Foreign Relations of the United States, 1951, National Security Affairs; Foreign Economic Policy, Volume I

394.31/10–1650: Telegram

The Acting Chairman of the United States Delegation to the Torquay Conference (Corse) to the Secretary of State

secret

Torquay, October 16, 1950—6 p. m.

78. USTAC. Deptel 57, October 11. Will send following letter to Wilgress¹ for release Thursday, October 19, 3 p. m. Torquay time:

• “I am instructed by my government to inform the contracting parties that an investigation by the US Tariff Commission has resulted in the following findings:
  • “1. That as a result of unforeseen developments and of the effect of the tariff concessions granted thereon by the US in the agreement on tariffs and trade, hats, caps, bonnets, and hoods, for women’s wear, trimmed or untrimmed, including bodies, hoods, plateaux, forms, or shapes, for women’s hats or bonnets, composed wholly or in chief value of fur felt, and valued at more than $9 and not more than $24 per dozen, which products are described in Item 1526(A) of Part I of schedule XX (original) of the said general agreement, are being imported into the US in such relatively increased quantities and under such conditions as to cause serious injury to the domestic industry producing like or directly competitive products, and as to threaten continuance of such serious injury.
  • “2. That the withdrawal in whole of the tariff concessions granted in said general agreement on the foregoing products, without specified time limit as to its duration, is necessary to prevent continuance of such injury; and that such withdrawal would afford much greater relief to the domestic producers if the effective date of such action were prior to December 1, 1950, than if it were later.
• “Among the circumstances which have led the Tariff Commission to make these findings are the following:
  • “1. Imports of women’s fur felt hat bodies since the reduction in duties in 1948 have supplied a progressively larger share of the domestic consumption of such articles; the domestic production has been materially smaller than before the war. Whereas, imports throughout the 1930’s and in the immediate postwar years were equivalent to less than 5 percent of production, they were equivalent to 7.2 percent of production in 1948 (the first year following the reduction in duty); 21.4 percent in 1949; and 30.5 percent in the first 6 months of 1950. The reduction in the domestic output of women’s fur felt hat bodies since the prewar years has been due in large part to the decline in the total domestic consumption of such hats, resulting from the increasing practice of going without hats. Increased competition from imported hat bodies has, however, also contributed substantially to the decline in domestic output.
  • “2. Before the war nearly all of the domestic production of women’s fur felt hat bodies, and the larger part of the imports in most years, consisted of hat bodies of plain felt. About the time the duties were reduced there was a style change greatly favoring hats with napped or pile finishes (such as velours and suedes). Increase in the supply of hat bodies having these special finishes began in the import trade and later extended, in much smaller proportion to domestic production. It is estimated that in 1949 and the first 6 months of 1950 more than 95 percent of the imports consisted of these special finishes, whereas hat bodies of that type represented 6 or 7 percent of the domestic production. Much the greater part of the consumption of hat bodies of these special finishes has been supplied by imports. Imports of hat bodies of these special finishes have to some extent affected domestic production of hat bodies of plain felt, particularly those in the higher-priced ranges. More especially, however, these imports have severely limited the establishment and expansion of domestic production of these special finishes. Domestic producers are not confronted with any technical obstacles in shifting their production from plain felt hat bodies to velours and other special finishes, the latter finishes, however, require much larger amounts of hand labor than the plain bodies.
  • “3. With respect to women’s fur felt hat bodies corresponding to an import value of more than $9 and not more than $24 per dozen, there is direct and sharp competition between the imported and domestic products, particularly those with special finishes. This price range comprises the great bulk of the imports. It is the marked recent increase in imports within this middle range of values which has caused serious injury to the domestic industry. This injury has been steadily increasing since the concessions went into effect, and, unless the concessions are withdrawn, the injury will continue and perhaps become still more serious.
  • “4. Women’s fur felt hats are mostly for fall and winter wear, and imports and domestic production of women’s fur felt hat bodies are highly seasonal. The peak period of production and sales of the domestic hat bodies occurs in June, July, and August, and that of the foreign hat bodies for the US market somewhat earlier. Considerably in advance of the season, however, samples are made up and price lines are established. Usually as early as December or January preceding a season, price lines and samples are initiated by importers and early contracts are made. Under these circumstances, withdrawal of the concessions by December 1, 1950 is necessary to afford the most effective relief.
• “In accordance with these findings and pursuant to the provisions of Article XIX the general agreement, the Government of the US finds it necessary to withdraw the concessions on the above-mentioned products. In view of the critical circumstances set forth above, which indicate that delay would cause further damage difficult to repair, it is necessary that a proclamation of the withdrawal be issued November 1, 1950, to be effective December 1, 1950.²
• “This action is being taken in accordance with the provisions of the last sentence of paragraph 2 of Article XIX, and my government is prepared to afford the contracting parties and those contracting parties having a substantial interest as exporters [apparent garble] products concerned an opportunity to consult with it immediately in respect of the proposed action. There is attached a table showing the principal foreign suppliers of US imports of these products.
• “It will be appreciated if you will inform the contracting parties immediately of this proposed action, and of my government’s willingness to enter into the required consultation at Torquay as soon as possible. A public announcement of the proposed action is being made today in Washington.”

Suggest Department and TO releases be issued simultaneously. Send USDel urgently copies of Department and TC releases.

Corse has discussed proposed action in confidence with Wilgress. Latter deeply disturbed. Thought action poorly timed from point of view of Torquay negotiations and Gordon Gray report.³ Expressed opinion this was exactly type of product US should import and was unable to believe even if unemployment caused by imports, workers could not find employment elsewhere. Wilgress asked that Department be informed specifically his views and hoped careful consideration could be given them. Corse said would do this but not optimistic US could change its position in view of TC finding et cetera, Wilgress also urged US notification to CP’s should be as complete as possible.

Also informed Holmes and Leckie UKDel today in confidence.⁴ Did not provide statistics or detailed information, but they did not appear concerned on basis of general statement.

Corse

1. L. D. Wilgress, High Commissioner for Canada in London, Chairman of the Contracting Parties of GATT.
2. In telegram 79 to Torquay October 17, 6 p. m., the Department suggested that the words “on or about” be inserted ahead of the date November 1, 1950, in order to take care of any contingencies that might arise in issuing the proclamation (394.31/10–1650).
3. For documentation on the Gordon Gray report, see Foreign Relations, 1950, vol. i, pp. 831 ff.
4. Respectively, Sir Stephen Holmes, leader of the British negotiating team at Torquay (Harold Wilson, President of the Board of Trade, was head of the British Delegation), and J. Leckie, member of the British Delegation.