FAS representatives also took an active part in the Committee II consultations which were held under the auspices of the GATT. Committee II of the GATT was directed to examine the use of contracting parties of nontariff measures for the protection of agriculture or in support of incomes of agricultural producers and their effect on international trade as a whole. This examination has highlighted the prevalence of agricultural protectionism in many countries around the world and may be influential in the adoption of less restrictive agricultural policies in the future. In efforts to make sure that policies and programs adopted by the European Economic Community will not be injurious to the legitimate interests of nonmember countries, FAS representatives participated with other U.S. Government officials in a series of high level consultations with government officials in member countries as well as with the European Economic Community Council in Brussels. These consultations concerned primarily the proposed common agricultural policy now under consideration within the EEC. One particularly objectionable feature of the present proposals involves the use of variable import levies. Largely at the insistence of agriculture, the United States has made it clear to the EEC at the tariff negotiating conference now underway in Geneva that it is essential that a workable solution to this difficult problem of variable import levies be found. This will be one of the most important tasks ahead of the United States in the coming year. 24. International Monetary Fund's decision on discrimination for balance-ofpayments reasons Subsequent to the move of nonresident convertibility by Western European countries, the International Monetary Fund approved a decision which dealt exclusively with discriminatory restrictions imposed for balance-of-payments reasons. This decision was published in October 1959 and bears directly on facilitating the Department of Agriculture's efforts in obtaining removal of quantitative restrictions against our agricultural export commodities. In some countries, considerable progress has already been made toward the elimination of discriminatory restrictions; in others, much remains to be done. Recent international financial developments have established an environment favorable to the elimination of discrimination for balance-of-payments reasons. There has been a substantial improvement in the reserve positions of the industrial countries in particular and widespread moves to external convertibility have taken place. Under these circumstances, the Fund considers that there is no longer any balance-of-payments justification for discrimination by members whose current receipts are largely in externally convertible currencies. However, the Fund recognizes that where such discriminatory restrictions have been long maintained, a reasonable amount of time may be needed fully to eliminate them. But this time should be short and members will be expected to proceed with all feasible speed in eliminating discrimination against member countries, including that arising from bilateralism. 25. Proceeds of sales increased by negotiation of more favorable exchange rate provisions. Where the currencies of foreign countries participating in the title I, Public Law 480, agricultural commodities sales program are devalued or depreciated by Government action, it becomes necessary to renegotiate the specific exchange rates applicable to such sales. During fisal year 1960, such negotations were necessary in the case of 6 countries: Republic of China, Spain, Indonesia, Korea, Greece, and Iceland. In the first case, long and difficult negotiations were necessary. The latter cases, although the rates were acceptable at the time of signing the agreement, called for modifications during the course of the year to adjust the rates to reflect subsequent changes in their exchange systems. All were successfully concluded. 26. Payments obtained for long-standing deposit shortfalls due to exchange rate problems Under the fiscal year 1956 title I, Public Law 480, agreement with Indonesia there had been an outstanding payment shortfall of approximately $5 million. This mainly reflected the fact that deposits had not been made at the exchange rate provided for in the sales agreement. During fiscal year 1959, in connection with negotiation of a new sales agreement, agreement to pay the shortfall was obtained. Actual payment was finally confirmed during fiscal year 1960. A similar problem was solved with respect to the fiscal year 1957 agreement with Brazil. Although a formal agreement was reached concerning appropriate deposit rates in the latter part of fiscal year 1959 it was not until late fiscal year 1960 that the majority of the shortfall payments were made. Some lesser difficulties still remain and appropriate action is continuing. 2. Investigations conducted Section 22 of the Agricultural Adjustment Act, as amended, is designed to protect agricultural programs from being materially interfered with by imports. During fiscal year 1960, preliminary investigations and related studies were conducted on a number of commodities including Swiss cheese, blue-mold cheese, Edam and Gouda cheese, Italian-type cheese, Colby cheese, casein, chocolate crumb, sterilized cream, cotton textiles, tobacco, tung oil and tung nuts, peanuts and peanut oil, flaxseed and linseed oil, rye, rye flour and meal. Section 22 cases were prepared for presentation before the U.S. Tariff Commission on Edam and Gouda cheese and Italian-type cheese, articles containing cotton, tung oil and tung nuts, rye, rye flour, and meal. 28. Import licenses issued Presidential Proclamations 3019 and 3025 issued in June 1953 under section 22 of the Agricultural Adjustment Act, as amended, give the Department of Agriculture responsibility for apportioning imports and issuing import licenses for certain manufactured dairy products. During 1960 fiscal year, 1,899 regular and 54 supplemental licenses for imports of cheese were prepared, 117 transfers of country of origin were authorized, 326 changes in port of entry were approved, and over 50 petitions for relief from hardships were received, examined and decided upon. In addition, 175 regular and 28 supplemental licenses for imports of manufactured dairy products other than cheese were issued. Under Presidential Proclamation 2550 issued on April 16, 1942, 19 licenses for imports of seed wheat were issued and, for experimentation and research, 3 licenses for imports of wheat and 53 licenses for imports of wheat flour were issued. Under Presidential Proclamation 3195 issued on August 17, 1957, 15 licenses for imports of dry milk products were issued. 