PROGRESS TOWARDS ADOPTION OF THE PRESIDENT’S FOREIGN
ECONOMIC PROGRAM SINCE MARCH 30, 1954
Since the President’s message of March 30, 1954, recommending the
adoption of certain measures to further the foreign economic policy of
the United States, the following legislative and Executive Branch
actions have been taken.
- 1.
- The Trade Agreements Extension Act of 1954 (P.L. 464, 83rd Congress)4 was
passed extending for one year (to June 12, 1955) the existing
authority of the President to reduce tariff rates through reciprocal
trade agreements. This one-year extension was needed to afford the
Congress sufficient time to study the President’s request for new
authority.
- 2.
- Under the authority granted by the Trade Agreements Extension Act
of 1954, a trade agreement was negotiated with Japan providing for
reciprocal tariff concessions. Negotiations were also completed with
Switzerland, Canada, and Benelux
(Belgium, The Netherlands, Luxembourg) providing tariff concessions
as compensation for concessions previously withdrawn by the United
States from those countries.
- 3.
- As a result of a thorough-going review by the 34 contracting
countries, the General Agreement on Tariffs and Trade was revised
and improved in a number of respects, and a new agreement was
negotiated to establish an Organization for Trade Cooperation
(OTC)5 for the
more effective administration of the General Agreement. United
States membership in the OTC awaits
Congressional approval.
- 4.
-
Supplementing the Customs Simplification Act of 1953,6 which has resulted in
considerable improvement of customs administration, is the
Customs Simplification Act of 1954 (P.L. 768, 83rd Congress).7 It directs the Tariff Commission to make a
complete study of all provisions of the customs laws of the
United States under which imported articles may be classified
for customs purposes, and to compile for further Congressional
consideration a revision and consolidation of such provisions of
the customs laws
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which, in
the judgment of the Commission, would accomplish to the extent
practicable the following purposes:
- (1)
- establish schedules of tariff classifications which
will be logical in arrangement and terminology, and
adapted to the changes which have occurred since 1930 in
the character and importance of articles produced in and
imported into the United States and in the markets in
which they are sold;
- (2)
- eliminate anomalies and illogical results in the
classification of articles; and
- (3)
- simplify the determination and application of tariff
classifications.
The Act incorporates two other recommendations embodied in the
President’s message of March 30, 1954. It amended the
anti-dumping laws to transfer the injury determinations from the
Treasury Department to the Tariff Commission and to provide that
dumping duties would not be levied against importations made
more than 120 days before the question of dumping was raised.
The latter amendment will help to reduce interference with trade
during the investigation of suspected dumping. The Act also
amended the procedures for the classification of articles not
enumerated in the Tariff Act by providing that, to the extent
possible, such articles should be classified at the rate
applicable to the enumerated article which they most resemble in
use.
The Act also contains a number of minor provisions to facilitate
trade. For example, certain metal products sent abroad for
repairs or alterations may now be returned to the United States
with payment of duty only on the value of such repairs or
alterations. Uniform tariff status is established for
importations from insular possessions.
- 5.
- A number of administrative actions were taken by the Bureau of
Customs to reduce paper work and to speed clearance of goods and
persons through customs. Among these are the following:
- (1)
- New customs regulations were issued to exempt all imports
not exceeding $500 in value from the requirement to have the
invoice certified before the nearest United States consul.
The value of shipments exempted from certified invoice
requirements when not imported for sale was increased to
$1,000.
- (2)
- Examination of passengers’ baggage has been reduced to a
minimum consistent with the adequate enforcement of the
laws.
- 6.
- Two revisions of the tax laws were enacted to help stimulate
private capital investment abroad.
- (1)
- One revision removed the over-all limitation on foreign
tax credits with the result that full credit, up to the
United States tax, can be obtained for income taxes paid to
a foreign country even though losses in another foreign
country completely offset the income in the first country
and there is no net taxable foreign income.
- (2)
- A second revision provides that a regulated investment
trust with more than 50 percent of its holdings in foreign
securities may pass on to shareholders the credit for income
taxes which it has paid abroad and cannot use here because
of its non-taxable status.
- 7.
- The Board of Governors of the Federal Reserve System modified
Regulation K relating to banking corporations authorized to do
foreign banking business (Edge Act corporations). This change
broadens the powers of Edge Act corporations to raise funds and to
increase the amount of credit that can be extended to a single
borrower. The Chase Manhattan Bank, in association with four other
banks, has taken advantage of this change to set up an American
Overseas Finance Corporation to provide medium-term credit
facilities for the expansion of exports.
- 8.
- The Export-Import Bank Act of 1954 (P.L. 570, 83rd Congress)8 was
enacted to improve the management machinery of the Export-Import
Bank, to provide for the representation of the Bank on the National
Advisory Council on International Monetary and Financial Problems,
and to increase the lending authority of the Bank by
$500,000,000.
- 9.
- The Export-Import Bank has expanded its financial assistance to
United States exporters of capital equipment as a means of enabling
these exporters to compete more effectively in foreign markets. This
assistance is in the form of the establishment of lines of credit
for exporters who can qualify. Under this new arrangement the
exporter himself is expected to carry not less than 20 percent of
the invoice value of the exported goods. Another 20 percent must be
received in cash by the exporter from the buyer by the time the
goods are shipped. The Bank thus participates with private capital
in the financing of export sales.
- 10.
-
An Executive Order establishing uniform standards and
procedures to be applied in administering the Buy American Act
was issued by the President.9 The Buy American Act, which became law in
1933,10 provides that preference
in the award of Federal Government contracts shall be given to
domestic suppliers, as against foreign suppliers, unless the
domestic supplier’s bid or offered price is unreasonable or the
award to him would be inconsistent with the public interest.
