Foreign Relations of the United States, 1964–1968, Volume VIII, International Monetary and Trade Policy

362. Report on the Congressional Briefings¹

Washington, undated.

CONGRESSIONAL BRIEFINGS ON KENNEDY ROUND—MAY 16, 1967

On Tuesday morning, May 16, 1967, the Vice President, together with Secretaries Rusk and Freeman, Acting Secretary Trowbridge, Under Secretary Reynolds,² and others briefed 23 Senators and Congressmen (see list attached).³ The briefing was based largely on the paper entitled “General Results of the Kennedy Round” and dated May 16, 1967.⁴

Overall, the 9:30 and 10:30 meeting went well. As is indicated by the summary which follows, some of the members of Congress expressed concern with respect to certain categories of products and certain domestic industries. On the whole, however, no attempt was made to dispute the conclusion of the Vice President that the general agreement reached in Geneva seemed to be a balanced one and in the interest of the United States. At the same time, however, it was clear that many were reserving judgment until they were able to scrutinize the details of the agreement.

There follows a detailed summary of the significant exchanges which took place between members of Congress and representatives of the Executive Branch.

Overall Balance

Apparently for the record, Pastore asked whether we had lost our shirt in our anxiety to bring the Kennedy Round to a successful conclusion. The Vice President replied with an emphatic “No”.

Industry and Agriculture

Pastore asked whether we had obtained concessions on our agricultural exports at the expense of granting concessions on industrial imports. Secretary Rusk pointed out that with respect to the EEC, for example, we were in balance in both sectors, thus suggesting that we did not have to buy benefits for agriculture with concessions on industrial products. Mr. Bator added that, in overall terms, each sector was generally in balance.

Market Disruption

Pastore asked whether any country is qualifying its tariff concessions by a proviso permitting duties to be increased or quotas imposed if imports cause market disruption. The answer was given that the General Agreement on Tariffs and Trade permits a country to take an escape-clause action if imports are causing injury to an industry. Pastore noted that this would require an industry to file a petition with the Tariff Commission and asked whether an economic entity smaller than an industry could petition for relief from imports. This question was left hanging as the discussion returned to other matters.

Justification of Agreement

Ford, as well as others, stressed the need for a full statement of the reasons why the agreement was concluded. In particular, he wanted information telling why he had granted concessions in sectors which seemed to be vulnerable to imports. He thought it was important that we provide our justification as soon as possible. The Vice President and others made the point several times during the meetings that it will take another month or so to work out all the details of the negotiation, but that material would be supplied to interested members of Congress as soon as possible.

American Selling Price

The issue of ASP, as it pertains to both chemicals and rubber-soled footwear, provoked perhaps the most discussion. The Vice President and others stressed that the second package, which would require Congressional action to eliminate ASP, was completely separate from the Kennedy Round agreement and stood on its own two feet. There seemed to be general acceptance of this, with the notable exception of Ribicoff. He noted that the second package includes EEC and U.K. concessions with respect to road taxes and the margin of preference on tobacco, respectively. He argued that this would stimulate industries outside the chemical sector to urge the enactment of the necessary legislation and that this would put a gun to the head of the Congress. In reply, the Vice President and others stressed that the President had insisted upon a separate package, that the Vice President has been emphatic about this during his European trip, and that the Congress was completely free to accept or reject the ASP agreement. It was also pointed out that the Congress had expected that if we took action on one of our non-tariff barriers we would obtain concessions with respect to other countries’ non-tariff barriers.

The Vice President stressed that both the first and second packages, viewed separately, were balanced deals and that, taken together, they were very much in the interest of the chemical industry. Williams (Del.) did not disagree but pointed out that the industry might be sufficiently satisfied with the concessions granted by the other countries in the first package that it would not press hard for the second package.

With respect to rubber-soled footwear, Adair asked whether the new compound duty provided the same tariff protection as the present rate of duty based upon ASP. When an affirmative answer was given, Pastore asked why, if that were so, we should bother to eliminate ASP on rubber-soled footwear. At this point, Curtis explained that the ASP system was objected to in large part because it left a foreign exporter uncertain as to what the final value would be on the basis of which he would pay duty.

Textiles

The Vice President reviewed the status of cotton textiles, woolen textiles, and man-made fibers. Pastore asked what the reaction of the textile industry was. Under Secretary Reynolds reported that the industry seemed to feel that their concerns were taken into account and that, while no tariff cuts would have been preferred, overall the final agreement on textiles was acceptable.

Cotton asked whether our granting tariff concessions on textiles in any way prejudices our ability to seek international agreements imposing quotas on textiles. The Vice President replied that nothing in the Kennedy Round agreement would preclude us from trying to negotiate such agreements. Pastore then asked whether the fact that we did not grant any concessions on woolen textiles would prejudice our ability to negotiate an international agreement regulating trade in such textiles. The Vice President answered no, but the impression seemed to be left that in those cases where we were granting concessions—particularly on man-made fibers—we weakened our case for quotas.

Grains

After the Vice President outlined two basic elements of the International Grains Agreement, Carlson said that his present position was one of “reserved acceptance”. He pointed out that, with respect to prices, the agreement was nothing more than an extension of the International Wheat Agreement (IWA),⁵ but without Russian participation. Moreover, he regarded the food-aid component as only a small step forward. Finally, he noted that the new minimum represents an increase of only 23# above the present floor established in the IWA, although he granted that the minimum of $1.73 was a good figure. Carlson stressed that we had a lot of work to do to sell this agreement in Congress.

Shoes

Cotton asked whether the agreement concerning shoes and textiles would return to the Congress—presumably for its approval or its disapproval. When the answer was no, he said that that was what he was afraid of. At a later point, Cotton asked whether the jobs of the workers making shoes in this country had been left secure by the Kennedy Round agreement. The Vice President answered that, as a general matter, shoes had been excluded from the negotiations, but he undertook to provide the details for Cotton.

Dairy Products

Aiken asked whether tariff concessions were granted on dairy products and whether the quotas established under section 22 of the Agricultural Adjustment Act of 1937⁶ had been changed. The answer was “No”, and during the two meetings the Vice President emphasized that for the most part both meats and dairy products had been excluded from the negotiations, with the major exception of canned hams.

Role of STR

During the discussion of ASP, Ribicoff returned to a favorite theme of his, which is that, contrary to the intent of the Congress, STR has not provided that dominant voice in the Executive Branch on matters of trade policy and tends to be dominated by the Department of State. He gave as examples the U.S.-Canadian auto agreement, which he said was a State Department measure, and the change by the Department of the Treasury in the guidelines concerning the determination of ASP with respect to rubber-soled footwear. Secretary Rusk replied that he had never given Governor Herter or Ambassador Roth an instruction and that the negotiations had been handled by STR, as was envisaged by the Trade Expansion Act. In addition, Mr. Bator emphasized that, especially in the closing days of the negotiations, it was the President who had been responsible for giving directions to Ambassador Roth.

1. Source: Johnson Library, Bator Papers, Kennedy Round—Congressional Briefings, Box 13. Limited Official Use. The source text bears no drafting information. The briefings were held at the Capitol.
2. James J. Reynolds, Under Secretary of Labor.
3. Not printed.
4. Tab A to Document 361.
5. Entered into force on July 16, 1962. (13 UST 1571; 444 UNTS 3)
6. P.L. 137, approved June 3, 1937; 50 Stat. 246. Section 22 relating to imports reenacted the same section in the Agricultural Adjustment Act of 1933.