GATT. I recently wrote a letter on this subject which the New York Times did not print, but which your Chairman put in the Congressional Record of March 2, 1953. The Times subsequently printed a shorter letter of mine on this subject.

Mr. E. Wyndham White, the executive secretary of GATT in Geneva, Switzerland, subsequent wrote me on one phase of this matter. His letter is instructive. I replied to it. As the time allotted alike to each of us is 20 minutes, I respectfully ask that these three documents may be inserted in the record of the hearings at this point without reading them.

The CHAIRMAN. Without objection, it is so ordered.

Mr. BENNET. Thank you.

(The documents are as follows:)

GENERAL AGREEMENT ON TARIFF AND TRADE,

PALIAS DES NATIONS,
Genève, March 6, 1953.

Mr. WILLIAM S. BENNET,

Care of New York Times, New York, N. Y.

DEAR MR. BENNET: I read with interest your letter in the New York Times of February 25. I do not wish to enter into the more general questions that you raise, but I would like to comment on your statement that "there is no machinery to enforce any signatory power to live up to the GATT."

In fact the general agreement does provide for dealing with complaints by individual contracting parties that benefits derived under the agreement are being nullified or impaired, or that the attainment of the objectives of the agreement are being impeded. We have in fact had a number of cases of this kind of which I will only mention the two most striking. The first was a complaint that the British Purchase Tax was being so operated as to discriminate against imported goods. This charge was upheld and the general body of the contracting parties recommended the United Kingdom to modify the tax so as to eliminate the elements of discrimination. This recommendation was accepted by the United Kingdom and has been acted upon. In the second case the United States and Canada complained that Belgium had introduced discriminatory import restrictions directed against dollar imports, contrary to the provisions of the general agreement. At the last session of the GATT Belgium agreed to take steps to eliminate progressively these discriminatory restrictions. As regards the particular case to which you refer in your letter, I would point out that the restrictions proposed by Belgium have not yet been imposed. If the Belgian Government were to proceed with the proposal it would be open to any other country affected to challenge Belgium before the contracting parties.

I would not deny that the sanctions in article XXIII of the GATT are, on the face of it, not very impressive since all that the contracting parties can do is to authorize retaliatory action. I do not feel, however, that the world has yet reached the point where governments would accept international arrangements which involve penal sanctions.

As I have said, our "complaints procedure" has not, on the whole, proved ineffective. It depends for its success upon the willingness of governments to make use of it, and secondly the willingness of governments to act upon the findings of their peers after an objective study of the facts. This is not always easy as you will appreciate from the very difficult question of restrictions imposed on the import of dairy products into the United States, which has been before the contracting parties for nearly 2 years without a satisfactory conclusion. Yours truly,

Mr. E. WYNDHAM WHITE,

Executive Secretary, Palais des Nations,

E. WYNDHAM WHITE,
Executive Secretary.

APRIL 1, 1953.

Geneva, Switzerland.

DEAR MR. WHITE: Matters which are in my law office have delayed my replying to yours of March 6, 1953. I appreciate very highly that you took the time not

only to read my letter in the New York Times of February 25 but to write me so fully from your standpoint in relation to the phrase in my letter, "there is no machinery to enforce any signatory power to live up to the GATT."

As you indicate that you do not wish to enter into the more general questions that I raised, I shall limit this letter to a brief discussion of the phrase to which you refer. Incidentally, you may be interested to know that I wrote a much longer letter to the New York Times, which did not print it probably because of its length; so, I sent it to Representative Daniel A. Reed who had it inserted in the Congressional Record where you will find it in the issue of March 2, 1953, at page A1066. I assume you have access to the Congressional Record. If not, and would like to read what I said which was more extensive than the Times article, I shall be glad to send you a copy of that portion of the Record.

I am a believer in the necessity of the United Nations. Our country went into the United Nations with our eyes open to the effect that we were for the first time in our history surrendering some portion of our sovereignty. We expected to, and I think have, lived up in full to the obligations incurred by our joining the United Nations. We assumed that other nations would.

Whether we are in GATT is somewhat uncertain. It is true that our representatives at Geneva signed the agreement. Whether they had authority to do so is a disputed question. You are familiar, of course, with the provision as to GATT which the 82d Congress inserted in the Extension Agreement voted by that Congress. It is gratifying to learn that the United Kingdom, in the case to which you refer, accepted a recommendation from the General Body of the contracting GATT parties and acted on it, and that Belgium, at the last session of GATT, agreed to take steps to eliminate progressively certain discriminatory restrictions to which the United States and Canada had objected. I am aware that the restrictions proposed by Belgium have not been imposed. Let us assume that the Belgian Government does proceed, and that when objection is made, as might happen, the Belgian Government calmly said that they intended to proceed anyway. Just what could anyone do?

