199. Memorandum From the Special Representative for Trade Negotiations (Strauss) to President Carter 1

SUBJECT

  • The Textile Program in the MTN

Enclosed is the final text of the Administration Textile Program which we will discuss again this morning.2 Its acceptance on our part will give us no less than the support of the textile industry and qualified support of the key unions as we seek first the extension of the authority to waive countervailing duties, and second, approval of the MTN agreements. Support of this bloc will make both tasks significantly easier; their opposition would be fatal. The benefits of having them in a position of support and cooperation will extend beyond these immediate legislative objectives, I am certain.

This industry, employing almost two and a half million people, more than half of them women, and a large portion minorities, has been provided with special programs of various kinds going back to the [Page 587]Roosevelt Administration, and the present type of import-control program has existed for almost twenty years.

Currently the industry is most concerned about rapid surges in specific products from other nations which can cause rapid loss of jobs and production. Their proposal is to allow trade to grow, but not in such disruptive ways—and that is the principal thrust of this paper.

As I explain in an attached outline of how this paper developed,3 it began after the industry had secured an overwhelming vote in the Congress to take textiles out of our MTN tariff negotiations, which legislation you vetoed on November 11, 1978. Your veto message (which I also enclose)4 was the starting point for this program.

Several agencies have expressed a distrust of this industry and its associated unions, fearing that once a program such as this has your approval they will renege on their promises to help us in the Congress. They recommend that failure of the MTN for any reason should immediately terminate the program we have set out upon. I do not believe this is realistic, but I do agree that we should think about how to handle certain elements of the textile trade should the MTN not be approved. I feel certain that a number of agencies would want to review where we stand in that event.

As a whole, the document we have drafted addresses a number of the industry’s problems in a coherent way, giving them a degree of certainty for annual planning purposes. This, as you know, is crucial to good business operations. Most of what is in here is already in place or is on the way even without this paper. There are, however, several concepts enunciated which represent the first statement of these policy directions:

(1) A global evaluation of imports. This is a promise that when we look at potential quantitative restrictions for a supplier we will consider the total volume of imports of the category of goods in question from all sources. This recognizes that a sharp increase from one source which would not cause us to respond if it were the only such increase, would in fact cause action to be taken if it occurred on top of substantial and disruptive levels of imports from multiple sources.

(2) An evaluation of the growth of imports from our three principal suppliers (Hong Kong, Korea and Taiwan) in the context of the growth of the domestic market. Currently growth accorded these major suppliers is determined without explicitly requiring a review of the condition of the U.S. market, often giving imports a disproportionate share of the [Page 588]market growth. In the next three years we would have an annual review of this relationship and take it into account in our negotiations.

(3) Avoidance of surges which now can occur when a country substantially underships its quota and then moves to full quota the next year. To avoid some very significant surges, we would under normal circumstances, limit a country to an increase of half of its unfilled portion in that product, but recovering fully in a relatively short period. This is one of the key points of providing some certainty for business planning.

The remainder of the significant elements of program fall within policies already in effect, and in some instances includes promises which have already been fulfilled.

  1. Source: National Archives, RG 364, 364–80–4, Special Trade Representative Subject Files, 1977–1979, Box 8, Textiles Two. No classification marking. An unknown person wrote at the top of the page: “1) 1st cost—slightly infl; Presentational. 2) Ambiguities; deliberate = Haggling.”
  2. Attached but not printed is a February 7 paper entitled “Administration Textile Program—Pursuant to the President’s Statement of November 11, 1978.” Carter met with Strauss and Eizenstat in the Oval Office on February 8 from 9:45 until 10:30 a.m. (Carter Library, Presidential Materials, President’s Daily Diary) No memorandum of conversation was found.
  3. Attached but not printed is an undated paper entitled “Chronology of the Administration’s Textile Program.”
  4. Attached but not printed is the November 11, 1978, press release announcing Carter’s veto of H.R. 9937. See footnote 2, Document 196.