429. Editorial Note
On August 21, the Operations Coordinating Board submitted a Progress Report to the National Security Council on NSC 5413/1, “United States Policy Toward the Philippines”. In most respects, this report did not differ substantially from the previous OCB report of January 16, except with respect to the problem of Philippine protective trade barriers, a matter which had not been covered in previous OCB reports. Regarding this subject, the OCB paper of August 21 reads:
“The Philippines is increasingly utilizing exchange controls for protection of local manufacturers as its industrialization program progresses, although the low level of the country’s international reserves is also cited as justification for the various import bans. The obligation under the Revised Trade Agreement for the Philippines to consult with the U.S. prior to the institution of trade restrictions has so far been disregarded, despite our formal protests in four selected and especially significant cases. The U.S. is concerned at what appears to be a trend towards Philippine preference for complete protection which seriously affects our export trade by eliminating all outside competition. A comprehensive tariff act, effective July 1, 1957, also contains many protective features, although current tariff preferences for U.S. products afford U.S. traders a temporary advantage vis-à-vis [Page 723] third-country suppliers. The tendency of the Philippine Government to protect domestic industries, even at high economic cost, will increase as the industrial sector of the economy is expanded and diversified. The U.S. Government is encouraging the Philippines to conserve its dwindling reserves by generally increasing domestic production, decreasing consumption of imported products, and making further use of external financing.” (Department of State,S/P–NSC Files: Lot 62 D 1, NSC 5413 Series)
Additional documentation on United States-Philippine commercial relations is ibid., Central File 411.9641.