[Enclosure]
OTC LEGISLATION
You have asked whether, if an analysis of Congressional opinion is
unfavorable to OTC, it would be wiser to
hold it up this session in the hope of obtaining passage of the
legislation next year. For the following reasons I believe that delay
would mean just as certain defeat as a prospective adverse vote in this
session of the Congress.
I do not think that we can again mobilize public support for OTC next year. That support is strong now
and is reflected in public opinion polls. Much of this favorable
sentiment has been developed by public groups who have worked hard on
the basis of assurances that the Administration would carry through. We
also have a favorable vote from Ways and Means (18 to 7) and a strong
committee report. If OTC is delayed the
whole hearing procedure would have to be repeated, and probably without
as favorable a result. I believe, therefore, that the OTC project could not survive a
postponement.
Since the OTC has already been deferred
for a year (it was first introduced in 1955) I believe that both foreign
governments and domestic supporters would consider another delay, with
the acquiescence of the President, as a euphemism for defeat. An
important part of the strategy of the opposition has been to cast doubt
on the firmness of the President’s intentions despite his strong
statements favoring OTC. If the
President now backs down, he will in effect be conceding the opposition
case and open the Administration to an even wider and more intense
attack, not only on U.S. participation in the GATT but on the Administration’s trade program generally.
That this is the opposition strategy is evident from several bills
already introduced which are designed to sweep away the entire framework
of our trade agreements program.
On balance, I think we would not be as badly off, internationally, if the
OTC were defeated in Congress than
if it were postponed with the consent of the Administration. The OTC was negotiated on
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the initiative of the United States, and
foreign governments agreed to this negotiation on the assumption that
the Administration would press for its adoption. They would view
deferral as an Administration decision to reject. An adverse
Congressional vote would at least allow us to work with other
governments in improving the administration of the General Agreement on
Tariffs and Trade on the assumption of no OTC. If OTC is deferred,
this will paralyze any forward movement for a considerable period.
Finally, there are certain substantive amendments to the General
Agreement, designed to speed up removal of restrictions of American
goods, that other governments have not yet ratified pending action on
OTC. If OTC were definitely out of the way (even though rejected)
we could press for getting these amendments into force.
