B. Measures Taken To Liberalize International Trade

634. PROGRAM TO AID THE UNITED STATES TEXTILE INDUSTRY: Announcement by the President (Kennedy), Issued May 2, 1961 1

The problems of the textile industry are serious and deep-rooted. They have been the subject of investigation at least as far back as 1935, when a Cabinet committee was appointed by President Roosevelt to investigate the conditions in this industry. Most recently these problems were the subject of a special study by the interdepartmental committee headed by Secretary of Commerce Luther H. Hodges.2 I believe it is time for action.

It is our second largest employer. Some 2 million workers are directly affected by conditions in the industry. There are another 2 million persons employed in furnishing requirements of the industry at its present level of production. Two years ago the Office of Defense Mobilization testified that it was one of the industries essential to our national security. It is of vital importance in peacetime, and it has a direct effect upon our total economy. All the studies have shown that unemployment in textile mills strikes hardest at those communities suffering most from depressed conditions.

I propose to initiate the following measures:

First, I have directed the Department of Commerce to launch an expanded program of research, covering new products, processes, and markets. This should be done in cooperation with both union and management groups.

Second, I have asked the Treasury Department to review existing depreciation allowances on textile machinery. Revision of these allowances, together with adoption of the investment-incentive credit proposals contained in my message to the Congress of April 20, 1961,3 should assist in the modernization of the industry.

Third, I have directed the Small Business Administration to assist the cotton textile industry to obtain the necessary financing for modernization of its equipment.

Fourth, I have directed the Department of Agriculture to explore and make recommendations to eliminate or offset the cost to United States mills of the adverse differential in raw cotton costs between domestic and foreign textile producers.

Fifth, I will shortly send to the Congress a proposal to permit industries seriously injured or threatened with serious injury as a result of increased imports to be eligible for assistance from the Federal Government.*

1 White House press release dated May 2, 1961 (text as printed in the Department of State Bulletin, May 29, 1961, pp. 825–826).

2 The committee was formed by the President, Feb. 16, 1961.

"H. Doc. 140, 87th Cong.

This proposal was contained in the President's special message of Jan. 25, 1962, on trade expansion (H. Doc. 314, 87th Cong.).

Sixth, I have directed the Department of State to arrange for calling an early conference of the principal textile exporting and importing countries. This conference will seek an international understanding which will provide a basis for trade that will avoid undue disruption of established industries.5

Seventh, in addition to this program, an application by the textile industry for action under existing statutes, such as the escape clause or the national security provision of the Trade Agreements Extension Act, will be carefully considered on its merits.

I believe this program will assist our textile industry to meet its basic problems, while at the same time recognizing the national interest in expansion of world trade and the successful development of less developed nations. It takes into account the dispersion of the industry, the range of its products, and its highly competitive character. It is my hope that these measures will strengthen the industry and expand consumption of its products without disrupting international trade and without disruption of the markets of any country.

635. ACCOMPLISHMENTS OF THE EIGHTEENTH SESSION OF THE CONTRACTING PARTIES TO THE GENERAL AGREEMENT ON TARIFFS AND TRADE, GENEVA, MAY 15-19, 1961: Report of the U.S. Delegation, Issued May 22, 1961

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The Contracting Parties to the General Agreement on Tariffs and Trade (GATT) concluded their 18th session at Geneva on May 19. At this meeting, which began May 15, forty-three countries participated in the work of the Contracting Parties. In addition a large number of newly independent countries, which are in process of deciding on the question of their future participation in the agreement, attended as observers.

Principal matters affecting the expansion of international trade discussed at the meeting were: plans for a ministerial meeting to be held in late November; tariff negotiations, the second phase of which is now scheduled to start on May 29; a new program for offering techni

8

19 U.S.C. §§ 1363-1364.

7 Department of State press release No. 339 (text as printed in the Department of State Bulletin, June 19, 1961, pp. 982–984).

