These conditions, of course, reflected the general world situation in spite of the effort to isolate the U.S. market.

Market conditions worldwide began to improve in 1963, and by mid-1964 surpluses had turned to shortages, burdensome stocks had disappeared, and consumption was the largest in nearly a decade.

By early 1964, producers' stocks of metals and of raw materials had been drawn down to virtually minimum working levels, and producers joined with consumers in supporting enactment of legislation to authorize releases from the national stockpile to meet the growing industrial demand.

In July 1964 the Congress authorized releases of 75,000 tons of zinc and 50,000 tons of lead. In April 1965, the Congress authorized releases of 150,000 tons of zinc and 150,000 tons of lead for commercial sale and 50,000 tons of each metal for Goverment use. In November 1965, the Congress authorized still another release of 200,000 tons of zinc.

As of the end of February, there were 89,000 tons of zinc and 38,000 tons of lead remaining unsold from the releases for commercial sale. Little of that available for Government use has been called for. Prices also firmed up during this period.

The price of lead, which had dropped from 13 cents in the latter part of 1959 to a low of 9.5 cents in 1962, rose during 1963 and 1964 to 16 cents at the end of 1964. Zinc, during the same period, rose from a low of 1112 cents in 1961 to 14.5 cents at the end of 1964.

These prices held during 1965 and the first part of 1966. In May of 1966, the lead price dropped to 15 cents and in October it dropped to 14 cents. The price of zinc has remained at 14.5 cents since November

1964.

The vastly improved supply-demand situation led the Tariff Commission in its report of June 1965 to advise the President that

termination of the quotas would not likely have a detrimental effect on domestic lead and zinc producers unless world demand for these metals should subside substantially in relation to world supplies.

The President, on October 22, 1965, proclaimed the termination of the quotas; shortly after he had approved, on October 5, 1965, the extension to December 31, 1969, of the Lead-Zinc Small Producers' Stabilization Act.

Thus, after 7 years of restricted trade in lead and zinc, exporters were free to ship to the United States whatever quantities of lead and zinc metal and ores that they wished.

As expected, imports immediately increased. Total lead imports of ore and metal in 1966 were 25 percent greater than in 1965. Zinc imports were 37 percent greater. Metal imports appear to have stabilized during the past 6 months.

Most of these increased imports, along with increased domestic production, have been absorbed without difficulty.

Nineteen hundred and sixty-six was a record year for consumption of lead and zinc in the United States. In spite of the increased imports, and increased domestic output, and in spite of substantial releases from the national stockpile, producers' stocks at yearend were still low-primary lead producers' stocks at the lowest level since the Korean emergency, while zinc producers who had record outputs in 1965 and 1966 had built up their stocks to mid-1964 levels.

Domestic mine production of lead has grown steadily during the past 3 years. It has climbed from the record low level of 1962 back to about where it was in 1957. Mine production of zinc surpassed 600,000 tons in 1965 for the first time since Korea. Work stoppages in 1966 caused the year's figure to fall slightly below 600,000 tons.

Production of slab zinc established new records in 1965 and again in 1966 and production of lead by primary producers in 1966, while not a record, was among the best years of the past decade.

During the past quarter, there has been some evidence of a decline in demand, especially of zinc. Shipments of zinc have been less than the comparable period a year ago and stocks have begun to grow. At least two domestic producers of zinc have announced reduction in output.

Demand for lead has continued strong, but prices have declined. The legislation before you is not intended to provide assistance during times such as this, while demand is good and stocks are manageable. It is intended, rather, to impose quotas on imports at such times as producers' stocks of metal reach a level considered excessive in relation to shipments.

The concerns of the industry may be more fully understood in the light of the expansion of mine and smelter capacity now taking place around the world.

Should all of the new capacity now being constructed or planned worldwide be brought into full production on schedule, supplies would probably exceed demand and stocks would accumulate, unless existing mines and smelters cut back to accommodate the new ones.

The international lead-zinc study group at each of its sessions attempts to catalog new developments in mines and smelters in the free world with some estimates of their capabilities.

A tabulation of the productive capacity of these new mines and smelters now under construction or announced through 1969 would indicate a potential increase in production of both lead and zinc considerably in excess of anticipated demand.