One thing, of course, any signatory power can do as to any action by any other signatory power to which it objects: For instance, some nations object to our so-called "cheese amendments." I do not like to use the phrase "authorized retaliatory action." I think the spirit of the language is that an objecting nation can enact legislation which, in its opinion, gives it an equivalent to the legislation complained of or action taken.

I do not think, nor do I say, that the "complaints procedure" of GATT had proved wholly ineffective. I merely said, as you quote me correctly: "There is no machinery to enforce any signatory power to live up to the GATT." Am I not correct in my belief that some nations have already enacted legislation as equivalents to the damage which they think that our "cheese amendments" have done to them? If we are actually a party to GATT, nations which have been damaged are authorized by GATT agreement to enact such legislation, and so far as the United States is concerned, I think we have reached the point where we "would accept international arrangements which involve penal sanctions." At least, I have not heard any objection to the legislation which has been enacted or proposed in the case of our "cheese amendments." I note, however, that in the last sentence of your letter you think differently on that subject than I do, but after all is said and done, if the United Kingdom had acted differently from what it did and Belgium had also pursued a similar course, what could the complaining nations have done?

The grim and grisly fact is that sovereign nations can do things which are discreditable and wrong, and the only recourse that other nations have against such action is war, and nobody now dares go to war; so, if Belgium wishes to go ahead with her embargo against entry of foreign-manufactured automobiles into Belgium, no nation will start a war over anything like that, and other than war there is no machinery to enforce any signatory power to live up to GATT. Of course, we can pass legislation which you describe as retaliatory, but we could do that, GATT or no GATT, and, as a matter of fact, foreign nations have been passing legislation aimed at the United States influenced by our tariff legislation, and there is nothing that we have done or could have done.

Very truly yours,

WILLIAM S. BENNET.

P. S. Possibly some people would not understand exactly what I meant when I quoted with approval from your letter, "would accept international arrangements which involve penal sanctions." This statement is to be considered in connection with your paragraph in relation to article 23 of the GATT. I take

it that the last sentence of that paragraph described the "retaliatory action" which might be taken under article XXIII as a penal sanction. When I dictated my reply, and made the quotation which I did, I intended it to refer only to the "retaliatory action" to which you had referred. Taken in that sense, I thought and still think that each government would accept an arrangement under which, if we passed legislation which other members of GATT thought infringed on their rights as to which they were authorized to take "retaliatory action" that each Government would not object. I didn't mean to use the phrase "penal sanctions" in any broader sense than as applicable to your paragraph.

W. S. B.

A SUCCINCT HISTORY OF THE AMERICAN TARIFF SYSTEM-EXTENSION OF REMARKS OF HON. DANIEL A. REED OF NEW YORK IN THE HOUSE OF REPRESENTATIVES, MONDAY, FEBRUARY 9, 1953

Mr. REED of New York. Mr. Speaker, I take pleasure in inserting in the Record, under leave to extend heretofore granted, a letter written to the editor of the New York Times by Hon. William S. Bennet, a former distinguished member of the House of Representatives.

Mr. Bennet has made a lifelong study of the American tariff system and is one of the best-informed men in the country on this subject. I believe that this article will be of great interest to students of the tariff and its effect upon our home market and foreign trade in general.

The article follows:

EDITOR, NEW YORK TIMES:

JANUARY 22, 1953.

As the Detroit Board of Commerce is circulating a statement of policy on United States foreign trade and foreign-aid policies which can be construed (and is so construed in some quarters) as advocating the adoption of a freetrade policy for the United States, those, of whom I am one, who do not believe in a free-trade policy for the United States have a duty to recall, dispassionately, to the public recollection a few uncontroverted facts.

There are in the present Congress 96 Senators and 435 House members. No one of these was elected on a free-trade platform, or is a known freetrader. The sole freetrader in Congress in 1909, 1922, or 1930 was the late Ellison D. Smith, a Senator from South Carolina, who voted consistently against the protective tariff provisions of the tariff acts of those respective years, so far as they came, singly, before the Senate, and then voted against each of the bills on final passage.

