394.31/10–1650: Telegram
The Secretary of State to the United States Delegation to the Torquay Conference
priority
82. USTAC. Ref urtel 78 Oct 16 Dept and TarComm will issue fol releases 10 a. m. Wash time Thurs Oct 19:
State Dept Press Release:1
“Pres proclamation will shortly be issued withdrawing as of Dec 1, 1950 certain US tariff concessions on women’s fur felt hats and hat [Page 1531] bodies made in GATT concluded at Geneva 1947. Action will be taken under escape clause (Art XIX) of GATT and will be first case in which US has invoked clause.
Action applies to women’s fur felt hats and hat bodies valued at more than $9 and not more than $24 per dozen. It will restore on these items tariff rates provided for in TA of 1930 ranging from 25 to 40 percent higher than rates provided for in GATT. Sched of categories affected showing present rates and those which will apply upon withdrawal of concessions given below.
In recent years imports of these products have come principally from Czech, Italy, France and UK.
Proclamation will be issued in accord with recommendations of TarComm made after investigation of trade in women’s fur felt hats and hat bodies. This investigation conducted in response to application by domestic producers of these articles for invocation of escape clause which provides that any party to agreement may modify or withdraw a particular concession if it finds that as result of concession and unforeseen developments, imports of product in question occurring in such increased quantities and under such circumstances as to cause or threaten serious injury to a domestic industry.
Report of TarComm to Pres states among other things that since reduction of duties in 1948 imports of women’s fur felt hat bodies have supplied progressively larger share of domestic consumption and that domestic production has been materially smaller than before war. Whereas imports thruout 1930’s and immediate post-war years equivalent to less than 5% of domestic production, they were equivalent to 7.2% in 1948 (first year fol reduction in duty), 21.4% in 1949 and 30.5% in first six months of 1950.
Escape clause in GATT requires that any party invoking it shall notify other parties of its action and shall consult with other CP’s interested in product. If CP’s affected do not agree upon action as result of such consultation, they may suspend substantially equivalent concessions which they have granted to party invoking escape clause, unless such suspension is disapproved by CP’s as group.
Required notice in this case has been given to other CP’s and necessary consultations have begun in Torquay.
Altho US has negotd tariff concessions on several thousand items subj to escape clause, only 20 applications for its invocation have been recd by TarComm. Eleven of these have been dismissed. Decision on six pending. One postponed. Two investigations ordered. One investigation, re spring clothespins, resulted in recommendation that no action be taken.
Attached is copy of TarComm’s findings; facts bearing on findings; and recommendations to Pres.2 Limited nr copies report, together with additional data developed during investigation, are available from TarComm which is issuing today press release on this subj.
Fol is sched of categories of women’s fur felt hats and hat bodies which will be affected by withdrawal of concessions; it shows existing [Page 1532] concession rates of duty and rates which will become effective upon withdrawal of concessions:
| Item | Rate of duty in: | |
| (1950) GATT | TA of 1930 | |
| Para 1526(a) TA of 1930 | ||
| Hats, caps, bonnets, and hoods, for women’s wear, trimmed or untrimmed, incl bodies, hoods, plateaux, forms, or shapes for hats or bonnets, composed wholly or in chief value of fur felt: | ||
| Valued per dozen at— | ||
| More than $9 and not more than $12 | 55% ad valorem | $5 per doz plus 25% ad val |
| More than $12 and not more than $15 | 47% ad val | $6 per doz plus 25% ad val |
| More than $15 and not more than $18 | 47½% ad val | $7 per doz plus 25% ad val |
| More than $18 and not more than $24 | 40% ad val | $9 per doz plus 25% ad val” |
Tariff Comm Press Release:3
“Pres has informed TarComm that he will issue proclamation withdrawing eff Dec 1 trade-agreement concessions in US duties on women’s fur felt hats and hat bodies valued at more than $9 but not more than $24 per doz. Effect of this action will be to restore on US imports of such hats and hat bodies rates of duty originally provided for by TA of 1930. Rates which will thus be restored are about 25 to 40% higher than trade-agreement rates which are now in effect.
Concessions on women’s fur felt hats and hat bodies are to be withdrawn under escape clause (Art XIX) of GATT. This clause provides that a country may modify or withdraw trade-agreement concessions on any articles, if as result of unforeseen developments and concessions, imports of articles occur in such increased quantities and under such conditions as to cause or threaten serious injury to domestic industry producing like or directly competitive articles.
Proclamation now announced is in accord with recommendations of TarComm made after investigation of trade in fur felt hats and hat bodies. Comm’s investigation was conducted under Exec Order 10082 which among other things directs Comm to make investigations in connection with invocation by US of escape clause of trade agreements.
Imports of women’s fur felt hat bodies since reduction in duties in 1948 have supplied progressively larger share of domestic consumption of such articles; domestic production has been materially smaller than before war. Whereas imports throughout 1930’s and in immediate postwar years were equivalent to less than 5% of production, they were equivalent to 7.2% of production in 1948 (first year fol reduction in duty); 21.4% in 1949; and 30.5% in first 6 months of 1950. Reduction in domestic output of women’s fur felt hat bodies since prewar years has been due in large part to decline in total domestic consumption of such hats, resulting from increasing practice of going without [Page 1533] hats. Increased competition from imported hat bodies, has however, also contributed substantially to decline in domestic output.
Investigation covered all women’s fur felt hats and hat bodies, but Comm found that conditions prevailing with respect to imports of hats and hat bodies valued at $9 or less or more than $24 per doz are not such as wld justify change in trade-agreement rates of duty applicable to imports of such hats and hat bodies. Hat bodies with foreign values ranging from $9 to $24 per doz have recently accounted for bulk of total imports of women’s fur felt hats and hat bodies and imports in this value range have increased greatly since present trade-agreement rates became effective. Comm found that these increased imports were causing serious injury to domestic industry.
Before war nearly all domestic production of women’s fur felt hat bodies, and larger part imports in most years, consisted of hat bodies of plain felt. About time duties were reduced there was style change greatly favoring hats with napped or pile finishes such as velours. Increase in supply of hat bodies having special finishes began in import trade and later extended, in much smaller proportion, to domestic production. It is estimated that in 1949 and first 6 months 1950 more than 95 percent of imports consisted of these special finishes, whereas hat bodies of that type represented 6 or 7 percent of domestic production. Much the greater part of 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 higher-priced ranges. More especially, however, these imports have severely limited establishment and expansion domestic production 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; latter finishes, however, require much larger amounts of labor than plain bodies. Increased imports of hat bodies with special finishes largely prevented domestic manufacturers from shifting, in line with style change, to such finishes.
Limited number copies TarComm’s report to Pres available for distribution and may be procured by addressing request to Secretary, US TarComm, 7th and E Streets, NW, Washington, 25, DC.”
- The text of the press release printed in the Department of State Bulletin (October 30, 1951, p. 710) omitted the last paragraph of the text printed here which includes the schedule of categories of women’s fur felt hats and hat bodies which were affected by the withdrawal of concessions. The Bulletin text appeared under the caption “U.S. To Invoke ‘Escape Clause’ Under GATT,” with the notation that it was released to the press on October 18 (rather than October 19 as indicated here).↩
- Not printed.↩
- The Tariff Commission Press Release was not printed in the Department of State Bulletin.↩