While most of the expansion of zinc capacity is taking place abroad, the big expansion in lead is taking place in the United States in southeast Missouri, by domestic producers. This suggests of course that a buildup of lead metal inventories could be caused by sharply increased domestic production without any increase in imports.

This leads us back, Mr. Chairman, to the major issue involved in the proposed legislation: Shall we single out one industry and provide different and preferential treatment involving a departure from our traditional trade policy?

Since the Trade Agreements Extension Act of 1951, all trade expansion legislation has provided an avenue of escape for industries suffering injury from increased imports due to a trade concession. Each of these has required a finding of injury or threat of injury before the President could impose import restrictions or take other remedial

measures.

S. 289, however, requires no finding or threat of injury. In fact, there need not even be an increase in imports. The only requirement in the bill is that the level of stocks owned by producers shall be, in the case of lead, two and a half times the monthly shipments, and in the case of zinc, one and three-fourths the monthly shipments. Rising stocks do not necessarily reflect increases in imports. Increased domes

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tic production alone could lead to excess supplies. Thus, the control of imports would be determined by the industry rather than by market conditions.

While we understand the concern of the producers and appreciate their position, we do not believe it is in the national interest to single out the producers of two commodities and depart so far from our trade policies.

We believe that only as there is a finding of injury or threat of injury flowing from increased imports due to a trade concession, should action be considered. We are aware of the producers' concern that the time elapsing between the filing of a petition with the Tariff Commission and action by the President allows the injury to widen and deepen and to make recovery more difficult.

The President had this in mind when, in terminating the quotas, he urged the members of the Tariff Commission to streamline its procedures and to redouble its efforts to expedite proceedings in any case where delay might bar effective action.

We are hopeful, of course, Mr. Chairman, there will be no occasion for the industry to seek relief from imports. The development and dissemination of good statistics on production, consumption, and trade in lead and zinc by the International Lead Zinc Study Group and the widespread participation of major producers of the world in its endeavors, we hope, have created an awareness on the part of all producers as to the nature and sensitiveness of free world lead and zine markets, especially the U.S. market.

Those who are planning new mines and smelters are surely aware of market demand and presently available supply and expect to adjust their output so that supply and demand remain in reasonable

balance.

There is evidence that producers of zinc within and outside the United States are already making such adjustments, as they are reducing output.

Furthermore, as the Tariff Commission pointed out in its June 1965 report, most domestic producers are in a stronger position to meet import competition than in the past. Their competitive position has improved substantially in the past 6 years. Production has been concentrated in larger, more highly mechanized and more efficient mines requiring less labor per unit of output. The efficiency of smelting and refining has also improved through modernization of facilities.

I do not mean in any sense to make light of the problems that will confront the lead and zinc industries in adjusting to the emerging supply and demand situation. They are serious, and we recognize them as such. Concern over the long-range supply and demand outlook for non fuel minerals prompted the President to request a study designed to describe existing nonfuel minerals policies and their objectives, and assess alternative ways of realizing the objectives. We would expect this study to provide guidance on nonfuel minerals policies when it is completed. We believe that existing provisions of law provide the necessary Government relief from the problems currently confronting the lead and zinc industries. The lead and zinc stabilization program protects small mines from the consequences of price declines. And, as I have already noted, the Trade Expansion Act provides an

escape clause for industries suffering injury from increased imports due to a trade concession.

Mr. Chairman, since you have asked that the Interior representative speak also for the other Departments, I should like to comment briefly on the foreign policy aspects of the problem.

Not only would S. 289 depart from our accepted trade policies, if enacted, but it would hurt our relations with important friendly countries and adversely affect U.S. exports, as a result of retaliation. Canada and Mexico are important suppliers of lead and zinc, both as ores and metal. They are of course good neighbors and good customers. The impact of the quotas proposed would fall heavily on them. Australia would be another country that would feel the im pact of the measure.

They would all resent this form of trade restrictions exercised unilaterally and without reference to the procedures for the determination of injury provided by the Congress.

