In the GATT (Geneva 1947), a concession was made as follows: "Topped crude petroleum, fuel oil derived from petroleum including fuel oil known as gas oil, and all-liquid derivatives of crude petroleum (except lubricating oil and such derivatives specified hereinafter in any item 3422 [of the Internal Revenue Code]), one-fourth cent per gallon." This GATT concession contains a proviso to the effect that in no event shall the import tax applicable to topped crude petroleum be less than the rate of tax applicable to crude petroleum. The following rates of duty are also provided for in GATT: Mineral oil of medicinal grade, derived from petroleum, one-half cent per gallon; gasoline and other motor fuel, 14 cents per gallon; lubricating oil, 2 cents per gallon; and paraffin and other petroleum wax products, one-half cent per pound. Effective January 1, 1951, the bilateral trade agreement with Mexico was terminated. This resulted in (a) the reinstatement of the concessions granted in the bilateral trade agreement with Venezuela, with particular emphasis on the reestablishment of the 5 percent of domestic refinery output tariff-rate quota, supra, and (b) the tariff-rate quota becoming applicable to topped crude petroleum, in accordance with the proviso to the GATT concession, supra. This joint Venezuela-GATT arrangement remained in effect until late 1952. In 1952 the President entered into a trade agreement supplementary to the 1939 agreement with Venezuela. Pursuant to this agreement (effective October 1952), the tariff-rate quota on crude petroleum, fuel oil, gas oil, and topped crude petroleum was removed. In addition, the tax on these products testing under 25 degrees (American Petroleum Institute) was further reduced to one-eighth cent per gallon. Also, the following GATT rates were granted to Venezuela: Gasoline or other motor fuel, 14 cents per gallon; lubricating oil, 2 cents per gallon; and paraffin and other petroleum wax products, one-half cent per pound. The Internal Revenue Code of 1954 reenacted the taxes originally established by the 1932 code, as amended, and continued in the 1939 code, but such reenactment specifically preserved existing trade agreement rates. In order to accomplish the reinstatement of the statutory rates of duty on these petroleum products by the termination process (as distinguished from elimination of the particular concession by such negotiating procedures as may be available), it would be necessary for the United States to withdraw from the GATT and to terminate the bilateral agreement with Venezuela. It should be noted that the termination of trade agreements would not, in all instances, result in higher duties. The higher-than-statutory rates of duty which have been established pursuant to the trade agreements legislation (including those established under the escape-clause procedure), would be superseded by the lower statutory rates. Sincerely yours, EDGAR B. BROSSARD, Chairman. UNITED STATES TARIFF COMMISSION, Hon. GEORGE W. MALONE, United States Senate. DEAR SENATOR MALONE: This is in response to your request this morning for an explanation of how the protocol of provisional application of the General Agreement on Tariffs and Trade permits the United States to withdraw from that agreement upon 60 days' notice. The basic general agreement was signed at Geneva on October 30, 1947. Article XXXI of the general agreement provided that any contracting party may withdraw from the agreement on or after January 1, 1951, upon 6 months' notice. Article XXVI of the agreement provides for the definitive entry into force thereof under specified conditions. The agreement, however, has never entered definitively into force. However, it has been applied by the United States since January 1, 1948, pursuant to the protocol of provisional application of the General Agreement on Tariffs and Trade signed at Geneva, Switzerland, on October 30, 1947, the same date on which the general agreement itself was signed. Paragraph 5 of the protocol of provisional application provides that "Any government applying this protocol shall be free to withdraw such application, and such withdrawal shall take effect upon expiration of 60 days from the day on which written notice of such withdrawal is received by the Secretary General of the United Nations." Since the United States is one of the governments applying the protocol of provisional application, and since the general agreement is being applied by the United States in pursuance of the protocol, if follows that the United States, under paragraph 5 of the protocol, may withdraw the provisional application of the agreement upon the expiration of 60 days from the day on which written notice of such withdrawal is received by the Secretary General of the United Nations. If the United States should withdraw the provisional application of the agreement pursuant to the protocol, it would automatically cease to apply the provisions of the general agreement because the agreement will not have entered into force pursuant to article XXXI of the general agreement. Sincerely yours, EDGAR B. BROSSARD, Chairman. Senator MALONE. Section 336-Equalization of Costs of Production, subsection A: CHANGE OF CLASSIFICATION OR DUTIES.