Mr. BOB WILSON. It is obvious that you have. You outlined three concerns; and, then, in your testimony just now, you have indicated another, that there is a great dependence on Russia, which is our main adversary today.

Would it be fair to ask you-and you don't have to answer if you don't want to-but I would like to know your personal views, not the views of the Department, but your personal views, from having studied this matter and this legislation.

Would you be personally for it if you were sitting in my seat here? Mr. GANSLER. The obvious answer is I am not, sir.

I find it, honestly, in my personal view, difficult. It is not a very clear situation. I heard the testimony yesterday, a large part of it, and I find the arguments on both sides very persuasive in some ways.

The political ones unfortunately I feel I am not adequate to judge in terms of the long-term impact that that will have on chrome to the United States.

Therefore, from the Department of Defense's viewpoint, which is, of course, my primary concern here. I can present some of the obvious short-term impacts, and that is what I have done.

But in terms of the long-term availability, even of chrome. I then, have to resort back to the State Department and others giving their views on the long-term position of the countries involved, and that is where I feel inadequate to judge.

That is why I don't have a strong personal view on it.

Mr. BOB WILSON. I think you probably reflect the attitude of a lot of us. I certainly am not a racist, nor in any way against civil rights and so forth; and yet, I am concerned about the defense of our country. This is the Armed Services Committee, and it is our responsibility to worry about the defense of the country, and in a like way, you are from the Defense Department. Your concern is not the same as if you were from the State Department. I think you have expressed very well the sentiment that many of us feel. I yield back the balance of my time.

Mr. BENNETT. Mr. McDonald.

Mr. McDONALD. Were you here yesterday when we heard the final witness of the day?

Mr. GANSLER. No, unfortunately, I had another meeting, and I missed part of the afternoon session. I came to the whole morning session and part of the afternoon.

Mr. McDONALD. I unfortunately missed the morning session, too. But I did have the opportunity of hearing the testimony of the gentleman, the Assistant Secretary and former Ambassador from the State Department.

I would suggest that to try to clarify some of the issues, to my way of thinking, the best prepared witness, the one that seemed to have the best grasp of the overall presentation, was the final witness of the dav.

You may find this testimony of help in clarifying areas of confusion that were presented in the early part of the day.

Thank you, Mr. Chairman.

Mr. BENNETT. Thank you, Mr. Gansler.

The staff has a question to ask.

56-945-75

Mr. Marshall.

Mr. MARSHALL. Mr. Secretary, is it the recommendation of the Joint Chiefs of Staff that the national stockpile objectives be based on a 3-year war requirement rather than 1?

Mr. GANSLER. In the reevaluation that they have suggested, we have all suggested, be made, that is one of the considerations; the 3-year versus the 1-year; yes.

Mr. BENNETT. If the gentleman will yield, I do want to make this point:

I think he indicated by his answer we are not restricted entirely to the 3-year criterion. There are some other criteria.

Mr. GANSLER. That is right, there are definitely other criteria. Mr. BENNETT. We wouldn't want to wed our criticism entirely to the 3-year proposition, because there are other things wrong about the new criteria which the Defense Department is looking at with careful vision; isn't that correct?

Mr. GANSLER. That is correct, there are other questions such as the openness of the sea lanes, the availability of the other suppliers, and so forth.

Mr. BENNETT. The imposition of restraints on the society-whether they can be compelled?

Mr. GANSLER. The impact on the manufacturing sector is involved. On the 3-year versus the 1-year, the chairman is correct; it is not a unique issue, it is one of three or four major issues we have.

Mr. MARSHALL. It was also the Department of Defense and Joint Chief of Staff's recommendation for a 3-year objective before this reexamination; is that correct?

Mr. GANSLER. That was the original criteria to be used in establishing the current stockpile.

་

Mr. MARSHALL. Right.

One more question. Congressman Fraser in his testimony, and also I think reflected in the report, said we have decades of chrome in the stockpile.

Would you comment on that statement? Is this true, and do you agree with that statement?

Mr. GANSLER. Obviously, that is a function of consumption.

