items, such as litharge, to import quotas, when there is no apparent need to do so, is not only administratively burdensome but inconsistent with our trade policy. In summary, therefore, the Department opposes the enactment of this legislation because it is untimely, harmful to our foreign policy objectives, inconsistent with our foreign trade policy and would, in our opinion, disrupt the domestic as well as foreign markets for lead and zinc. In our judgment, it is probably contrary to the long-range interests of our own domestic lead and zinc industry and certainly contrary to the interests of United States consumers of lead and zinc. 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, WILLIAM B. MACOMBER, Jr., Assistant Secretary for Congressional Relations. GENERAL COUNSEL OF THE Department OF COMMERCE, Hon. HENRY M. JACKSON, Washington, D.C., April 5, 1967. Chairman, Committee on Interior and Insular Affairs, U.S. Senate, Washington, D.C. DEAR MR. CHAIRMAN: This is in further reply to your request for the views of this Department with respect to S. 289, a bill to protect the domestic economy, to promote the general welfare, and to assist in the national defense by providing for an adequate supply of lead and zinc for consumption in the United States from domestic and foreign sources, and for other purposes. S. 289 would provide for quarterly import quotas on unmanufactured lead and zinc equal to 80 percent of the quantities imported in a ten-quarter base period preceding the imposition of the quotas. The quotas on unmanufactured lead would be imposed when the metal stocks of domestic producers exceed 250 percent of their metal shipments for three consecutive months, and in the case of unmanufactured zinc when the metal stocks of domestic producers exceed 175 percent of their metal shipments. At the time import restrictions are imposed on unmanufactured lead and zinc the bill directs the Secretary of the Interior to impose import quotas on manufactured lead and zinc items if an item is imported in excess of 100 percent of the rate in the quota base period. The bill provides for allotments of the quota by country of origin and between kinds of materials, such as ores and refined metals, and places a limit of five years within which import restrictions may be imposed. This Department, after giving careful consideration to the provisions of this bill, recommends that it not be enacted for several reasons, as follows: 1. It is not at all clear that economic conditions justify the controls on imports proposed in the bill. The high level of economic activity both here and abroad in recent years resulted in increased consumption of lead and zinc and benefitted domestic producers of these two metals. 2. It has been only a year and a half since the President terminated existing import quotas on lead and zinc. Although imports have increased during this period, it is too early to determine whether the conditions which led to the initial imposition of import quotas are in the offing in the immediate future. 3. In any event, procedures exist in the Trade Expansion Act of 1962 to deal with injury or threatened injury to domestic industries resulting from increased imports. In this regard we note that in 1965, the President stated "Domestic lead and zinc producers who do not object to greater imports at this time have expressed concern that future relief, if necessary, should not be inordinately delayed. Accordingly, I have urged the members of the Tariff Commission to streamline its procedures and to redouble its efforts to expedite proceedings in any case where it is indicated that delay might bar effective relief." 4. We believe that the existing procedures, which take into consideration all factors which might affect the public interest, are adequate to safeguard the lead and zinc industry if confronted with injury or threatened injury as a result of trade agreement concessions. In contrast, under the proposed bill the only factor controlling imposition of import quotas for lead and zinc is the magnitude of the stocks of domestic producers. 5. One of the objectives of the proposed measure is "to assist in the national defense." We believe the bill unnecessary for this purpose because after a thorough review the stockpile objectives for lead and zinc were eliminated in June 1963. The Government has determined that adequate supplies for defense requirements are available from domestic production and imports from contiguous or other accessible areas. If future conditions result in the establishment of a stockpile objective, its existence, of course, would make up the difference be tween anticipated supply and anticipated requirements. We have been advised by the Bureau of the Budget that there would be no objection to the submission of our report to the Congress from the standpoint of the Administration's program. Sincerely, ROBERT E. GILES, General Counsel. HENRY M. JACKSON, THE GENERAL COUNSEL OF THE TREASURY, Chairman, Committee on Interior and Insular Affairs, DEAR MR. CHAIRMAN: Reference is made to your request for the views of this Department on S. 289, "To protect the domestic economy, to promote the general welfare, and to assist in the national defense by providing for an adequate supply of lead and zinc for consumption in the United States from domestic and foreign sources, and for other purposes." The proposed legislation would establish quarterly, absolute import quotas on lead metal, lead ores, zinc metal and zinc ores and would authorize the Secretary of the Interior to establish quarterly import quotas for any manufactured