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United States. Dept. of State. Office of Public Co.

Department of State bulletin (Volume v. 22, Apr- Jun 1950) online

. (page 99 of 116)
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developments in 1950 when residual use is ex-
pected to increase as indicated above.

CHARGES OF "DUMPING"

In testimonj' before your Committee and in
other public statements spokesmen for the coal
industry have charged that foreign oil is being
"dumped" in this country and is taking away the
markets of the coal industry.

If the term is used to indicate that fuel oil prices
are abnormally low, the facts regarding fuel oil
prices are relevant. The average price of resid-
ual fuel oil in 1949 was exceeded in the past 20
years only by the average prices in 1947 and 1948.
In those 2 years, the general fuel shortage was
responsible for the abnormally high levels then at-
tained by fuel oil prices. Wlien the demand eased
and supplies again became normal, fuel oil prices
declined. Coal prices did not. Even at the low
point of last summer, the price of heavy fuel oil,
as indicated bj^ the wholesale price series of the
Independent Petroleum Association of America,
was 60 percent higher than the 1935-39 average.
Prices liave risen since last July in the face of a
strong demand which not only absorbed the in-
creased imports but led to substantial reductions
in domestic stocks as well. In April 1950, the
most recent month for which the IPAA price series
is available, residual fuel oil prices were 113 per-
cent above the 1935-39 average. This is hardly
a demonstration of dumping.

If, however, those making such charges are
using the term "dumping" in its technical sense
of sales at lower than a fair value, they can have
the alleged dumping investigated luider the Anti-
Dumping Act of 1921. If the charges are sub-
stantiated, they can obtain a remedy, for such
imports are prohibited by that act.

Effects of Restrictions

on Other American Interests

If imports of oil were reduced substantially,
whether by imposing a quota, a high import tax,
or by balancing imports and exports, the effects
would be the same. The action would seriously

June 19, 1950



and adversely affect certain American interests,
commercial, strategic, and political. In the
absence of serious injury to the domestic oil and
coal industry, the disadvantages seem to outweigh
the benefits in terms of the over-all national
interest.

The commercial disadvantages would ari.se in
three principal instances. The first is in regard to
those American connnodity expoits which depend
to a substantial degree on the (loilar income of oil-
producing countries. The most impoi-tant such
case is Venezuela. Ninety percent of Venezuela's
foreign exchange, chiefly dollars, is derived from
oil operations. Forty percent of Venezuela's oil
production is exported directly or indirectly to
the United States. Substantial reduction of im-
ports of oil from Venezuela would, through the
effect of Venezuela's dollar income from royalties,
taxes, and wage payments, result in a reduction in
exports from the United States. Venezuela is
our fourth largest export market, and the second
largest on a cash basis. Our exports to Venezuela
were valued at over 500 million dollars in both
1948 and 1949, which, in both years, was con-
siderably in excess of our imports of all products
from Venezuela, including oil. Our exports rep-
resented a substantial amount of industrial and
agricultural employment in a number of states,
for the list of what we sell to Venezuela is ex-
tensive. Any barrier which we might raise
against imports from Venezuela would serve to
reduce American employment and the income of
American firms currently engaged in the export
trade with Venezuela.

There is also a domestic consumer interest in the
oil import question. Kestriction of fuel oil imports
would mean higher prices for fuel oil and in-
creased costs both for industries that cannot con-
vert to other fuels, such as the shipping industry,
as well as for those who can convert but would be
able to do so only at higher than present oil prices.
The Export Trade and Shipper of May 1, 1950,
stated the point well :

Fuel is one of the basic elements in the cost of liv-
ing. ... Its cost directly influences the delivered price
of practically everything that everyone consumes.

Any barrier to oil imports would also affect
American foreign oil interests, for most of our im-
ports come from American companies or their sub-
sidiaries. The principal restrictions which have
been suggested would be far more burdensome than
barriers which foreign nations have raised against
our oil companies. An action limiting their oil
shipments to the United States would adversely
affect their American employees and suppliers of
American equipment for their foreigii opei-ations.
It would weaken the American position in oil
operations abroad, in control of foreign reserves
and facilities. The United States, its Allies, and
friendly nations drew large supplies from our
overseas oil output in the last emergency. If there
should be another war there is no possibility of
supplying our petroleum needs, according to mili-

1007



tary authorities, without recourse to production
elsewhere in the Western Hemisphere.

Not only do we have a strategic need for oil
sources in the Western Hemisphere but also we
have a strategic interest in the political stability
of the Middle East. Political stability in that
area, as in many countries, is to a large extent
dependent on economic well-being. In certain
Middle East areas, economic well-being depends
mainly on the level of oil operations in which
American companies have an extensive interest.

