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

136. Circular Telegram From the Department of State to Certain Diplomatic and Consular Missions⁰

November 7, 1960, 12:56 p.m.

659. Following for your information is text press release on wool fabrics tariff to be issued Washington noon November 9. Washington representatives of countries to which you are accredited (except Switzerland) will be informed November 7, but will be strongly urged to guard against public disclosure until November 9.

“The Department of State today announced that new tariff rates on certain woolen and worsted woven fabrics will go into effect on January 1, 1961, and replace the present tariff quota system. These rates, described in the attached table, were approved by the President upon recommendation of the interdepartmental Committee on Trade Agreements and the Trade Policy Committee. They have been the subject of negotiations and consultations with the interested supplier countries in accordance with the provisions of Article XXVIII of the General Agreement on Tariffs and Trade.

At the present time, these fabrics are subject to a compound tariff duty, consisting of a specific duty and ad valorem rates, both of which vary according to the nature of the fabric. The specific duty, which is compensatory for the duty on raw wool, is 37½ cents per pound for most fabrics. This part of the compound duty will remain unchanged. The ad valorem rates presently in effect have since 1956 been subject to a tariff quota under which the rates for most fabrics were 25 percent ad valorem for imports within the quota limits, and 45 percent for imports after the quota was filled. Exceptions were made for certain specialty fabrics which entered at lower rates even after exhaustion of the quota. With the exception of these specialty fabrics, the new ad valorem portion of the duty will be 38 percent for fabrics valued over $2.00 per pound, and 76 cents per pound for lower priced fabrics, with a maximum ad valorem limit of 60 percent.

The total duty, including the specific rate, resulted in an average incidence in 1959 of 45 percent on all imports. The incidence of the new rates, computed on the basis of 1959 trade data, would be 48 percent for fabrics valued over $2.00 and upwards of 57 percent for lower-priced fabrics.

The operation of the tariff quota system has disrupted normal marketing practices in the woolen goods trade. United States importers, clothing manufacturers, and retailers were faced with many difficulties resulting from the need to place orders far in advance of delivery and from the uncertainty over the applicable tariff rates at the time of importation of the fabric. To correct these difficulties and to provide a solution better suited to the needs of all the parties concerned, the United States agreed in 1959 to enter into negotiations with the interested supplier countries for renegotiation of the so-called ‘Geneva reservation’ under which the tariff quota arrangement was established. These renegotiations have now resulted in the new arrangements described above.

A Presidential Proclamation will be issued in due course to give legal effect to the new rates as of January 1, 1961.”

Table mentioned in the above text not being cabled because of length and technical complexity. “Specialty fabrics” mentioned in text are handloom fabrics and cloth for religious vestments, which will carry 25 percent ad valorem duty, and billiard cloth, which will have 30 percent ad valorem duty.

Embassy London requested inform Maudling that details US proposals given to British Embassy here and that release scheduled for November 9.¹

Dillon

0. Source: Department of State, Central Files, 394.41/11–760. Confidential; Priority; Verbatim Text. Drafted by Michael J. Dux, of the Trade Agreements Division of the Office of International Trade, on November 4; cleared by Hadraba and Martin and in substance by BNA, WE, and FE; and initialed for the Acting Secretary by Martin. Sent to London, Rome, Brussels, Paris, The Hague, Tokyo, and Geneva.
1. Reginald Maudling was President of the British Board of Trade. The announcement was released on November 9. (Department of State Bulletin, November 28, 1960, pp. 832–834) On November 22, the Embassy in Rome received a memorandum expressing the Italian Government’s surprise and disappointment at this decision. (Despatch 464 from Rome, November 23; Department of State, Central Files, 394.41/11–2360) The White House released Proclamation No. 3387 establishing the new wool tariff rates on December 28; see Department of State Bulletin, January 16, 1961, pp. 87–90.