lead article or manufactured zinc article. The quotas on lead and zinc would be related to the size of stock held by domestic primary producers and the quotas on manufactures of lead and zinc would be related to a fixed quota base period for imports of articles manufactured from these metals. Administration of the quotas would be vested in the Secretary of the Treasury. Domestic producers of lead and zinc may avail themselves of the remedies provided in the Trade Expansion Act relating to injury or the threat of injury from imports on which tariff concessions have been made. Restrictive legislation of the type envisaged in S. 289 would most likely lead to retaliation by other countries to the detriment of our exports and balance-of-payments position. Moreover, a move in the direction of new trade restrictions at this time would deal a heavy psychological blow at the Kennedy Round, now in its final stage of negotiation. Furthermore, the Department anticipates great difficulty in administering the quotas established under the bill. For these reasons, the Treasury Department is opposed to the enactment of S. 289. The Department has been advised by the Bureau of the Budget that there is no objection from the standpoint of the Administration's program to the submission of this report to your Committee. Sincerely yours, FRED B. SMITH, Senator ANDERSON. A most impressive list of witnesses is scheduled to appear before the subcommittee today. In view of the number of witnesses, I will direct that portions of my statement be incorporated into the record as if read. I venture to hope that my colleagues in the Senate will follow my example in this respect, summarizing the main points of their presentations and inserting the remainder. Also, I urgently request the witnesses from the lead-zinc industry, and spokes men for interested groups and organizations will do likewise. I assure each and every one that his statement, in toto, will be given full and careful consideration. The Senate Committee on Interior and Insular Affairs has for years tried to obtain from the executive department some overall policy recommendations that will not only maintain current mining and smelting operations, but revive mineral production and encourage the industry to invest in essential exploration and development of new mineral reserves. There are several items such as tungsten, manganese, mercury, and I must include gold, that are present in our country in substantial quantities but only in times of trouble are we able to bring some of these into production. A survey of the mineral industry, made several years ago, indicated that one miner supports 10 to 12 people through the service jobs created to support his production and the families of the workers involved. Taking this a step further, "It has been said that metal mine products multiply in value 15 to 20 times before they reach the ultimate consumer.' Now it seems to me, it is just plain good business for the United States generally and the communities and States in particular when we can generate jobs through reactivating of continuation of a sound domestic industry such as mining. I will agree that representatives from the departments downtown do come up and point out some items that assist the industry, but these are generally fringe issues that do not solve the important and long-term problem of equating foreign costs of production with those of our domestic mines. They do not present plans that will help equalize supply and demand in good times and bad as a means of having adequate metal stocks when they are really needed, and, at the same time, stabilize the industry when consumption drops and things are not quite so prosperous. In the past we have noted that the position of the executive department is to throw this particular problem to continued studies by the Tariff Commission. That group does a good job under the provisions provided by our laws, but under present definitions, it is a dead-end street. The mining industry finds it must come to Congress for help, and we are very interested in being of assistance. Today we are talking about the lead-zinc mining and smelting industry. Members of this committee have sponsored a series of legislative proposals that were all logical and reasonable at the time they were introduced. We held a hearing in 1963 on such a proposal and approved it in spite of the negative reaction downtown. This would have provided the long-range mineral policy needed to stabilize our domestic lead-zinc production, and I think would have helped ease the tight supply situation we have been through in 1965 and early 1966. Fortunately, the business has changed for the better since that hearing, and the legislation has been changed or liberalized accordingly. There are two important points I would like to emphasize as we proceed here today: 1. I repeat that the lead-zinc business is better, but we know from recent experience that these good and bad times run in cycles. There are firm reports on expansion of this industry around the world, which indicate to me the good possibility of near future adverse cycles, and this time we want to be ready. My friends in the industry tell me we do need some imports, but we do not need, cannot use, and do not want all the surplus. 