ably match that and go up not quite as high perhaps but almost as high?

Mr. BERMAN. There is no question that domestically produced coats today have been kept down in price because of import competition. If you release that competition, their prices will go up substantially because they are at abnormally low levels.

Mr. MOORE. Resulting in fewer garments made from that commodity of leather being sold. Thank you.

Mr. GIBBONS. Mr. Jenkins?

Mr. JENKINS. Thank you, Mr. Chairman.

I only have one or two questions.

Mr. Simon, I don't know that I fully comprehended the import of your statement regarding the 807 program. You indicated that the amount of money had increased because of participation under this program by the domestic industry.

What point are you making there?

Mr. SIMON. The 807 program works such that the domestic manufacturer does a certain amount of his labor-intensive manufacturing in the United States and then sends the rest abroad; he does, for instance, the cutting in the United States and then the sewing abroad, and then reimports it. If the response of the domestic industry to the current market situation and to a tariff increase would be, as statistics indicate, to intensify their 807 operations, then you would be benefiting the Mexican laborers and the Dominican laborers, but not the American laborers, because it is not going to increase the number of man-hours worked in the United States.

So you would be helping the profit picture for the domestic industry but you will not be helping domestic capital formation or investment, and you will not be helping the domestic labor picture. Mr. JENKINS. And you indicate that imports under the 807 program have been increasing?

Mr. SIMON. Yes, sir. They are not at a very high level now, but they were zero 10 months ago. There are at least two substantial 807 operations that appear to have come into existence in the last 8 or 10 months.

Mr. JENKINS. It would appear that in order to compare you would have to go from month to month, June to June. And looking at your table of June of 1979, it was 12 million, if I understand your table correctly, and in June of 1980 it has decreased instead of increased.

Mr. SIMON. Where is that?

Mr. JENKINS. Page 16 of your statement.

Mr. SIMON. You are saying essentially, you have to compare the same month to the same month in order to avoid a seasonality effect.

Mr. JENKINS. The purchase of a commodity is I assume on a month-to-month basis. So to get any accurate picture you would have to compare June with June or a December to a December.

Mr. SIMON. Well, that may well be so but you have to look also at the internal figures on this table. The June 1979 and June 1980 men's figure is just about the same. The women's market, which has been collapsing at a much more horrendous rate than the men's market, is where all the loss was experienced. And the point

that I would like to bring out is that from January through June of this year there has been a steady rate of increase whereas in the years before-I haven't set out the monthly figures for the year before, except for June 1978 and December 1978, but those were all zero-so since June 1979 this increase, while it has not been a steady increase on a month-to-month basis, it has certainly been steady in 1980.

Mr. JENKINS. Are the Mexican and Dominican wages lower than those of Taiwan?

Mr. SIMON. I don't have any knowledge of that. I just don't know. Mr. JENKINS. Thank you.

Mr. VANIK. I want to take this opportunity to express my gratitude to the panel. We appreciate your long and extended colloquy. I am going to be very mindful of what everybody says. I was in and out of the room. I am certainly going to be familiar with everything in the record. I am going to read it over so I am actually advised as to every position that was taken. I want to thank you very much. The committee will stand in recess for 10 minutes, after which time we are going to start with the tariff and the trade bills. We will take those up in the order in which they are set forth in the announcement.

[A brief recess was taken.]

Mr. VANIK. The subcommittee will be in order. We will now proceed to hearing our four tariffs and trade bills, H.R. 6750, H.R. 7660, H.R. 7709, H.R. 7802.

Our first witness is William H. Cavitt, Acting Director, Office of Trade Policy in the Department of Commerce, who will present the administration's position on the four bills first.

I might state at the outset before you proceed that as one who has gone over this process for a long, long time, I feel there ought to be a simpler way for us and the trade staff and the staff of the Senate Finance Committee to handle these many trade issues without involving the full committee. I haven't come down on any formula, but I hope that in my recommendations that in completing my work as chairman I may be able to have a recommendation in place which would expedite this entire procedure and make it move more rapidly and efficiently without consuming so much time and preparation as in these hearings. We would be happy to hear from you. You might speak to each bill in the order which I have named them.

STATEMENT OF WILLIAM H. CAVITT, ACTING DIRECTOR, OFFICE OF TRADE POLICY, DEPARTMENT OF COMMERCE, ACCOMPANIED BY ARMOR ARMSTRONG, MARITIME ADMINISTRATION

Mr. CAVITT. Thank you.

H.R. 6750

The administration would have no objection to the enactment of H.R. 6750, provided it were amended to cover only fabric coated with natural rubber. The language of this bill, as currently drafted, would suspend the duty on fabrics in TSUS item 359.50 suitable for use in the manufacture of hovercraft skirts, including those coated with natural rubber, synthetic rubber, and plastic.