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

262. Memorandum From the Under Secretary of State (Ball) to Secretary of State Rusk⁰

Washington, February 25, 1963.

I was concerned when you told me of the President’s comment to you on Thursday morning that I had been present when the commitment was made to the woolen textile Congressmen. This is a misunderstanding. To the best of my recollection—and I am confident of my memory on this point—I have never been present at any meeting with the President when he talked about woolen textiles with any member of Congress or the textile industry, and I have consistently advised against any commitment on woolen textiles.

Obviously, I regard a promise of the President as a solemn undertaking and will do whatever he feels is justified to carry it out. At the same time, it would trouble me deeply if I thought the President felt I had misled him into a promise that can be carried out only at great cost.

Once the Administration had given its commitment in Mr. Feldman’s letter to the industry dated August 7, 1962,¹ I did tell the President that we would try our best to find ways and means to keep it. But I also made it clear that this was going to be very difficult and costly.

How the Commitment was Made

The facts are as follows:

When the Cabinet Textile Committee was first established early in 1961, I was the one member who insisted that the textile problem not be approached as a whole since the cotton situation was clearly different from that of wool. In all of the dealings that I had with the representatives of the industry and with the Congress, I carefully avoided any promise that we would do more than study the problem of woolen textile imports. As you will recall, this was one of the points on which Congress complained; over 150 Congressmen and 40 Senators joined in letters to the President protesting my handling of the question.

In July, 1961, in order to avoid the need to impose mandatory quotas on cotton textiles—which all of the other members of the Cabinet Committee were pressing to do—I offered instead to negotiate a multilateral textile agreement. Such an agreement was unprecedented and not easy to achieve—particularly since it had the effect of waiving any compensation claims by the exporting nations. At that time, I made it clear to the members of the Industry Committee present at Geneva—as well as to the President’s Cabinet Committee on Textiles—that the type of agreement worked out for cotton could not be utilized for textiles from any other fiber.

A cotton textile agreement was possible for one reason only. The markets of the old industrialized countries of Europe and America were being disrupted by low-wage textile products from less-developed countries. The economically advanced countries therefore had a common interest in developing a protective device against these imports which they could, by common action, impose on the less-developed countries.

I was able to negotiate the cotton textile agreement only because the special situation of cotton textiles permitted me to organize the Atlantic nations into a common front to bring the low-wage producers into line.

The situation with respect to woolen textiles is wholly different. Here the increase in our imports comes almost entirely from three countries—the United Kingdom, Italy, and Japan.

The situation of wool, unlike that of cotton, does not permit us to make common cause with the industrialized countries. Instead, we would have to restrain imports from countries that are our principal allies and customers. In view of our heavily favorable trade balance with the UK and EEC our bargaining position would be very poor.

I made these points emphatically clear to the Cabinet Textile Committee on every occasion when the matter of woolen textile imports arose.

I may add that during this whole time I was under great pressure from other members of the Committee to expand the scope of the Administration’s commitments to all sectors of the textile industry. Those other members did not have to face the responsibilities of negotiation or the realities of maintaining an overall commercial policy favorable to the United States national interest.

On July 16, 1962, the National Association of Woolen Textile Manufacturers wrote the White House indicating that the Board of Directors of the Association had recently adopted a resolution calling, among other things, for quantitative limitations, by categories and by countries of origin, on imports of wool textile and apparel products.

Mr. Feldman prepared a draft reply to the Association’s letter that would have committed the Administration to holding woolen textile imports to the fiscal year 1961 level. He discussed this matter over the telephone with an officer of the Department who was then in New York. That officer strongly advised Mr. Feldman against such a commitment and warned against the inclusion of such language in a letter to the Association.

There is a discrepancy in the recollection of this conversation. Mr. Feldman advises me that, after considerable discussion, the State Department officer agreed to the compromise language which was finally incorporated in the reply that was sent on August 7. The State Department officer has a different recollection. He recalls that he recommended against that language, suggesting an alternative formulation that did not include an express commitment.

In any event I was not personally consulted on this matter and knew nothing about any letter to the woolen textile industry until after it had already been sent.

Mr. Feldman’s letter to the wool textile industry contained the following commitment:

"Limitation of textile imports to prevent market disruption is an essential element of Administration policy. We intend to implement this policy with regard to all textiles, and particularly to prevent market disruption such as would result from an increase over current levels of import.”

