MR. STEWART

GOVERNMENT

17(B)

The President and his spokesmen have indicated that in the
forthcoming negotiations under GATT with the EEC, EFTA countries, Japan,
and other developed and less developed nations, the United States would
be intent upon accomplishing in the negotiations selective increases in
duty on products being imported in such volume and under such circumstances
as to injure domestic production and employment. The criteria set forth
in Section 111 fail to respond to this declared intention. No indication
is given in the language of Section 111 of any responsibility on the part
of the Commission to identify particular product categories, the imports
of which are causing or threatening serious injury to a domestic industry,
nor for advice to the President in order that he might be able to consider
the negotiation of tariff increases with respect to such categories.

The approach taken by the Tariff Commission in the prenegotiations
stage of the Kennedy Round in conducting studies of the probable economic
effect of modifications of duties on domestic industries producing like
or directly competitive products was so inadequate to the necessities of

competitive position of the United States, the Tariff
Commission in scores of determinations on petitions for
import relief and adjustment assistance has found lacking
the requisite connection between tariff concessions and
serious injury or the threat thereof. The familiar
fallacy of asserting that a condition is caused by an event
merely because it follows the event cannot prevail here in
view of the specific determinations of the Tariff Commission.
The assertions contained in the Stewart paper are not
supported on the record.

As a remedy for the imagined ills described by the
paper, it proposes a return to the ponderous procedures
imposed by sections 3 and 4 of the Trade Agreements
Extension Act of 1951, with the addition of the further
requirement that every trade agreement which reaches
beyond the "peril point" must be submitted to Congress
and subjected to a veto procedure similar to the optional
procedure proposed by the Administration in respect of

MR. STEWART

GOVERNMENT

17(C)

the negotiations that there has taken place subsequent to the implementation
of the concessions granted by the United States in the Kennedy Round wide-
spread deterioration in the competitive position of American industries
vis-à-vis import competition in the United States market.

The identification of many U. S. manufacturing industries

whose position in foreign trade has substantially deteriorated as a result
of the concessions granted in the Kennedy Round, incorporated in the Appendix
to this statement, constitutes compelling evidence that the type of informa -
tion generated by the Tariff Commission in its prenegotiations investigation
was wholly inadequate to inform the President of the particular product
classifications as to which it would be wise for him to avoid making further
reductions in duty, or to avoid reductions that proceed beyond a certain
point.

The President and his spokesmen have indicated in various
public statements their intention that the forthcoming trade negotiations
benefit all American workers, not merely those engaged in export indus-

non-tariff barrier agreements.

The peril point/vcto

procedure would, according to its proponent, apply in some
fashion to agreements for the removal of non-tariff barriers
under section 103(c) of the bill, though the method of
application is far from clear. It is assumed that this
proposal is an alternative to the paper's recommendation
that section 103 (c) be deleted.

...

The proposed section 111 (a) would require the Tariff
Commission to report on the "limit to which such modifi-
cation, imposition or continuance may be extended
without causing or threatening serious injury to the
domestic industry producing like or directly competitive
articles. But in the case of non-tariff barriers such
as marking requirements, no single article is involved;
the formulation of the proposal is thus confusing, and
the Tariff Commission would require further guidance as
to the appropriate subject of its report, where a

"

MR. STEWART

GOVERNMENT

17(C)

the negotiations that there has taken place subsequent to the implementation
of the concessions granted by the United States in the Kennedy Round wide-
spread deterioration in the competitive position of American industries
vis-à-vis import competition in the United States market.

The identification of many U. S. manufacturing industries
whose position in foreign trade has substantially deteriorated as a result
of the concessions granted in the Kennedy Round, incorporated in the Appendix
to this statement, constitutes compelling evidence that the type of informa-
tion generated by the Tariff Commission in its prenegotiations investigation
was wholly inadequate to inform the President of the particular product
classifications as to which it would be wise for him to avoid making further
reductions in duty, or to avoid, reductions that proceed beyond a certain
point.

The President and his spokesmen have indicated in various
public statements their intention that the forthcoming trade negotiations
benefit all American workers, not merely those engaged in export indus-

non-tariff barrier agreements.

The peril point/veto

procedure would, according to its proponent, apply in some
fashion to agreements for the removal of non-tariff barriers
under section 103 (c) of the bill, though the method of
application is far from clear. It is assumed that this
proposal is an alternative to the paper's recommendation
that section 103 (c) be deleted.

...

The proposed section 111 (a) would require the Tariff
Commission to report on the "limit to which such modifi-
cation, imposition or continuance may be extended
without causing or threatening serious injury to the
domestic industry producing like or directly competitive
articles." But in the case of non-tariff barriers such
as marking requirements, no single article is involved;
the formulation of the proposal is thus confusing, and
the Tariff Commission would require further guidance as
to the appropriate subject of its report, where a

MR. STEWART

GOVERNMENT

17(D)

tries but those whose livelihood and whose welfare are directly tied to
industries particularly vulnerable to import competition. This promise
cannot be kept unless the advice given by the Tariff Commission to the
President is meaningful in terms of alerting the President to the point
at which domestic employment would be placed in jeopardy by further tariff
concessions.

For this reason the approach set forth in the bill, essentially
á carbon copy of the approach embodied in the Trade Expansion Act of 1962,
which has been shown by the results of the Kennedy Round negotiations
to have been a failure, ought not be followed. Instead, there should now
be restored to the mandatory prenegotiating procedures the approach that
was followed in trade agreement negotiations antedating the Kennedy Round
in which the Tariff Commission specifically draws expert conclusions from
the economic data developed in its investigation in such manner as to
identify the extent to which existing import duties on particular product

negotiation is entered into requiring modification of
one of the indicated non-tariff barriers.

The veto procedure proposed in the paper goes far
beyond what Congress provided in the Trade Agreements
Extension Act of 1951. The language proposed by the
paper is inconsistent in various particulars with the
veto procedure proposed by the Administration in section
103; no reason is given for the discrepancies. Once again,
it appears that the author of the paper has failed to
grasp the two-stage nature of the veto procedure; the
reference in his proposed subsection 111 (d) (2) (iii) to
the "120-day period referred to in subsection (d)" would
indicate that he does not appreciate the fact that this
section provides for two such periods: one before
conclusion of an agreement or, as here, before issuance
of the "proclamation," and the other following transmittal
of the agreement to the Congress.

MR. STEWART

categories may be reduced without causing or threatening serious injury
to a domestic industry or its workers and, in addition, identifying the
extent to which existing duties should be increased if domestic industries
and their workers are to be safeguarded from actual or threatened serious
injury under current circumstances.

Accordingly, it is proposed that Section 111 of the bill be completely rewritten and in its place there be substituted the following:

GOVERNMENT

17(E)