154. Paper Prepared in the Office of the Special Representative for Trade Negotiations1
A Proposed Design and Outline of a Comprehensive Trade Bill
Trade legislation over the years has been primarily focused on authority to participate in international multilateral negotiations and to lower tariffs. In the late ’60s pressures developed for major legislative proposals to restrict imports into the United States in various ways. Most of these were related to the concept of "orderly marketing" or orderly growth of imports in "sensitive" markets for domestic industries. In the same period, international nontariff barriers increased, tariffs were lowered in industrial areas, but discriminatory tariff schemes were introduced, and protection was either not lowered or in fact increased [Page 595]in the agricultural area. Consequently, we should focus any proposed legislation in 1973 in a way that recognizes the change in times, and the specific domestic concerns in the United States, but at the same time take into account the interdependent relations we have with our trading partners.
New legislation should be designed to distinguish it in both appearance and substance from the past traditional legislative proposals made by the Executive. The substantive features should emphasize equally (1) the control and management of trade issues by the United States domestically, and, (2) provision for authority to negotiate a more open and fairer trading market and system in the world.
Such a bill could be entitled the Trade Reform and Expansion Act of 1973. The first title of the bill would revamp present authorities for the day-to-day management of trade issues. This would grant the necessary authority to manage a domestic safeguard program. Such a program would include the following: (1) provision for broader import relief and its application; (2) provision for adjustment assistance; (3) authorization on a very limited basis to negotiate minor agreements supplementary to GATT, to withdraw tariff concessions, to conclude minor agreements on particular products, and to provide for the payment of compensation where required; (4) expanding the President’s authority to retaliate against foreign import restrictions; (5) provisions for safeguarding the national security; (6) authorizing the President to impose import restrictions in a serious balance of payments emergency; (7) providing a coordinated system for handling unfair competition—antidumping, countervailing duties, and Section 337 of the Tariff Act and (8) organizational provisions, such as clarification of the STR interagency functions.
These provisions would become effective immediately upon passage of the bill, and provide alternative answers to many proposals raised by labor and represented by the Burke–Hartke Bill (except limitations on investment, licensing and tax provisions).
Title II would include the authority for new negotiations on non-tariff and tariff barriers. Tariff reductions would become effective only upon agreement with our trading partners after at least two or three years of negotiations and would be phased in over some lengthy period of time. The Congress should also provide strong encouragement or authority to negotiate new rules for nontariff barriers. This would allow us to seek elimination of nontariff distortions to trade, or at least develop new, equitable rules based on common commitments. The lowering of trade barriers and development of new codes or rules, in conjunction with new methods of management of our domestic programs should facilitate the evolution of what we can describe as a more open and a more fair system.[Page 596]
Such a more open and fairer system can only be achieved by managing both (1) the domestic trade problems by a domestic safeguard system, i.e., prevent abrupt market disruptions and acting affirmatively on matters which affect our exports, and (2) by negotiating a better multilateral system and lowering trade barriers; i.e., more equitable rules, lowering tariffs to reduce preference, reducing nontariff barriers to increase our export possibilities (agriculture, etc.), and to stop more barriers on exports.
Other titles of the bill could include such matters as (1) trade relations with Communist countries, (2) generalized preferences, (3) authorization for GATT appropriations; (4) Congressional participation; (5) requirements concerning negotiations involving independent agencies (Tariff Commission, etc.); (6) amendments to Automotive Products Trade Act; and (7) various technical matters.
Attached is an outline of a bill2 which ties together such a concept of domestic safeguards, lowering of trade barriers and unfair practices in a way that should allow the negotiators to work toward a system of a more open world for American exporters, while offering possibilities for avoiding abrupt market disruption domestically while such negotiations are going on.
This approach would also be consistent with negotiations taking place in other economic and political arenas, by providing for managing the trade issues by both positive actions and negotiations.
- Source: National Archives, RG 56, Records of Secretary of the Treasury George P. Shultz, 1971–1974, Entry 166, Box 6, GPS Trade—Volumes I & II 1973/74. No classification marking. An attached January 3 memorandum from Eberle to Shultz reads: "Attached, for your information, are copies of the material on the proposed Trade Bill which I mentioned to you last week." According to an attached note from Shultz’s Executive Assistant, Ronald Brooks, the material was forwarded to Shultz on January 18.↩
- Attached but not printed.↩