GATT files, lot 63 D 134, “Section 22”

Memorandum by Leonard Weiss of the United States Delegation to the Ninth Session of the Contracting Parties to the General Agreement on Tariffs and Trade to the Chairman (Waugh) 1

confidential
  • Subject:
  • Our Position on Section 22

At our Delegation meeting this morning we were asked to consider how, given that we do not modify Section 22 in any way, we should meet this problem in the GATT. I would like to raise again a more fundamental question of whether we should not seek to modify our substantive position on Section 22 and try to reach agreement with the countries here on a reasonable agricultural [Page 209] provision even if it should require our going to the Congress to seek an amendment of Section 22.

I think I am fully appreciative of all the difficulties that following the latter course would entail for us domestically and with the Congress. I wonder, however, for reasons suggested below, whether it would not be possible for us to follow such a course and still attain our objectives in the Congress—and on a more satisfactory basis than if we adhered to our present position.

Before going into the details of what I would like to propose, I should like to emphasize that my concern about our present position on Section 22 is not so much as to our ability to get other countries to accept it, as it is with respect to the great cost that we are likely to have to pay to achieve our position. Our position on Section 22 weakens our entire posture in the GATT. In particular, it is going to make it exceedingly difficult, if indeed it will be possible at all, to get in the GATT the kind of balance-of-payments provisions we would like to see. It is affording the basis on which other countries, for example the Germans, are seeking broad exemptions to apply restrictions to protect their farmers—restrictions which will materially impair the opportunities for American agricultural exports abroad.

In any case, aside from these substantive aspects, it would seem unlikely on the basis of our present position on Section 22 that we shall come out of these negotiations with a result which will be palatable to the Congress. The other countries here are not likely to accept the technique of giving us an exemption for Section 22 in the form of changing the date in the Protocol of Provisional Application. But even if they were, the advantage domestically for us in getting such an exemption must be offset by the political disadvantage at home in coming back to the Congress with an agreement which fails to do much, if anything, to get rid of balance-of-payments restrictions against American exports and which further opens the way for other countries to apply restrictions on US exports of agricultural commodities.

Are there other techniques for meeting this problem in the GATT in a way which would not require a change in Section 22 and in a way which avoids the political difficulties we fear if we should seek an amendment to Section 22?

I am inclined to doubt it. Some countries have suggested that we ought to seek a waiver under Article XXV2 of the GATT to meet [Page 210] our problem. If such a waiver were granted, I would think that it would be limited in some way, either time-wise or on the basis of some general standards, so that we would not in fact be able to go back to the Congress and say that we have a completely free hand as regards Section 22. Walter Hollis3 has made a suggestion for a provision in the GATT which would allow us to go as far as the letter of Section 22 might permit but which, if we went that far, would authorize retaliatory action against us. I doubt that the Congress would be happy with any such provision explicitly sanctioning retaliatory action against us if we apply Section 22 up to the maximum it might allow or require.

Since we would seem to face all these political difficulties with the Congress in trying to maintain Section 22 under the GATT, I wonder if it would not be better for us to take all these political difficulties in fighting for a provision we believe is reasonable and defensible, one which enables us to obtain a more satisfactory result generally in our negotiations in the GATT, and one which leaves us with a result more fully in accord with our national interest.

What I would like to suggest for consideration, therefore, is that we return to our proposal to allow import restrictions in order to safeguard domestic agricultural programs, provided, however, that such restrictions are not applied to cut off normal imports, that is, imports which would have come in even if we had not had any domestic program. I think any reasonable person would agree that such a provision would be fair, to us as well as to foreigners. Its inherent equity would, it seems to me, provide an extremely powerful argument to persuade the Congress to accept it. Indeed, it can be argued with some force that the purpose of Section 22 even as it is now written is not to curtail normal imports but only those imports which have been attracted by our domestic support programs.

If in addition to the essential reasonableness of this proposal, we could also show the Congress that we have got in the GATT tighter balance-of-payments provisions and other limitations which will promote American exports generally and agricultural exports in particular, we would have a very strong basis for persuading the Congress to accept the change in Section 22 involved. With the “normal imports” approach suggested above, we would have a very good chance of getting in our negotiations here the kind of balance-of-payments provisions the Congress would like to see and of avoiding any general opening up of the door to other countries to impose restrictions on agricultural imports from us and others.

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Let us assume, however, that despite the reasonableness of this proposal and despite the fact that it enabled us to get a GATT otherwise highly satisfactory to the Congress, the latter refused to accept any provision in the GATT involving a modification of Section 22. It would seem to me that in such circumstances, we, at worst, might still get our Organization Agreement through the Congress, with some sort of reservation to the effect that acceptance of the Agreement by the Congress is subject to our further renegotiating the GATT so as to give us a free hand with regard to Section 22.

If we did wind up with such a reservation, we could then go back to the Contracting Parties and seek such a provision as we are now attempting to get—and, in my judgment, we could seek such a provision with much better results and under circumstances much more propitious to the achievement of our objectives. If we had such a reservation, we would be coming back to the Contracting Parties after the GATT had already been tightened up in the respects which we desire and after we had approval from the Congress of our Organization Agreement, albeit subject to a reservation.

If you feel there is some merit in the above line of argument, I wonder if it would not be useful for us to discuss the matter with Congressman Cooper and with Senator Gore when he arrives to get their reaction.4

  1. Memorandum addressed also to Vice Chairman Brown.
  2. Under Article XXV, two-thirds of the Contracting Parties to the GATT could waive an obligation imposed upon a Contracting Party but would have the right to prescribe whatever conditions or criteria they desired for the execution of the waiver.
  3. A member of the U.S. Delegation.
  4. Senators Albert Gore (D.–Tenn.) and Frank Carlson (R.–Kans.) and Representatives Jere Cooper (D.–Tenn.) and Richard M. Simpson (R.–Pa.) were members of the U.S. Delegation.