463. Paper on “The Wool Textile Import Problem,” March 41
THE WOOL TEXTILE IMPORT PROBLEM
A. Commitments to contain wool textile imports have been made repeatedly:
1961 May 2—The President’s 7-Point Textile Program expressed a desire to achieve “a basis for trade that will avoid undue disruption of established industries.”
June 30—The President to Congressman Vinson stated that the contemplated cotton textile negotiations are “one of a series of efforts . . . to get the best possible relief, not only for cotton, but for other fibers.”
1962 January—Lawrence O’Brien to Senator Pastore and Congressman Vinson stated “after the conclusion of the permanent (cotton) textile agreement, the problems of the wool and man-made fiber industries will certainly be attacked.”
February 26—The President to Congressman Vinson said he had “requested the Departments involved to implement my program for the wool, man-made fiber, and silk divisions of the industry.”
May 10—Hickman Price, Jr. to the National Association of Wool Manufacturers said “The President’s Cabinet Textile Committee last Monday appointed a three man ad hoc committee to consider and report upon, as rapidly as possible, the implementation of the President’s 7-Point program relating to textile products manufactured from fibers other than cotton.”
August 7—Myer Feldman to the National Association of Wool Manufacturers said “we intend . . . to prevent market disruption such as would result from an increase over current levels of imports.”
August 24—The President to a group of Senators and Congressmen reaffirmed the intention to “hold imports of wool textiles to current levels.”
December 11—Michael Blumenthal, Deputy Assistant Secretary of State, to the International Wool Study Group, stated “there is . . . a [Typeset Page 1843] commitment by the President to the Industry that . . . the Administration will not permit excessively large imports or rapidly rising imports, which have a disruptive effect, effectively to destroy the stability and the survival of all sectors of this industry.”
1963 January 18—Senator Pastore told newsmen that “the President promised to propose within a month measures to limit (wool textile) imports.”
[Facsimile Page 2]B. Import Level has risen rapidly in the latter half of 1962, either on the previous (raw wool) method of calculating the ratio of imports to domestic consumption or on the new (all-fibers on the wool systems) method. By the previous method the ratio for 1962 is 20.2 (Exhibit 1), which is 36% higher than 1961 and 9% higher than 1960. By the new method the ratio for 1962 is 18.0 (Exhibit 2), and the increase is greater—40% over 1961 and 15% over 1960.
By either method imports have increased above those that members of the Congress and the industry understood would be maintained, and the prospect is for further substantial increases.
C. Various solutions have been studied, so far without finding an entirely acceptable one:
Agreements have been explored in indirect ways but not on a direct government to government approach. Some are reluctant to pursue this solution in view of possible international reactions.
Tariffs are high already, and preliminary investigations indicate that legal limits would prevent adequate increases to make this a meaningful solution. Experience on higher fabric tariffs has already shown this approach to be ineffective as exporters adjust to the higher rates. In addition, rates sufficient to deter lower wage countries would exclude EEC countries entirely.
OEP has been held out to interested members of Congress and the industry as a last resort solution.
D. Recommended action: While some think it unwise to make an all out effort on a direct government to government approach to achieve an international agreement, this remains the most feasible solution. The countries involved have been well prepared for such an approach but understandably are not going to take the initiative and are going to put up at least a show of resistance.
[Facsimile Page 3] [Typeset Page 1844] [Facsimile Page 4] [Typeset Page 1845]- Commitments enumerated and current status of problem. No classification marking. Attached tables reflect amounts of raw wool and all-fiber import totals for years 1957–1962. Official Use Only. 4 pp. Kennedy Library, National Security Files, Kaysen Series, Trade Policy, Trade Expansion, 10/62–3/15/63, Box 378.↩