Foreign Relations of the United States, 1977–1980, Volume III, Foreign Economic Policy

150. Memorandum From the General Counsel, Office of the Special Representative for Trade Negotiations (Rivers) to the Special Representative for Trade Negotiations (Strauss) and the Deputy Special Representative for Trade Negotiations (Wolff)¹

Washington, July 21, 1978

SUBJECT

• Extending the Countervailing Duty Waiver

Very shortly you must decide whether and under what circumstances, you will ask Congress to extend the authority to waive countervailing duties.² As you know, the present authority expires January 3, 1979, and Congress has announced its intention to adjourn sine die on October 7, 1978. The key question is whether you believe the recent progress towards a subsidies agreement—in particular the prospect of progress on agricultural export subsidies—provides a defensible basis for asking Congress to extend the waiver authority 6, 8, or 10 months in the hope of concluding an acceptable agreement this fall.

Needless to say there are risks, whatever you decide. Treasury has exercised the waiver fifteen times, on trade valued at approximately $500 million, on products ranging from canned ham and cheese, to butter cookies and handbags, and most recently, Canadian groundfish. (See attached table.)³ There is little doubt that collecting the duties on January 3, 1979 would disrupt the trade and complicate our efforts to negotiate a satisfactory conclusion to the MTN. (Treasury and Agriculture are preparing economic analyses; State, a political analysis, of the consequences of collecting duties on the products involved.) Clearly, the Europeans (Gundelach, in particular) expect you to seek a waiver, and failure to even seek one would damage their trust in you. On the other hand, it is equally clear that seeking an extension of the waiver in the present climate risks a pre-election Congressional debate on the MTN and trade policy in general, and the likelihood of undesirable, extraneous amendments.⁴ Time is short, but there is no shortage of legislative vehicles, provided the votes are there to control the matter and push the bill past the shoals.

If we should fail to gain an extension of the waiver, there is one other option for avoiding collection of the duties: Treasury could reach deep into its bag of administrative tricks and come up with a way of merely “suspending liquidation” of the duties, although technically the authority does not really exist. This would be an act of desperation which could compound the problem, i.e., damage our credibility abroad (we’ve been saying we have no option but to collect the duties January 3, 1979) and possibly enrage elements of Congress.

Finally, you should be reminded that Murray Finley has thirteen countervailing duty complaints pending at Treasury involving approximately $1 billion worth of textile products from less developed countries.

1. Source: National Archives, RG 364, 364–80–4, Special Trade Representative Subject Files, 1977–1979, Box 2, Countervailing Duties 1977. No classification marking. Printed from a copy that does not bear Rivers’ initials. A handwritten notation at the top of the page reads: “discuss Finance Committee + Both Staffs.”
2. Congress had granted the President temporary authority to waive the imposition of countervailing duties on subsidized imports.
3. Attached but not printed is a February 2 table entitled “Current CVD Waivers.”
4. John Donaldson of the STR staff discussed Congressional attitudes regarding an extension of the countervailing duty waiver in a July 21 memorandum to Strauss and Wolff. (National Archives, RG 364, 364–80–4, Special Trade Representative Subject Files, 1977–1979, Box 2, Congressional Correspondence 1977)