Foreign Relations of the United States, 1964–1968, Volume VIII, International Monetary and Trade Policy

320. Statement by the Deputy Special Representative for Trade Negotiations (Blumenthal)¹

Geneva, September 14, 1966.

UNITED STATES OPENING STATEMENT ON AGRICULTURAL OFFERS IN GATT KENNEDY ROUND, GENEVA

Committee on Agriculture

Mr. Chairman, I would like to say some general words about the offer on agricultural products presented by the United States. I shall be brief since we fully agree that the work that now has to be done is of a negotiating nature and involves individual and specific negotiations on the different commodities which these countries have placed on the table in terms of offers.

May I say at the beginning that my delegation is, of course, gratified that we have finally reached that stage where we can begin this process and where the actual negotiations can start. It is no secret that this is a stage of the negotiations that we have long and anxiously awaited. As we see it, the next stage is to bring our agricultural negotiations, as quickly as possible, at least to the same point in which our industrial negotiations have progressed. Towards the end of the year we must be in a position to make the kind of over-all assessment that will be necessary in order to judge the adjustments required to achieve balance in the Kennedy Round.

I should like now to refer to a few figures in order to illustrate what the United States has done.

Total United States agricultural imports in the year 1964 amounted to $4.1 billion. Out of that $4.1 billion, $2.1 billion, or slightly more than half, already entered the United States free of duty in 1964. In virtually all cases, except one, for all major items these zero duties are bound. So, of course, there is no further offer on these. Let me just say that that large group of over $2 billion worth of commodities already entering free of duty into the United States are heavily concentrated in the tropical products area. The single largest item is coffee, with $1.2 billion; and such other commodities as rubber, cocoa beans, bananas, certain types of wool, and tea make up the rest.

Some of the countries represented around this table have an interest in these products, but as far as the others are concerned, I take it that there is no particular problem with those since they already come in free of duty.

Out of the remaining $1.9 billion in items which are dutiable and available for concessions, there are some commodities which are going to be discussed in the Cereals, Meats and Dairy Groups. They amount to $331 million of imports. I shall not be commenting on the offers on those commodities here since I understand that we will be dealing very shortly with the offers that have been placed on the table in the Dairy Group. The same thing applies to the Meat Group, and, of course, in cereals we are already engaged in our negotiations.

There is another group of items, comprising $61 million, on which we have not made offers. These are commodities for which, quite frankly, we have economic exceptions. They are commodities where, on the basis of a very careful judgment, we feel that it is not possible to offer concessions. That $61 million, of course, represents a very, very small proportion of the over-all volume of imports into the United States. These items, moreover, come in a very high proportion from countries which are not participants in the negotiations.

The largest single item, involving $21 million, is in tobaccos, of which the principal suppliers are the Dominican Republic, Colombia, and Brazil. There are some other items, such as mushrooms, which come, primarily, from China and, to the small extent of about $1 million, from the European Economic Community. There are three or four other items in this group of exceptions. These are frozen strawberries, dates, figs and fig paste, pepper and lemon juices. Cotton is also included. The United States holds very large stocks of cotton and is the only world producer in that position. Liberalization is therefore not possible.

That leaves us, Mr. Chairman, with another category of $740 million of items on which we are not making offers. These are in commodities which, to a very large extent, are supplied to us by countries who are not participating in this negotiation. The largest part of that $756 [$740?]million represents sugar ($458 million). In the case of sugar, the United States reserves a very sizeable portion of its protected internal market at the same premium prices to foreign suppliers as it guarantees to domestic producers. It is well known that we—as well as many other major consuming countries—have a rather clear sugar import program and sugar policy, under which we allocate quotas. These quotas are valuable and constitute considerable sources of income for many exporting countries.

We have, of course, made no further offer in this area, because the Sugar Act and the sugar policy that we follow is a matter of separate determination. All of the countries who supply to us are constantly in touch with us on those matters.

The main items in the group of $740 million, which are supplied primarily by non-participants, are the following:

• Coconut oil—which comes from the Philippines, not participating in this negotiation.
• Copra—totally coming from the Philippines, not in this negotiation.
• Coconut meat—Philippines, not in this negotiation.

There are certain items, such as non-edible molasses, which account for $34 million, and which very heavily come from countries not in this negotiation. One other important item, fresh tomatoes, is in its totality supplied to the United States by Mexico, another country not participating in this negotiation.

This brings us to the United States offers being examined this week. These cover about $750 million worth of items where the U.S. offer is of real relevance; and it is these $750 million worth of imports to which I wish to address myself at this time.

