International Trade Files, Lot 57 D 284, Box 165, “Section 22—Magnuson Amendment”

Memorandum by the Assistant Chief of the Commercial Policy Staff (Weiss)1

Subject: Status of Almond Investigation

1. The Tariff Commission instituted on April 13, 1950 an investigation of imports of tree nuts. This action was taken under Section 22 at the request of the President, who had been asked by the Secretary of Agriculture to request the investigation. After hearings and study, the Commission announced on November 30, 1950, with the President’s approval, that there was at the time no basis for imposing restrictions on imports of tree nuts under the provisions of Section 22. The Commission also undertook to continue the investigation, to keep a close watch on the trade and on provisions and operations of marketing agreements and other programs of the Department of Agriculture with a view to considering whether future developments might warrant the imposition of restrictions on imports. Late this summer, a reopening of the investigation was announced and hearings were held on September 12.

2. Interested parties have until October 5 to submit briefs. We do not know when the investigation may be completed. We understand that the Department of State may be asked to comment on the nut situation in relation to our international obligations and/or foreign policy objectives, notwithstanding the present language of subsection (f).

The Department of Agriculture testified at both hearings (last year and this) and argued strongly this year for quotas. “Obvious examples of imported tree-nut interference” (with Agriculture programs) were cited and the volume of imports of almonds last year was shown to be in excess of what had been estimated in setting the percentage of the almond crop which might be marketed as nuts.

3. While we do not know what this year’s demand for almonds will be, the situation of the almond industry may be less good this year than last, since the crop is bigger and there is a sizeable carryover. A large crop also means that there will be a higher than average percentage of small nuts, which can be used in candy bars and will compete in that use with imports. The Department of Agriculture has issued a preliminary order restricting the quantity of almonds which may be marketed as such, shelled or unshelled, to 75 percent of the crop, and the balance will be sold for crushing to oil. Last year 100 percent of the crop was declared saleable as nuts. There is so far no subsidy [Page 1477] available to growers on sales of nuts for crushing; we lack information concerning the profitability of crushing.

Italy is the supplier of nearly all of our imports, and imports from Italy amounted to $1.6 millions. Almonds are a product of southern Italy, the other principal products of which are cheese (under restriction under Section 104) and olive oil (which is among the products upon which Section 104 restrictions might be imposed). A note has been presented concerning the Italian interest in the trade, pointing out its importance to the producing areas and to the Italian balance of payments. The point is also made that while much of the domestic crop is marketed in the shell, all imports are shelled. Further, the note points out imports are used to a large extent in candy bars where a small whole almond is wanted, and normally United States domestic production of these sizes is inadequate. Copies of the note are being transmitted to the Commission.

A quota on almonds under Section 22 might be consistent with Article XI of GATT if considered to be imposed as a measure “necessary to the enforcement of governmental measures which operate to restrict the quantities of the like domestic product permitted to be marketed . . .” and if it met the tests as to size of the quota relative to past imports. But the marketing agreement does not restrict the total quantities of almonds which may be marketed; it does not even place an absolute limit on the quantity marketable as nuts. It merely fixes percentages of the crop to be marketed in different channels. In addition, there is the question raised by Italy whether imports compete with the entire domestic crop or with a part only.

Nevertheless, the case for a quota on almonds is probably better than that for any other nut, and in view of the present wording of Subsection (f) of Section 22, it may be difficult to find a basis for persuading the Commission not to recommend restrictions. The President will act on the investigation and report under the following language:

  • “(b) If, on the basis of such investigation and report to him of findings and recommendations made in connection (with the report) . . ., the President finds the existence of such facts, he shall by proclamation impose such fees . . . or such quantitative limitations . . .”

Although fees have not been requested, consideration should perhaps be given to the possibility of urging that, if anything is to be done, fees rather than quotas be imposed. No trade-agreement concession has been made on almonds.

  1. Addressed to J. Robert Schaetzel, Special Assistant to the Assistant Secretary of State for Economic Affairs, and Raymond Vernon, appointed Deputy Director of the Office of Economic Defense and Trade Policy.