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

367. Memorandum From the Special Representative for Trade Negotiations (Roth) to President Johnson¹

Washington, June 26, 1967, 7:15 p.m.

SUBJECT

• Approval of Multilateral Kennedy Round Agreements

This memorandum requests that you authorize signature, on behalf of the United States, of the multilateral trade agreements described herein, which have been negotiated in the Sixth (or Kennedy) Round of Trade Negotiations.

The principal free world trading nations have succeeded in negotiating a balanced and mutually beneficial reduction of trade barriers opening vast new commercial opportunities for all the free world community. Concessions made by the other major participants (the European Economic Community, the United Kingdom and other countries in the European Free Trade Area, Japan, and Canada) compare favorably with those of the United States. In terms of trade coverage, the concessions of all these countries cover $6.5 billion of their dutiable imports of United States products in 1964 and $879 million of their duty-free imports of such products. The concessions being made by the United States cover $6.5 billion of dutiable 1964 imports from the above countries and $223 million of duty-free imports from them.

Tariff Concessions—General

The tariff concessions agreed upon are substantial, even though short of the initial goal of the United States and some of the other major participants for a “linear”, that is, across-the-board, reduction in their duties by 50 percent, with a minimum of exceptions. (Trade data are in Annex A, a list of participants in Annex B, and country summaries in Annex C.)²

The agreement we have reached with the other major participants is balanced as between our tariff concessions and theirs. To less-developed countries, on the other hand, we have given more in terms of tariff concessions then we have received from them. This result is consistent with the rules that the United States and other major participants accepted for the negotiations. The lowering of barriers by the United States and other countries to exports of the less-developed countries will increase their foreign exchange earnings, thereby strengthening their economies and providing better markets for exports of the developed countries, including the United States.

Agricultural Concessions

In our negotiations on agriculture, we obtained concessions that are significant in terms of aiding U.S. exports and that compare favorably with the concessions the United States is granting for imports of foreign agricultural products. The results of the negotiations, while smaller for agriculture than originally contemplated, are in the interests of U.S. agriculture as well as the economy as a whole. I believe this conclusion is warranted even though we were not able to get agriculture fully included in the negotiations, as we had hoped at the outset of the negotiations, but found it necessary to settle for a more limited coverage of agricultural concessions, particularly insofar as the EEC was concerned. (See Annex A, part 2, for table summarizing trade coverage of the agricultural concessions exchanged.)

Memorandum of Agreement on Cereals

The essentials of a World Grains Agreement were agreed to during the trade conference and incorporated in a Memorandum of Agreement. A further negotiation will be carried out over the coming weeks to complete the arrangement. The benefits expected from the contemplated grains arrangement are difficult to quantify or to equate with tariff reductions. However, the arrangement should benefit the United States by providing reasonably effective assurance of an increased price range for exports of United States wheat and by securing increased commitments from some foreign countries to a food aid program that will assist hungry nations and help to relieve the occasional depressing effects of surpluses on world grains prices. (Annex C briefly describes the arrangement.)

Industrial Concessions

Concessions which the United States is making and obtaining in the industrial sector are in approximate balance. United States exporters of a wide range of products will benefit from reduced duties in all of our major markets. Some commodity sectors—chemicals, steel mill products, cotton textiles, aluminum, and paper and pulp—were to a large extent negotiated multilaterally as self-balancing “packages.” This sector approach was utilized because these commodity groups presented particularly difficult problems for several participants. By using this negotiating procedure, we were able to obtain better results than would otherwise have been possible. (Results of the five sector negotiations are described in Annex E.)

Exceptions from Negotiations

At the outset of the negotiations, the United States excepted from its offers the products, both industrial and agricultural, which were considered by this Office and the agencies that are responsible for advising it to be most sensitive economically. As the negotiations progressed, the United States added some items to its offers and withdrew others. Its withdrawals were determined both by negotiating considerations and by the relative economic sensitivity of the products. (A list of selected products on which the United States is making no concession or is making less than a 50-percent tariff reduction is contained in Annex F.)