Mr. Chairman, I have not attempted to go into the technical merits and difficulties of the proposed measure, nor to project what might occur were it enacted. I have rather tried to point out the major issue; namely, whether we should ignore existing trade policies, make an exception and provide different treatment for lead and zinc producers, or whether they be accorded the same treatment provided for all other domestic industries. We think S. 289 would represent a serious departure from our trade policy and would damage our foreign relations. Mr. Chairman, I have with me Mr. Joseph McCaskill, Acting Deputy Assistant Secretary, who has long had a great deal of experience in this field, and if the committee or any member of this committee, or the chairman, would care to ask us any questions, either Mr. McCaskill or myself would do our utmost to answer them.

If you require additional data which we do not have with us, we would be pleased to obtain that for you.

Senator ANDERSON. Let me ask one question. Has the State Department or the Interior Department ever tried to help the lead and zinc miners of the United States? Don't you always have to have some reason why it can't be done?

Mr. MOORE. I am not sure that I can answer that precisely, Mr. Chairman.

Senator ANDERSON. Can you answer as far as your knowledge is concerned?

Mr. MOORE. I feel that the Department of the Interior has on numerous occasions over many, many years exerted great efforts to help the lead and zinc industry.

Senator ANDERSON. I have been in meetings for 20 years, at least, and maybe more. I have never seen the State Department favor lead and zinc legislation of any kind.

Mr. MOORE. I am not prepared, of course, to speak specifically for the State Department. I can only say that in the aggregate the general concensus has been that the lead and zinc industry today is in a very healthy condition.

Now, that is not to say that conditions will not arise when we will return to the period that existed back 4 or 5 years ago, when we did have excess production in both lead and zinc. However, the mere fact that producing facilities have been provided not only in the United

States, but abroad, would indicate a record healthy condition at the present time.

Senator ANDERSON. When did the President make this request for a study?

Mr. MCCASKILL. In his message of January 30 to the Congress on natural resources.

Senator ANDERSON. This year?

Mr. MCCASKILL. Yes, sir.

Senator ANDERSON. How many times have we requested some help in previous years?

Mr. MCCASKILL. With regard to this particular one, there is an item in the pending budget of $500,000 for the purpose of this study which has been before the Appropriations Committee.

Might I also, Mr. Chairman, remind you that in 1957 the administration did seek in the Congress a sliding scale tariff on lead and zinc. The State Department and Interior Department both testified before the Ways and Means Committee in support of that. Subsequently the Interior Department and the State Department both testified on a subsidy program that would have involved lead and zinc, and neither of those bills passed the Congress. Subsequently, the Interior Department did support the small producers stabilization bill.

Senator ANDERSON. Yes.

Mr. MCCASKILL. Very recently we supported an amendment to extend this legislation.

Senator ANDERSON. Was this nationwide?

Mr. MCCASKILL. Nationwide, sir.

Senator ANDERSON. I thought that there might be a pocket of leadzinc producers among the areas for which this small producers bill was intended.

Mr. MCCASKILL. The small producers bill is nationwide. I think the major impact probably falls in the tristate area, but there are participants in the bill from other States.

Senator ANDERSON. Senator Jordan?

Senator JORDAN. Yes.

Referring to your statement on page 8, Mr. Secretary, "Total imports of ore and metal in 1966 were 26 percent greater than in 1965. Zinc imports were 37 percent greater," do you have the figures on that? Mr. MOORE. Mr. McCaskill will read those to you.

Mr. MCCASKILL. In 1965, the imports of ore were about 122,000 tons of lead and in 1966 had risen to 143,000 or 144,000.

Pig lead metal, in 1965, was 221,000, and in 1966 had risen to 285,000. In zinc, imports of ores in 1965 were 426,000 tons. That had risen in 1966 to 521,000. Slab zinc imports in 1965 were 153,000 tons. In 1966 that was 277,000 tons.

Senator JORDAN. Actually, then, foreign imports amount to slightly more in each instance than domestic production; is this true? Mr. MCCASKILL. Yes, sir.

Senator JORDAN. At what point do you regard those imports to have reached a dangerous level? Already you have indicated on the next page of your statement that prices for lead have declined, and you have indicated that at least two domestic producers of zinc have an