Foreign Relations of the United States, 1961–1963, Volumes VII, VIII, IX, Arms Control; National Security Policy; Foreign Economic Policy, Microfiche Supplement

459. Letter from Hodges to Ball, September 14¹

September 14, 1962

Dear George:

Attached herewith are the minutes of the President’s Cabinet Textile Advisory Committee held Monday, August 27, 1962, at the White House.

The delay in getting these to you is regretted.

Sincerely yours,

Luther H. Hodges

Secretary of Commerce

Attachment

Minutes of President’s Cabinet Textile Advisory Committee Meeting

August 27, 1962

PRESENT

• Secretary of Commerce Luther Hodges, Chairman
• Under Secretary of State George W. Ball
• Myer Feldman, Deputy Special Counsel to the President
• James A. Reed, Assistant Secretary of the Treasury
• G. Griffith Johnson, Asst. Secretary of State for Economic Affairs
• John P. Duncan, Jr., Asst. Secretary of Agriculture for Marketing and Stabilization
• Hickman Price, Jr., Asst. Secretary of Commerce for Domestic Affairs
• Mike N. Manatos, Administrative Assistant to the President
• Daniel P. Moynihan, Special Assistant to the Secretary of Labor
• E. Wayne Weant, Deputy Asst. Secretary of Commerce for Domestic Affairs
• Willard W. Cochrane, Director, Agricultural Economics
• Stanley Nehmer, Deputy Director, Office of International Resources, Department of State
• Raymond N. Marra, Asst. Deputy Commissioner, Bureau of Customs, Department of the Treasury
• James S. Love, Jr., Department of Commerce

Secretary Hodges called the meeting to order and directed the discussion through five major topics.

1. Correction of the two-price cotton system.

Mr. Feldman stated that we should be prepared for a negative decision on the off-set fee by the Tariff Commission. He reviewed the President’s intention in such an event to (1) make an announcement at the time of the Tariff Commission’s decision that the Department of Agriculture was directed to find another solution and (2) to make a conditional statement along these lines to Senators with whom he is meeting this week. Secretary Hodges pointed out that these statements would be very helpful in achieving favorable action on the Trade Bill in the Senate.

Dr. Cochrane indicated that the Department of Agriculture was preparing several proposals to compensate for half of the price differential, and that all contemplated a payment for this amount. Mr. Feldman asked why the plans didn’t cover the complete differential, and Secretary Hodges explained that while it was originally proposed that the other half would be made up by a partial off-set fee it had been decided at the meeting with the President on August 21 that compensation and/or price reduction would be the only methods used. Dr. Cochrane agreed to prepare plans on this basis.

Assistant Secretary Duncan expressed concern that the textile industry might not support a compensation plan, but Assistant Secretary Price replied that while the industry might be reluctant to propose such a plan he felt confident it would vigorously support one proposed and backed by the Administration. Mr. Feldman indicated he would favor a price reduction of as much as two cents so that the compensation could be correspondingly less, but he was not sure that the President would support more than a one-cent reduction at this point.

2. Short Term Arrangement.

Secretary Hodges reviewed import levels for the first nine months of the Short Term Arrangement and then pointed out that preliminary figures for the first ten months, just received, would bring total imports through July to 110% of the base year, Fiscal 1961. Assistant Secretary Price stated that this was somewhat more than had been expected for the tenth month and that this might indicate that imports for the full short term year might be slightly over the previously estimated 120% of the base year. Mr. Feldman questioned the significance of this, and Mr. Love replied that if imports exceeded 120% of the base year they would also likely exceed 6% of domestic consumption. Assistant Secretary Price thought that this would be only a slight excess of perhaps 6.1%, and Mr. Feldman thought that such a small excess would not be too disturbing to the President’s commitment to hold imports at 6%.

3. Japanese Bilateral.

Secretary Hodges then turned to the Japanese Bilateral, and it was pointed out that the Japanese have now agreed not only to stay within the total limit but also to stop shipments of the disputed categories. It was generally agreed that the State Department had done an excellent job in handling this situation and that in addition there had been excellent press on the announcement over the weekend. Under Secretary Ball passed out copies of the State Department press release on this matter.

4. Long Term Arrangement.

Secretary Hodges reviewed the President’s commitment to hold imports below 6% of domestic consumption over the five years of the Long Term Arrangement. He stated that while a Presidential commitment should be sufficient, certain key Congressmen were insisting on more tangible assurances from the Departments who would be administering the Arrangement. Various possibilities were discussed, and Assistant Secretary Price pointed out that a Subcommittee of ITAC was in the process of drawing up a policy for administration of the Long Term Arrangement. It was agreed that the matter would be reconsidered when this paper was ready, probably in the next few days.

Mr. Feldman raised the question of obtaining adherences to the Long Term Arrangement, and Under Secretary Ball pointed out that probably few if any others would adhere until we did so ourselves. He further indicated that we would not do so until the Trade Bill was out of the way or at least further along so that we could maintain flexibility and freedom to maneuver depending upon what happened to the Trade Bill. Secretary Hodges was concerned that our waiting would delay others, but Under Secretary Ball was emphatic that we should maintain this flexibility.