An important consideration also is that we can-
not, in circumstances where there is no serious
injury traceable to oil imports, restrict them as
some have proposed without violating our inter-
national commitments, specifically the trade agree-
ments with Venezuela and Mexico and the Gen-
eral Agreement on Tariffs and Trade. We have
spent many years and much effort in furthering a
program for the improvement of international
economic relations. We have, with due regard
for security and for exchange and other prob-
lems, sought to free international trade from all
possible restrictions. This program has contin-
uously had the approval of Congress. We as the
world's greatest trading nation have the most to
lose if we fail in this effort. Imposition of the
proposed restrictions on oil imports under pre-
vailing circumstances would set an undesirable
precedent here and abroad. It would seriously
affect our program to expand international trade
and could undo much that already has been
achieved.

The question of whether restrictions should be
placed on oil imports is not a simple one of pro-
tecting certain private American interests from
foreign interests or from other private American
interests. It is a matter involving broad ques-
tions of national policy, and the decision should
be the one which will best serve the national in-
terest. The facts seem to indicate that the do-
mestic oil and coal industries have not been seri-
ously injured by oil imports to date and that
they are not threatened with serious injury by
those in prospect in the near future. In the cir-
cumstances, the proposed restrictions appear un-
necessary and inadvisable.



Speculative Swings in Rubber
Prices Cause Serious Concern

[Released to the press June 9]

The United States Government has directed the
attention of countries interested in the production
and marketing of natural rubber to the serious
implications of recent movements in the price of
that commodity. These countries have been told
that the United States believes that wide specula-



tive swings in the price of a major raw material
perform a disservice to producer and consumer.

The New York spot price for the grade of
natural rubber known as Ribbed Smoked Sheet
(ESS) No. 1 averaged 17.56 cents in 1949. By
June 1, it had reached 34 cents- This trend is such
as to create anxiety as to the future well-being of
natural rubber-producing areas. It could lead to
a decreased demand for natural rubber and to
higher prices for rubber products. Tire prices
have recently been increased by some manu-
facturers.

The latest available statistics indicate that pres-
ent prices may reflect merely a temporary scarcity
of spot rubber because of a number of market
factors and that the upward price movement may
be arrested by increased marketings of natural
rubber. April exports from Indonesia were
nearly three times January exports. The inter-
national Rubber Study Group has predicted a
1950 production of natural rubber 140,000 long
tons in excess of consumption. In addition, the
United States Government has been taking steps
to increase its production of synthetic rubber, and
it is expected that, by July, the production of
general purpose synthetic rubber (GR-S) will
have reached a rate of 35,000 long tons per month,
as contrasted with 19,000 in January. If these
forecasts are correct, recent natural rubber prices
are a temporary phenomenon.

On May 4, the United States delegate, Willis C.
Armstrong, associate chief. Economic Resources
and Security Staff, Department of State, included
the following remarks in his statement to the
seventh meeting of the Rubber Study Group at
Brussels :

All members of the Rubber Study Group are interested
in expanding the consumption of rubber. We in the
United States are as anxious as anyone to expand this
consumption and, through mass-production techniques,
to bring to our own and other markets an ever-increasing
quantity and variety of high-quality products at reason-
able prices. . . . Our industry has done a great deal to
promote consumption along these lines. Under these
circumstances we cannot ... be indifferent to trends in
natural rubber prices. As purchasers of natural rubber
we wish to avoid wide speculative swings in the price
of this major raw material. As major producers of
synthetic rubber, we can scarcely ignore price movements
of a competitive product. We also have a genuine and
profound interest, as a Government and a people, in the
welfare and economic well-being of both producing and
consuming nations . . .

For these reasons we are disturbed whenever prices
of commodities vital to wide areas of the world appear
to be following trends that can lead, sooner or later, to
a decline in effective demand for the commodity. Thus,
for example, a sharp upward trend in natural rubber
prices (which some authorities appear to consider a
current phenomenon), if continued, might well lead to
a general impairment of the long-term earning power of
producing areas and might, simultaneously, hamper the
efforts of the manufacturing industry in consuming
countries throughout the world to expand the market for
their products. We have thought it appropriate to call
attention to these fundamental considerations which we
regard as generally self-evident and applicable to all
countries.



1008



Deparfmenf of Sfafe Bullefin



The Need for an International Trade Organization



Statement hy Howard H. Foley
Under Secretary of the Treasury '



Mr. Chairman and Members of the Commit-
tee: I appreciate j'oiir invitation to appear be-
fore the Committee to discuss House Joint Reso-
lution 236, ;uithorizin



Online LibraryUnited States. Dept. of State. Office of Public CoDepartment of State bulletin (Volume v. 22, Apr- Jun 1950) → online text (page 99 of 116)