8 See post, doc. 639.

The first phase, which commenced Sept. 1, 1960, was concerned principally with negotiations held under the provisions of Article XXIV: 6 of the GATT (American Foreign Policy, 1950–1955: Basic Documents, p. 2988), with the Commission of the EEC acting on behalf of the member states. In this phase, the United States relinquished rights, deriving from its position as country of initial negotiation or principal supplier, to old concessions of the EEC member states covering $1,488 million of trade, in return for new concessions on trade of $1,677 million. Of the $1.488 of old concessions, United States trade in those bound directly to the United States amounted to $900 million, and, of the total new concessions, trade in the ones bound directly to the United States amounted to $1,583 million. For the details of the results of these negotiations (first

cal assistance in the commercial policy field to newly independent countries; the new arrangements recently concluded in connection with Finland's association with the European Free Trade Association (EFTA); 10 efforts to accelerate the removal of import restrictions; and the admission of Sierra Leone to the ranks of the Contracting Parties.

Finnish association with EFTA was supported by the United States as a significant and welcome development. It will offer Finland scope for strengthening her economy and for developing traditional ties with her Scandinavian neighbors, as well as with other members of EFTA. The agreement bringing about this association generally follows the lines of the Stockholm Convention, establishing the EFTA," and has been referred to a working party for further examination.

In presenting this agreement to the Contracting Parties, Finland drew attention, however, to a trade agreement concluded with the Soviet Union under which Finland will gradually extend free entry to Soviet goods, though like treatment is not to be extended to other countries outside the EFTA.12 It was generally agreed that this action conflicts directly with the most fundamental obligation of the General Agreement, namely the commitment to conduct commercial relations with one another on the general basis of equality of treatment, or nondiscrimination. As concerns tariffs this "most-favored-nation principle" means that, with certain exceptions including special arrangements which create thoroughgoing customs unions or free-trade areas, the trade of each contracting party is to be treated no less favorably than that of any other country. The Fenno-Soviet agreement is a clear violation of this fundamental obligation, since Soviet goods will eventually enjoy tariff treatment far more favorable than goods of other countries.

The United States and other countries expressed serious concern with this deviation from the most-favored-nation principle but took no immediate stand on what their ultimate attitude might be. It was agreed that the matter would be given further consideration at the 19th session.

The most important decision of the session was to convene next fall a meeting of officials in the trade policy field at the ministerial level. Over the past 3 years the countries associated in the work of the General Agreement have been working on a program to attack three major problems within the field of governmental barriers to trade.

First, it is widely felt that tariffs remain an important obstacle to the expansion of trade. Second, the ministers will be expected to address themselves to ways of finding a coordinated approach to the problem of excessive tariff and non-tariff protection in agriculture.

phase), see General Agreement on Tariffs and Trade: Analysis of United States Negotiations, 1960-1961 Tariff Conference, Geneva, Switzerland, vol. I (Department of State publication 7349), from pp. i-ii of which this footnote is adapted. 10 See the unnumbered title, ante, p. 512.

12

Text in American Foreign Policy: Current Documents, 1960, pp. 335-351.
This agreement was signed at Moscow Apr. 1, 1961.

Preliminary work in this field indicates that both tariff and non-tariff barriers to agricultural trade have widely impaired benefits expected from the agreement. Third, the time has come for policy-level attention to the problem of lowering barriers encountered by less developed countries in the expansion of their international trade. Since, to a large extent, these three major problems are interconnected, the ministerial meeting offers an opportunity for action on a broad front.

A start was made at this session in affording newly independent countries assistance in the development of sound trade policies. The Contracting Parties agreed that, upon request from a newly independent state, the Executive Secretary should take appropriate action to furnish qualified technicians or technical advice. This could mean undertaking to train officials and offering them the benefit of the secretariat's experience in trade policy problems. Or it could mean sending a mission to study a country's trade problems and submitting to it a comprehensive report with recommendations.

