Chapter 1

Introduction and Summary

This, the fifth report of the Tariff Commission on the operation of the trade agreements program, covers the period from July 1, 1951, through June 30, 1952.1 During this period the United States concluded no new trade agreements. The report, however, discusses in detail the concessions that the United States granted and obtained at the Torquay Conference of the General Agreement on Tariffs and Trade 2 in 1950-51, and analyzes the effects of all trade-agreement concessions on the level of the United States tariff. It also covers, for the last half of 1951 and the first half of 1952, important developments respecting the General Agreement on Tariffs and Trade; changes in tariffs, exchange controls, and quantitative restrictions on imports by countries with which the United States has trade agreements; and United States measures relating to imports of trade-agreement items.

TRADE AGREEMENTS EXTENSION ACT OF 1951

During the period covered by this report the United States Government conducted its trade agreements program under the provisions of the Trade Agreements Act of 1934, as amended, and the Trade Agreements

1 The first report of the Tariff Commission, Operation of the Trade Agreements Program, June 1934 to April 1948, Rept. No. 160, 2d ser., 1949, consisted of five volumes, as follows: Part I, Summary; Part II, History of the Trade Agreements Program; Part III, TradeAgreement Concessions Granted by the United States; Part IV, Trade-Agreement Concessions Obtained by the United States; Part V, Effects of the Trade Agreements Program on United States Trade. Hereafter this report will be cited as Operation of the Trade Agreements Program (first report). The second report of the Tariff Commission was Operation of the Trade Agreements Program: Second Report, April 1948–March 1949, Rept. No. 163, 2d ser., 1950. Hereafter this report will be cited as Operation of the Trade Agreements Program (second report). The third report of the Tariff Commission was Operation of the Trade Agreements Program: Third Report, April 1949–June 1950, Rept. No. 172, 2d ser., 1951. Hereafter this report will be cited as Operation of the Trade Agreements Program (third report). The fourth report of the Tariff Commission was Operation of the Trade Agreements Program: Fourth Report, July 1950–June 1951, Rept. No. 174, 2d 1952. Hereafter this report will be cited as Operation of the Trade Agreements Program (fourth report). The General Agreement on Tariffs and Trade is known by the short titles "General Agreement" and "GATT." In this report the short title "General Agreement" is ordinarily

used.

ser.,

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Extension Act of 1951.3 The extension act of 1951 (sec. 2) extends the President's authority to enter into trade agreements with foreign countries for a period of 2 years from June 12, 1951. It differs from the extension act of 1949 in several respects, the most important differences being the "peril point" and "escape clause" provisions.*

Peril-Point Provision

Sections 3 and 4 of the extension act of 1951 incorporate the peril-point provision in substantially the same form that it appeared in the Trade Agreements Extension Act of 1948. The peril-point provision of the 1951 act requires the President, before entering into any trade-agreement negotiations, to transmit to the Tariff Commission a list of the imported articles that may be the subject of negotiations. The Commission is then required to make an investigation of the listed commodities (including a public hearing), and to report to the President its findings regarding (1) the maximum decrease in duty, if any, that can be made on each listed commodity without causing or threatening serious injury to the domestic industry producing like or directly competitive articles, or (2) the minimum increase in duty or additional import restriction that may be necessary for any of the products in order to avoid such injury or threat thereof. The President may not conclude an agreement until the Commission has made its report to him, or until 120 days from the date he transmitted the list of products to the Commission. If the President concludes a trade agreement which provides for greater reductions in duty than the Commission specifies in its report, or which fails to provide for the additional import restrictions specified in the Commission's report, he must transmit to the Congress a copy of the agreement, identifying such articles and stating his reason for not carrying out the Tariff Commission's recommendations. Promptly thereafter, the Tariff Commission must deposit with the appropriate House and Senate committees a copy of those portions of its report that deal with the articles the President. has identified in his report to the Congress.

Escape-Clause Provision

Section 6 of the extension act of 1951 makes mandatory the inclusion in all future trade agreements of an escape clause conforming to the policy set forth in section 6 (a) of the act. Section 6 (a) provides that no tariff concession in any future trade agreement shall be permitted to

For discussions of the legislative history of the trade agreements program, see Operation of the Trade Agreements Program (first report), pt. 2, ch. 2; Operation of the Trade Agreements Program (second report), ch. 2; Operation of the Trade Agreements Program (third report), ch. 2; and Operation of the Trade Agreements Program (fourth report), ch. 2.

♦ For a detailed discussion of the extension act of 1951, see Operation of the Trade Agreements Program (fourth report), ch. 2.

continue in effect when the product concerned is, as a result (wholly or in part) of the duty or other customs treatment reflecting the concession, being imported into the United States in such increased quantities, either actual or relative, as to cause or threaten serious injury to the domestic industry producing like or directly competitive products. Section 6 (b) directs the President to bring all existing trade agreements into conformity with this policy as soon as practicable.

Section 7 of the act sets forth the procedure for administering tradeagreement escape clauses. Under this section the Tariff Commission, upon request of the President, upon resolution of either House of Congress, upon resolution of either the Senate Committee on Finance or the House Committee on Ways and Means, upon application by any interested party, or upon its own motion, must promptly make an escape-clause investigation (including, under specified conditions, a public hearing). Should the Tariff Commission find the existence of serious injury or the threat thereof, the Commission must recommend to the President that the concession be withdrawn or modified, that it be suspended in whole or in part, or that import quotas be established, to the extent and for the time necessary to prevent or remedy such injury. In arriving at its determination, the Commission must consider a number of specified factors, not to the exclusion of others. Within 60 days, or sooner if the President has taken action, the Commission must transmit to the Senate Committee on Finance and the House Committee on Ways and Means a copy of its report and recommendations to the President. Should the President fail to follow the Commission's recommendations within 60 days, he must report to the Senate Committee on Finance and the House Committee on Ways and Means, stating the reasons why he has taken no action. Should the Tariff Commission find that serious injury or the threat of serious injury does not exist, it must make and publish a report of its findings and conclusions.