Accession

During the course of the negotiations, several countries negotiated for the purpose of acceding to the General Agreement. Korea and Yugoslavia completed all necessary steps and acceded before the Kennedy Round was completed. Of the remaining countries, the United States reached agreement on exchanges of tariff concessions with Argentina, Iceland and Ireland. In lieu of a schedule of tariff concessions, Poland is undertaking a commitment to maintain purchases from foreign sources at not less than stipulated levels.

Non-tariff Barriers

As a result of multilateral negotiations, agreement was reached on an antidumping code to reinforce the provisions of GATT Article VI with agreed practices and procedures to be followed by the major trading countries. American exporters will benefit from this agreement, which removes uncertainties now hampering our commerce with various countries.

A multilateral agreement was also negotiated envisaging elimination of the American selling price system of customs valuation. In return for the elimination of this system, which will require Congressional action, other countries have agreed to give us additional tariff concessions, to modify certain automobile road tax systems, and to reduce a British excise preference for Commonwealth tobacco.

A few actions on other non-tariff barriers were agreed in bilateral negotiations. (See Annex G.)

Additional Authority Requested

Because of last minute technical problems or negotiating situations, we found it desirable to make a few minor modifications, subject to your approval, in offers that you had previously authorized. The improved offers for which your approval is now requested are explained in Annex H.

Legal Aspects

The agreements for which your approval is now sought were negotiated within the basic authorization you have already granted to the Special Representative for Trade Negotiations. With regard to the principal agreement relating to tariff concessions, all legal requirements of the Trade Expansion Act pertaining to each of our offers of tariff concessions have been satisfied. Our concessions are set forth in detail in a schedule which is attached.

These requirements included: issuance of public notice of intention to negotiate, the holding of public hearings by the Tariff Commission and the Trade Information Committee, and the consideration of the advice of the Commission and of Executive agencies.

The concessions under the principal agreement are within the authorities of the TEA; notably, section 201 for reductions not exceeding 50 percent of, or binding of, existing rates; section 202 for elimination of duties which are five percent or less; section 213 for elimination of duties on tropical products; and section 254 for rounding of rates. All concessions under TEA authority will be staged over not more than five annual stages in accordance with the requirements of section 253. In accordance with the exception permitted by that section, the elimination of duties on certain tropical products will become effective at one time.

It is intended that the first stage of the United States tariff concessions will come into effect on January 1, 1968 by a proclamation to be submitted at a later date for your signature. The concessions of some other countries are expected to start coming into force on that date or, with some compensatory acceleration, on July 1, 1968.

The agreements on American selling price, on cereals, and on antidumping, have been negotiated pursuant to the President’s Constitutional authority concerning international agreements. Of these agreements, only one will require Congressional action—legislation to implement the agreement to eliminate ASP.

Request

I request your approval to have the United States, under the authority of the Trade Expansion Act and your Constitutional authority, enter into the multilateral trade agreements negotiated within the framework of the Kennedy Round. If you approve, either Ambassador W. Michael Blumenthal, Ambassador Roger W. Tubby or I will sign the following instruments:³

1. Final Act authenticating the results of the 1964–67 GATT Trade Conference,⁴

2. Geneva (1967) Protocol to the GATT (to which will be annexed the schedules of tariff concessions of the participants),⁵

3. American selling price agreement,⁶

4. Memorandum of Agreement on basic elements for the negotiation of a World Grains Arrangement,⁷

5. Antidumping agreement (Agreement on implementation of Article VI of the GATT).⁸

William M. Roth

1. Source: Johnson Library, Bator Papers, Kennedy Round Windup, Box 13. Confidential. Drafted by Brewster (STR), Norwood (STR), and S.G. Kallis (STR), concurred in by Rehm.
2. None of the annexes is printed.
3. The President approved on June 28; see Document 366.
4. Text is in General Agreement on Tariffs and Trade: Basic Instruments and Selected Documents, Fifteenth Supplement (Geneva, 1968), pp. 4–5.
5. Ibid., pp. 5–8.
6. Ibid., pp. 8–18
7. Ibid., pp. 18–24.
8. Ibid., pp. 24–35.