As I recall, I requested a meeting with the President, which was held on August 20, 1962.² In the course of that meeting I reviewed both the cotton and wool problems, pointing out the difficulties posed by the commitment which the Administration had made in the August 7 letter. A larger meeting was held with the President on the following day.³ At that time I pointed out that, if we tried to impose restraints on woolen textiles we would jeopardize the Long-Term Cotton Textile Agreement. My notes—and my recollection—indicate that I made three additional points: (1) that the situation of wool textiles was unlike that of cotton and that, in my opinion, a multilateral agreement was non-negotiable; (2) that any quantitative restrictions on wool textiles would require massive compensation; and (3) that the nations participating in the Cotton Textile Agreement had expressly stipulated that they would not enter into a wool textile agreement. However, since it was felt that some action was necessary, I agreed that when the accessions to the Long-Term Agreement were completed we would try some exploratory probing. Meanwhile, the President would advise interested members of Congress that we would try to hold imports at or below “current levels” but without specifying the exact percentage or how it would be done.

On August 24, the President met with certain Congressmen interested in the textile problem,⁴ and an even larger meeting was held about a week later.⁵ I was not present at either meeting, but, prior to the second one, the President telephoned me in New York to say that he was meeting with a group of textile Senators and Congressmen in about five minutes. We discussed various points that he should make with regard to cotton textiles. When the question of woolen textiles was raised, I replied that since a commitment had already been made there was little the President could do other than to try to make it clear that “current levels” did not mean 15% but something over 17%. I said that I did not know how we would be able to carry out the Administration’s promise, but we would do our best.

That is the story so far as the making of the commitment is concerned. To the best of my recollection, I was never present with the President when woolen textiles were discussed with any Congressmen or Senators. The President, however, remembers otherwise and I have more respect for his memory than for mine. Until the time that the commitment was made to the industry, I did my best to argue against it. Thereafter, I always tried to make it clear that its fulfillment would be difficult and costly.

If, however—as I fear is the case—the President feels that I did not adequately warn him about the difficulties of keeping the commitment, then the fault is mine in not being sufficiently clear and explicit.

Efforts to Fulfill Commitment

I think the record shows that the Department has tried, in good faith, to keep the Administration’s promise with respect to woolen textiles—while at the same time seeking to keep the cost within reasonable limits.

Early in May, 1962, the Cabinet Textile Committee appointed a subcommittee comprised of representatives of the Departments of State, Commerce and Labor to examine what we might do with regard to the woolen textile import problem. At an early meeting of that subcommittee, the State Department representative proposed that we utilize the International Wool Study Group as a forum for exploring this problem on an international basis. Mr. Feldman opposed this course of action on the ground that it would merely provide a forum for discussion and not a means of negotiation. Upon becoming further acquainted with the difficulties, he later agreed to a meeting of the Wool Study Group. In October the Management Committee of the Wool Study Group finally agreed—reluctantly and over loud objections from the EEC and UK, who suspected our intentions—to call a meeting for December. This accorded with our desire to do nothing precipitous regarding wool until the necessary nations had finally signed the Long-Term Cotton Textile Agreement.

Meanwhile, the Trade Expansion legislation had, at Congressional insistence, been revised so as to transfer responsibility for trade negotiations from the State Department to the Chief Negotiator. As soon as Governor Herter was appointed, I reviewed the woolen textile problem with him. I suggested means for providing further protection to the woolen textile industry through tariff increases. However, we recognized that this would be unpopular with the industry.

During the Wool Study Group meeting in December, Mr. Blumenthal of the State Department, tried to lay the basis for a possible future international agreement on wool textiles. He found it very heavy going. Nevertheless, following the meeting, I proposed to Governor Herter, Secretary Hodges, Secretary Wirtz, and Mr. Feldman that we undertake an exploratory probe—offering as bait a possible reduction in the United States tariff on raw wool. Since Mr. Feldman did not feel that we were in position to promise such a reduction, it was agreed that the United States Government would not itself approach foreign governments but that Mr. Eric Wyndham White, Executive Secretary of the GATT, would be asked to undertake some soundings on our behalf.

