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

International Trade Files, Lot 57 D 284, Box 164, “Magnuson Amendment”

Memorandum by Mr. Walter Hollis of the Office of the Assistant Legal Adviser for Economic Affairs (Cardozo)¹ to the Director of the Office of International Trade Policy (Brown)

[Washington,] January 11, 1951.

Subject: Legal Interpretation of the Magnuson Amendment²

Problem

You have requested a legal opinion on the following three questions:

1. What effect would an amendment to section 22 which provided that no international agreement should be entered into by the United States or renewed or extended in contravention of section 22 have upon our participation in the GATT?

2. Would this effect be any different if the amendment contained the words “or allowed to continue beyond its permissible termination date”?

3. Specifically, would an amendment prohibiting international agreements “in contravention of” section 22 require renegotiation of the GATT?

A preliminary problem, which is relevant to each of these three questions, is the meaning of the term “contravention” as used in the Magnuson amendment.

Proposed Reply³

Section 22 provides that, if the President finds that imports are interfering with any of a number of agricultural programs he shall impose upon such imports either a fee or a quota, whichever he considers more appropriate to remove or alleviate the injury. GATT prohibits the imposition of fees, charges, or exactions in connection with the importation of products upon which concessions have been granted in excess of those imposed on the date of the agreement in which the concession is embodied. It also prohibits the imposition of quotas on any imports except under specified circumstances, which do not include all the situations under which section 22 might provide for the imposition of quotas. Consequently, it would seem that the provisions of GATT are in contravention with section 22, both as to the imposition of fees on products on which concessions have been granted and as to the imposition of quotas under certain circumstances on any product to which the section might apply. That is the two contain such conflicting rules that under many circumstances full effect could not be given to both.

With respect to your first question, as to the effect upon GATT of language that no international agreement could be entered into, renewed, or extended in contravention of section 22, it may be pointed out that, although GATT itself has already been entered into, there are a number of ways in which it may be considered that the extent of these existing obligations under GATT are extended. The prohibition against new fees is extended with respect to products on which concessions have already been granted when new countries accede to the agreement, with the result that this obligation applies to imports of such products from the new countries. The same prohibition against fees is extended to new products through the conduct of new negotiations in which concessions are granted on products which had not previously been the subject of trade-agreement concessions.

The obligations with respect to quotas would be extended by any amendment prohibiting the future imposition of quotas under circumstances envisaged by section 22 and now permitted under GATT, and also by the definitive application of GATT which is now being applied only provisionally.

GATT obligations continue indefinitely subject to certain possible modifications pursuant to provisions of the agreement, so that there is no clear case of a “renewal” of GATT or of the obligations thereunder. However, the extension of the period before which certain relatively simple procedures may be utilized for the withdrawal of concessions, which is now under consideration at Torquay in connection with Article XXVIII of GATT, would seem to be somewhat comparable to a renewal of the original firmness of such concessions. If not so viewed it would seem to constitute another example of the extension of the scope of GATT obligations.

Consequently, the wording proposed in your first question would seriously impede the operation of the United States under GATT, by making it impossible for this country to participate in many aspects of the normal functioning of the agreement in the future.

The answer to your second question, as to whether the effect would be different if the amendment to section 22 provided that GATT should not be allowed to continue beyond its permissible termination date, is in the affirmative. As has already been pointed out, there is a basic conflict between GATT and section 22, both with respect to the possible imposition of fees on products on which GATT concessions have been granted and with respect to the situations under which quotas may be imposed on certain products.

Consequently, such an amendment would require the withdrawal of the United States from the GATT, which would constitute a major reversal of our post-war foreign economic policy, unless extremely difficult negotiations could be promptly carried out by the United States. Should such negotiations result in giving all contracting parties to GATT the same rights with respect to fees and quotas which we would have to ask for ourselves there would be relatively little protection for the concessions on agricultural and other products which have been obtained in GATT for exports from the United States. However, it seems unlikely that most of the other parties to the agreement would be willing to give the United States such a free hand to nullify concessions it has granted, as would be required to prevent any contravention of section 22, without asking similarly broad rights for themselves.

In reply to your third question, it would seem that an amendment in general language prohibiting international agreements in contravention of section 22 would, unless the legislative history clearly showed the contrary, be taken to have the same meaning as one containing both the possible amendments discussed with respect to questions one and two. That is such an amendment would have that effect insofar as it relates to GATT, an international agreement concluded pursuant to Congressional authorization in a field in which Congress is constantly legislating. It would seem that such a provision would prohibit the conclusion of new agreements, the extension of existing ones, and would even require the withdrawal from, or drastic modification of, GATT.

1. Michael H. Cardozo.
2. The proposed amendment offered by Senator Magnuson regarding Section 22, was not enacted by the 81st Congress. Senator Magnuson reintroduced the proposal in the 82d Congress in connection with legislation relating to the enactment of the Trade Agreements Extension Act of 1951 (for documentation on this subject, see pp. 1373 ff.).
3. Reference uncertain.