The Acting Secretary of State to the Embassy in Belgium 1


No. 52

The Acting Secretary of State refers to the Department’s telegram No. 778 of November 27, 1951 requesting the Officer in Charge to give notice in writing to the Government of Belgium of the findings and recommendation of the Tariff Commission with regard to the concession on hatters’ fur, and encloses two copies of the Tariff Commission’s Report to the President in this case.2 The Officer in Charge is requested to transmit one copy of this Report to the appropriate official of the Belgian Government, specifically indicating its confidential nature.

The Department is aware that this is not a propitious time to discuss the proposed withdrawal of this concession, and has considered at some length the various matters which are already under discussion with the Belgian Government and which would have made it advisable to have postponed the discussions of the concession on hatters’ fur if it had been possible.3 However, under the Trade Agreements Extension Act of 1951, the President must, within 60 days from November 9, the date of the Tariff Commission’s Report, either make the modifications recommended by the Commission or submit a report to the Ways and Means Committee of the House of Representatives and the Finance Committee of the Senate, stating why such action has not been taken. Consequently, it was imperative that the matter be brought to the attention of the interested foreign governments at once so that consultations with them, if requested, might be completed as soon as possible in view of the aforementioned 60-day period.

As stated in the reference telegram, the Embassy should stress in the strongest terms the need for observing the highly confidential nature of this notification and the Report. Should the Belgian Government feel it absolutely essential to secure information from its industry for [Page 1550] a study of the effect of the withdrawal, care should be taken to give no indication as to the purpose for which data are being requested. As the Embassy will understand, if information regarding the recommendations of the Tariff Commission should become known to the trade prematurely it would be highly embarrassing, and it might result in the President’s having to take steps to put the recommendations into effect without waiting for the completion of any consultations which may be requested by interested governments.

It has not been decided what recommendation the Department should make to the President in this case, but it would be necessary to have extremely important or persuasive reasons to justify any recommendation for a modification of the proposed action. The Department will appreciate full and prompt reporting of any comments made by the Belgian Government regarding the proposed action.

As background information and guidance in carrying out any consultation which may be requested, it should be noted that Article XIX of the General Agreement on Tariffs and Trade contemplates the reaching of agreement with other contracting parties having a substantial interest in the concession on hatters’ fur as a result of any consultations which may be requested. In any such consultations, recognition must be given to any claim that the reciprocal balance of concessions as originally negotiated will have been impaired by a modification of the concession on hatters’ fur. Consequently, this Government must be prepared, if requested, to consider the possibility of compensatory adjustment of the reciprocal schedules of concessions involved.

Such compensatory adjustment might conceivably embody (1) the granting of additional substantially equivalent concessions by this Government, or (2) the withdrawal of equivalent compensatory concessions on the part of the other contracting parties having a substantial interest in the concession on hatters’ fur.

The former raises important procedural and legal questions under the Trade Agreements Act which have not yet been explored and resolved. Nevertheless, should the Belgian Government propose that this Government make such compensatory concessions, you should not reject them, but report them fully to the Department for examination and study.

As additional background information in this connection, it is recalled that at Torquay the United States did in effect grant compensatory concessions to France and Italy to offset the withdrawal from Schedule XX under Article XIX, of the concession on certain women’s hats and hat bodies. This extension of compensatory concessions was made possible by, and was carried out in connection with, the negotiations for new reciprocal tariff concessions with these countries which were held at Torquay; that is, in considering the reciprocal balance of new concessions made at Torquay between the United [Page 1551] States and France and Italy, respectively, weight was given to the benefits lost by France and Italy as a result of the withdrawal from Schedule XX of the concessions on women’s hats and hat bodies.

As to (2), the retaliatory withdrawal by affected other contracting parties of equivalent concessions, this Government would, of course, greatly regret the taking of any such action by another contracting party because of the additional “unraveling” of the concessions provided for under the Agreement which this would entail.

Moreover, any such retaliatory withdrawal might well involve consultation also with other contracting parties claiming an interest in the concessions which a contracting party, e.g. Belgium, might propose for such retaliatory withdrawal. The completion of any such chain of consultations obviously could not be completed within the time remaining before the President must take action in the matter.

One problem which arises with respect to both of the above approaches arises out of the fact that concessions withdrawn under escape clause action are to be kept under review and should be restored if conditions change so that such restoration may be made without causing serious injury. If the concession is restored at some future date, any concessions which may have been withdrawn from the United States because of the original escape clause action should also be restored. Similarly, it may be necessary to make some provision for adjustment of the balance in the event the United States should now give a new concession in compensation for the withdrawn concession and the latter is then restored at some later date.

As stated, it is recognized that our action is likely to meet strong objections from the Belgian Government, and the Embassy should, in discussing it, express a willingness to hear in full any comments made by the Belgians, and to report them in detail to the Department.

  1. Similar instructions were formulated also for Luxembourg (No. 12, December 5), The Hague (No. 55, December 5), Paris (No. 139, December 6), and Rome (No. 166, December 6), none printed (file 394.31).
  2. Not printed, but see telegram 82, October 18, p. 1530.
  3. See documentation regarding Belgian import restrictions, pp. 1478 ff.