Foreign Relations of the United States, 1958–1960, Foreign Economic Policy, Volume IV

111. Telegram From the Department of State to the Embassy in Japan⁰

October 20, 1959, 8:17 p.m.

966. Depcirtel 520.¹ Following may be useful for Embassy’s background information in discussing escape clause action on stainless steel flatware with GOJ:

Other possible alternative actions were: a) restore 1930 statutory rates to all imports; b) raise duties to maximum permissible rates (50 percent above 1934) on all imports; c) establish U.S. global import quota of 4 to 6 million dozen; d) reject Tariff Commission report² on basis no serious injury; and e) obtain strengthened commitment from Japan re future of voluntary quota and undertaking to charge verified transshipments to future years’ quotas.

First four alternatives rejected for following reasons: a) as ineffective; b) as raising duties on all imports to such high level as to adversely affect U.S. posture international trade relations; c) as also raising serious problems U.S. trade policy; and d) as contrary to general agreement that on balance serious injury has been demonstrated. As Embassy aware GOJ unable give necessary assurances under e).

In evaluating practical effect on Japan of action taken following should be taken into consideration:

1. Tariff quota will apply to all countries and Japan not singled out for restrictions. U.S. imports from Hong Kong increasing and appear to be emerging problem as in cotton textiles.

2. Japanese flatware valued over $3 per dozen (now included under Japanese quota) excluded from tariff quota.

3. Total Japanese exports to U.S. will probably exceed 5.5 million dozen. High duty rates on imports in excess quota do not appear prohibitive. Believe some Japanese flatware in excess tariff quota entered under higher rate may still compete with U.S. flatware although at considerable reduced advantage. Theoretically Japanese exporters and U.S. importers could “average” out imports over year with possible resultant “average” duty rates below 1930 level although this would require extensive revision merchandising practices.

4. Under Executive Order 10401³ regular reports reviewing situation are required from Tariff Commission which would permit periodic restudy quota levels. First report normally two years after President’s action.

5. Action avoids necessity, under alternative e) above, of sharp cutback in 1960 Japanese export allocations to compensate for 1959 transshipments now running at annual rate exceeding 1.5 million dozen.

6. Also avoids situation where U.S. in effect enforcing Japanese “voluntary” controls, as under alternative e) above.

7. From U.S. industry viewpoint decision involves affirmative U.S. Government action under escape clause procedure while taking account improved situation 1958 and indicates to both U.S. industry and Japanese that U.S. prepared take remedial steps where voluntary quota approach operates unsuccessfully.⁴

Herter

0. Source: Department of State, Central Files, 411.994/10–2059. Confidential; No Distribution Outside Department. Drafted by Vettel and cleared in substance with TA.
1. Dated October 20, circular telegram 520 informed posts that the White House intended to announce on October 22 that flatware imports were damaging U.S. industry and that duties on these items would be raised. (Ibid., 411.006/10–2059)
2. Not found.
3. Dated October 14, 1952. (17 Federal Register 9125)
4. On October 21, the White House announced that Eisenhower had issued Proclamation No. 3323 raising duties on imports of stainless-steel table flatware. See Department of State Bulletin, November 16, 1959, pp. 727–729.