vided, however, That said trade agreements before becoming operative shall be submitted to the Congress of the United States for ratification or rejection.1 (e) Description of the Bargaining Provisions of the When the tariff bill of 1921, which became the Act of 1922, was reported to, and when it passed, the House of Representatives, it contained the reciprocity and penalty provisions of the Act of 1897, much amplified in detail but not altered in principle." The first provision (Section 301) proposed to authorize the negotiation of commercial treaties "with a view to securing reciprocal trade with any foreign country" or dependency. In return for such treatment of merchandise from the United States as should be deemed to be for its interests, the President could offer the reduction or abolition of duties upon such merchandise as should be designated in the treaty, or for its retention upon the free list, when imported into the United States from such country or dependency. No limitations were placed upon the amount of the concessions or the term of their continuance; the agreements were, however, to be subject to ratification by the Senate and approval by the Congress. The 1897 prototype of this provision, it will be remembered, limited not only the amount of the authorized reductions in American duties, but also the period within which treaties could be negotiated and the length of their duration. In this respect it resembled a second bargaining provision of the Fordney bill. The second provision (Section 303) repeated the first one with the following essential alterations: (1) the agree 1 Sec. IV, A. 'For text of Sections 301, 302 and 303 of the House Bill, see Appendix 7. ments authorized to be negotiated with other countries were required to be concluded within three years from the date of the passage of the bill; (2) they were to remain operative during a specified period not exceeding five years; (3) they were limited with respect to their reduction of American tariff rates to twenty per centum ad valorem; (4) nothing was said about pledging the retention of articles on the free list, and (5) the agreements were to go into effect without being ratified by the Senate or approved by the Congress. The corresponding provision of the Act of 1897 permitted only specified reductions on a limited list of about a dozen products, but it did not contain the time limits of Section 303. Finally, the Fordney Bill contained a provision (Section 302), which had the purpose not only of "securing reciprocal trade", but also of "regulating the commerce of the United States" with other countries. By the terms of this provision it was made the duty of the President, under certain circumstances, to impose penalty duties upon the importation into this country of such products from other countries as he should designate. The amount of these duties was to be "equal" to "the duties or other exactions, limitations, or embargoes" imposed by such other countries (or dependencies), respectively, upon "like or similar " products of the United States, which impositions the President should deem, in view of the duties imposed upon such articles when imported into the United States, to be "higher and reciprocally unequal and unreasonable ". This section differs from the penalty-duty provisions of the Acts of 1890 and 1897 in certain important particulars: (1) it authorizes penalty duties, varying in amount according to the imposition of the other country, to be levied upon imported articles generally, while they specified additional duties applicable only to a small and limited number of products, included in their free lists; (2) it requires the penalty duties to be levied upon the same kinds of goods as are treated unequally and unreasonably by the country to be penalized, while they specified articles that were imported into but not produced in the United States. In as much as the more important commercial exchanges between countries seldom consist of the same sorts of merchandise, the latter difference would probably have rendered the practical usefulness of Section 302 exceedingly limited. The discussion of the Fordney Bill in the Senate indicated that the principle expressed in Section 317 of the enacted law—i. e., the defense of American exports against adversely discriminatory treatment in foreign marketswould meet the present needs of this country more fully than could a provision penalizing treatment considered unreasonable or actually unequal in rate of duty as compared with that accorded by this country. The same was true with respect to the principle involved in the other bargaining provisions adopted by the House of Representatives. Moreover, the penalty duties of Section 302 would, it appeared, if put into effect against a country to which the United States had agreed to grant most-favored-nation treatment, violate such agreement.1 In the course of his address of April 24, 1922, Senator Smoot enumerated other reasons why he opposed the acceptance by the Senate of Section 302, among them the improbability of achieving the purpose of the section, the danger of retaliation and the impropriety of basing the rate of import duty to be imposed upon goods entering this country upon the rate imposed upon similar goods by other countries." 'The subject of treaty violation is discussed in subdivision 28, infra, in connection with the provisos to certain paragraphs in the schedules and free list of the Tariff Act of 1922. 'Congressional Record, vol. 62, pt. vi, 67th Congress, 2d Session, p. 5880. During the hearings which the Senate Committee on Finance conducted, beginning July 25, 1921, upon the tariff bill as it passed the House, a discussion occurred which to some extent illustrates the progression of thought likely to mark the adoption of a provision like Section 317 in place of such a provision as the original Section 302. The witness, Mr. Bentley of San Francisco, represented the California Packing Corporation and the National Canners' Association. Mr. Bentley. France at the present time is exacting a much higher rate of duty on canned vegetables and canned salmon which go from this country than it is proposed to levy in this country against her canned sardines, vegetables, and fruits shipped to this country, and in this she is discriminating, because she admits canned salmon from British Columbia and Canada and from Siberia, where Japan is operating, on a very much lower rate of duty than France charges the United States for canned salmon. And we hope in this way, by indicating that unless she lowers her duty on canned salmon and canned milk and canned vegetables, which we naturally would ship to her, that we will ask our Government to raise the tariff on French canned foods to the level that she is charging against our foods. Senator Curtis. What you want, is it not, is a provision authorizing the President, if advised that any country discriminates against our products, to increase the duty upon the products of that country? Mr. Bentley. Products of "similar character, purpose, or use." Senator McCumber. Similar articles would not mean that if France charged us a high duty on fish that we could then increase our duties on French olives, for instance. Mr. Bentley. Well, that would be a question, of course. Senator McCumber. That would neither be "such or similar". UNIZ OF VINNOJIV 311] HISTORICAL DEVELOPMENT OF PRINCIPLE ΙΟΙ Mr. Bentley. We would hope that it would apply to the general line of canned foods. Senator McCumber. What you want to do is to make just the broad statement that we can change our tariffs on all of our canned goods to meet the prices on canned goods of all character coming from another country? Mr. Bentley. Yes, sir.1 Mr. Bentley was thinking in terms of the House Bill, Section 302, but his expressed need would seem to be best satisfied by such a provision as was afterwards to become Section 317 of the act. 19. THREE TYPES OF INTERNATIONAL COMMERCIAL POLICY The foregoing discussion of bargaining and defensive provisions in our tariff laws has disclosed three general types, each having distinctive characteristics and each well calculated to aid in making effective certain clearly defined and thoroughly diverse policies in our national treatment of international trade. These provisions and their respective purposes may conveniently be described as follows: (1) The theory of reciprocal agreements contracting for mutual concessions finds a natural setting in the field of commerce. Trade itself grows out of the fact that any given person or nation has, or probably has, capacities for production that exceed in some respects and in others are inferior to the capacities of other persons or nations. What a person or nation can well produce is produced by that person or nation in quantities beyond the personal or national needs. The surplus is exchanged for desired commodities that are produced better by some other person or nation. A nation may find itself particularly desirous of a market for a particular product in a particular country. To get an 1Hearings, Committee on Finance, U. S. Senate, on proposed tariff act of 1921, vol. vii, pp. 5065-5066. See table of principal sources at the beginning of this monograph. |