1. Trade liberalization AGRICULTURAL ATTACHÉS The agricultural attachés' participation in trade liberalization efforts covers a wide variety of activities. Their efforts to secure reductions in duties or revisions in quality and quantity limitations are well understood. However, there are many less common areas of activity affecting U.S. trade in which the agricultural attaché takes an active part. For example, they supply the U.S. Tariff Commission with material required in the escape clause investigations and interest themselves in transshipment rights wherever this is a matter of concern to American produce. Specific examples include supplying data upon the Tariff Commission's request on the production, marketing, and export of specific commodities imported into the United States from Denmark, Sweden, West Germany, and Japan, securing permission from the Mexican Government to permit the shipment of American fruit through Mexico to inland areas of the other Central American Republics. 2. Market development Market development activity is given priority attention by all agricultural attachés. Their individual efforts vary with each country and each commodity. A few specific examples of activities during the past year are: Austria.-Issuance for the first time of licenses by Austrian officials permitting the importation and sale of American poultry in Austria. United Kingdom.-Removal of the 61-percent limitation on tobacco imported from the dollar area into the United Kingdom. Denmark and Norway.-The scope of the European cotton promotion program of the Cotton Council was completed when the Danish and Norwegian cotton industry signed an agreement with the American Cotton Council and assumed one-half of the promotional cost within the two countries. Greece. The persistent emphasis on feed grains paid off when the Greek Government imported its first grain sorghums with a trial shipment of 2,000 tons. India, Pakistan, and Iran.-Due to the concentrated efforts of the several, widely separated agricultural attachés, each of these countries reduced their tariff barriers on soybean oil. This permitted American soybean oil to compete on an equal basis with all other imported oils in these three countries. France.-Active representation resulted in the French Ministry of Agriculture deferring their pending action to prohibit the importation of American fruits treated with the decay inhibitor, diphenyl. Australia.—A new market for canned whole U.S. chickens has been developed in Australian cities. Since the spring of 1960, 500,000 pounds have been purchased for dollars by the Australian trade people who report good public acceptance of this new commodity. Spain. Under persistent urging, the Spanish Government took two significant steps affecting U.S. soybean exports: 1. Spain imported 53,000 tons of soybean meal for feed for the first time in history. 2. In this home of olive oil, Spain permitted the sale of soybean oil as soybean oil instead of limiting its use to an extender blend with home-produced olive oil. Iran, Thailand and Chile.-Due to persistent efforts in these three countries, their first milk recombining plants are now in operation. Each of the plants is under American management and utilizes U.S. dairy products. Australia, Venezuela, and Canada.--Responded to repeated representation and removed their vesicular exanthema quarantine restrictions on importation of pork products from the U.S. 3. Public relations Public relations as conceived by the Agricultural Attaché Service is an integral part of all the attaché's activities. The attaché serves not only as a bridge for American exporters and foreign importers and a coordination point for U.S. Agriculture's many foreign research and informational activities, but also actively supports and backstops 23 active and 16 planned U.S. association-sponsored market development projects in 25 countries. To further these objectives he utilizes every opportunity to attend and speak to public gatherings of consumers, farmers, or food technicians. These grassroot contacts are a valuable backdrop to strengthen their work with the government and importers in the country of their assignment. They are also in great demand when in the United States on home leave as speakers at land-grant colleges, farm organization meetings, and before commercial groups on the needs and attitudes of potential foreign buyers. The wide variety of activity is evident in the following few examples: Austria.-The agricultural attaché utilized his knowledge of local customs, law, and language in helping the cotton council complete the staging of a cotton use promotional pageant and movie entitled "Five Thousand Years of Cotton." Switzerland.-The agricultural attaché induced the officials of the Zurich Grain Exchange to invite American wheat importers and associations to present information on American wheat. Spain. After repeated requests the Spanish Government reversed a policy established in 1952 and permitted the private trade to import raw cotton in the name of their own trade organization. Previously, all purchases of cotton had been handled exclusively by and through the Spanish Government. 