363. Memorandum From Acting Secretary of Commerce Trowbridge to President Johnson1
SUBJECT
- U.S. Tariff on Raw Wool
You requested my recommendation on Prime Minister Holt’s request to you the we reduce the tariff on raw wool.2
I recommend against acceding to Australia’s request without the United States receiving something in return from Australia. During the Kennedy Round negotiations we consistently maintained that we would be willing to cut the raw wool duty if Australia would reduce its restrictions on American tobacco and make worthwhile concessions on industrial products. Australia has refused and presumably the Prime Minister is asking us to cut the raw wool duty unilaterally without Australia taking any reciprocal action. This would be inconsistent with the basic concept of the Kennedy Round which all major participants have recognized as an economic exercise aimed at achieving balance in tariff reductions among nations.
There is no doubt that domestic wool growers would be unhappy if the raw wool duties were reduced. If they were reduced, however, without the United States receiving some equivalent commercial gain, I believe that the dissatisfaction could become a substantial problem, particularly when we will be seeking the support of agricultural interests for the new grains agreement.
Whatever tariff cuts are made on raw wool, a commensurate reduction must be made in the specific tariffs on wool textiles and products. Here too, we could justify such reductions to the wool textile industry, but not in the absence of reciprocal action by Australia.
I would urge, therefore, that in reply to the Australian Prime Minister, we indicate our continued willingness to reduce the duty on raw wool providing Australia is willing to grant meaningful reciprocal trade benefits to the United States.3