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

265. Memorandum From the Under Secretary of State (Ball) to President Kennedy⁰

Washington, March 4, 1963.

SUBJECT

• Some Points in Connection with the Wool Textile Problem

I understand we are going to have a chance to review the problem of wool textile imports tomorrow. In connection with that discussion, several points have special relevance:

1. The major companies leading the fight to restrict wool textile imports have already been the principal beneficiaries of the Cotton Textile Agreement.¹

There is no longer a separate wool textile industry. Most US textile companies manufacture all fibers including cotton, wool and synthetics. The ten largest textile companies, which are the moving force in pressing for wool textile protection, are primarily cotton textile manufacturers. Half of their activities consists in manufacturing cotton textiles. Another third consists of the production of textiles from man-made fibers. Wool textile manufacture is only a small part of their total activities.

These are the companies that have been the major beneficiaries of the Cotton Textile Agreement that we negotiated at Geneva.

2. An attempt to impose wool textile restrictions could well mean the collapse of the Cotton Textile Agreement—and the companies know it.

The Japanese have already threatened that if we try to restrict wool textile imports, they may withdraw from the Cotton Textile Agreement. Hong Kong would not be far behind. That would bring down the whole house of cards. Yet it is far more important to the major textile companies to have the Cotton Textile Agreement than to have restrictions on wool textile imports.

3. From the point of view of the United States economy, wool textile production is far less important than either cotton or synthetic fiber textile output.

The figures for 1962 indicate that, of the labor force employed in producing textiles, 60 percent worked on cotton textiles. Man-made fibers occupied 25 percent. Woolen textiles constituted only 15 percent of the total.

4. Wool textile imports are presently running at a rate of only 17 percent of domestic consumption—rather than 20 percent as has been stated.

An inter-agency committee has just reviewed the statistics we have been using. Their report, which is (Tab A)² attached, shows that, while no ratio is completely accurate, the most reasonable method of computation indicates that imports are now running at a rate of 17 percent of domestic consumption. Under this same method of computation, imports were running at the rate of 15.7% in 1960, the year which registered the previous high, at the time Mr. Feldman’s letter was sent to the woolen industry on August 7, 1962.³

5. The textile industry is making lots of money and is not in any trouble.

Recent financial statements of textile companies are in stark contrast to the persistent complaints of textile industry executives that the industry is being seriously injured by imports. The year 1962 was at least as good as 1960, and there was a full recovery from the textile recession of 1961. Virtually all companies showed increases in sales in 1962 over previous years. Burlington, the largest company in the industry, became the industry’s first billion-dollar company in 1962. Net earnings after taxes increased substantially in 1962 and dividends were increased or extra dividends declared.

The attached table showing comparative company results illustrates this point clearly. (Tab B)2

6. The world political scene has substantially changed since the wool commitment was made.

I do not need to expand on this. General De Gaulle’s press conference of January 14⁴ has materially altered prospects for the liberal trading world which we envisaged. The very countries that would play the key role in any restriction of wool textile imports are the countries most affected by General De Gaulle’s action. In view of these developments, we have more riding on the success of the Trade Expansion Act negotiations than ever and cannot afford to jeopardize our general position with a limited restrictive move in wool.

George W. Ball⁵

0. Source: Department of State, Central Files, INCO-WOOL US. Confidential. Drafted by Ball.
1. Reference is to the Long-Term Arrangement Regarding International Trade in Cotton Textiles; see footnote 1, Document 258.
2. Not printed.
3. Not found, but See Document 262.
4. See footnote 6, Document 262.
5. Printed from a copy that indicates Ball signed the original.