And the current consumption levels do not indicate that is the case. Mr. MARSHALL. Excuse me, let me read the exact language contained in the report on page 6:

It can be seen from these figures that there is already enough chrome ore in the national stockpile to meet national security needs for several decades of

war.

Mr. GANSLER. The statement relates-the numbers he is talking about relates to direct consumption. And direct consumption, as I defined it earlier, is that which we specifically use in our weapons.

As the chairman pointed out, the assumption of that being available exclusively to the Department of Defense is one of the statements of

error.

It refers to what we need for direct consumption and ignores what our manufacturers need for transportation and other things. If one ignores those needs and the civil impact, then, there are decades of supply.

That is not a valid assumption, we believe.

Mr. MARSHALL. Thank you very much.

Mr. BENNETT. No further question; thank you very much for your testimony.

And now we call Mr. Stanley Sommerfield, Director, Foreign Assets Control, Department of the Treasury.

I understand you will probably submit for the record Mr. Macdonald's statement; is that correct?

Mr. SOMMERFIELD. Yes, Mr. Chairman.

Mr. BENNETT. Mr. Macdonald, Assistant Secretary for Enforcement Operations and Tariff Affairs was here but was called away. Do you adopt his statement?

Mr. SOMMERFIELD. Yes. He has testimony to prepare for another congressional committee this afternoon, so he asked to be excused.

Mr. BENNETT. You have had a lot of experience. How long have you been in this type of work?

Mr. SOMMERFIELD. I have been in economic embargo for 39 years, sir.

Mr. BENNETT. I think you qualify.

As Mr. Macdonald left, he said, "You know, you are getting to hear a man that really has been in this field and knows something about it." He implied there was probably nobody better qualified in the Government to give us advice."

We are glad to hear from you. Do you have a prepared statement? Mr. SOMMERFIELD. If you wish, Mr. Macdonald's statement can be submitted for the record, I have no statement of my own. I am here to answer questions. It is his statement, the Treasury statement.

Mr. BENNETT. It is only a page and one-half; why don't you read Mr. Macdonald's statement because I implied to him this would be done anyway.

In other words, this is a very controversial, complex matter. I do want to get the position of the authority on it.

Mr. SOMMERFIELD. Yes, sir.

STATEMENT OF DAVID R. MACDONALD, ASSISTANT SECRETARY OF THE TREASURY FOR ENFORCEMENT, OPERATIONS, AND TARIFF AFFAIRS, PRESENTED BY STANLEY L. SOMMERFIELD, ACTING DIRECTOR OF THE OFFICE OF FOREIGN ASSETS CONTROL

Mr. SOMMERFIELD. "Mr. Chairman and members of the subcommittee, my name is David R. Macdonald. I am Assistant Secretary of the Treasury for Enforcement, Operations, and Tariff Affairs, with me today is Stanley L. Sommerfield, Acting Director of the Office of Foreign Assets Control, which is under my supervision, and which administers the Rhodesian sanctions regulations.

"I am pleased to appear before your subcommittee today to testify on H.R. 1287, as reported by the House International Relations Committee. H.R. 1287 is a bill to amend the United Nations Participation Act of 1945 to halt the importation of Rhodesian chrome.

"The Department of the Treasury supports the objectives of H.R. 1287. We endorse in principle the proposal to repeal section 10 of the Strategic and Critical Materials Stock Piling Act (50 USC 98-98h), thereby restoring the United States to its proper posture of

being in full compliance with the international treaty obligations of the United States.

"We support the first section of H.R. 1287, which simply nullifies the impact of the so-called Byrd amendment insofar as imports of chrome from Rhodesia are concerned.

"There are, however, some potential difficulties with section 2 of H.R. 1287, as modified, which we feel the subcommittee should be aware of before it acts.

"This section provides in substance that no steel mill product which contains chromium in any form may be imported unless accompanied by a certificate of origin from the exporting country which satisfies the Secretary of the Treasury that the product does not contain any Rhodesian chromium.

"Steel mill products imported from third countries are not in fact subject to the U.N. sanctions, regardless of the origin of their chrome content, unless they were originally produced by Rhodesian steel mills.

