68. Letter From the Acting Deputy Under Secretary of State for Economic Affairs (Kalijarvi) to the Chairman of the Senate Finance Committee (Byrd)1
Dear Senator Byrd: I understand that the Senate Committee on Finance will consider S. Res. 2362 and other questions related to the importation of cotton textiles at a meeting scheduled for June 28.
The Department’s position on S. Res. 236 has been made known to you in a letter dated May 1, 1956.3 In that letter the Department [Page 193] said that the escape clause investigation with regard to cotton textiles proposed in the resolution was in accord with the position which the Department had taken in discussions with representatives of the textile industry, although an investigation of the scope called for in S. Res. 236 might create a number of practical difficulties.
In view of the concern which the textile industry has expressed regarding imports of cotton textiles, it may be of interest to the Committee to be informed of the consideration the Administration has given to this question and of the actions that have been taken.
Top policy-level officers of the Departments of Agriculture, Commerce, and State and members of the White House staff have met repeatedly with representatives of the domestic textile industry and with residents of textile-mill areas. These meetings have been most useful in that they have served to inform the Administration of the views of the domestic industry and have provided the latter with an opportunity to learn at first-hand what the Administration has done and is doing with regard to this question.
The Administration has discussed the question of textile imports with the Japanese Government, both in Washington and through the American Embassy in Tokyo. The importance of diversifying their exports so as not to concentrate on a limited number of items which might result in injury to an American industry has been discussed fully with representatives of the Japanese Government. Despite a multitude of serious problems associated with restrictions on exports from Japan, the Japanese Government instituted voluntary controls on cotton textile exports to the United States. On May 16, 1956 the Japanese Government officially informed this Government of its restrictions on exports of textiles to the United States during 1956 and of its intention to adopt similar measures for 1957. Japan has stated that it will give at least three months’ advance notice if for any reason it might change its export quotas. I am enclosing a copy of the exchange of notes4 with the Japanese Government on this question which the Committee may wish to include in its record.
The Japanese quota for 1956 is limited on an over-all basis to less than 1.5 percent of the United States production in 1955 of cotton textiles and provides for restrictions on the export of specific types of textiles to assure substantially increased diversification. The over-all quota is 150 million square yards of cotton cloth. Within this quota print cloth exports are limited to 20 million square yards and velveteens to 5 million square yards. A further sub-quota on ginghams is under consideration.
A separate quota of 2.5 million dozen ladies’ blouses was also established voluntarily by the Japanese Government. This quota was [Page 194] reduced only recently to 1.5 million dozen blouses for the twelve months ending March 31, 1957. The American blouse manufacturing industry considers that this action removes the threat of serious injury posed by blouse imports, and has withdrawn its request for an escape clause investigation. The request to stop the investigation was approved by the Tariff Commission on June 22.
Another important step of significant help to the domestic textile industry is the cotton products export program, now under preparation by the Department of Agriculture. This program, to be announced before August 1, is designed to make our cotton textiles more competitive in world markets by giving our textile exporters a price advantage equivalent to that which foreign mills enjoy in purchasing cotton under the new raw cotton export program.
These are steps which the Administration has taken and is taking. By no means has the Administration taken the position that these constitute the limit of remedy when and where remedy is needed. Other opportunities may well present themselves to provide further implementation of a basic Administration policy, stated by President Eisenhower on February 17, 19555 and followed by every Executive agency concerned, that no domestic industry will be placed in jeopardy by the trade agreements program.
However, actions which are taken in connection with the textile import question must not be self-defeating nor must they give rise to new problems more serious than the ones which they try to solve.
In this connection action by the Congress to establish import quotas on textiles would create many problems. Such quotas, instituted without regard to the well-established and internationally-accepted escape clause procedure, would ignore the legitimate interests of all parts of our economy: producers, importers and exporters, and consumers. The escape clause procedure makes it possible for individual segments of an industry to receive protection against serious injury or the threat of such injury as a result of imports. It provides for an investigation of the facts and for public hearings by the Tariff Commission as in the case of the three segments of the cotton textile industry which have already applied under the escape clause: velveteens, pillowcases, and ginghams. Experience has shown that factors other than imports are frequently the cause of an industry’s difficulties. That is why the escape clause procedure, open to all, provides such a useful way in which to ascertain the facts.
[Page 195]Quotas by legislation would hurt the textile industry itself. The United States exports by value twice as much cotton textiles as it imports. On a yardage basis our cotton cloth exports in 1955 were four times as large as our cotton cloth imports. If we restrict our imports we also restrict the ability of countries to pay for our exports and we provide an excuse for other governments to take reciprocal restrictive action against our exports. Thus, the price which the textile industry might pay for action by the Congress to limit imports could be a loss of export business of great significance to the industry.
A further problem associated with legislative import quotas is that it provides an open invitation to many other industries to request similar restrictive action. If a precedent of legislative import quotas were established, the Congress would be faced with the conflicting demands of various segments of American industry. Government controls have a tendency to expand and import quotas once established by Congressional action may well lead to ever-widening government controls over the operation of our free enterprise economy.
In a narrower sense, but of almost equal importance is that complex problem which the administration of import quotas poses. It requires, among other things, regulations, government forms and enforcement. It will mean more government with increased personnel and increased expenditures.
It would also be most unfortunate if the Congress were to require the automatic imposition of import quotas prior to a Tariff Commission investigation. Such an action would put into motion all of the disruptive effects on our foreign trade and on the business community described above. It could not fail to weaken the sound procedures already prescribed in our present legislation.
The foregoing considerations indicate that the Administration is actively concerned with the question of textile import competition. It has taken significant steps to ameliorate the difficulties which may exist for certain segments of the textile industry, and it supports the escape clause procedures of the Trade Agreements Act as a fair course to seek remedial action against injurious imports. The Administration is vigorously continuing in its efforts to assist the textile industry, but it believes that import quotas by act of Congress cannot solve and may actually add to the difficulties of the textile industry.
The Department of Agriculture and the Department of Commerce concur in this letter. Officials of these Departments and of the [Page 196] Department of State are at your disposal for whatever assistance they can provide on this question.
Sincerely yours,
- Source: Department of State, Central Files, 411.006/6–2756. Drafted by Nehmer and cleared by five Department of State offices, the White House, and the Departments of Agriculture and Commerce.↩
- S.Res. 236 requested the Tariff Commission to make an immediate escape clause investigation of the cotton textile industry to determine whether it was being harmed by foreign imports.↩
- Not printed. (Department of State, Central Files, 411.006/6–2756)↩
- Not printed.↩
- Eisenhower’s assurances were made in a letter to House Speaker Martin, February 17, concerning the Trade Agreements Extension Act of 1955. Martin read the letter in the House of Representatives the following day. For text, see Department of State Bulletin, March 7, 1955, p. 388.↩
- Printed from a copy which bears this typed signature.↩