Other Provisions

Section 5 of the extension act of 1951 directs the President, as soon as practicable, to suspend, withdraw, or prevent the application of any tariff concession contained in any trade agreement to imports from the Soviet Union and from any Communist-dominated or Communistcontrolled countries or areas.

The act provides (sec. 8) that no existing or future trade agreement shall be applied in a manner inconsistent with the requirements of section 22 of the Agricultural Adjustment Act, as amended, thereby reversing. the previous provisions of law.

Section 8 also provides that when the Secretary of Agriculture reports to the President and the Tariff Commission that, because of the perishability of any agricultural commodity, a condition exists requiring

emergency treatment, the Tariff Commission shall make an investigation under section 22 of the Agricultural Adjustment Act or under section 7 of the Trade Agreements Extension Act of 1951, and recommend such relief as may be appropriate. The time allowed for the investigation and action by the President is limited to 25 days. If he considers it necessary, the President may act without awaiting the recommendations of the Commission.

The other sections of the extension act of 1951 delete certain provisions of the Trade Agreements Act of 1934 and the Customs Administrative Act of 1938 which made section 516 (b) of the Tariff Act of 1930 (relating to appeals from the classification of imports by the customs authorities) inapplicable to commodities included in any trade agreement (sec. 9); declare that enactment of the act shall not be construed to determine or indicate the approval or disapproval by the Congress of the General Agreement on Tariffs and Trade (sec. 10); and direct the President to prohibit imports of certain furs and skins which are the products of the Soviet Union or of Communist China (sec. 11).

DEVELOPMENTS RESPECTING THE GENERAL AGREEMENT ON TARIFFS AND TRADE

On June 30, 1952, there were 34 contracting parties to the multilateral agreement known as the General Agreement on Tariffs and Trade. The General Agreement now embraces the original agreement concluded by 23 countries at Geneva in 1947; the Annecy Protocol of 1949, under which 9 additional countries acceded to the agreement; and the Torquay Protocol of 1951, under which 4 other countries have acceded. All together, 37 countries have acceded to the General Agreement, but 3 of these countries have since withdrawn.

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Apart from the accession of the new members after the Torquay tariff negotiations, developments respecting the General Agreement during the period July 1, 1951, to June 30, 1952, relate principally to the proceedings of the Sixth Session of the Contracting Parties, held at Geneva from September 17 to October 26, 1951, and to the activities of the newly created Intersessional Committee which the Contracting Parties established as an experimental arrangement to handle urgent matters between the Sixth and Seventh Sessions.

Although the Sixth Session was concerned largely with problems relating to the general provisions of the agreement, it dealt also with

The Netherlands negotiated concessions on behalf of the Netherlands Indies (Indonesia) at Geneva in 1947. On February 24, 1950, the Contracting Parties recognized Indonesia as a contracting party to the General Agreement in its own right.

The term "contracting parties," when rendered with initial capitals (Contracting Parties), refers to the member countries acting as a group. When rendered without initial capitals (contracting parties), it refers to member countries acting individually.

matters concerning tariffs, tariff negotiations, and the future administration of the agreement. The Sixth Session took two actions that may have special significance in the long-run administration of the General Agreement: the establishment of an ad hoc Committee for Agenda and Intersessional Business; and the adoption of rules for tariff negotiations in the periods between full-scale conferences.

General Provisions

During the period July 1, 1951, to June 30, 1952, the Contracting Parties did not amend the general provisions of the General Agreement. At their Sixth Session, however, and at the several meetings of the Intersessional Committee, they held various discussions and consultations relating to the general provisions, the operation of the agreement, and routine problems and complaints.

At the Sixth Session the major discussions and consultations relating to the general provisions were those concerning the waiver for continued free entry into Italy of Libyan products (art. I); the United Kingdom purchase-tax system (art. III); quantitative restrictions for balance-ofpayments reasons (arts. XI-XIV); special exchange agreements (art. XV); the withdrawal by the United States of its concession on women's fur felt hats (art. XIX); the modification by the United States of its concession on hatters' fur (art. XIX); extension of the time limit for the elimination of certain quantitative import and export restrictions (art. XX); United States restrictions on imports of dairy products (art. XXIII); Belgian measures to deal with current financial problems (art. XXIII); the Belgian family-allowance tax (art. XXIII); the South Africa-Southern Rhodesia customs union and the Nicaragua-El Salvador free-trade area (art. XXIV); and the relation of the General Agreement to the proposed Charter for an International Trade Organization (art. XXIX).

These discussions and consultations are described in detail in the section of chapter 2 on developments relating to the general provisions of the General Agreement. Because of their complexity, they are not susceptible of further condensation for the purposes of this summary.

Tariffs and Tariff Negotiations

In the field of tariffs and tariff negotiations, the Contracting Parties at their Sixth Session granted the United States and Czechoslovakia permission to suspend their obligations to one another under the General Agreement. The Contracting Parties also considered the report of the intersessional working party on the disparity in the level of European tariffs, and extended the time allowed certain countries to sign the Torquay Protocol.