Foreign Relations of the United States, 1958–1960, Foreign Economic Policy, Volume IV

105. Memorandum From the Alternate Chairman of the Interdepartmental Committee on Trade Agreements (Robinson) to President Eisenhower⁰

Undated.¹

SUBJECT

• Recommendations of the Interdepartmental Committee on Trade Agreements Concerning Renegotiation of the Tariff Concessions on Certain Wool Fabrics

Under the reservation in the United States Schedule to the General Agreement on Tariffs and Trade (GATT), invoked by the United States since October 1, 1956, the United States has maintained a tariff quota for imports of certain wool fabrics on an annual basis.²

The Interdepartmental Committee on Trade Agreements (TAC), after full consideration of the operation of this quota and the increasingly difficult trading conditions, both for domestic and foreign interests, arising from its operation, recommends that the United States indicate to the United Kingdom and other interested countries that, as requested by the United Kingdom, it will enter into renegotiation of the concessions on tariff paragraphs 1108 and 1109(a).

The reservation under which the tariff quota is established is one which was first negotiated under the GATT in 1947 but not invoked until 1956. It permits, but does not require, the United States to increase from 20 or 25 percent (depending on the fabric) to 45 percent the ad valorem part of the compound rate of duty on any imports of woolen and worsted fabrics dutiable under the concessions on tariff paragraphs 1108 and 1109(a) which are in excess of 5 percent of average annual domestic production of similar fabrics during the preceding three calendar years. The tariff quota may be larger than 5 percent of domestic production on the basis described above, but under our international commitments it may not be less than 5 percent. For imports in excess of the tariff quota the rate of duty may be less than 45 percent but it may not be more than 45 percent.

Since the reservation was first invoked in 1956, and particularly during the past year, the agencies represented on the responsible interdepartmental committees have repeatedly reviewed the operation of the wool-fabrics tariff quota. As a result of these considerations the TAC has from time to time recommended, and you have approved, interim modifications designed to alleviate immediate problems arising from the operation of the quota. Such modifications have not, however, solved the over-all problem of disruption of the trade of American importers, clothing manufacturers, wholesalers and retailers and of foreign producers and exporters caused by the operation of the quota.

Consequently, the TAC has considered the question of renegotiation, and there have been informal discussions between the United States and other interested governments of possible solutions to the difficulties arising from the operation of the quota. On August 2 British Foreign Secretary Lloyd informed the Secretary of State³ that the United Kingdom Government had concluded that the only solution would be the earliest possible renegotiation and expressed the hope that the United States would initiate action under Article XXVIII:4 of the GATT to seek special authorization to renegotiate the concessions in advance of the 1960/61 tariff conference. Therefore, the TAC recommends that the United States should inform the United Kingdom and other interested governments of its willingness to enter into renegotiation of the concession with a view to avoiding the disruptions in the trade resulting from the present tariff quota.⁴

JAR

0. Source: Department of State, Central Files, 394.41/8–2459. Confidential. Drafted by Vincent J. Cherry, of the Trade Agreements Division of the Office of International Trade, and cleared in draft by Kallis and L/E and in substance by Elrod and Gleeck.
1. The source text was undated, but was attached to copies of transmittal memoranda from Herter to Mueller and from Herter to Eisenhower, both dated August 24.
2. See footnotes 1 and 4, Document 92.
3. Not printed. (Department of State, Presidential Correspondence: Lot 66 D 204)
4. For text of this September 14 announcement, see Department of State Bulletin, October 5, 1959, pp. 481–482.