Office of the Historian

125. Memorandum From Lubert O. Sanderhoff of the Office of British Commonwealth and North European Affairs to the Director of the Office (Willoughby)0

June 9, 1960.

SUBJECT

  • Wool Fabrics Tariff Quota

The US proposal to be made to the UK and, if negotiable, later to Italy and Japan, continues to evolve into an increasingly protectionist device.

The first stage, a month ago, was a State-supported position to propose replacing the 24–25 tariff quota by a flat rate of 36% for the bulk of the fabrics, i.e., the peril-point finding rate. Commerce then sought 40%, arguing that our industry needed more than minimum protection afforded by the peril-point rate. Commerce won support from Treasury and Interior. State, at the direction of Mr. Dillon, next proposed a 36% rate coupled with a minimum specific duty of 72¢ a pound. Under this proposal, the cheaper fabrics, almost all from Italy, would bear the heaviest impact. Italian fabrics valued at $1.00 per pound would pay the same duty as UK and Japanese fabrics valued at $2.00 per pound.

On June 6, Mr. Dillon and Secretary Mueller met with White House Staff officials, and reached agreement on a more protectionist rate, i.e. 38% coupled with a minimum specific duty of 76¢ per pound.1

In my opinion, there is about a 50–50 chance that the UK, and subsequently Japan, will be willing to negotiate on this. If the UK agrees to negotiate on such a proposal, our approach to Italy may draw a strong reaction. Because of this, WE drafted a brief memo to E on this point, in place of clearing the E memo on the proposal for EUR.

Copies of the E and EUR memos are attached.2 The E memo has been endorsed by Mr. Dillon and delivered to the White House. There was a last-minute minor change, again in the protectionist direction: at the request of the White House Staff a proposed rate for hand-woven fabrics for religious use was raised from 24% to the rate now in effect, [Page 261] 25%. The White House Staff thought there was little if any bargaining power on this item, and that the reduction would only irritate the domestic industry.

  1. Source: Department of State, Central Files, 394.41/6–960. Confidential. Initialed by Willoughby.↩
  2. No further record of this meeting has been found.↩
  3. Not found attached.↩