substitution. In addition, such restrictive trade action by the United States could promote a reaction by other world trading blocs. 7. Bill S. 289 is particularly pointed at Canada, traditionally the major supplier of imported lead and zinc to the United States, and is inconsistent with further development of mutually beneficial and co-operative trade relations between our two countries. Canada, as the major trading partner of the United States and as largest single market for U.S. goods, would bear the main brunt of any restrictions imposed. STATEMENT OF AUSTRALIAN EMBASSY, WASHINGTON, D.C. The United States Government will recall earlier representations made by the Australian Government over the extended period from 1958 to 1965 when an import quota system for lead and zinc was in operation. Although the Australian Government regretted the action taken by the United States at that time, it recognized that the quotas were imposed as a temporary measure to prevent injury to the United States lead and zinc industry. The United States was in fact able to justify the temporary restrictions in terms of Article XIX of the General Agreement on Tariffs and Trade which permits emergency action against imports in certain circumstances. However, in the judgment of the Australian Government, the provisions of the Bill S. 289 can hardly be justified on similar grounds in the light of our existing understanding of market circumstances. Moreover, looking at conditions likely to apply in the foreseeable future, and noting announcements of expansion programmes by United States lead and zine producers, it would not appear that imported supplies are threatening serious injury to domestic producers. The domestic industry already has the protection afforded by a quite significant tariff on imports of lead and zinc. The United States, as a contracting party to the General Agrement, subscribes to that Organization's objective of substantially reduced tariffs and other barriers to trade and to eliminate discriminatory treatment in international commerce. It would be most unfortunate if the principles of trade liberalisation and expansion embodied in the Trade Expansion Act of 1962 were to be compromised by the imposition of a further non-tariff barrier to trade with the United States. The Australian Government particularly regrets that strong pressure is being generated for the imposition of quotas at a time when the United States and Australia are making strenuous efforts to bring the Kennedy Round of trade negotiations to a meaningful conclusion. In the Australian view, the quota system proposed in the Bill S. 289 can only serve to distort world marketing conditions for lead and zinc. Since the United States is the world's largest market for overseas suppliers of lead and zinc the imposition of quotas at any stage would almost certainly lead to a diversion of supplies originally destined for the United States market on to the residual free market, with consequent disruption of the free market and fluctuations in price levels. The "stop-go" nature of the Bill, tied as it is to the level of domestic producers stocks over a short period, would appear likely to aggravate the instability of residual markets. Uncertainty with regard to availability of supplies would surely be contrary to the long term interest of all lead and zinc producers particularly as regards substitution by metals with a greater degree of market stability. Although the United States market would be insulated from the full effects of world market instability, experience during the term of the previous quota system clearly showed the United States prices for lead and zinc were influenced by variations in world price levels. Moreover, it will be recalled that during the operation of the earlier controls the United States Tariff Commission reported on a number of occasions that import quotas were in fact prejudicial to the long term interests of the domestic lead and zinc producers. In the view of Australian Government, certain provisions of S. 289 would be even more inimical to the interests of Australian producers than those of the previous quota system. (a) In contrast with the fixed quota levels of the previous system, the Bill envisages a system of retrogressive quotas on overseas suppliers by virtue of the fact that imports in each quarter are limited to 80 percent of the previous 10 quarters, in each successive quota period. (b) The Bill makes no allowance for the influence of stockpile sales by the United States Government. This means that import quotas would be based on an import performance that had been lessened by stockpile releases. Exporters would therefore not be allowed to satisfy the full commercial shortfall. (c) Australia, as a distant supplier to the United States, would be disadvantaged under the present proposals because of the substantial time involved in delivering a shipment from Australia. Australian suppliers could well be faced with a situation whereby an order contracted for a non-quota period was despatched only to find on arrival in the United States that quotas had been imposed, with no guarantee that the shipment would fall within quota entitlement. Australia is the world's largest producer of lead and one of the major producers of zine. Exports of lead and zinc which were valued at over $A.143 million in 1965/1966 accounted for a significant percentage of Australia's total export earnings. In that year exports of lead and zinc to the United States were valued at $A.24 million. The Australian Government is not only concerned at the effect that the proposed legislation would have on the welfare of the