Foreign Relations of the United States, 1955–1957, Foreign Economic Policy; Foreign Information Program, Volume IX

80. Memorandum of a Conversation Between the Deputy Under Secretary of State for Economic Affairs (Dillon) and the British Commercial Minister (Garran), Department of State, Washington, April 26, 1957¹

Washington, April 26, 1957

SUBJECT

• British Views on Wool Textile Tariff Quota

Mr. Garran, at his request, called upon Mr. Dillon. He said his primary interest at the moment was the wool textile problem which arose as a result of the exercise by the United States of its reservation on wool under GATT.² Mr. Garran reiterated the British view that tariff quotas should be sparingly resorted to and pointed out the effects such a quota would have on the sizeable British trade in the item. He said he hoped the United States would set the level of imports to enter at the lower duty under the tariff quota at as high a percentage of domestic production of wool textiles as possible.

Mr. Dillon told Mr. Garran that discussions were scheduled for the afternoon and that he would know more of the progress of the report to the President at that time. He assured Mr. Garran that the Department was giving most careful consideration to the British views. In answer to Mr. Dillon’s inquiry into the arrangement the British might find most acceptable Mr. Garran said that he rather hoped that six and one-half per cent of domestic production could enter as imports at the lower duty and that the minimum figure of five per cent would not be settled on. Mr. Garran described the nature of the British textile trade and the advantage of the higher figure. Mr. Dillon thanked Mr. Garran for his explanation.

Mr. Garran inquired into the status of the legislation on OTC.³ Mr. Dillon said it was difficult to speculate on the chances of action on the OTC bill, but that he felt that when legislative committee hearings were held strong proponents of OTC would come forward to testify. Mr. Dillon pointed out that the OTC (ITO) had got off to a rather bad start in the beginning (1947) but that over the years its supporters had increased, some of whom came from industries originally in opposition. However, Mr. Dillon added that a long contest was still to be fought and that liberal trade policy would likely be a major issue in the coming year. Mr. Dillon told Mr. Garran he remained an optimist until, and, in the event of defeat, even after, a battle were lost. Mr. Garran said he was pleased to find such optimism when most observers were generally pessimistic on OTC.

Mr. Garran briefly mentioned the ODM hearing on woolen textiles scheduled for June 3. Mr. Dillon said he had spoken with ODM Chairman Gray and learned that the hearing was to consider a long-standing petition that imports of woolen textiles constituted a threat to national security as defined under Section 7(b) of the Trade Agreements Extension Act of 1955. Mr. Dillon added that the hearing was mandatory and should not be considered as indicating any ODM position on the merits of the case.

1. Source: Department of State, Central Files, 411.006/4–2657. Confidential. Drafted by Warrick E. Elrod, Economic Officer, United Kingdom and Ireland Affairs.
2. On September 28, 1956, President Eisenhower issued Proclamation 3160 establishing a quota for certain woolen and worsted fabrics. It provided that the ad valorem rate of duty applying to most imported woolen textiles would be increased when such goods exceeded 5 percent of the average U.S. annual production calculated over 3 years. The President’s action was authorized under paragraphs 1108 and 1109a, Section 350 (a) of the Tariff Act of 1930, and under the Geneva Protocol to the General Agreement on Tariffs and Trade, signed October 30, 1947. For texts of the White House announcement of the wool quota and the President’s proclamation, see Department of State Bulletin, October 8, 1956, pp. 555–557.
3. H.R. 6630, which authorized U.S. membership in the proposed Organization for Trade Cooperation, was introduced in the House of Representatives in April after the President sent a special message to Congress urging its passage. For text of the message, April 3, 1957, see ibid., April 22, 1957, p. 657. The House Ways and Means Committee subsequently discussed the OTC bill in executive session but neither scheduled hearings nor voted formally on the bill. The Senate Finance Committee took no action on the bill.