Foreign Relations of the United States, 1955–1957, Foreign Economic Policy; Foreign Information Program, Volume IX

74. Memorandum of Discussion at a Meeting of the Clarence Randall Working Group, Washington, November 26, 1956¹

Washington, November 26, 1956

The meeting was called by Mr. Randall to decide on the Administration’s program of trade legislation for the forthcoming Congressional session. In addition to Mr. Randall, the White House was represented by Jack Stambaugh, Ed Galbreath, Roemer McPhee² and Gerald Morgan. Agency representation was substantially similar to that of the CFEP. Among those present were Messrs. Overby, Kendall and Dan Throop Smith of Treasury; Mr. McClellan of Commerce; Mr. Burmeister of Agriculture;³ and Mr. Cooley of ODM. Messrs. Kalijarvi, O’Connor and Frank attended for State.

OTC

It was noted that the first public announcement of the Administration’s decision to resubmit the OTC to the Congress was made that morning (November 26) by Secretary Weeks in his speech before the National Foreign Trade Council.⁴ Mr. McClellan said that Commerce plans to get all the mileage possible out of Weeks’ speech.

Mr. Randall expressed his confidence that the OTC would go straight through the Congress but others, including Mr. McClellan, said they expected it would be a tough fight.

Mr. Kalijarvi suggested that John Leddy should again be given the task of coordinating interagency staff work for the OTC, and that the White House should designate someone for liaison with public groups as well as someone to handle Congressional relations. Mr. Randall agreed with the suggestion about John Leddy. He also noted that the White House Congressional liaison was being organized on a functional basis so that a single individual would carry through on a particular subject both for the House and the Senate. It was announced that Jack Martin, who unfortunately was out of town, had been assigned the OTC job.

It was agreed that the amended OTC bill should be reintroduced. The possibility was discussed that only supplementary hearings need be held in the House, perhaps by the Boggs Subcommittee. Mr. Randall felt that so far as the House was concerned the less beating of drums the better. Mr. Kalijarvi pointed out that one of the first things to be done was to check with Jere Cooper. Mr. Randall said that as soon as Jack Martin returned, Mr. Morgan and Mr. Kalijarvi should get together with him and discuss tactics.

Authority for Customs Reclassification

Mr. Kendall explained the Treasury position that the Administration should not request advance authority to put into effect the recommendations on tariff reclassification which the Tariff Commission is scheduled to make by March 1958.

The principal reasons given were: an effort to get such advance authority in the forthcoming session would dilute the effort on OTC; we do not know what the Tariff Commission will come up with; and it will open up opposition to the effect that Congress is being asked to buy a pig in a poke.

It was also decided that the Tariff Commission should be pressed to complete its report by March 1958, and Mr. McPhee was requested to follow up on this.

Frelinghuysen Bill

This is the bill to increase the present customs exemption for returning travellers from the present $500 to $1000. All agreed that it was a good idea to include it in the President’s program for the coming session.

Preparations for Trade Agreements Legislation in 1958

Mr. Randall called for comments on the State Department draft of terms of reference for an interdepartmental working group to consider trade agreements renewal legislation. Only Agriculture responded. They indicated they wished to add something to the Department’s proposal but would submit it in writing.

Mr. Kalijarvi suggested that the interagency working group might be the same one that would work under John Leddy on the OTC preparations. Mr. Randall indicated that the latter was an action job whereas the former required a study group. In any event he suggested that the personnel of the group not be chosen until after the first of the year.

Both Mr. Morgan and Mr. Overby hoped the activities of such a group would be kept confidential. Otherwise, the knowledge that the Administration was preparing to seek new authority would arouse suspicions and adversely affect the prospects for OTC.

Tax Concessions

Dan Throop Smith gave a number of reasons why the Administration should not again seek legislation to provide tax concessions on income from foreign investments.

1. It is just about impossible to separate out exporters from bona fide investors. As a result, the legislation would get us into the problem of export subsidies with the danger of countervailing duties being applied against us.

2. It would mean singling out a single piece of tax legislation for the benefit of a certain group rather than introducing it, as originally planned, as part of a package.

3. There is already a good bit of opposition to the Western Hemisphere tax provisions. Resubmission of the general tax concession proposals might result in reopening the whole subject of the existing Western Hemisphere concessions.

4. The oil companies would oppose the bill since they want both tax depletion and the new tax concession, and not just a choice of either as provided in the Treasury proposals.

Mr. Randall expressed the view that the subject of tax concessions to stimulate foreign investment requires further study and stated that he would ask Forrest Siefkin of his staff to undertake such a study. Mr. Siefkin is from International Harvester and has had considerable experience in the tax field. Mr. Randall thought that one aspect that should be looked into is the possibility of investment of mutual funds in foreign undertakings.

1. Source: Department of State, International Trade Files: Lot 57 D 284, OTC. Limited Official Use. Prepared by Isaiah Frank.
2. H. Roemer McPhee, Special Assistant at the White House.
3. Gustave Burmeister, Assistant Administrator for Agricultural Trade Policy and Analysis, Foreign Agriculture Service.
4. The Secretary of Commerce spoke at the 43d National Foreign Trade Convention held at the Waldorf Astoria in New York City. A brief summary of the speech appears in the New York Times, November 27, 1956, p. 49.