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ment as a much needed precedent and a significant step toward greater liberalization of international trade in the hide sector.
Mr. MOORE. I have an idea perhaps your professional opinion might be worth as much as any calculations we can make, which is speculative. Is it your opinion that when we turn back to the way things were, by protectionism in export of hides, that we risk loss of jobs in our domestic footwear industry?
Ms. HUGHES. I think that is possible. The situation that occurs is that countries that have hides can simply make shoes cheaper if they protect their own hide market. That includes all of the Latin American countries. It also means where you have a price differential existing already, such as you have in Korea and Taiwan, if you have a cost differential on the hide you are going to have a significant advantage remaining for the low-cost imports.
Mr. MOORE. Then would it be fair to conclude that the risk of creating 4,160 new jobs through this protectionist measure might well jeopardize jobs now in the footwear industry, in the tanning industry and in the industry producing agricultural products that they will be retaliating against? Is it fair to assume that?
Ms. HUGHES. Yes.
Mr. BENNETT. Mr. Gibbons, could I confirm for the record Mr. Shannon's question on the 40 percent Argentina tariff. We can confirm for the record that is the case.
Mr. GIBBONS. The committee will recess just long enough to take a vote, a recorded vote. Then we will reconvene, at which time we will hear from a panel consisting of Mr. Finley, Mr. Nehmer, Mr. Cooper and Mr. Swann, and any substitutes thereon.
[Brief recess.] Mr. GIBBONS. The committee will come to order. Our next panel will be composed of Murray H. Finley, president of the Amalgamated Clothing and Textile Workers Union; Mr. Stanley Nehmer, president, Economic Consulting Services, Inc.; Morton Cooper, president, Cooper Sportswear Manufacturing Co., Inc.; and James R. Swann, president of Star Sportswear, and Mark Love, vice president of Economic Consulting Services, Inc. STATEMENT OF MURRAY H. FINLEY, PRESIDENT, AMALGAMATED
CLOTHING AND TEXTILE WORKERS UNION; ALSO ON BEHALF OF THE INTERNATIONAL LADIES' GARMENT WORKERS' UNION, AND THE UNITED FOOD AND COMMERCIAL WORKERS UNION Mr. FINLEY. Mr Chairman, my name is Murray Finley, president of the Amalgamated Clothing and Textile Workers Union. We represent almost 500,000 workers who are engaged in the apparel, textile and related industries.
I am also privileged today to represent the International Ladies' Garment Workers' Union and United Food and Commercial Workers Union, both of whom were copetitioners with us on the hearing held before the U.S. International Trade Commission.
With us today on our panel, if I might briefly introduce them, Mr. Chairman, on my extreme left is Mr. James Swann, the president of the Starr Sportswear Co.; on my immediate left is Morton Cooper, the president of Cooper Sportswear Manufacturing Co.
On my far right is Mr. Mark Love, counsel for the Outerwear Association. On my immediate right is Stanley Nehmer, president of the Economic Consulting Services, Inc.
Mr. Chairman, we have prepared statements. We are not going to read them. With your permission we would like to have them made part of the record.
Mr. GIBBONS. Mr. Finley, your statement, as all other statements of the panel, will be included in the record in full.
Mr. FINLEY. Thank you very much.
Also, Mr. Chairman, I have a copy of a letter that was addressed to Congressman Vanik as chairman of the subcommittee, from Mr. Ray Dennison, director of the department of legislation, AFL-CIO, of which I think copies went to all the subcommittee members according to the copy I have, sir.
Mr. GIBBONS. Yes, they did. We will put the letter in the record. [See letter in appendix.]
Mr. FINLEY. Before I get to my presentation I would like to make two comments, because I had the pleasure of listening to the testimony by members of our Government for whom we have the greatest respect.
Ambassador Hormats, who has left, gave in my judgment a balanced presentation but I will say, and I am sure the Ambassador will agree with me, that I was more persuaded a few months ago when the Ambassador agreed with us that import relief was justified than by the presentation today. I think I can say the same thing for Ms. Hughes.
Mr. Chairman, there was a lot of discussion about cost of the import relief that was proposed by the International Trade Commission. You heard numbers of $70 million to $130 million additional cost to consumers. You heard figures of $32,000 for every job that would be created or increased, and so forth.
