231. Memorandum From the Special Representative for Trade Negotiations (Herter) to President Johnson 1
You have asked for a report on what we can do about the problems discussed in the two memoranda given you by Messrs. Blough and McDonald on March 16 concerning the steel import situation.2
Dumping
The principal complaint of both memoranda is that the present antidumping law3 is being administered improperly by both the Department of the Treasury and the Tariff Commission. In addition, Mr. Blough’s memorandum contends that most steel imports into the United States are dumped. Accordingly, both memoranda recommend more stringent administration of the antidumping law.
There is no way to substantiate, or to dispute, a contention that most steel imports into the United States are dumped. However, the facts of the antidumping cases which have been litigated to date do not, in our opinion, show that dumping has played a significant part in the steel import picture. Moreover, it is our judgment that these cases have been fairly and conscientiously decided by both the Department of the Treasury and the Tariff Commission.
Nevertheless, a number of agencies are working together on a study of our antidumping law and procedures in general. This work has not yet been completed, but I expect that within the near future some affirmative steps will be taken.
The re-examination of our antidumping laws was initiated late last year in response to an earlier Blough-McDonald protest to President Kennedy, as well as a continuing wave of counter-protests from foreign governments claiming that the U.S. law was too harsh. Foreign governments have asked that antidumping laws be reviewed in the forthcoming Kennedy Round negotiations. One facet of this review has been an interagency study, under the direction of this Office, to evaluate the various [Page 624] complaints and thereby to develop a U.S. negotiating position on dumping. The Department of the Treasury, while participating in this study, has also been re-examining its own regulations.
Work on both projects is nearing a conclusion. Preliminary results indicate that a few improvements could be made in the Treasury regulations to meet some of the complaints on both sides. In addition, it is possible that some form of international agreement could be of benefit to the United States.
The Luxembourg Steel Pipe Case
A few words should be said about the recent case involving Luxembourg steel pipe, which Mr. Blough noted. This case was decided under a published Treasury regulation,4 known to the litigants, which provides that sales prices in the country of origin will not be used for price comparison unless sales in the country of origin account for 25% of total sales. This rule plainly conforms to the law’s purpose. One element of a dumping finding is a sale at less than the normal price for a product. Such sales are believed to be unfair because they permit a seller to use the leverage of profits made in one market in order to sell at an abnormally low price in another. In the Luxembourg case, 83% of the steel pipe was being sold at or below the United States price quoted in Mr. Blough’s memorandum. A price covering 83% of production cannot realistically be regarded as abnormal. Nor is it possible to contend that the profits in the remaining 17% of the market could unfairly support the price in the other 83%.
Discrimination in “Levies”
The other problem raised in Mr. Blough’s memorandum is the alleged disparity between “levies” on steel imports into the United States and “levies” on steel imports into other countries. I fear the memorandum is misleading. Import duties on steel are about the same in Europe as they are in this country—perhaps somewhat less. The European countries, however, have what amounts to a sales tax which is levied on all steel products, domestic and foreign. Mr. Blough has added these taxes in reporting the “levies” paid in Europe.
Although there is no apparent competitive disadvantage in the equal application of such sales taxes, this Office has undertaken a further study of this question in preparation for the coming negotiations.
Adjustment Assistance
Mr. McDonald’s statement is concerned mainly with the Tariff Commission’s decisions under the adjustment assistance provisions of the [Page 625] Trade Expansion Act of 1962.5 A few applications for adjustment assistance benefits for workers have been filed, but the Commission has not found any of these cases to qualify under the Act.
I have not reviewed these cases in detail, but my judgment is that none of these cases appears to qualify under the standards of the Act. One noteworthy point is that United States firms and workers have of course not yet experienced the effects of the broad tariff reductions envisaged under the Trade Expansion Act, for which the adjustment assistAnce provisions were primarily designed.
- Source: Kennedy Library, Herter Papers, Memoranda to the President, 9/19/63–10/15/65, Box 10. No classification marking. Drafted by Hudec and Auchincloss on March 25.↩
- These two memoranda, probably by Roger M. Blough, Chief Executive Officer of U.S. Steel Corporation, and David J. McDonald, President of the U.S. Workers of America (CIO), have not been found.↩
- Reference presumably is to the Antidumping Act of 1921, Title II of P.L. 67–10, approved May 27, 1961; 42 Stat. 9, 11–15; as amended by Title III of the Customs Simplification Act of 1954, P.L. 83–768, approved September 1, 1954; 68 Stat. 1138; and P.L. 630, approved August 14, 1958; 72 Stat. 583, 585.↩
- Not further identified.↩
- P.L. 87–794, approved October 11, 1962; 76 Stat. 872.↩
- Printed from a copy that bears this typed signature.↩