2. S. 289 has a time limit under which quota action can be taken and a further limitation on the length of the quotas if they are ever found to be needed. This is a gentle warning to all concerned, do not take advantage of us and everybody having a share in our domestic markets will be better off. It also tells the executive department that we still need the overall plan, but this industry will have a few years to gain a deserved return on current investments, while we wait for this long-range minerals policy. Finally, it gives the Congress a chance to reevaluate the facts and figures a few years in the future and decide whether additional legislation is required. S. 289, as has been indicated, is the latest of a long series of legislative proposals to bring some degree of stability and order to the leadzinc industry. However, it is not necessarily the last such proposal, in its present form. The sponsors of this bill have no uncompromising pride of authorship. We expect there will be recommendations for amendment, and we will give all such suggestions full and careful consideration. If there is a better way to do the job that must be done, we'd like to hear about it. What we want is accomplishment, not credit. Now I will ask if any member of the committee wishes to make a brief statement. STATEMENT OF HON. FRANK E. MOSS, A U.S. SENATOR FROM THE STATE OF UTAH Senator Moss. Thank you, Mr. Chairman. I have a statement that I would like to make supporting S. 289, which was your bill to establish the import quotas. This bill is somewhat similar to bills that you have introduced before and which I have been most happy to cosponsor and which this committee has favorably reported heretofore. Our problem seems to arise elsewhere in the bills. They get through this committee in good style, but we can't seem to have it move through other committees that have a measure of jurisdiction and we have not been able to get enacted into law the principal of this bill. However, I believe that we are taking the proper step in again considering this matter, and I hope that we can again get a favorable report and move the bill forward, hoping that somewhere along the line we can get more cooperation than we have had in years past. I speak as a Senator from a State with a record of production of a broad range of minerals. My remarks today are concerned with the lead-zinc industry and in support of S. 289, introduced by Senator Clinton P. Anderson and cosponsored by many of us from mining States. Last year Utah ranked third in lead mine production and fifth in zinc mine production. For years the names of several of our mines have consistently been listed with those of the 25 leading lead-zinc producers throughout the United States. This production is vital to the economy of our State and for years has been the support of communities such as Lark, in the Bingham district; Park City, a district of its own; Eureka, another famous Utah mining area; and numerous other towns with smaller mining operations. Lead-zinc properties and profits are a substantial part of the tax base of our State and its counties. We have felt the pinch of the lean years and are happy to report that the improvements in prices during the past 3 years has resulted in new mining investments, development of new ore bodies, increased production, and a greater dollar return to our State and all associated with the industry. In 1958 the market value of recoverable lead and zinc mined in Utah totaled $18.6 million. Last year, we produced $28.4 million. The figures speak for themselves. Our mines produce a complex type of ore. In addition to the lead and zinc, there is a substantial associated production of gold, silver, and copper. This production and these values add up to a continuing need for a minerals policy which will stabilize the economics of the lead-zinc industry and encourage the continuing investment in exploration and development of new ore bodies. I guess the feeling that those who are involved in establishing U.S. trade policy, particularly as it affects our mining industry, get lost in an overall game of U.S. tons versus foreign tons, need to be brought back to an assessment of what these industries do for our own people and our own community. I feel it is necessary to emphasize this point, because I come from an area where people have invested their lives and substance in ventures that depend on a domestic mining industry retaining a fair share of our own market. Utah can report three recent important additions to expand lead and zinc production. Early this year, the Kennecott Copper Corp. announced plans for construction of a 500-ton-per-day concentrator at its newly developed mining operation near Eureka, Utah, in the Tintic mining district. This property is contributing substantially now production of leadzinc and silver to the economy of our State and has revitalized a district that has been virtually closed for 10 years. Hecla Mining Co. has invested several million dollars in exploration and erection of a concentrator at the Mayflower mine in the Park City district. United Park City Mines Co. has developed new ore reserves in the Park City district and 'invested in a new, modern, up-to-date shaft installation for more efficient mine operation. These and other operations in Utah are deserving of some assurance that their efforts and investments will earn a fair return. It is right that they should and, I repeat, it is good business for Utah and the United States. I get the feeling that those who are involved in establishing U.S. tons versus foreign tons and need to be brought back to an assessment of what these industries do for our own people and our own communities. I feel it is necessary to emphasize this point, as I come from an area where people have invested their lives and their substance in ventures that depend on a domestic industry retaining a fair share of our own markets. |