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

92. Memorandum of Conference With President Eisenhower⁰

March 19, 1959, 2:23 p.m.

OTHERS PRESENT

• Dr. Paarlberg
• General Goodpaster
• Mr. Areeda
• Major Eisenhower

In his meeting with members of the State Department at 9:00 AM this date, the President directed that Dr. Paarlberg brief him on the subject of the tariff quota under the Geneva Wool Reservation.¹

Mr. Areeda, who accompanied Dr. Paarlberg, briefed the President in accordance with the attached text.

At the end, Mr. Areeda added the recommendation that in the forthcoming discussions with Mr. Macmillan,² the President be vague and say merely that the matter is under consideration.

The President questioned Mr. Areeda to clarify the exact status of the Trade Policy Committee and to ensure that it bears no relationship to the Tariff Commission. Mr. Areeda confirmed this and informed him that what was contemplated here was only an administrative action. The President further ascertained that these measures pertain only to woven fabrics and not to raw wool.

Mr. Areeda summarized by saying that the tentative proposal of the Trade Policy Committee will represent a liberalization of current policy with respect to British wool if the first 350,000 pounds of high quality wool over the breaking point are subject to only 30% rather than 45% ad valorem, and if the breaking point is not lowered below the present 14.2 million pounds.

John S.D. Eisenhower

Attachment

³

March 19, 1959.

TARIFF QUOTA UNDER THE “GENEVA WOOL RESERVATION”

1. In granting a tariff concession on woolen and worsted fabrics in 1947, the United States reserved the right to increase the tariff on those imports that, in any year, exceed five percent of average domestic production over the preceding three years. The concession and Reservation were negotiated with the United Kingdom and extended to other GATT countries.

2. This Reservation was first invoked by a proclamation of the President in September 1956⁴ for the last quarter of 1956. This proclamation provided that after imports during any year reached a certain “breakpoint,” subsequent imports during that year would be subject to a duty of 45% ad valorem instead of the concession rate of 20 or 25% (depending on the fabric). There is, in addition, a duty of 30 cents or 37.5 cents per pound, but that doesn’t change.

3. The President established breakpoints for 1957 and 1958, respectively of 14 and 14.2 million pounds. In each case, the breakpoint approximated 5% of production over the preceding three years. The 5% figure for 1959 is about 13.5 million pounds. The Trade Policy Committee will probably recommend a breakpoint in that amount within a week or two. That recommendation will, of course, be reviewed in the White House.

4. Until last year, the ad valorem part of the duty was 45% for all imports in excess of the breakpoint for the given year. Exceptions were made last year for two kinds of fabrics: certain handwoven woolens less than 30 inches wide (principally, certain Scottish and Irish tweeds) and certain “religious” fabrics (that is, special fabrics used in the manufacture of apparel for members of religious orders, such as nuns’ veiling). Imports of these items—after the breakpoint in any year is passed—are subject to duty of 30% rather than 45%.

5. An additional exception may be proposed by the Trade Policy Committee for 1959. The tentative proposition is that certain “high-cost and high-quality” fabrics will be subject to a duty of 30% (rather than 45%) after the overall breakpoint is passed. This special rate may be limited, however, to the first 350 thousand pounds of such imports after the overall breakpoint is passed. If it is possible to frame an administratively feasible definition for such fabrics, the additional exception would be of primary benefit to British exporters.

6. The foreign countries primarily involved are the United Kingdom, Japan, Italy, France. Some other European countries ship much smaller amounts to the United States.

7. Nearly everyone affected is unhappy with the tariff quota and the Reservation. To allay some of this concern, the President last year directed the Secretary of Commerce to make a “special review” of “alternatives to the present arrangements.” The Trade Policy Committee proposal may not be thought by the industry to fulfill that mandate.

Phillip Areeda

0. Source: Eisenhower Library, Whitman File, Eisenhower Diaries. No classification marking. Initialed by Goodpaster.
1. A memorandum of this meeting is scheduled for publication in volume VII. The Geneva Wool Fabrics Reservation was a right the United States reserved under the General Agreement on Tariffs and Trade and applied to woolen and worsted fabrics under paragraphs 1108 and 1109(a) of the Tariff Act of 1930, as amended.
2. At Eisenhower’s invitation, Macmillan visited Washington March 19–24 for informal discussions on the international situation.
3. No classification marking. Prepared by Areeda.
4. For text of Proclamation No. 3160, September 28, 1956, effective October 1, 1956, see Department of State Bulletin, October 8, 1956, pp. 556–557.