ONE ANSWER TO QUERY]
GIVEN IN INSTITUTE BRIEF
ON CHEAP FOR'GN LABOR
Of vital concern to every citizen in Roanoke
Rapids is the following brief submitted to the
Committee on Reciprocity Information in Wash
ington October 18, 1937, by the Cotton Textile
Institute.
The brief relates to the consideration of tariff
reductions on towels, table damasks, sheets and
pillowcases in the prospective trade agreement
with Czechoslovakia.
Further tariff reduction will cause additional
handicap and injury to the textile industry in the
United States.
INTRODUCTORY
In the development of the trade
agreements program of the United
States, certain fundamental princi
ples governing the selection of
commodities upon which tariff con
cessions are requested or given
have become definitely established.
Reference to these principles is es
pecially pertinent to the considera
tion of tariff changes on goods of
cotton manufacture.
1.
The first of these principles is that
tariff concessions should be grant
ed only with respect to those goods
of which the other nation to the
agreement is the main supplier or,
in those cases where a wide distri
bution of origin obtains, the coun
try which is the most prominent
supplier.
This principle is a necessary ele
ment in any program of trade pro
motion which makes applicable a
generalization of tariff duties un
der the most favored national prin
ciple and it is presumed that the
integrity of this principle will be
carefully safeguarded if the bar
gaining power of the United States
is to continue unimpaired in future
negotiations with countries not yet
parties to any trade agreement with
the United States.
In the light of this principle the
trade agreement authorities are re
quested to take note of the fact
that with respect to cotton towels
on which tariff reductions are to
be considered, Czechslovakia is not
the most important supplier. In
1936 imports of cotton towels from
Japan exceeded similar imports
from Czechoslovakia by a ratio of
two to one in dollar values and by
a ratio of approximately eight to
one in terms of quantity: With re
spect to towels made of competitive
fibers—flax, hemp and ramie—
Czechoslovakia is likewise not the
main supplier. In this classifica
tion, imports from the United King
dom exceeded by two-fold those
from the former country. It is ob
vious, therefore, that concessions to
Czechoslovakia in the form of tar
iff reductions on these items would,
if generalized, be of far greater
benefit to Japan and the United
Kingdom than to the country which
is a party to the agreement. It is
respectfully suggested that these
considerations alone taken in con
junction with what has heretofore
been considered an unassailable
principle in the prosecution of our
foreign trade policy would auto
matically disbar the consideration
of towels as appropriate articles
for tariff reductions with respect
to the agreement in issue.
As regards cotton table damask,
which has also been announced as
subject to consideration for tariff
reduction, the same general truths
apply. In 1936, imports of this ar
ticle and manufactures therefrom
were in greater volume from Japan
than from Czechoslovakia in terms
of weight and yardage. Until 1935
Czechoslovakia was the leading
supplier but she is being rapidly
deprived of this position by Japan- j
ese competition. In 1935 Japanese
imports were virtually negligible.
I Within a single year, however, they
swept beyond the physical volume
of the imports from Czechoslovakia
and the circumstances of the first
half-year of 1937 indicate an early
and virtually complete supremacy
of the Japanese product, provided
of course the Japanese competitive
situation is not fundamentally al
tered by military activities in the
Far East.
With respect to table damask of
vegetable fiber other than cotton,
the chief supplier of our imports is
the United Kingdom whose sales to
us are twice those received from
Czechoslovakia.
2.
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established and equally deserving
of unqualified allegiance is the rec
ognition of the undesirability of
employing tariff reductions on
those articles the manufacture of
which is wholly adequate for the
home market and available to do
mestic consumers at competitive
prices which reflect fairly the es
sential cost conditions of manufac
ture.
The present capacity of the cot
ton textile industry to manufac
ture those articles under present
consideration to the full limit of
consumption requirements can not
be questioned. It is equally true
that the industrial units engaged in
this manufacture are highly com
petitive in their operations and
supply their output to the Ameri
can market at the lowest price per
mitted by the American cost sys
tem. The profit and loss reports
issued by the United State Bureau
of Internal Revenue and the Fed
eral Trade Commission seem to in
dicate that the industry has in fact
during the past decade sold its
goods to the American public at a
price approximating the cost of
production and, on many occasions,
considerably below the cost of pro
duction.
