Foreign Relations of the United States, 1977–1980, Volume III, Foreign Economic Policy

191. Memorandum From the Special Representative for Trade Negotiations (Strauss) to President Carter¹

Washington, January 5, 1979

SUBJECT

• Extension of the Countervailing Duty Waiver Authority

The expiration on January 2, 1979, of the authority to waive the imposition of countervailing duties has seriously hampered our efforts to conclude successfully the Tokyo Round of Multilateral Trade Negotiations. This issue arose in the closing days of the 95th Congress and, although legislation to extend the waiver was passed twice by the Senate and once by the House, in varying forms, it proved impossible to enact this necessary legislation.

In a series of consultations with the Commission of the European Community (EC) and with officials of various EC Member States, we have given assurances that we will do everything that can be done under the law to avoid any disruption of trade. In particular, we have given assurances that, in lieu of collecting duties, Treasury will suspend liquidation of duties on the affected products beginning January 3rd, and that bonds or other security will be utilized to protect the revenues of the United States. We have also given the EC our commitment to go forward with legislation early in the 96th Congress seeking an extension of the waiver authority. On the basis of this commitment, the EC is concluding the MTN negotiations with us.

In going forward, we recognize that there are risks that either the waiver legislation will be blocked or become the target of unacceptable amendments (e.g., from the textile industry). If events warrant, we may have to fall back to making the waiver extension retroactive as a part of the unamendable package of legislation implementing the results of the Tokyo Round. However, there is something of a chicken and egg problem—we cannot submit the MTN package to Congress for implementation until it is signed and the EC has reiterated that it is not possible to sign final agreements until the waiver issue is resolved.

We need and we should seek to obtain a waiver extension for a limited period (i.e. from the date of its expiration until such time as the MTN implementing legislation is voted upon by the Congress). Because the waiver authority includes provisions protecting U.S. industries from subsidized competition—no waiver may be granted unless adequate steps have been taken to “reduce or substantially eliminate” the adverse effect of the subsidy on U.S. producers—extension of the waiver authority for this limited period will not impose added burdens on U.S. industries and workers.

We have the support of key Congressional leaders, including Speaker O’Neill and Chairmen Long, Ullman, Ribicoff, and Vanik. In addition, we are working with representatives of industry, agriculture and labor to avoid potential opposition. Although I have no illusions about the difficulty of this enterprise, I am reasonably hopeful of success. Accordingly, I am attaching a draft message to the Congress as well as a draft legislative proposal providing for an extension of the waiver authority from January 3, 1979 until September 30, 1979.²

I recommend that the attached message and draft legislative proposal be transmitted to the Congress on January 15, 1979. All interested agencies, and in particular Treasury which administers this law, join in this request.³

1. Source: National Archives, RG 364, 364–80–4, Special Trade Representative Subject Files, 1977–1979, Box 2, Countervailing Duties 1977. Confidential. A stamped notation indicates that Strauss signed the original.
2. Attached but not printed.
3. In a January 15 message to Congress, Carter requested an extension of the countervailing duty waiver until September 30, 1979. For the text of Carter’s message, see Public Papers of the Presidents of the United States: Jimmy Carter, 1979, Book I, pp. 46–47. Congress approved the extension in March. (“Senate Passes Duty Waiver,” The New York Times, March 29, 1979, p. D12)