The Order was designed to bring about the greatest possible
uniformity among executive agencies applying the basic
legislation.
[Page 5]
It provides
methods for determining whether a domestic supplier’s price is
unreasonable as compared with the price of a foreign bidder.
- 11.
- An international trade fair program has been undertaken by the
Government in cooperation with industry. The purposes of this
program, initiated in August 1954, are twofold: to tell the story of
our free enterprise system to the people of other nations, and to
provide effective cooperation with United States business and
industry in international trade promotion. This country is now
actively participating in most of the international trade fairs
throughout the free world.
- 12.
- The President has appointed a Special Assistant to advise and
assist him in accomplishing an orderly development of foreign
economic policies and programs, to assure the effective coordination
of foreign economic matters of concern to the several departments
and agencies of the Executive Branch, and to bring about
improvements in the organization of the Executive Branch for the
development and coordination of foreign economic policy. The Special
Assistant for Foreign Economic Affairs was authorized to establish
and serve as Chairman of a Council on Foreign Economic Policy
through which executive agencies can participate effectively in this
undertaking.11 The
Secretaries of State, Treasury, Commerce, and Agriculture, or their
principal deputies, and the Director of the International
Cooperation Administration comprise the basic membership of the
Council. In addition, the President’s Administrative Assistant for
Economic Affairs, his Special Assistant for National Security
Affairs, and a member of the Council of Economic Advisers, are ex
officio members. Heads of other departments or agencies are invited
by the Chairman to participate in meetings of the Council when
matters of direct concern to them are under consideration.
- 13.
-
The Trade Agreements Extension Act of 195512 continues the trade
agreements program for three years and provides new authority to
the President to reduce tariffs through trade agreement
negotiations. In return for tariff concessions granted to the
United States, the President is authorized to reduce tariff
rates over the three-year period by 5 percent per year. Likewise
he is authorized to reduce tariffs in excess of 50 percent to
that level. No more than one-third of such reduction, however,
may be made in any one-year period.
This extension of the trade agreements program represents a most
important step forward in the achievement of the President’s
foreign economic program. The enactment of this legislation by
an overwhelming vote in both Houses of the Congress reflects the
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strength of the
support in this country for the program to expand trade with the
free world. The three-year period provided by the Act (for the
first time since 1948) will give the stability and assurance as
to United States foreign trade policy needed here and abroad for
the development of expanded trade.
- 14.
- The United States has pressed forward vigorously its participation
in technical cooperation programs, through both the United Nations
Expanded Program of Technical Assistance and bilateral arrangements.
At the request of the President, the Congress has appropriated funds
for a substantially larger technical cooperation program for 1956.
Participation has been concentrated on providing experts and
know-how rather than large funds or shipments of goods except for
necessary demonstration equipment, and has been related to
development programs of the assisted countries.
- 15.
-
The Executive Branch has been striving vigorously to stimulate
international travel in various ways, especially through
simplifying governmental procedures relating to customs, visas,
passports, exchange or monetary restrictions and other
regulations that may harass the traveler. An International
Travel Staff was established in the Department of Commerce in
the latter part of 1954 to work with other agencies of this
government, with national and international travel
organizations, and with agencies of other governments. Its
activities are designed to encourage foreign countries to
improve their facilities for accommodating tourists, to urge
them to eliminate unnecessary restrictions applying to tourists
and to encourage an increase in their sales and promotional
efforts within the United States. Other activities include the
encouragement of increased travel to the United States through
reduction of U.S. Government restrictions and through provision
of international marketing data and other information required
by private firms and companies in this field. This program has
achieved a number of beneficial results.
The Bureau of Customs, as mentioned above, has adopted procedures
for clearing travelers much more rapidly through customs at
ports of entry. Studies are under way to improve further the
handling of passengers and baggage. To correct a general
impression that retail value is used in determining the value of
tourists’ purchases for customs declarations, instead of
wholesale value as permitted by law, the Bureau’s pamphlet
“Customs Hints” is being revised, and customs inspectors have
been instructed to use the reasonable equivalent of a wholesale
value in making their determinations. Returning travelers may be
expected to bring increased quantities of foreign purchases into
this country for their personal use.
The Department of State has extended the period of validity of
visas for foreign visitors from two to four years, with an
unlimited
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number of
entries, and has taken steps to expedite issuance of visas and
passports.
- 16.
-
Legislation was enacted by the Congress in August 1955
providing for participation of the United States in the
International Finance Corporation (IFC),13 which would be affiliated with the International
Bank for Reconstruction and Development (IBRD). The objective of the IFC will be to encourage the growth
of productive private enterprise in its member countries,
particularly the less-developed areas, by investing in
productive private enterprise in association with private
investors, and without government guarantee of repayment, where
sufficient private capital is not available on reasonable terms.
The IFC will serve as a clearing
house to bring together investment opportunities, private
capital and experienced management, and in general to stimulate
productive investment of private capital. The IFC is intended to provide venture
capital but is not authorized to invest in capital stock or to
assume managerial responsibility in an enterprise in which it
has invested.
The authorized capital of the IFC
is $100,000,000 of which the United States will contribute about
$35,000,000.
- 17.
-
Renegotiation of the Philippine Trade Agreement of 1946,14
undertaken at the request of the Philippine Government, was
successfully completed on December 15, 1954. A bill, the
Philippine Trade Agreement Revision Act of 1955, authorizing
revisions of the 1946 trade agreement, was enacted by the 84th
Congress and became law on August 1, 1955 (P.L. 196, 84th Congress).15
Revision of the 1946 agreement will be beneficial to both the
United States and the Philippines and will contribute materially
to the improvement of the already friendly political and
economic relations between them. This action is further
demonstration of the desire and readiness of the United States
to cooperate with underdeveloped countries in meeting their
problems of economic development.