-In order to put into force and effect the policy of Congress by this Act intended, the Commission (1), upon the request of the President or (2) upon resolution of either or both Houses of Congress or (3) upon its own motion or (4) when in the judgment of the Commission there is good and sufficient reason therefor, upon application of any interested party, shall investigate the differences in the costs of production of any domestic article and of any like or similar foreign article. In other words, when they have reason to believe that the cost-ofproduction relation between this Nation and the chief competing country has changed on any product, then they can reexamine that article and determine what that change is and recommend it as the tariff. That is what it says: It is specific that they can reexamine that difference in cost of production for practically any reason. This committee, for example, can pass a resolution requesting them to investigate any particular commodity; then they do it under this act. Now you understand, or do you, that the Tariff Commission is an agent of Congress? Secretary WEEKS. Yes, sir; I do. Senator MALONE. All right, then. What does the Commission do when it takes up a product upon such a request or upon their own motion? You do not need to guess, I will read what it does for the record: If the Commission finds it shown by the investigation that the duties expressly fixed by statute do not equalize the differences in the costs of production of the domestic article and the like or similar foreign article when produced in the principal competing country, the Commission shall specify in its report such increases or decreases in rates of duty expressly fixed by statute (including any necessary change in classification) as it finds shown by the investigation to be necessary to equalize such differences. It sets down in words of one syllable what they shall do and how they shall do it. They shall determine the cost of production differences if the cost differences are found to have varied from the last investigation or from the existing duty. Then they make an investigation to determine what the cost here is at the time of the investigation, not the high cost nor the low cost but the reasonable cost, and then what the cost of production is in the chief competing country of that product or a like product, not the high cost nor the low cost, but the reasonable cost. And, Mr. Secretary, they recommend the difference to be the tariff. Now what does that policy mean? It has been followed in general although awkwardly at times since the first Tariff Act in 1789. It means that the duty or tariff is designed to take the profit out of sweatshop wages at the water's edge. Congress was continually improving the process, but there was just one objective of all those tariff bills for 150 years and that was to equalize the cost of production and under that policy free trade would be immediate and automatic when and if the chief competing country reached a standard of living in general equal to that of the United States of America. Would you not judge that that was the objective? Secretary WEEKS. I think so; yes. Senator MALONE. For the edification of the good folks testifying who apparently do not know what the law is now or what happens if this one under which we are working today is not extended. Now, do you know just what happens if this act about which you are testifying today is not extended? Secretary WEEKS. I think I do; yes, sir. Senator MALONE. Will you explain it for the record? Secretary WEEKS. There are no further agreements entered into. Senator MALONE. Either at Geneva by the 37 nations of which we are one, or by the Secretary of State making bilateral agreements. Secretary WEEKS. That is correct. Senator MALONE. Bilateral or multilateral. Secretary WEEKS. That is right, and we stand on the Senator MALONE. That is after midnight, the 30th of this month. Secretary WEEKS. Yes, sir, and we stand on the agreements that are in vogue unless they are abrogated by the established procedure or by act of Congress. Senator MALONE. Now what is established procedure? Secretary WEEKS. I believe on 6 months' notice we give notice that we intend to withdraw concessions and the agreement is at an end. The multilateral agreements are abrogated upon 60 days' notice and the bilateral on 6 months' notice. Senator MALONE. Who gives the notice? Secretary WEEKS. The State Department. Senator ANDERSON. Whichever party wanted to abrogate it. Senator ANDERSON. Whichever party wanted to abrogate it, ourselves or Secretary WEEKS. Ourselves or the other side. Senator MALONE. Only the State Department could do that? Secretary WEEKS. The President is the individual who takes the action obviously by direction of Congress, of course such a procedure. could be undertaken, would be undertaken. Senator MALONE. But the State Department acts for the President. Secretary WEEKS. Yes, sir. Senator MALONE. It is generally understood, is it not, that the State Department is the spearhead for the President in all these negotiations? Secretary WEEKS. The State Department is one agency. It is the agency that takes the lead in these negotiations. Senator MALONE. They really represent the President at Geneva in negotiations for a bilateral or multilateral trade agreement. Secretary WEEKS. But today, as I pointed out in my testimony yesterday, the President has established a Trade Policy Committee under the chairmanship of the Secretary of Commerce, and I am sure no action, affirmative action, would be taken without this committee's advice to the President on the subject. Senator MALONE. Who are the members of that Committee? Secretary WEEKS. The Chairman is the Secretary of Commerce and the others are the Secretary of State, the Secretary of the Interior. Senator MALONE. All Cabinet members? Secretary WEEKS. Yes, sir. Senator MALONE. All the Cabinet members? Secretary WEEKS. Yes, sir. Senator MALONE. Is that all? Secretary WEEKS. No, not all of the Cabinet members but all the members are members of the Cabinet. Senator MALONE. Then will you complete the membership for the record if you just do not happen to remember all the members. If you do, name them now. Secretary WEEKS. Treasury, Agriculture, Interior, State, Commerce and Defense, and Labor. Senator MALONE. You understand that your testimony will be furnished to you for completion of material? Secretary WEEKS. Yes. Senator MALONE. But the Secretary of State does take the lead in these negotiations on bilateral trade agreements made between the United States and any other nation and also at Geneva, does he not? Secretary WEEKS. Yes, sir, as far as the actual negotiations are concerned. Senator MALONE. Yes, and