Australian lead and zinc industry but also at the wider effects on the level of export income and the balance of trade with the United States. Relying as it does on primary commodities for the buik of its export earnings Australia is finding it increasingly difficult to expand its exports at a rate commensurate with its rapidly increasing imports of manufactured products from the United States and other developed nations. A number of Australia's important primary commodities are already subject to the reality or the threat of quantitative limitation in the United States market, as is the case with meat and dairy producs. The Australian Government is therefore gravely concerned at the possibility of quantitative restrictions on a further major segment of Australian commodity exports to the United States. Ten year ago Australia exported $A.111 million to the United States and imported $A.198 million in return. In 1965/1966 the figures were $A.338 and $A.703 million respectively. By 1965/1966 the trade gap had widened to $A.365 million. Thus, this imbalance would be expected to worsen if the proposed legislation were implemented. The Australian Government is appreciative of the leading role which the United States Administration has taken in opposing moves to introduce similar legislation in the past year. It is the earnest hope of the Australian Government that forceful efforts will continue to be made in opposition to these attempts to isolate the United States lead and zinc market from the normal currents of world trade. THE ORE & CHEMICAL CORP., New York, N.Y., April 7, 1967. Re Lead and Zinc Act of 1967 (S.289). Washington, D.C. SIR: We would like to submit for your consideration our reasons for opposing the enactment by Congress of the Lead and Zinc Act of 1967 and respectfully request that our statement be made a part of the record of the public hearing scheduled by your subcommittee for April 12, 1967 in Washington. Our company, incorporated under the laws of the State of New York, has dealt in non-ferrous metals and minerals in the United States and abroad for more than forty years. We have regularly imported lead and zinc in the form of primary metals and serve a circle of distinguished customers in this country. We employ a staff of thirty persons and pay substantial amounts in taxes to the Federal Government, New York State and New York City. We oppose the Lead and Zinc Act of 1967 for four reasons: (1) As a matter of principle, import quotas for lead and zinc should not be the subject of a specific act of Congress. (2) The application of lead and zinc import quotas would be contrary to the present policy of the United States and its best interests. (3) Import quotas for lead and zinc are detrimental to the interests of consumers, importers and exporters in the United States. (4) Flexible quotas for lead and zinc as proposed in Bill S. 289 are difficult to administer and present certain pit-falls. We would like to make the following comments to these four points: (1) To our knowledge, it has not been the rule in the past that Congress regulates, by specific acts, the importation of raw materials. It is our firm belief that this matter should be left to the executive branch of the government and that enactment of the Lead and Zinc Act of 1967 would set an entirely undesirable precedent. While we concur with the postulation of the members of your subcommittee that the United States must have a "minerals policy", we feel certain that the application of import quotas would be a self-defeating and unconstructive means. The United States minerals policy should cover all minerals alike, it should consist of a combination of imaginative tax incentives, a far-reaching exploration program, intensive educational and other assistance to mining communities, direct subsidies to mines in special cases and other measures which are within the prerogative of Congress. (2) The Trade Expansion Act of 1962 was conceived and enacted in recognition of the fact that the United States as the leader of the free world best serves its own interests and those of other free nations by reducing barriers to free trade. It would be entirely inconsistent with the aims of this great act and the present negotiations in the "Kennedy Round" in Geneva if this country reintroduced import quotas for lead and zinc thereby hurting our good relationship with such friendly countries as Australia, Canada, Mexico, Peru and the countries of Western Europe. These countries, to protect their interests, would have to retaliate in one way or another and the free world would make a dangerous step backward into an atmosphere of protectionism and isolationism which the United States can ill afford. Instead of seeking unilateral solution, the United States could strengthen the efforts of the United Nations Zinc Lead Study Group to stabilize lead and zinc markets on a multilateral basis. (3) Import quotas of any kind (whether flexible or fixed) will cause the domestic lead and zinc prices to rise considerably above the world market levels. Consequently, the United States users of lead and zinc and the consuming public will be at a distinct disadvantage compared with consumers in other countries. United States exporters of products made from lead and zinc, or in the manufacture of which lead and zinc play a significant role, will not be competitive against foreign manufacturers which would be harmful to the policy of this country to increase exports of of semi-finished and finished goods and thereby improve its balance of payments. Comparatively high prices for lead and zinc are entirely detrimental to the finding of new applications