Foreign Relations of the United States, 1951, National Security Affairs; Foreign Economic Policy, Volume I

411.436/9–1151

The Secretary of State to the Australian Ambassador (Spender)¹

The Secretary of State presents his compliments to His Excellency the Ambassador of Australia and has the honor to refer to the Embassy’s aide-mémoire dated September 11, 1951 concerning the imposition of import restrictions by the United States on fats, oils, and certain dairy products. The Embassy stated that the restrictions; nullify the tariff concessions on butter negotiated jointly by Australia and New Zealand. It also expressed the desire of the Australian Government to be assured that import licenses would be forthcoming for cheese if applied for by United States importers and to be assured that Australian exports to the United States of the dairy products referred to in the aide-mémoire would not be impeded. The Embassy requested that the aide-mémoire be considered the commencement of consultations in the sense of Article XXII of the General Agreement on Tariffs and Trade and asked how the United States authorities regard the measures in relation to the General Agreement.

Section 104 of the Defense Production Act was, as is known, enacted into law on July 31, 1951, and, in accordance with its provisions, the Secretary of Agriculture on August 9 imposed import restrictions on fats, oils, cheese, and other dairy products. The application of the restrictions was subsequently modified to provide that the quotas for cheese be allocated according to country of origin. Shares allotted are proportionate to the trade accounted for by the individual supplying countries in the base period 1948–50.

Following enactment into law of the Defense Production Act Amendments of 1951, the President, on August 23, recommended to Congress changes in the legislation. In his message to Congress, the President asked for prompt repeal of Section 104 of the Defense Production Act, which requires the imposition of restrictions on fats, oils and certain dairy products. S. 2104, a bill to repeal Section 104, has been introduced in Congress by the Chairman of the Senate Committee on Banking and Currency. This Committee has reported favorably on this legislation.

With respect to the request of the Government of Australia to be advised as to how the United States authorities regard the restrictions in relation to the provisions of the General Agreement on Tariffs and Trade, it might be noted that the President, when asking the Congress to repeal Section 104, stated that the restrictions run counter to the United States policy of reciprocal trade agreements. It might also be pointed out that Assistant Secretary of State Thorp and Under Secretary of Agriculture McCormick testified before the Senate Committee on Banking and Currency on August 31 in support of the President’s request for repeal of Section 104. On this occasion Mr. Thorp stated that “the restrictions required by Section 104 appear to the Department clearly to violate the provisions of the General Agreement on Tariffs and Trade”.

The Department of State understands the concern of the Government of Australia over the imposition of the restrictions pursuant to Section 104, will continue to make every effort to have the situation remedied, and will continue to give sympathetic consideration to the representations of the Government of Australia in this matter. In this connection, it might be pointed out that there has been placed on the agenda of the Sixth Session of the Contracting Parties to the General Agreement, now in progress in Geneva, an item on the restriction on the importation of dairy products into the United States. Should the Government of Australia so desire, the United States delegation to the Sixth Session will be prepared to consult on this matter with the delegation of Australia in Geneva.²

Washington, September 28, 1951.

1. A chit attached to the record copy of this note reads in part: “The attached note in reply to the Australian note on cheese ... differs somewhat from our previous replies in that it answers directly the question posed by the Australians about our attitude on the matter of GATT violation.” (411.436/9–1151).
2. The Sixth Session of the Contracting Parties to GATT convened at Geneva, Switzerland, on September 17, 1951. For the composition of the United States Delegation, see Department of State Bulletin, October 1, 1951, p. 553. Willard L. Thorp, Assistant Secretary of State for Economic Affairs was Delegation Chairman, and John L. Leddy, Acting Director, Office of Economic Defense and Trade Policy, was Vice Chairman. Files of the United States Delegation are located in GATT Files, Lot 63 D 134, Box 268, and Lot 66 D 209, Box 454 (FRC Accession Nos. 65A987 and 71A6682, respectively).