Since 1856-96 years-the campaign of 1892 has been the only successful presidential campaign conducted on an antiprotective basis. A President, Senate, and House were all elected on that basis. Nevertheless, the act which the Congress sent to President Cleveland contained definite protective features. President Cleveland denounced the act as an instrument of perfidy and dishonor. However, as a matter of party regularity, he permitted it to become a law without his signature.

The House, immediately thereafter, elected in 1894, was overwhelmingly Republican. President McKinley and a Republican Senate and House were elected in 1896, and the Dingley Tariff Act of 1897 was promptly enacted.

In 1928 the Democratic platform contained the statement, "Some industries have been benefited by the tariff." Since July 4, 1789, when President Washington signed the first protective tariff act (described as such later, by a unanimous vote of the Supreme Court) this country has never, at any time, been on a free-trade basis. The Underwood Tariff Act of October 13, 1913, passed by a Democratic Senate and House and signed by President Woodrow Wilson, was not a free-trade act.

The present trade-agreement law has been on the statute books since June 12, 1934. No person can point to one single American industry or one agricultural product which has been benefited by any of the agreements entered into under its provisions. At the time of the passage of the 1934 act, it was widely believed that the agreements made under it were really treaties requiring Senate ratification. However, the Congress which passed the act repealed the long standing law which would have permitted this question to be tested in the courts. The 1934 act was a short-term act, requiring extension at intervals. Democratic Congresses authorized these extensions from time to time. The 80th Congress,

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elected in 1946, had a slight Republican majority in each the Senate and the House. It amended the act in a way which it deemed necessary and then extended it for 1 year. The Democratic Congress, elected in 1948, repealed these amendments but the Democratic Congress, elected in 1950, reenacted more than the provisions enacted by the Republican 80th Congress. They are the law now. The Republican 80th Congress inserted a peril point provision, but did not legislate the escape clause because the escape-clause machinery was set up by the administration under a bipartisan agreement. The Democratic 81st Congress removed the peril-point provision in time so that it would not be invoked in the then-pending Annecy agreement. The Democratic 82d Congress not only restored the peril-point provision but added a legislative requirement for the inclusion of escape clauses in trade agreements and set up criteria and machinery for the domestic application of clauses.

Although we have had Democratic Congresses continuously since 1933, except the 80th Congress in 1947-49, the Democrats have permitted the Republican Tariff Act of 1930 to remain as our basic tariff law, with many of its provisions neither amended nor affected by any of the trade agreements. No other tariff act in our history ever remained so long continuously on the statute books.

A feature of both the 1922 and 1930 tariff acts, recommended by Republicans and endorsed by Woodrow Wilson, is the bipartisan tariff commission. Under it, the President, on the recommendations of the tariff commission, can increase or decrease any tariff rate, not to exceed 50 percent.

Under this provision, Presidents Coolidge, Hoover, and F. D. Roosevelt each increased tariff rates. Under the escape provision, the Tariff Commission made recommendations of tariff increases to President Truman, some of which he has approved and others of which he has rejected. Under the escape provision, President Truman, in the cases where he has rejected the Tariff Commission recommendations, has been obliged to send his reasons for doing so to each House of Congress.

Before saying something further about the reciprocal legislation, and what has been done under it, brief mention is made of the International Trade Organization. This organization was created by a meeting of representatives of various (57) countries, including the United States, held at Habana, Cuba, from November 1947 to March 1948. Its provisions were not binding on any country until that country had ratified it. No one who was familiar with the history of the United States and knew its firm belief in its independent sovereignty for this country, ever expected our country to ratify this agreement and it has not. Recent Congresses have not even reported it out of committee in either branch. It is pretty dead in this country. Only one country, Liberia, has ratified it unconditionally. Australia ratified it on the condition that the United Kingdom and the United States ratify it, but this has not come about.

President Truman, on doubtful authority, attempted to put some of its provisions into effect through GATT. Under the Trade Agreements Act of 1934 and its extensions, there has been considerable activity.

Numerous bilateral agreements have been entered into with various countries. Under the law, when an agreement with, say Honduras, reduces the United States tariff on honey, it reduces the tariff on honey imported into the United States from every other country. Therefore, one of the greatest beneficiaries under these agreements was Russia which had benefited by every concession the United States had made to any country, without itself making a single reciprocal tariff concession, either to the United States or to any other country. At a meeting in Geneva, Switzerland, in 1947 of representatives of countries, including the United States, which had entered into reciprocal-trade agreements, a general agreement on tariffs and trade was provisionally entered into. Ordinarily, it is referred to as GATT. It has been amended at subsequent meetings and has received provisionally the approval of representatives of 34 nations. The representatives of the United States claimed authority for them to sign existed under the Trade Agreements Act. The existence of any such authority is gravely doubted. GATT has never been submitted to Congress for ratification. When Congress extended the Trade Agreements Act in 1951, it inserted a provision that enactment of the extension did not indicate congressional approval or disapproval of GATT.