With respect to the cotton tex
tile industry, the major objective
of public interest at this time is
not to procure more equitable
prices on behalf of the consumer
but to aid in the strengthening of
a domestic price structure which
will preserve the industry’s solven
cy. In this connection, it is perti
nent to point out that within recent
years cotton mill machinery and
methods have become universally
standardized to a very high degree.
The nature of manufacturing re
quirements is such that even the
comparatively backward industrial
states, such as Czechoslovakia,
Brazil, Argentina and others, can
produce cotton goods in most cate
gories with the same degree of
mechanical efficiency as can be
commanded by the most advanced
industrial countries, such as Great
Britain and the United States. It
can not, therefore, be taken for
granted that substantial variations
in man hour productivity exist in
the cotton textile industry as be
tween one country and another.
This being the case, wage varia
tions serve as the best possible in
dex of cost differentials. By this
test and by all additional support
ing evidence which is available, the
United States is the world’s highest
cost country in the production of
textiles.
From this cost disadvantage we
have already suffered a loss of the
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greater part of our cotton goods
export trade and that portion which
is left rests largely upon an arti
ficial foundation of special conces
sions enjoyed in Cuba and the Phil
ippines. The industry now depends
almost solely for its support upon
the home market. The continued
possession of this home market is
essential to the maintenance of the
industry’s self-imposed program of
short hours and high wages as in
augurated during the period of the
National Industrial Recovery Act.
The present standard work wepk of
40 hours and the present average
wage (as reported by the Bureau
of Labor Statistics) of 42%c per
hour, far excell the wage and hour
standards of all other nations. It
is not in the public interest that
these standards should be under
mined by the further release of low
cost foreign competition.
It is, of course, true that the ar-.
tides under consideration are spe
cialized in character and therefore
might be regarded by some people
as being entirely independent of
and separate from the bulk of the
industry’s activites. However, the
industry, though subject to consid
erable specialization throughout its
structure, is not composed of sep
arate and insulated departments in
the market sense. Towels, table
damask, sheets and pillowcases re
quire for their manufacture the
same sources of yarn which are
drawn upon in the manufacture of
other cotton goods. A decline in
the manufacture of any cotton fab
ric, however specialized, if not off
set by the development of new
fabrics necessarily means a dimi
nution in the total yarn consump
tion. There is the further consid
eration that the bulk of looms in
the industry is sufficiently flexible
as to serve alternative uses. Any
decline in the number of looms de
voted to the manufacture of the
articles in question would inevitab
ly mean the utilization of such
looms in the manufacture of other
articles which are already being
produced in adequate volume for
the country’s needs. Briefly, the
composition of the industry is such
that any depressing influence
quickly traverses the entire struc
ture, irrespective of the particular
points of pressure.
As evidence of Government sym
pathy for the ills of the textile in
dustry which have been so manifest
in recent years, a number of spe
cialized official studies nave been
made, a notable example being the
report to the President of the Cab
inet Committee on the textile in
dustry. Certain departments of
Government, particularly the State
Department, Department of Com
merce and the Tariff Commission,
have developed a full and detailed
understanding of the industry's in
ternational competitive situation
through various emergency efforts
recently resorted to to protect the
industry from Far Eastern compe
tition. Illustrative of thesS efforts
is the present quota agreement on
cotton rugs negotiated between the
American and Japanese Govern
ments. Official recognition of the
industry’s need for protection was
illustrated further by the gentle
man's agreement between the U
nited States and the Japanese Gov
ernment relative to the Philippine
trade and by the attempt to apply
the same method of control to the
imports of cotton goods into con
tinental United States from Japan.
Subsequent to these Governmental
activities in our behalf, the industry
was able privately to effectuate
certain agreements with the Jap
anese industry having to do with
imports of hosiery, velveteens and
cotton piece goods and establishing
machinery which makes possible
further similar arrangements as
the need may arise. These private
arrangements were effected with
the full knowledge of the appropri
ate Government agencies whose ad
vice and unofficial encouragement
were gratefully received and utiliz
ed by the industry. It is not felt,
therefore, that this brief is being
addressed to those whose know
ledge and understanding of the in
dustry’s problems are deficient or
limited. On the contrary, we re
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