International Trade Files, Lot 57 D 284, Box 164, “Magnuson Amendment”
Memorandum Prepared for a Press Conference of the Secretary of State, Washington, October 12, 19491
Subject: Senator Magnuson’s amendment of Section 22 of the Agricultural Adjustment Act regarding the relationship between Section 22 and international commitments of the United States2
If the Secretary is asked to comment on Senator Magnuson’s amendment of Section 22 of the Agricultural Adjustment Act, he may wish to comment as follows:
“The Magnuson amendment raises a number of legal problems regarding the relationship between possible action under Section 22 and the obligations this Government has assumed under the General Agreement on Tariffs and Trade and other reciprocal trade agreements. The Department is much concerned about Senator Magnuson’s amendment, as it appears to require changes in our trade agreements with the possible loss of important benefits accruing to the United States under those agreements. As I have not yet seen the amendment in the form approved by the Senate, I cannot comment on it in more detail.”
Background:
As part of the farm bill now under consideration by the Senate, an amendment proposed by Senator Magnuson modifying Section 22 of the Agricultural Adjustment Act of 1934, as amended, was approved yesterday by the Senate. Section 22 provides that the President shall impose import fees or quotas if he finds that imports threaten the impairment of farm programs undertaken for price support and other purposes. In its present form Section 22 explicitly provides that no action may be taken under that Section which conflicts with obligations under existing or future trade agreements. Senator Magnuson’s [Page 1465] amendment in its original form would have eliminated this limitation and provided instead that every international agreement hereafter entered into must reserve to the United States the unilateral right to impose the fees and quotas contemplated by Section 22 and that no agreement now in force shall be permitted to continue beyond its permissible termination date without the inclusion of such a reservation. This amendment was narrowly defeated in the Senate last week by a vote of 37–35. The amendment approved by the Senate yesterday still calls for the elimination of the present limitation on action under Section 22 and provides that “No international agreement hereafter shall be entered into by the United States, or renewed, extended or allowed to extend beyond its permissible termination date in contravention of this Section”.
The GATT allows us to use quotas in connection with agricultural products when domestic production or marketing is also limited. It allows legitimate use of Section 22, but imposes a limitation upon its unrestricted use. This is a hard-won compromise with over 30 other countries. It is satisfactory to Agriculture, the Farm Bureau and the Farmers Union.
The lawyers have not yet a chance to decide just what effect this new language may have on our trade agreement obligations. If its effect is similar to that of the original version, as is undoubtedly intended, we will be faced with the possibility, should the amendment become law, of having to renegotiate or withdraw from the GATT upon the expiration of 60 days after the amendment becomes effective, since for any individual contracting party applying the Agreement provisionally “the permissible termination date” of the Agreement would be upon the expiration of 60 days’ notice of intention to withdraw from the Agreement.