Assistant Secretary Price emphasized the importance of immediate discussions with exporting countries to space out shipments under the Long Term Arrangement, particularly because of the long pipelines involved and the fact that ships may be loading even now or certainly very shortly. Mr. Nehmer reported on discussions already held with Israel and Taiwan and commented on discussions to be held with Hong Kong, not only for proper spacing but also for reducing the base applicable to the Long Term Arrangement. Assistant Secretary Price indicated that the embargo on Portugal might have to be continued. Assistant Secretary Johnson agreed that spacing of shipments was extremely important and suggested that it might be worth giving something on the totals in order to achieve this; this point however was dropped. Under Secretary Ball stated that whatever is required would be done, and Secretary Hodges pointed out that it should be all nations involved and not just a few principal ones.

Assistant Secretary Price stated that ITAC had also agreed to call all important categories and countries on October 1, but Assistant Secretary Johnson raised the question as to whether this was necessary if an adequate job was done of getting to agree to spacing out shipments.

Mr. Feldman advised that the President would see the Senators on August 31. He raised the question of an OEP decision since the President said the Senators know we can control this decision to some extent. Mr. Feldman said however that he was not in favor of an OEP decision because of possible pressure to take other actions with this authority. He suggested assurances be given the Senators that imports would be held in total and by categories.

5. Wool.

Secretary Hodges reviewed the discussion at the meeting with the President on August 21, at which it was decided that bilateral agreements with the United Kingdom, Italy and Japan would be attempted in October after the Long Term Arrangement has been signed by enough countries.

Under Secretary Ball raised the possibility of solving the wool import problem by other methods and suggested that the used wool products from Prato, Italy, were the most serious and that if these could be controlled it would largely solve the wool import problem. He further suggested tightening the labeling requirements or imposing sanitary restrictions, indicating that this line of inquiry had been suggested to him by the wool industry whom he used to represent. Mr. Feldman stated that there were no sanitary restrictions, and Secretary Hodges expressed the belief that tightening labeling requirements would not solve this problem.

Dr. Cochrane asked whether the higher fabric duty could be applied to unfinished garments through an escape clause action, and Mr. Moynihan pointed out that the tariff on apparel is considerably lower than that on fabric. Under Secretary Ball suggested a fast escape clause action on all apparel or on at least those items where imports were most serious. Mr. Feldman stated however that any fast action was impossible due to the workload of the Tariff Commission and that at least six months would be needed.

Dr. Cochrane read a paper prepared by the Department of Agriculture on steps for controlling wool imports—principally modernization of the wool industry and reduction by 5¢ per pound in the tariff on raw wool with a corresponding increase in compensation to the wool growers. He pointed out that the Department was recommending only 5¢ in order to avoid a revision of the Wool Act and was not going along with a 50% or 12.5¢ reduction proposed by State. Under Secretary Ball complimented Dr. Cochrane on this paper and endorsed it. Mr. Feldman commented that a reduction in the raw wool tariff would simply substitute one problem for another and would not be sufficient to solve the problem. In addition, it was agreed that it would cost heavily on votes for the Trade Bill with Western Senators.

Assistant Secretary Price commented that all of the suggestions on other methods to solve the wool import problem were helpful but that the real question was how to meet the commitment of the President to keep imports at current levels. He further stated that none of these suggestions would be sufficient and that some sort of overall restriction would be needed to prevent imports from rising to 20% of domestic consumption by the end of the year. Dr. Cochrane stated that the Department of Agriculture agreed with the 20% projection. Secretary Hodges pressed for State’s agreement to begin negotiations as promised in the President’s meeting, and Under Secretary Ball said that the State Department would find a way to control the wool imports but that he would rather trade with the other countries on a tariff increase rather than a quota.

Secretary Hodges asked Mr. Love to explain the charts on the import projections which he did, pointing out that the biggest problem is in apparel imports where there is a very marked seasonal variation. Mr. Moynihan stated that apparel has a higher value than other imports and therefore on a value basis the problem was even greater. Under Secretary Ball requested a detailed analysis of wool imports in the apparel group with as much information on value as possible. It was agreed that this would be made available by Commerce by Thursday.

The question of what could be done to stop the imports of Italian fabric through the Virgin Islands was raised by Assistant Secretary Price, pointing out that the Treasury Department had advised that there was no administrative remedy. Assistant Secretary Reed, however, took issue with this, stating that an administrative remedy was possible through voluntary restraint. Mr. Feldman at that point suggested that this was a matter that should be settled later.

Mr. Feldman mentioned the possibility of an OEP action on wool only as one way to get fast tariff action. However, this course involves the usual objections to an OEP action.

Assistant Secretary Johnson advised that there was pressure from some countries to delay the meeting of the International Wool Study Group until January. It was agreed, however, that we should continue to push for the earliest possible date.

The various immediate actions to be taken were reviewed, and Secretary Hodges then adjourned the meeting.

1. Conveys minutes of August 27 meeting of President’s Cabinet Textile Advisory Committee. Confidential. 6 pp. Department of State, Central Files, 394.41/9–1462.