4. Reporting The agricultural attachés stepped up the number of reports submitted in response to the growing demand from all public and private sources for more information to keep U.S. agriculture informed on the actual and potential developments abroad. The number of required reports rose from some 1,100 last year to over 1,700 in 1960 but the big increase was in the voluntary reports which rose from approximately 3,000 to over 9,000. Special reporting and services were required of the 9 attachés who had 1 or more of the 20-odd trade fair exhibits in their area, as well as by those attachés located in or adjacent to areas of the Sino-Soviet bloc penetration. However, the attaché in the trouble spots, most specifically the man in Havana, Cuba, and the one in Leopoldville, Congo, have had the most difficult and exacting reporting assignments. Both of these men have disregarded personal safety and on their own initiative travelled widely throughout their areas so as to supply the Department of Agriculture and the whole U.S. Government with the best possible up-to-date information on food reserves, agricultural production, and rural social-economic developments in their areas. 5. International organizations Washington and field personnel take an actitve part in all U.N., FAO, OAS and other international organization activities within the U.S. Government affecting agriculture and attend various international meetings. Attachés in the field are frequently named as delegates or advisers to international meetings. Recent examples include the International Wheat Agreement and Sugar Agreement meetings, the Economic Commission for Asia and the Far East Trade Committee, the Committee on Industry and Natural Resources, the FAO Congitative Subcommittee on the Economics of Rice, the FAO Technical Meeting on Coffee Production and the FAO African Regional Conferences. Meanwhile, Washington personnel served on a number of interdepartmental and international committees, took an active part in FAO freedom from hunger campaign, the U.S. food for peace activities, and were official representatives to all FAO meetings in Rome and the Joint FAO-OAS meeting in Mexico City. MARKET DEVELOPMENT AND PROGRAMS 1. Interfiber competition in Western Europe analyzed Analysis of interfiber competition shows that the production of manmade fibers in Western Europe in 1959 amounted to 2 billion pounds, equal to about 46 million bales of cotton. About 55 percent was rayon staple-cotton's closest manmade competitor. In most western European countries, the cost of producing rayon staple appeared to be about 20 to 23 cents per pound under conditions prevailing in 1958 and 1959. Domestic prices in a number of countries were at levels that would permit further reductions if it were necessary to meet further price competition from cotton. Producers of rayon staple have encouraged its use since the close of World War II by the maintenance of a price that approximated 20 percent less than raw cotton prices. This price differential resulted in considerable substitution of spun rayon products for cotton as well as certain blending of rayon staple with cotton. The relative consumption of cotton, wool, and manmade fibers in the domestic markets of Western Europe changed considerably between 1938, when cotton represented almost 60 percent of the total of these fibers, and 1957, when it represented only 54 percent. On the other hand, manmade fibers increased their share from 19 to 28 percent. More recently cotton appears to be making a comeback in a number of Western European countries. Cotton's position is likely to be at its strongest when its price is kept fully competitive with that of rayon staple, when cotton textiles are actively promoted in a full range of end uses, and when research to improve cottons' quality is pursued aggressively. 2. Interfiber competition in Japan surveyed A survey was undertaken preparatory to a study on interfiber competition in Japan. Preliminary evaluation indicates (1) the liberalization of raw cotton imports on April 1, 1961, should improve cotton's position against competing textile fibers and the position of Japanese cotton products in the export market in the short run; (2) cotton's position in the Japanese market will continue to be challenged by an agressive manmade fiber industry and intensive promotion of cotton products appears to be the most effective means of meeting this challenge: (3) Japan's export markets for cotton products will be faced with increasing competition from other sources and will be particularly sensitive to the relative price of cotton vis-a-vis other textile fibers; and (4) improvement in the national income of Japan will remain dependent to a substantial degree upon a continuing large export business for textiles and other products. 8. Colombia's cotton program analyzed An on-the-spot study of the cotton economy of Colombia reveals that Colombia's financial stabilization program has played a major role in converting that country from a net importer to a net exporter of cotton. Abandonment of the unrealistically low exchange rate, which made imported cotton comparatively cheap, was followed by sharp increases in domestic support prices. Domestic producers responded to this stimulus by doubling cotton production and placing the country on a net-export basis. Since Colombian prices have been well above world levels, various arrangements have been used to enable Colombian cotton to be exported Current indications are that the maintenance of domestic price export at present levels will continue to encourage expansion of cotton proCaction. Thus, despite enlargement of Columbia's textile industry and the con |