for these metals and would cause the consumers to search for substitute materials. The users here were very badly hurt by the fixed import quotas for lead and zinc in recent years and therefore oppose strongly the reintroduction of any type of quotas, flexible or non-flexible. (4) Flexible quotas for lead and zinc as proposed in Bill S.289 would be difficult and expensive to administer. Importers and their customers would be unable to enter into firm long-term contracts before quotas are set and afterwards there would be further uncertainty since through repreated lifing and reimposition the quotas could become constantly smaller. The fixing of minimum percentages for imports of lead and zinc in the form of ores and concentrates provided for in Bill S. 289 is particularly detrimental to developing foreign countries which must export as much metal as possible in refined form rather than in crude form; it could even lead such foreign countries to ban the export of ores and concentrates to the United States unless it were prepared to take larger quantities of lead and zinc in refined form, causing much embarrassment to the United States and anxiety to the consumers. By varying their stocks at-will, the United States producers of lead and zine could influence the imposition, lifting, re-imposition and diminishing of the quotas. While we are convinced that the producers, whose integrity is well known to us, do not have any such intentions we feel, nevertheless, that a bill which would leave open the theoretical possibility for outside influence should not be enacted. We are certain that the important domestic producers of lead and zine do not need the protection of import quotas as they are sufficiently strong, and produce cheaply enough, to compete in the United States and in foreign markets against other producers of lead and zinc. In consideration of these reasons, we respectfully request that Bill S. 289 be not reported favorably out of your subcommittee and not be enacted by Congress. Very truly yours, E. MUGDAN, Vice President. WOLVERINE DIE CAST CORP. Hon. HENRY M. JACKSON, New Senate Building, Washington, D.C. DEAR CONGRESSMAN: As you know, manufacturers of zinc die cast parts have frequently experienced grave difficulty in obtaining a necessary zinc supply to conduct their manufacturing operations. My company, for one, has often been forced to search out inadequate quantities of zinc on the gray market at premium prices. I can assure you, sir, that the passage of Senate bill S. 289 will only serve to create such shortages as to seriously hamper the ability of all die casters to supply customers and to provide employment. This will ultimately adversely affect the entire auto industry. I am appealing to you on behalf of our 400 employees at Wolverine Die Cast Corp. and also on behalf of the many thousands of employees in every section of our country who depend on manufacturers of die castings for their livelihood. Please take a stand against Senate bill S. 289 which is designed to impose flexible quotas restricting U.S. imports of lead and zinc. Our industry must be responsive to market conditions demanding a continuing supply of zinc (our very life blood) which cannot possibly be available if this legislation is adopted. Very truly yours, FRANK H. BLADERGROEN, Jr. JACK M. EHRHORN, MINING ENGINEER, Hon. HENRY M. JACKSON, Chairman, Committee on Interior and Insular Affairs, Washington, D.C. DEAR SENATOR JACKSON: One by one the natural resource industries which are so basic to our economy are experiencing the effects of dumping. I am certain that you are well aware of our need for strength in these industries. Senate bill S. 289, flexible lead-zinc quota bill, is based on reserving to our lead and zinc mines a climate under which they may operate continuously, profitably, and with growth. I have seen at firsthand the deplorable results to our lead-zinc mines during the thirties, the fifties and, I predict, the sixties if there be no reservation for these mines. I commenced my career in mining engineering in 1927 and presently am industrial development director for United States Smelting Refining and Mining Co. Removal of quotas without substituting some control over dumping is bringing results exactly as anticipated by what has happened in the past. I urge your favorable consideration of this bill. Hon. HENRY M. JACKSON, JACK M. EHRHORN. STATE OF ARIZONA, DEPARTMENT OF MINERAL RESOURCES, Phoenix, Ariz., April 12, 1967. Chairman, Senate Interior and Insular Affairs Committee, DEAR SENATOR JACKSON: May we record with your committee our support of the Lead-Zinc import quota bill S. 289, even although this will reach you after the announced date of April 12th for your hearings on the bill? The domestic lead-zinc industry, including ours in Arizona, has been seriously injured in the past because timely protection against excessive imports was not available and we naturally are concerned with our one remaining lead-zinc mine above the class of very small producers. In 1964 it ranked 11th in lead and 12th in zinc production in the United States. It yields the bulk of our production. Its operation is a marginal one and therefore vulnerable. We believe the flexible import quota plan proposed in S. 289 is fair and simple to carry out, and urge its adoption as a safeguard against further injury to the industry. Yours very truly, FRANK P. KNIGHT, Director. IDAHO MINING ASSOCIATION, Bosie, Idaho, April 11, 1967. Senator HENRY M. JACKSON, DEAR SENATOR JACKSON: The Idaho Mining Association respectfully submits for incorporation in the record of the April 12 hearing before the Senate Com |