Reports were made to the Contracting Parties on consultations which the United States initiated with Italy and France on their remaining import restrictions.13 The United States was able to express satisfaction with new liberalization steps to be taken shortly by Italy and hoped that additional action to eliminate quantitative import restrictions would be announced in the near future. In discussing the consultation with France the United States observed that, while it found encouragement in the relaxation of French import restrictions over the past 6 months, there was still much to be done in liberalizing imports of agricultural commodities.

The session also approved reports of the Committee on Balance of Payments Restrictions on the consultations held with five countries (Ceylon, Chile, Indonesia, South Africa, and Turkey).1

With the admission of Sierra Leone the number of full contracting parties was raised to 39.15

There was considerable debate on the trade difficulties which some contracting parties, particularly the less developed countries, believe will be created by the common external tariff of the European Economic Community and the trade advantage resulting from the association of the overseas territories with the EEC.

The Contracting Parties also welcomed the announcement that six signatories to the Montevideo Treaty establishing the Latin American Free Trade Area 16 had deposited instruments of ratification on May 2, 1961.

The Contracting Parties disposed of a number of other items of business concerning the renegotiation of certain tariff concessions, reports by Australia and South Africa on the extent to which they

13 See the report adopted by the Contracting Parties, May 18, 1961; text in General Agreement on Tariffs and Trade: Basic Instruments and Selected Documents. Tenth Supplement (Geneva, 1962), pp. 117-130, and the Department of State Bulletin, July 3, 1961, pp. 33-34.

14 GATT docs. L/1427 and L/1462-1465, respectively.

15

See the table annexed to doc. 639, post.

16 Text ante, doc. 139.

have taken advantage of waivers of particular GATT obligations granted by the Contracting Parties, a convention for the temporary importation of professional equipment," a trade problem raised by New Zealand on the dislocation of the United Kingdom butter market, 18 and administrative matters dealing with the GATT budget and secretariat personnel.

The chairman of the U.S. delegation was Theodore J. Hadraba, Director, Office of International Trade, Department of State. The vice chairman was Harold P. Macgowan, special assistant to the director, Office of Economic Affairs, Bureau of Foreign Commerce, Department of Commerce. Carl D. Corse, U.S. Minister and representative on the GATT Council of Representatives, was special adviser to the delegation. Other members of the U.S. delegation were drawn from the Departments of State, Treasury, Agriculture, Commerce, and Labor.

636. ARRANGEMENTS REGARDING INTERNATIONAL TRADE IN COTTON TEXTILES, Agreed to at Geneva by Representatives of Major Textile Importing and Exporting Countries, July 21, 1961 (Excerpt)19

THE PARTICIPATING COUNTRIES recognize the need to take co-operative and constructive action with a view to the development of world trade and that such action should be designed to facilitate economic expansion and in particular to promote the development of the lessdeveloped countries by providing increasing access for their exports of manufactured products.

They take note, however, that in some countries situations have arisen which, in the view of these countries, cause or threaten to cause "disruption" of the market for cotton textiles. In using the expression "disruption" the countries concerned have in mind situations of the kind described in the Decision of the CONTRACTING PARTIES of 19 November 1960 the relevant extract from which is annexed as Appendix A 29 to this Agreement.

The participating countries desire to deal with these problems in such a way as to provide growing opportunities for exports of these products provided that the development of this trade proceeds in a reasonable and orderly manner so as to avoid disruptive effects in individual markets and on individual lines of production.

"See the report adopted by the Contracting Parties, May 17, 1961; text in General Agreement on Tariffs and Trade: Basic Instruments and Selected Documents, Tenth Supplement (Geneva, 1962), pp. 211–236.

"See the report on consultation held in April 1961; text ibid., pp. 74–76.

1 TIAS 4884; 12 UST 1674. The Geneva meeting. held July 17-21, 1961, at the request of the United States, was attended by Representatives of Australia, Austria, Belgium, Canada, France, the Federal Republic of Germany, India. Italy, Japan, the Netherlands, Pakistan, Portugal, Spain, Sweden. the United Kingdom, and the United States. Representatives of Brazil, Denmark, Greece, Norway, Switzerland. Turkey, and the United Arab Republic attended as observers. Not reprinted here.

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