These explorations, conducted as discreetly as possible, still produced a violent reaction from Europe, the United Kingdom, and Japan. The reaction was compounded by the fact that the proposal leaked to the European press. Since then the gratuitous comment at the final press conference of the outgoing Assistant Secretary of Commerce, Mr. Hickman Price, that the Administration was definitely planning to take action to restrict wool textile imports, has exacerbated an already bad situation.

Recently, the atmosphere of strain in the Western Alliance since President De Gaulle’s press conference⁶ has introduced a new element. The French are threatening to drag their feet regarding the undertaking of any trade negotiations. The British are concerned at any action on our part that might further jeopardize their export earnings. The Japanese are threatening to withdraw from the Cotton Textile Agreement.

In our talk with the President this week we should make clear the costs and dangers involved in going forward with a program of restraining woolen textile imports at this time.

Among those costs and dangers are the following:

1. Action to restrain woolen textiles would produce an explosion of anger and resentment that would play into the hands of those opposing our policies. The French are already using the fact that the United States may try to restrain woolen textile imports to cast doubt on the sincerity of our efforts to liberalize trade. This is part of a general campaign to discredit American intentions with regard to Europe.

2. The British would likely regard such an American move as justification for their making a discriminatory deal with the Continent—if such a deal can be negotiated.

3. Intelligence information suggests that, if we attempt to restrain woolen textiles the Japanese would be likely to torpedo the Long-Term Cotton Agreement. That agreement is a house of cards; the withdrawal of one major producing country would bring down the entire structure.

4. The effect of an action to restrain woolen textile imports would create major domestic political problems. The United States would be faced with compensation claims on over $200 million worth of trade. This compensation takes the form of concessions in tariffs on other industrial and agricultural products. The industrial and farm interests affected by these concessions are not likely to take this lying down. The Administration would, therefore, be in position of robbing one industrial or agricultural sector for the benefit of another.

5. The effect on negotiations under the Trade Expansion Act would be calamitous, but hard to appraise with precision.

At the best, it would greatly complicate Governor Herter’s efforts. Not only would the United States have to use up substantial authority to pay compensation, but the atmosphere of the negotiations would be seriously prejudiced.

At the worst, it might make it impossible to use the Trade Expansion Act powers with any major effect. The French would seize our wool textile action as an excuse to justify the maintenance of high restrictions against American agricultural products. They would almost certainly be joined by the Italians who stand to lose the most by woolen textile restraints. Our exports not merely of poultry but of wheat, feed grains and all other agricultural products would be jeopardized.

I am not overstating the dimensions of the problem.

If our dilemma is fairly presented to the Congressmen and Senators involved, they should be willing to forego pressure for restraint action—at least for the time being. They will not like it—but they should, at least, recognize the problem.

Certainly the changed climate in Europe has added a new factor not present when the original commitment was made. Nor is this a case where grave injustice is being done. The woolen textile industry is showing record earnings. The most important companies in the industry make both cotton and woolen textiles; thus they have already greatly benefited from the Long-Term Cotton Agreement. They cannot say that the Administration has done nothing for them.⁷

0. Source: Kennedy Library, National Security Files, Kaysen Series, Trade Policy, 1962. No classification marking.
1. Not found.
2. See footnote 1, Document 249.
3. On August 21, the President met with Ball and others from 6 to 7:05 p.m. (Kennedy Library, President’s Appointment Books) No further record of this meeting has been found.
4. No record of this meeting has been found.
5. No record of this meeting has been found. On August 31, however, President Kennedy met off-the-record with 17 Senators, including Senator Pastore and Representative Vinson who had earlier, in a letter of June 22, 1961, to President Kennedy, expressed their concern about problems in the U.S. textile industry and the President’s plans to address them. The congressional letter is printed as See Document 219; for President Kennedy’s response, Document 220.
6. On January 14, French President Charles de Gaulle, in response to a question posed to him at a news conference, rejected the United Kingdom’s application for full membership in the EEC. For an excerpt of his response, see American Foreign Policy: Current Documents, 1963, pp. 441-443.
7. None of the major incidents that Ball cites in this memorandum has been documented. However, documents alluding to the Feldman letter to the wool industry of August 7, 1962, and the August 20, 21, 24, and 30, 1962, meetings are included in the Supplement. For further information about these meetings, see Ball’s March 9 memorandum to the President, Document 272.