then Secretary WEEKS. But in the preparation for the negotiations, the Trade Policy Committee discusses who shall be our representatives and advises the President as to who shall be the representatives and what the agenda shall be and so on. Senator MALONE. Do you have a Chairman of this Policy Committee? Secretary WEEKS. The Secretary of Commerce is Chairman. (The Secretary of Commerce subsequently forwarded to the committee, for insertion in the record, the following documents relating to the Trade Policy Committee, which are set forth in full below: (a) The Executive order establishing the Committee; (b) statement of functions and operations procedures; (c) related public announcements.) [Press release, November 25, 1957, Anne Wheaton, Associate Press Secretary to the President] THE WHITE HOUSE. The President today issued an Executive order establishing a Trade Policy Committee to advise and assist him in the administration of the reciprocaltrade program. The new order establishes a Trade Policy Committee to recomment to the President basic policies for the administration of the Trade Agreements Act. The Trade Policy Committee consists of the Secretaries of State, Treasury, Defense, Interior, Agriculture, Commerce, and Labor, with the Secretary of Commerce as its Chairman. Heretofore, recommendations on the administration of the Trade Agreements Act have been made directly to the President by an interagency committee known as the Trade Agreements Committee. These recommendations will now be reviewed by the new Cabinet-level Trade Policy Committee before going to the President. An important new function which will be carried on by the new Trade Policy Committee will be to advise the President with respect to recommendations by the Tariff Commission in escape-clause cases. The escape clause is a provision of the Trade Agreements Act under which the United States may raise tariffs above the level established in our trade agreements if serious injury is threatened to American industry. In issuing the Executive order, the President pointed out that the reciprocaltrade program is now one of our most important programs in the field of foreign economic policy and should, therefore, be under constant consideration by a Cabinet-level committee with increased responsibility in the Secretary of Commerce, who is responsible for the development of foreign and domestic commerce. EXECUTIVE ORDER 10741 ESTABLISHING THE TRADE POLICY COMMITTEE By virtue of the authority vested in me by the Constitution and statutes, including the Trade Agreements Act approved June 12, 1934, as amended (48 Stat. 943; 57 Stat. 125; 59 Stat. 410; 63 Stat. 698; 65 Stat. 72; 69 Stat. 162; 19 U. S. C. 1351-1354), it is ordered as follows: SECTION 1. There is hereby established the Trade Policy Committee, consisting of the Secretary of State, the Secretary of the Treasury, the Secretary of Defense, the Secretary of the Interior, the Secretary of Agriculture, the Secretary of Commerce, and the Secretary of Labor, or of alternates designated by them. Such alternates shall be officials who are required to be appointed by the President with the advice and consent of the Senate. The Secretary of Commerce or his alternate shall be the Chairman of the Committee. The Committee may invite the participation in its activities of other Government agencies when matters of interest thereto are under consideration; provided that such participation shall be limited to the heads of such agencies, or their alternates who are required to be appointed to office as above described. SECTION 2. The Trade Policy Committee shall make recommendations to the President on basic policy issues arising in the administration of the trade-agreements program, which, as approved by the President, shall guide the Interdepartmental Committee on Trade Agreements established by paragraph 1 of Executive Order No. 10082 of October 5, 1949 (hereinafter referred to as the Trade Agreements Committee), in carrying out its functions. SECTION 3. Each recommendation made by the Trade Agreements Committee to the President, together with the dissent of any agency, shall be transmitted to the President through the Trade Policy Committee, which shall submit to the President such advice with respect to such recommendation as it may deem appropriate. The said Executive Order No. 10082 is hereby amended accordingly. SECTION 4. The Trade Policy Committee shall make recommendations to the President as to what action, if any, he should take on reports submitted to him by the United States Tariff Commission pursuant to section 7 of the Trade Agreements Extension Act of 1951, as amended (65 Stat. 74; 67 Stat. 472; 69 Stat. 166), and pursuant to Executive Order No. 10401 of October 14, 1952. SECTION 5. Agencies of the Government shall furnish the Trade Policy Committee available information upon request of the Committee therefor for use in connection with the carrying out of the functions conferred upon the Committee by this order. DWIGHT D. EISENHOWER. THE WHITE HOUSE, November 25, 1957. (Published in Federal Register, issue of November 27, 1957, Vol. 22, F. R. p. 9451.) [Press release Department of Commerce, Office of the Secretary, Washington, D. C., November 25, 1957] SECRETARY WEEKS ISSUES STATEMENT ON TRADE POLICY COMMITTEE Following the announcement by the White House that the President had established a Trade Policy Committee, composed of seven Cabinet members to advise and assist him in the administration of the reciprocal trade program, Secretary of Commerce Sinclair Weeks, Chairman of the Trade Policy Committee, said: "A major objective of the new Cabinet committee will be to strengthen the American economy through the sound and vigorous development of world trade. "International trade is not something apart from American industry or a substitute for it. Rather, it is a projection and an aid to American industry and commerce. Hence its healthy development both safeguards the Nation's economy |