Those numbers, as I look at them, sir, use the top of the estimate. They said $70 to $135 million and then used $135 million as the cost of the job. Let me present to this committee a figure that I don't think we have to ask where was it derived. The Congressional Budget Office, if I am not mistaken, has estimated for every 1 percent increase in unemployment there is a loss to the Federal Government of some $25 billion, a combination of loss in taxes, an increase in aid and assistance, and so forth, for the unemployed workers and their families.
If you take a simple calculation, sir, in the last 5 years some 6,000 jobs have been lost in the United States by the workers in the leather apparel industry. Very simple mathematics would show on the basis of 1 percent unemployment it is little less than a million jobs. Six thousand would come to a cost to the U.S. Treasury of almost $130 million every year as a result of this erosion of 6,000 jobs.
And to take the corollary, what does it cost for one job lost to the U.S. Government, and if you use the same Congressional Budget Office calculations of 1 million lost jobs equals $25 billion in lost revenue to the Government, then one lost job comes to some $25,000, Mr. Chairman.
I mention these figures because this isn't the only basis, but this was not mentioned in the presentation I heard today in terms of what has been lost as against estimates of what might be the cost in terms of the proposed remedy given by the International Trade Commission.
Now let me get down to the substance of what I want to present to this subcommittee. The workers we represent in this industryand our union represents the majority of the leather apparel industry workers—there are approximately 5,500 workers still engaged in the manufacture of leather apparel, sir, and they are concentrated in the inner cities of New York, Chicago, and Newark, N.J. They are employed in rural New England and the small towns of Missouri and Wisconsin primarily.
Of that 5,500, Mr. Chairman, some 75 percent are women, and a high percentage are minorities, black and Hispanic.
Now, I think it is vital that we recognize this, because when we hear talk about adjustment assistance and we hear conversations about what can be done for these people, the fact is, you cannot take women and relocate them and leave the husbands behind; and the fact is that the inner city workers are for varying reasons going to remain in those communities; and the sad fact is, when you look in Newark or you look in New York, or some of the other areas, the unemployment rates there are such that there is no real meaningful prospect of these people finding employment at any time in any near future.
So, you are really talking about people who are already in the categories of high unemployment; and I am talking about the innercity minorities and the women who are now under the threshold of losing another 3,000 or 4,000 or 5,000 more jobs if this industry is wiped out, as happened to the 6,000 who lost their jobs in the last 5 years, who can only really look forward to going back on public assistance, Mr. Chairman, for many years, and that is a price that I think has to be put into balance, of what we talk about in terms of the hearings that you are now conducting.
Let me say one other thing about these people, because their average earnings are about $5 an hour.
Now, these are not people who have taken advantage of the strong position of the union-and we could have probably, economically, forced them out of business if we wanted to exercise the poor judgment of doing so—but our members last year voted for an agreement where they got 40 cents last year; and this November 1 their agreement only provides for a 30-cent increase, and this was approved by these workers, which means that they accepted an increase of only 6 percent this coming November 1.
There is a cost-of-living clause but it is a modest one; it is a passthrough with a cap of 10 cents. So the chances are that they will end up with 40 cents or only an 8-percent increase. They accepted the agreement knowing they will get less than whatever the inflationary impact will be as of that time. And may I point out, a year from this November they will only then get another 30cent increase.
I say this not with pride but I say this with the fact that these people understand the problems of the industry and they are paying their price in the battle against inflation, which all of us recognize is vital. They are paying their dues in this one, sir.
And one last corollary: There is no more productive worker in the world in the leather apparel industry than the workers in the American leather apparel industry. The output per worker hour is higher in the United States than it is in any of the countries who are inundating us to the extent of 79 percent of the market.
So what we have got here is basically a women's industry, a minority industry—the most productive in the world—who are making modest earnings and who have accepted a wage pattern which will provide them less than the inflationary impact, and who have yet lost over half the jobs that they held 5 years ago, but are struggling, those who are left, to maintain the dignity that comes with work as against public assistance. And what have they done? What have we as their representatives done in the industry?