The seventh and most recent meeting of GATT was held at Geneva, Switzerland, October 2-November 10, 1952, and an eighth session has been announced for September 17, 1953.

At this seventh session, Belgium, 1 of the 34 signatory powers announced its decision to first restrict, and later to bar, automobile imports so that by 1954

a virtual embargo on imports of foreign cars into Belgium would be in effect. The plan is to foster the Belgian automobile industry by forcing outside manufacturers to set up plants in Belgium and thus employ Belgian labor. This decision, of course, runs directly contrary to the provisions of GATT, but Belgium, as can any other nation, can ignore GATT, if it wishes to. Your representative in Geneva, commenting on November 12, on this action of Belgium, said, inter alia. "The removal of quantitative controls on imports by members of the western community of trading nations seems to be about as distant an objective as at any time since World War II" and also stated that the "Belgian Government does not even pretend that this action is consistent with its obligation as member of the general agreement. Nor can Belgium aver to be a backward country or one with general balance-of-payments difficulties."

In past years, other signatory countries in Europe and South America have similarly disregarded their agreements under GATT. instances of such violations by other countries are reported in the 1949-52 yearbooks of the Encyclopedia Britannica. The so-called cheese amendments, by which our country set quotas on imports of dairy products, are held, by GATT contracting parties, to be in violation of GATT.

Probably every outstanding economist in the world, certainly an impressive majority of them, would, as of today, state that the greatest impediments to international trade are not ordinary tariffs but quantitative restrictions, preferential tariffs, such as the Ottawa agreement, monetary license restrictions such as exist in many countries, and various devices.

Probably our country resorts to fewer of such trade impediments than does any other country of comparable international trade. Why do not other countries, with their commendable slogan, “Trade, not aid," ever refer to what I have already pointed out, but also to the following?

First. If some rates in the Tariff Act of 1930 are felt to be too high, anyone, American or foreign, can apply to the Tariff Commissioner for a reduction in rates. That Commission, with Presidential approval, can increase or decrease any tariff rate up to 50 percent. Some foreigners have acted under this statutory provision and obtained reductions. Under the Trade Agreements Act, this provision applies, now, only to rates not changed by trade agreements.

Second. In addition to the tariff increases already referred to, made by Presidents Coolidge, Hoover, and F. D. Roosevelt, President Truman, under the "escape" clause of the present law, has, on the recommendations of the Tariff Commission, also made some increases.

Third. Many industries now have applications for tariff increases now pending under the "escape” clause.

Fourth. After 163 continuous and consecutive years under the protective tariff system, the national wealth is now the greatest in its history. Read any periodical and President Truman's message of January 14, 1953, for details.

Fifth. Of the 34 GATT nations, not one is on a free-trade basis.

Sixth. About two-thirds of our imports, largely noncompetitive, come in duty free.

Seventh. Our present tariff rate, as decreased by our bilateral agreements is the lowest in our history-lower than the act of July 4, 1789, which had, at least a 5 percent rate on each import. No free list at all.

Eight. While our exports for the calendar years 1951 and 1952 each exceeded our imports, the difference, in each year was less than in any recent year.

Ninth. The suggestion that our country increase its exports 300 percent annually is simply sheer nonsense. Our imports are made by individuals in accordance with individual needs and desires. The Government has no control over them.

Tenth. The tariff policy to which the Republican Congress is committed is that contained in the 1952 party platform. Since 1861-91 years-when in power, the Republican Party has legislated in accordance with every platform promise except its 1928 anti-lynching plank, which the Senate had the power to block. No other party in any country has as good a record as to following promises with performance.

Eleventh. The platform states: (1) We favor the expansion of mutually advantageous world trade. (2) To further this objective we shall press for the elimination of discrimination practices against our exports such as preferential tariffs, monetary license restrictions, and other arbitrary devices. (3) Our reciprocal trade agreements will be entered into and maintained [on a basis of true reciprocity and to safeguard our domestic enterprises and the payrolls of our workers against unfair import competition]. (Matter in brackets supplied.)