226. Memorandum From the Under Secretary of State (Ball) and the Special Representative for Trade Negotiations (Herter) to President Johnson1
- Wool Textiles
The issue for decision is whether the United States should now mount an effort to obtain an international wool textile agreement.
- We recognize that there is substantial Congressional pressure to curtail wool textile imports. We have been living with it. But, in spite of the textile industry’s representations, this is not a situation that is jeopardizing an industry or contributing seriously to unemployment. The textile industry as a whole has never been more prosperous. The decrease in production in the wool textile sector has been due significantly to the competition of synthetic fibers. Imports have appreciably increased only in one category of wool textiles—knit outerwear.
- In spite of this, we have taken careful soundings to determine the feasibility of a wool textile agreement. Over the past year and a half we have explored the problem through bilateral approaches and in international meetings. The results have been uniformly negative. The governments of the three major supplying countries have all indicated their strong opposition. The United Kingdom is “adamantly opposed”. Japan opposes an agreement “of any nature”. The EEC countries would demand terms we could not afford to meet. Wyndham White, Executive Secretary of GATT, whose support was indispensable to us in negotiating the Cotton Textile Arrangement, views a wool textile agreement as being “completely non-negotiable”.
We have gone as far as we can prudently go at the present time. Some months ago, in an effort to prepare the ground for a possible agreement, we encouraged the domestic wool textile industry to enlist wool textile producers abroad to soften up their own governments. These efforts did not succeed in changing any government positions.[Page 610]
Nevertheless, in May Secretary Rusk sent Wilson Wyatt and Warren Christopher to Europe to explore once again the feasibility of an international wool textile agreement.
This mission was undertaken with full awareness that such an exploration at this time might have dangerous repercussions on the United States position in the Kennedy Round. For that reason, before proceeding to other countries, Wyatt and Christopher were requested to take soundings in Geneva. There they found that Wyndham White was preparing to launch a major new procedure under the GATT. This new procedure offered the prospect of relief for meritorious cases in which it could be demonstrated to the satisfaction of an international panel that imports produced “market disruption”.
Wyndham White advised Wyatt and Christopher that it would be extremely unwise to approach the governments of the major producing countries (London, Rome, Brussels, Hong Kong and Tokyo) about a wool textile agreement at the present time. Such conversations, he asserted, would seriously prejudice American interests in the Kennedy Round, while destroying the possible chances for the new procedure for disruptive imports.
Upon receipt of this advice, Messrs. Wyatt and Christopher returned to the United States to report their findings.
- We are now in the most sensitive phase of the Kennedy Round negotiations. We are persuaded that we would seriously impair our bargaining position if we were to push further at this time in an effort to obtain a wool textile agreement. Such an effort would jeopardize understandings reached on the key rules, and in particular the basic agreement to make 50% linear offers with a minimum of exceptions—the heart of the United States position in the Kennedy Round.
At a later point these dangers will not be so acute. Once offers and exceptions have actually been made, the danger to the Kennedy Round will be lessened.
Under these circumstances, we believe that the best chance of achieving effective control of wool textile imports is through the Kennedy Round negotiations. Other countries besides the United States are interested in protecting their wool textile producers. There is, therefore, a good chance that we could work out a special quantitative arrangement for textiles by trading tariff reductions on wool textile items.
We strongly recommend, therefore, that, at this critical time, we do not make a further effort—which would almost certainly prove futile—to negotiate a wool textile agreement. We make this recommendation on the understanding that the problem would be tackled as a part of the [Page 611] Kennedy Round negotiations after exceptions have been tabled toward the end of the year.
We further recommend that the President request the Tariff Commission to make an escape clause finding dealing with the wool textile industry. The industry has so far refused to take this step. However, we believe that the mere fact that such an investigation was underway could be most useful in strengthening our hand during the negotiations.
- Christian A. Herter
- George W. Ball
- Source: Johnson Library, National Security File, Subject File, Trade—General, Vol. I [1 of 2], Box 47. Limited Official Use. Attached to another copy of this memorandum is a June 18 note from Bator to Secretary Hodges, indicating that he wanted Hodges’ “decision about how to proceed,” and that Herter and Ball “would like to meet with you before the issue goes up to the President.” (Washington National Records Center, RG 40, Secretary of Commerce Files: FRC 69 A 6828, Textiles—Wool Advisory Committee) Attached to another copy is a handwritten note, June 19, indicating that the original was signed by Ball and handcarried to the White House by E. (Department of State, Central Files, INCO–WOOL 4)↩