Memorandum by the Secretary of State to Dr. John R. Steelman, The Assistant to the President
Subject: Proposed Alternatives to the Raw Wool Concession
There is enclosed a memorandum1 from the Alternate Chairman of the interdepartmental Committee on Trade Agreements setting forth the results of that Committee’s consideration of the alternative to the concession on raw wool recommended in the memorandum to you from the Secretary of Agriculture, dated November 15, 1950,2 which was referred to the Committee by this Department.
On September 26, the majority of the Committee on Trade Agreements recommended to the President that the duty on raw wool be reduced from 25½ cents per pound to 17 cents per pound. This Department supported the recommendation of the Committee and urged its approval. On November 14 the President approved the recommendation of the majority of the Committee.
For a number of reasons I strongly urge that no change should be made in the offer on wool as approved by the President. Quite apart from the question of whether the duty on raw wool should be suspended under Section 318 of the Tariff Act of 1930, which authorizes [Page 807] duty-free importation of supplies for use in emergency relief work, it would, in my opinion, be most inappropriate to offer to take such action in connection with tariff negotiations and as an alternative to a tariff concession. There is, of course, no question as to the appropriateness of making a concession on wool with the right reserved to withdraw that concession by a Presidential Proclamation stating that the abnormal situation regarding wool had ceased to exist. There is no reason to believe, however, that Australia and New Zealand would consider that such an offer by the United States provided a basis for negotiations. At the present time the success of the Torquay conference is being seriously endangered by insistence on the part of a number of countries, in particular France, on withdrawing a substantial number of the concessions negotiated by those countries at Geneva and Annecy. The United States has taken the lead in urging that such withdrawals be held to a minimum. Our influence in guiding the conference to a successful conclusion would, in my opinion, be greatly reduced if we were to offer to Australia and New Zealand a purely emergency concession on an item which is of such vital importance to these countries. Such action would greatly discourage the conference at a very critical stage. At best it would prolong the negotiations with Australia and New Zealand, as well as with the other Commonwealth countries involved in the preferential system. Insistence on maintaining a limited offer on wool would, in my judgment, eventually result in failure to conclude negotiations with Australia and New Zealand (wool finer than 44’s accounted for 98 percent of United States imports in 1948 of items on the offer list for Australia). Furthermore, if in the circumstances it was possible to conclude negotiations with the United Kingdom, only very limited results could be expected. It should also be noted that the Australians have only recently agreed, after extended negotiations, to participate in a set-aside arrangement for wool which is designed to ensure adequate supplies of wool for United States military requirements.
Should the suggestion be made that the United States make an initial offer to the Australians along the lines proposed by the Department of Agriculture with authority to recede to the concession already approved by the President, it is believed that this course of action would be undesirable. It is the view of the Chairman of the United States Delegation at Torquay that such tactics would be wholly unproductive and would only serve to dishearten the conference, to prolong the negotiations and to endanger their successful outcome.
I therefore recommend that no change be made in the offer approved by the President.