347. Memorandum From the Special Representative for Trade Negotiations (Roth) to President Johnson1
SUBJECT
- Supplemental Authority to Offer Tariff Concessions in the Kennedy Round
Request for Negotiating Authority
In order to improve our ability to obtain concessions from certain countries in the Kennedy Round, I request that you authorize me, under the Trade Expansion Act of 1962 (TEA), to offer certain new tariff concessions. Although we consider that our present offers to the countries to which I should like to make improved offers are already more valuable than their present offers to us, the modest new offers which I am recommending should help us to get those countries to make the important adjustments necessary to bring their offers into balance with ours.
Discussion
The contemplated new U.S. offers, set forth in Tab A,2 are intended principally to benefit Italy. Italy has already been hit harder than most [Page 911] other major participants by our having withheld a number of industrial and agricultural offers. By improving our offers of benefit to Italy, we should encourage the Italian Government to be more agreeable to concessions that would increase our exports to Italy and to urge the other European Economic Community (EEC) member states to take a more liberal position on EEC offers to the United States. We are particularly interested in getting new agricultural offers from the EEC. The contemplated new U.S. offers would also help us in our negotiations with Sweden, the United Kingdom, Canada, and Japan.
Glassware—TSUS 546.35 and 546.45–.57: To benefit Italy and Sweden, I request authority to offer a reduction of approximately 20 percent in the duty on “bubble glass” and to make an overall improvement—involving a partial withdrawal of existing offers but a more than offsetting new offer on other glassware items, including ashtrays, tableware, and perfume bottles.
The new U.S. tariff rates for these glassware articles would provide a very small reduction in duties on items that compete with those produced in West Virginia and other Appalachian areas. Because the glassware industry in this region has been beset by economic difficulties, we believe that the tariff protection which it presently enjoys should be substantially maintained. The principal item for which we would be maintaining protection is found in a low-price bracket of certain “other” glassware; the rate of duty of 50 percent ad valorem would be maintained.
In order to simplify customs administration, the number of different rates of duty that apply to the sector would be reduced by the new proposal.
In explanation of the proposal set forth fully in Tab A, the substance of the glassware proposal is contained in the simplified table under Tab B1.
Gloves—TSUS 705.40–.78: To strengthen our negotiating position with Italy, and consequently with the EEC, I request authority to improve our present offer on certain women’s and men’s leather gloves and, in so doing, to simplify customs administration by establishing new tariff classifications that would reduce the number of tariff rates applicable in this sector.
Because the U.S. leather glove industry, concentrated in Gloversville, New York, has been regarded as competitively weak, early in our negotiations we withheld fully offers on certain items and made very small offers on other items. The proposed offer would result in a reduction in tariffs of approximately 18 percent, setting aside a small measure of adjustment resulting from the revision of the classifications according to price categories.
[Page 912]Taking account of factors of competition and of customs administration, the proposed offers would entail a reduction in the number of tariff rates among the related items and a revision of the price brackets. In place of the present complex rate structure, the new offers would provide for two rates for men’s gloves ($5 per dozen pairs for gloves valued not over $20 per dozen pairs, 25 percent ad valorem for those over $20 per dozen pairs) and four rates for women’s gloves (specific rates in two low-price brackets and ad valorem rates in two high-price brackets).
Subject to formal confirmation by the Tariff Commission, we propose the conversion of some tariff rates that are involved in the proposal, that is, changing some dollars-per-dozen-pairs duties in percentages of value duties in some cases and the reverse in other cases. The particular conversions of rates are noted in Tab B2.
Woolens—TSUS 372.30, 372.40, 372.45, 374.50, ex 380.60, 382.48, ex 382.57: To benefit Italy and the United Kingdom, I request authority to offer modest reductions in the tariffs on such woolen items as mufflers, hosiery, cashmere sweaters, and infants’ outerwear.
These items, which will be of considerable interest to these two countries, have been carefully chosen and are among the woolen imports to which the domestic industry is least sensitive. It is therefore believed that the negotiating advantage of offering concessions on these items outweighs any political disadvantages of doing so.
Dicyandiamide—TSUS ex 425.40 and Limestone (imported for the manufacturers of cement—TSUS ex 513.34: The Bureau of the Budget will shortly recommend that you approve enrolled bill H.R. 286. This bill would permit the President, under the authority of the TEA, permanently to eliminate the duty on dicyandiamide and limestone pursuant to a trade agreement, without having to satisfy the usual prenegotiation and staging requirements of the TEA.
Subject to your approval of this bill, I request authority to offer the permanent elimination of duty on these two items. They are both of interest to the Canadians, and we have determined that we can expect reciprocal concessions from the Canadians. As a result of Congressional consideration of this bill, we are satisfied that there is no domestic opposition to the duty-free treatment for these items.
Titanium—TSUS 629.15: To respond to the Japanese request I request authority to make a small offer on titanium, so that the rate on unwrought titanium (TSUS 629.15) would be reduced by 10 percent to match the existing rate of 18 percent ad valorem on wrought titanium (TSUS 629.20).
To the extent that there is a national security need to maintain protection on titanium in either or both forms, that protection would be at least as effective as at present by bringing the rate of duty on the [Page 913] unwrought material down to the level of the rate of the processed product.
After receiving from the Office of Emergency Planning (OEP) its view that a tariff concession would be undesirable on national security grounds, we decided to make no offer on either unwrought or wrought titanium. We recently asked OEP to review the situation and have obtained its concurrence to the 10 percent reduction in the rate of the unwrought product.
The present rate relationship is perverse since the protection for the processed material is less than the burden imposed on the material used in that processing.
Congressional Aspect: Of the articles dealt with in this memorandum, only the glassware, gloves, and woolen items appear to present any political problems.
We believe that, although there is considerable Congressional concern about textile imports, concessions on the few woolen items should not be troublesome, because they do not, for the most part, compete with domestic production. The gloves and glassware, on the other hand, are politically sensitive, since imports are increasing steadily and since the domestic articles are made in Gloversville, New York, and Appalachia, respectively, which are both depressed areas. Accordingly, while it appears that imports will rise steadily whether tariff concessions are granted or not, Congressional criticism can be expected.
Legal Authority: All the applicable prenegotiation requirements of the TEA for making these offers have been met. The tariff concessions on the items in question would be made under the authority of section 201 of the TEA, and all, with the exception of dicyandiamide and limestone, would be subject to the requirement in the TEA that concessions be put into effect in five annual stages.
Any trade agreement which is negotiated on the basis of the offers for which I now seek your authorization will be concluded subject to your final approval.
Recommendation
With the concurrence of other agencies concerned, I recommend that you authorize me, as your Special Representative for Trade Negotiations, to offer the concessions listed in Tab A in addition to concessions on these articles that you have previously authorized be offered.
- Source: Johnson Library, Bator Papers, Kennedy Round, March–April 1967, Box 12. Confidential. The source text was transmitted to President Johnson under cover of a May 4 memorandum from Bator, in which Bator strongly recommended the President grant Roth the authority to make further tariff offers involving glassware, gloves, and certain noncompetitive woolens. (Ibid., May–June 1967, Box 12)↩
- None of the tabs was found with the source text.↩