Foreign Relations of the United States, 1961–1963, Volume IX, Foreign Economic Policy

255. Letter From the Under Secretary of State (Ball) to the President’s Deputy Special Counsel (Feldman)⁰

Washington, December 5, 1962.

Dear Mike: I have your note this morning¹ regarding the President’s interest in a specific program for meeting the commitment to maintain wool textile imports at no more than 17-1/2%.

On the basis of my personal memorandum to members of the Cabinet Textile Committee, dated November 23,1 and the discussions at the Cabinet Textile Committee meeting on November 30,² the Committee, as I understand it, reached the following conclusions:

1. Neither a multilateral international agreement nor individual bilateral agreements providing for voluntary restraint are feasible with respect to woolen textiles. Any effort to negotiate such voluntary arrangements would be not only futile but extremely prejudicial to our larger program of negotiations contemplated by the Trade Expansion Act.

2. The imposition of mandatory quotas on woolen textile imports would not only undermine our efforts to enlarge our foreign markets by eliminating quota restrictions on American agricultural products but would subject us to claims for compensation in the form of tariff concessions on other goods in an amount approaching $250 million a year.

3. The only practicable way to achieve the necessary restriction on woolen imports is through a well-designed system of tariff increases utilizing the powers granted by the Trade Expansion Act.

In the light of these conclusions, I would suppose that the program I set forth in my memorandum of November 23 would still stand. That program, in essence, was as follows:

1. Mr. Herter should be requested to give attention to the wool textile problem as one of the first tasks to be undertaken by the President’s Special Representative for Trade Negotiations. The assignment of this responsibility to Mr. Herter is required by the Trade Expansion Act. The statutory language requires that the Chief Representative conduct “each negotiation” under the Act, and there is no available solution that does not involve the use of the authority granted by that Act.

2. The Commerce Department should immediately undertake a detailed study and analysis to determine the exact nature and extent of the import pressure and recommend the tariff increases necessary to restrict imports to the required level on a category by category basis. Quite possibly the President will wish to request the staff of the Tariff Commission to participate in this study.

3. The International Wool Study Group is meeting in Plenary Session beginning December 10th. We are seeking that Group’s expression of a continuing interest in the avoidance of disruption in world wool textile markets. The meeting will not itself result in any agreement but it should set the climate in which a negotiation can be conducted.

4. The Special Representative should, as soon as practicable, visit Europe to undertake preliminary discussions with a view to working out a deal for tariff increases on woolen textiles. Although undertaken within the GATT rules this would be a special negotiation undertaken with only those countries with which we have bindings on our relevant woolen textile tariffs.

5. Upon the completion of the Study Group meeting in December, we should set in motion the machinery for a special negotiation under section 201 of the Trade Expansion Act³ with regard to import duties on wool textiles. This procedure would involve the publication of a list of the articles—wool textiles upon which we want higher duties plus other articles upon which we would cut tariffs as compensation—to be considered during such a negotiation. The list would be submitted to the Tariff commission for advice concerning the probable economic effect of tariff modifications with respect to each article. Public hearings would be held simultaneously by the Tariff Commission and an interagency trade committee. When the Tariff Commission makes its recommendation based upon its hearings and when the President receives a summary of the hearings held by the interagency committee, he may then initiate the negotiation. While the statute gives the Tariff Commission six months to make its findings, this process could be speeded up in this instance since the list of articles would not be broad and the White House interest in quick resolution could be brought to bear.

I recognize that the above program may cause disappointment in Congressional circles. But, as was made abundantly clear in the discussion of the Textile Committee, there is no cheap, quick, or easy way to achieve the required restraint on woolen textile imports. The situation is wholly different from that prevailing with regard to cotton textiles and—even with the best of luck—we shall be able to meet our commitment to restrain woolen textiles only at substantial cost to our political and trading interests.

The suggested program is the best I have been able to devise. It is awkward and costly, but any alternative I can think of would be far worse for us in every way.

Sincerely,

George

0. Source: Department of State, Central Files, 411.006/12-562. Confidential.
1. Not found.
2. No record of this meeting has been found.
3. Under Section 201 (a) (1) of the Trade Expansion Act of 1962, the President had the authority to “enter into trade agreements with foreign countries or instrumentalities thereof” after June 30, 1962, and before July 1, 1967. (American Foreign Policy: Current Documents, 1962, p. 1383)