132. Editorial Note

On June 30, Council on Foreign Economic Policy Secretary Galbreath distributed to CFEP members CFEP 592/1, a discussion paper on trade competition between the United States and Europe, which had been prepared at the request of the National Security Council. CFEP 592/1 examined import competition by analyzing petitions made to the Office of Civil and Defense Mobilization (OCDM) under the national security clause of the Trade Agreements Act and outlined the following criteria for the OCDM decisions on them:

“In accordance with the policy expressed in the enabling legislation for the purpose of evaluating the cases submitted to OCDM, emphasis has been placed on those aspects which bear the most immediate relationship to the national security. The OCDM has borne in mind the danger of allowing the national security clause to become a substitute for the ‘escape clause’ of the same Act. Some indication that industries have, in fact, tried to use the national security clause in this way is given by the fact that many of the industries seeking relief from the OCDM have also and, in some cases simultaneously, sought relief from the Tariff Commission.

“In general, the OCDM decisions of denial have been based on the determination that new weapons and strategic concepts have greatly reduced or altered current and foreseeable mobilization requirements for the commodities in question; that existing reserves, Government inventories and import availability even with reduced domestic production capability are sufficient to meet emergency requirements; and that in view of the above conclusions as to supply and requirements, the possible costs to our foreign policy interests outweigh any benefits which might be derived from limitations on imports.

“However, there is one special point in the administration of Section 8 cases that needs to be mentioned. The 1958 revision of the Act provided that the Director and President shall ‘further recognize the close relation of the economic welfare to our national security and shall take into consideration the impact of foreign competition on the economic welfare of individual domestic industries; and any substantial unemployment, decrease in revenues of Government, loss of skills or investment, or other serious effects resulting from the displacement of any domestic products by excessive imports shall be considered, without excluding other factors, in determining whether such weakening of our internal economy may impair the national security.’

“In accordance with this amendment, OCDM has included these additional economic factors to the extent possible as elements in determining the validity of the claims. In the three cases which OCDM has decided since this amendment was adopted there has been no showing that the economic factors were of sufficient significance to alter a conclusion based solely on the relevance to national security. This does not preclude the possibility that in some future case the combination [Page 272] of criteria based on economic welfare and its relationship to the national security may lead to an affirmative recommendation to the President.”

A footnote to the second paragraph noted:

“An exception to this line of thinking was the Heavy Electrical Equipment case in which no plea of injury to the domestic industry was made. In this case, the decision hinged on the amount and location of foreign equipment installed in the U. S., its reliability in comparison to American equipment, and the availability of maintenance and repair facilities.” (Washington National Records Center, CFEP Files: FRC 62 A 624, Trade Competition between the U.S. and Europe, CFEP 592)

The National Security Council considered CFEP 592/1 on September 7. After OCDM Director Hoegh’s presentation on the paper, “Secretary Herter observed that the guidelines developed by OCDM were very good and that extraordinary good sense had been shown in the examination of these cases. Secretary Mueller stated that he agreed completely with Governor Hoegh’s report and noted that a few of the cases that had been brought under Section 8 should have been brought as escape clause actions.” The National Security Council “concurred generally” in the OCDM guidelines. (Memorandum of discussion at the 458th Meeting of the National Security Council, September 12; Eisenhower Library, Whitman File, NSC Records)

Also on September 7, the White House released a statement by President Eisenhower giving his reasons for withholding approval from H.R. 5054. Eisenhower contended that the bill, which extended requirements for labeling imports with their country of origin, ran “counter to one of our major foreign policy objectives—the reduction of unnecessary barriers and hindrances to trade.” For text of his statement, see Public Papers of the Presidents of the United States: Dwight D. Eisenhower, 1960–61, pages 687–688. Regarding H.R. 5054, see S. Rept. 1747, Eighty-sixth Congress, Second Session.

On September 8, Secretary Herter gave an address in Washington on the problems the United States faced internationally. He spoke briefly about the U.S. role in the Organization for Economic Cooperation and Development and stated that he hoped the next administration would be able to submit an OECD convention to the Congress. For text of his statement, see Department of State Bulletin, September 26, 1960, pages 467–473.