103. Memorandum From the Director of the Office of International Resources (Armstrong) to the Secretary of State1
SUBJECT
- Lead and Zinc
Problem:
To determine the position of the Department with respect to a revised proposal for increasing import taxes on lead and zinc, as approved by the Senate Finance Committee on August 16.
Background:
On August 16 the Senate Finance Committee, by a vote of 11 to 2, amended a bill dealing with the tariff on mica by adding to it an important legislative proposal for increased duties on lead and zinc, at considerable variance with the Administration lead and zinc proposal. Senator Byrd was quoted as having said that the new legislation would not be reported out for Senate action until he obtained the views of the Departments of State and Interior. The mica bill, H.R. 6894, had already passed the House of Representatives, and action by the Senate to amend it by adding legislation on lead and zinc would throw the two proposals into conference. (The mica bill is not controversial.)
On the same day, August 16, the Chairman of the House Ways and Means Committee, Congressman Jere Cooper, addressed a letter to the President in which he pointed out that the President has ample authority under existing trade agreements legislation to provide whatever relief he may deem necessary to the lead and zinc industries, and also that the President can act more expeditiously in this way than would be the case if the Administration’s proposal were adopted. Congressman Cooper urged the President personally to review the situation and the proposal submitted to Congress. He said he was sure that the President would be convinced that he does have ample authority, and that by-passing the existing provisions of the trade agreements law would undermine the program. In his penultimate paragraph, Mr. Cooper suggests that, if the President does not exercise his authority under the Trade Agreements Act, the Congress “will be forced to study again the delegation of authority [Page 265] made to you under the trade agreements legislation”. Mr Cooper’s last paragraph says that the other 14 Democrats on the committee concur with him in the letter. (Copy of letter attached as Tab A.)2
On Saturday morning there was a White House conference of legislative experts from various departments, and one of the items considered was the lead and zinc legislation. Mr. Hoghland was present, and has informed me that the understanding of the meeting was that the original Administration position on lead and zinc legislation would continue to be supported in any response made to Senator Byrd or to Congressman Cooper. After the meeting I had a phone call from Under Secretary of Interior Chilson, who asked for help from our people in drafting appropriate responses. Officers of E worked with Interior officers during the day, and gained the impression that there was strong sentiment in the Interior Department towards acceptance of some of the more important features of the legislation approved by the Senate Finance Committee. The Department of Interior had an extensive conference on Sunday, August 18, with the lead and zinc industry, and reported to us that it had succeeded in obtaining agreement from the industry to a number of improvements in the legislation as it was approved by the Senate Finance Committee. Significant and important differences between the original proposal and the Senate Finance Committee proposal, as it will be amended by industry consent, nevertheless remain.
The most important difference is in the rates of duty. The maximum rate in the original three-step proposal of the Administration was 1.8 cents for zinc ore and 2 cents for zinc metal. The new proposal would establish rates of 2.1 cents for zinc ore and 3 cents for zinc metal. The new proposed rate on lead ore is 1/10 cents higher than the maximum rate in the Administration proposal, and the 3 cents per pound on lead metal is the same. Furthermore, the Administration proposal had the virtue of applying the maximum rates only when the price of lead was below 15 cents and the price of zinc below 121/2 cents, with lower rates applied at higher prices. The new proposal would immediately apply the full rate at the time the materials fell below the target prices of 17 cents for lead and 141/2 cents for zinc. Thus the sliding scale feature of the Administration bill has been completely lost in the new legislation.
There is a fairly large number of lead and zinc products, with separate rates for each, but nearly all of the business is done in lead and zinc ore and metal. The increase of the zinc rate above that proposed by the Administration, and the elimination of the three-step sliding scale principle would mean that several friendly [Page 266] countries which are now profoundly dismayed at the Administration proposal would be still more seriously concerned. They would consider the proposal far more onerous in its impact on their economies. (A table showing the existing tariff, the Administration proposal, and the Senate Finance Committee proposal is attached as Tab B.)3
It is likely that the Department of Interior will, on the morning of Monday, August 19, seek our agreement to the Senate Finance Committee proposal in a modified form. The modifications, however, do not affect the main points set forth above, and we believe that we should not concur with the Department of Interior, and should insist that the Administration stick to its original proposal.
The letter from Congressman Cooper to the President occupies a secondary position in the eyes of the Department of Interior which proposes that a reply go forward later in the week.4 This reply would presumably be a refutation of the points made by Cooper. (It must be remembered that the Cooper letter does not represent a formal action of the Ways and Means Committee, but a partisan action.)
Recommendation:
That the Department maintain its position of rejecting proposals for such significant modifications of the Administration bill as would be encompassed by an increase in rates on major items or by dropping the sliding scale principle.
- Source: Department of State, Central Files, 611.0041/8–1857. Confidential. Delivered to Under Secretary Herter on August 19.↩
- Not printed. For text of Congressman Cooper’s letter, see Department of State Bulletin, September 23, 1954, p. 491.↩
- Not printed.↩
- For text of President Eisenhower’s reply, June 23, 1957, see Department of State Bulletin, September 23, 1957, p. 490.↩