We followed the legislation that you and Congress passed. When the Trade Act of 1974 was passed to liberalize world trade, it was understood and accepted by Congress that in order to have fairness and equity and not have a revolution of protectionism, there had to be some mechanism where if there were proven injury by imports, there was some form of relief that could be given.
I am telling you what you know because you were part of the process; but we explained that to our people, and we said we will now follow the due process of law established by this Congress. And so we held the hearings before the International Trade Commission, as you are well aware. Our people testified. The workers testified. Not only did we, the officials of the union and the industry and the rest, but also the workers themselves got up there and told their story. And as you heard, and I don't have to repeat it over and over again, this was only the third time that the ITC came out unanimously both for injury and relief. It is only the sixth time they were unanimous that there was injury.
I have heard a lot of talk here about the dangers of retaliation, that Argentina will stop selling us hides and the Koreans will do this and everything else. Let's look over the other five cases:
Footwear, what retaliation? None. Color TVs, the only thing I know that happened is Sony opened a plant in the United States to sell TV's here and increased American employment. I would hope this type of retaliation would happen.
In the high carbon ferric chromium, no retaliation. Clothespins, none. Nonelectric cookwear, no retaliation.
I mention this when I hear of the horrendous horrors. What is the historic precedent for this, Mr. Chairman? The historic precedent is in every case there has not only been no retaliation but also in the one case American jobs increased by the movement of the Japanese industry, at least part of it, to here in the United States.
I mention this because you can throw out these and people can state all these kinds of concerns, but I ask them, what is the experience of the past, which is all we can truly go by.
And so to me to tell our people that here we have a decision that was unanimous, that nobody argues the import relief, but, “Well, there might be retaliation,” which never happened in the past and therefore, we cannot go along with you, is the kind of thing that would stretch credibility and respect for law, in my judgment, Mr. Chairman, beyond any kind of credibility that, it seems to me, any of us could really go to our people and say.
Now, we went then to the Interagency-and the STR, by the way, agreed with the injury, the STR agreed that relief was worthwhile. All right, they were overruled in the Interagency. I understand their workings; they gave their best shot here to justify that which they didn't agree with when they came out in the early part of this year; but that is part of the obligation.
You know, I would have to do the same, I suppose, if my board overruled me, so I don't fault this, but I also think to myself that the credibility is a little bit gone.
Now, Ambassador Hormats put his finger on the whole issue, in my judgment, when he said this decision came out by the administration in March of this year and that is when the inflation was at its highest, when the attempt was made to present a balanced budget, and he said a wrong signal would be given if they approved the ITC recommendation.
I won't argue if that was right or wrong in March; but Congress in its wisdom gave itself the right to reverse a determination of the President if it so desires, if it so sees merit in it. This is now the end of August, and I submit at the end of August there is no concern about this kind of a signal. Inflation is still a problem, but as the administration itself says, probably it is abating. For the last month there is no increase in the rate of inflation, and my judgment is, if the administration were going to decide this case today, they would come out differently, because there is no real meaningful signal that could come out. But they are caught with the political decision in March, and I submit it is unfair to tell 5,500 workers, who are the people I described, that they got caught in a political signal.
Everybody accepts that it is a small industry. Their effect on the inflation, if this thing is put through, is as meaningless as anything in the world, and if you will only look at this year, the price in leather apparel has gone down; and if you look over the past year, this is one industry which is not one of the causes of inflation. Apparel, by the way, in general has lagged behind inflation. Leather apparel at the most might have kept up with the rate.
So it is not an industry that has fueled the fire of inflation. These are workers who are getting less than inflation, so the argument becomes one, it seems to me, of speciousness and so on. So it comes down to a simple thing, in my judgment: A law was passed. It is very difficult to prove injury and get relief. The workers followed that course; they proved their case, and if it is turned down in this case then it is like saying the escape clause was put in by Congress but it really wasn't meant to be by Congress.
You see, when I hear the argument, “Well, if we have an escape clause it is protectionism,” then what did Congress put it in for? And I don't think Congress put it in on the theory they don't intend to uphold the sanctity of the laws they themselves passed, and I don't know any clearer case you can have of justification, of equity, of fairness, without harm to anybody, than the case of the workers involved in the leather apparel industry.