"However, section 2 of H.R. 1287 expands our implementation of the U.N. sanctions to apply to steel mill products produced in third countries which contain Rhodesian chrome. This secondary embargo is to be enforced by a certification procedure.

"In operation, certification procedures of this type would involve considerable additional paper work for exporters, importers, and governmental agencies.

"The administrative burden imposed, and the additional burden on international trade, would be far from negligible even with a perfectly functioning operation.

"Moreover, no certification system works perfectly-there are always accusations that one foreign country or another is issuing false certificates.

"It has been our experience in the administration of the Chinese-type commodity certification procedures that more than one commodity had to be suspended from eligibility for certification because the certification procedure was not working properly.

"It is in this area of enforcement that our concerns with H.R. 1287 exist. To be effective, the certification procedures must be carefully set up and effectively enforced. Otherwise, they are widely regarded as shams, and the certification structure soon breaks down.

"Previous certification arrangements of this type have either involved a number of countries but were limited to products of relatively small total value in international trade, as in the certification of Chinese-type commodities. Or, they have involved one or two commodities such as Cuban nickel but have been limited to only one or two foreign countries and, thus, have not had an impact on trade.

"These earlier certification procedures have been manageable partly because the dimensions of the trade involved were relatively small. However, U.S. imports of specialty steel products which may contain chromium come from about 30 countries, and were valued at some $200 million during the year 1974, if you limit the coverage to ferrochrome and stainless steel products. If you include alloy steel products, you increase this total by an unknown amount. Some low alloy steel products contain chromium, and our total imports of low alloy steel exceeded $200 million in 1974.

"Effective enforcement of this amendment could lead to suspension of imports of third-country steel mill products from one or more foreign countries. This would constitute an impediment to our normal trade relations with affected foreign countries. The problem would be increased if, as seems likely, we were also compelled to suspend imports of ferrochrome from these same countries. Obviously, if their steel mill products contain Rhodesian chrome, it is quite likely that their ferrochrome would also contain Rhodesian chrome.

"Thus, under section 2 of H.R. 1287, we would be faced with impediments to our normal foreign trade with third countries which would only indirectly be related to the primary sanctions program against Rhodesia itself.

"How extensive these additional impediments would be is unknown. In theory, they should be minimal, since in theory all nations except South Africa adhere to the U.N. sanctions. In practice, there is more than a little doubt that all countries do faithfully comply with the sanctions program, as evidenced by section 2, itself."

"I do not wish to overemphasize these difficulties-the problems may not in practice turn out to be major ones. I would be less than candid, however, if I said no problems are foreseen. Nevertheless, we support the repeal of the 'Byrd amendment,' and if enactment of section 2 of H.R. 1287 is necessary to achieve this objective, then we will make our best efforts to administer it effectively, while striving to avoid unnecessary damage to our international trade relations.'

Mr. Chairman, that concludes Mr. Macdonald's statement.

If I can help, I will be glad to answer any questions.

Mr. BENNETT. Mr. Carr.

Mr. CARR. I have no questions.

Mr. BENNETT. Mr. Daniel.

Mr. ROBERT DANIEL. No questions.

Mr. BENNETT. Mr. McDonald.

Mr. McDONALD. Thank you, Mr. Chairman.

From the testimony of witnesses this morning, I think we have ascertained that this particular bill will increase the price, will increase the unemployment in this country; and the Defense Department witness who just concluded said it will increase the cost to national defense. And now, in testimony of the Treasury Department, it is your opinion that there is a strong likelihood it will increase the bureaucracy-the difficulty of administration-and there stands the potential for increasing the trade difficulties with our trading partners; is this correct?

Mr. SOMMERFIELD. That is substantially correct, sir. There is no question but what there will be additional paperwork for businessmen, additional paperwork for Government agencies, additional staff needed. Mr. McDONALD. Is it possible, considering the additional paperwork on the part of trading partners, a company abroad simply might say, "Doing business with the United States is becoming so cumbersome we frankly, find it much easier just to do business with Australia or do business elsewhere"; and we would lose a trading partner that would be operating on a marginal-profit situation?

Mr. SOMMERFIELD. It is hypothetically conceivable, sir. I don't think you will get too much of that. The people who normally export steel