Our offer is a very simple one. For these imports, after considerable deliberation and soul-searching, and in spite of some difficulty and pressures which, I am sure, will be readily understood around this table, and in spite of the fact that this is a difficult undertaking for us, we have placed a full 50 percent offer on the table. In fact, for all items, other than those covered in the special commodity groups, for which countries represented around this table have a principal export interest to the United States, we are offering to cut our tariff by 50 percent. This is significant because in virtually all of these cases there is no other import protection, no other protective device, in existence in the United States. So that an offer to cut these tariffs by 50 percent represents, in fact, an offer to reduce the total import protection by that amount, and these offers are therefore not impaired or nullified in any way.

Let me very quickly run through some of the major items which we have offered for a 50 percent cut in this group.

The largest single item is canned pork ($106 million). We have offered a full 50 percent cut. The major suppliers are Denmark, the EEC and Poland. It is clear that this is a precise offer on an item in which these countries have a major export interest to the United States. This item is now unbound.

The second item is wool ($101 million), supplied to us by Australia, the largest single supplier, South Africa and New Zealand. This, too, is a full 50 percent cut.

The next item is tobacco ($83 million), supplied by Turkey, Greece and Yugoslavia, for a full 50 percent cut.

The next item is wine ($61 million), supplied largely by the EEC, which exports $50 million to the United States. We have no other protective device. We have offered a full 50 percent cut in the duty.

The next item is cashew nuts ($33 million), supplied to us by India and Mozambique. That is also on the table for a 50 percent reduction. Certain beef and veal products supplied by Argentina, Uruguay and Brazil are all subject to full 50 percent offers.

There are many more, Mr. Chairman, up to a total of just about all the commodities of export interest to the countries around this table; and for all of these we have placed the 50 percent offer on the table.

We are now anxious to move at the earliest possible date to individual discussions with our various negotiating partners on these offers, to listen to their comments and to answer any questions that they may have. We believe that our offer is by its very nature a simple one, easily understood; but we are, of course, prepared to deal with any questions or comments which may arise and to negotiate seriously on these commod-ities. And, Mr. Chairman, we want to discuss the offers of other countries with them, as well as the offers which they have not made. I do not propose to make any particular comments at this time as regards the individual offers that have been placed on the table by other countries. It is clear that we have many questions, comments and suggestions with regard to these offers; but again, by their very nature, we think that what is required is the sort of thing that you suggested a moment ago, Mr. Chairman: real negotiation on each of the specific problems and commodities involved, either bilaterally or perhaps in groups of three or four countries which have a particular interest, as the case may be. I do wish to say, however, that, looked at globally, the sum total of the offers in agriculture placed on the table by other countries, if examined by us in the light of commodities in which we have an export interest, gives us considerable cause for concern. Last year, after multilateral discussions in this Committee, we presented to the fourteen countries who are our most important agricultural export markets, requests for 50 percent reductions in their tariffs on about $1.2 billion of our exports. If we look at the offers made by others on the totality of these items, we find that there are offers for a 50 percent cut on $267 million of that U.S. $1.2 billion, in other words less than 25 percent. That is a misleading figure, moreover, because virtually three-quarters of that $267 million on which we have offers for 50 percent cuts is accounted for by one offer on one commodity from one country and is a rather special case. If you subtract that item from the total, we have really only about $50 or $60 million worth of offers of interest to us and which are offered for a 50 percent cut. On the rest, about a billion dollars in which we have an export interest, the offers are more modest or there are no offers at all. That is obviously no secret to anyone who has looked at these offers. In many cases they are considerably more modest and in some cases the offers are of a nature which, it appears to us, is indeed of really very questionable value. We look forward to exploring the offers of other countries with them in our individual discussions and to exploring the possibility of improving them. We sincerely hope that it may be possible to do so, because it is clear that if it were to prove not possible to do so the implications for the entire United States offer in agriculture and industry as well could be serious. It is clear that our offer for 50 percent cuts in agriculture and elsewhere will have to be reviewed very seriously in the light of what improvements we are able to negotiate—or cannot negotiate—through the discussions we are having here. With that comment, Mr. Chairman, I would like to conclude my opening remarks and say again that we are ready with a full team to go into detailed negotiation on a case-by-case basis without delay.

1. Source: Department of State, Central Files, FT 7 GATT. Confidential. The source text is enclosure 1 to Tagg A–56 from Geneva, September 25. The date of the statement is taken from this airgram. Five tables, which further defined the U.S. offer, were additional enclosures. They are not printed.