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well as exports will increase; and this increase
will, in the overwhelming number of cases, be bene-
ficial for the reasons outlined above. Nevertheless
ample safeguards against injury to American in-
dustry and agriculture will be retained. Escape-
clause relief will continue to be available with
more up-to-date definitions. Temporary tariff re-
lief will be granted where essential. The power



to impose duties or suspend concessions to protect
the national security will be retained. Aiticles
will be reserved from negotiations whenever such
action is deemed to be in the best interest of the
Nation and the economy. And the four basic
stages of the traditional peril-point procedui-es and
safeguards will be retained and improved :

— the President will refer to the Tariff Com-
mission the list of proposed items for negotiations;

— the Tariff Commission will conduct hearings
to determine the effect of concessions on these
products ;

— the Commission will make a report to the
President, specifically based, as such reports are
based now, upon its findings of how new imports
might lead to the idling of productive facilities,
the inability of domestic producers to operate at
a profit, and the unemployment of workers as the
result of anticipated reductions in duties; and

— the President will report to the Congress on
his action after completion of the negotiations.
The present arrangements will be substantially
improved, however, since both the Tariff Commis-
sion recommendation and the President's report
would be broader than a bare determination of
specific peril points ; and this should enable us to
make much more informed use of these recom-
mendations than has been true in the past.

Trade Adjustment Assistance. I am also rec-
ommending as an essential part of the new trade
program that companies, farmers, and workers
who suffer damage from increased foreign im-
port competition be assisted in their efforts to ad-
just to that competition. When considerations of
national policy make it desirable to avoid higher
tariffs, those injured by that competition should
not be required to bear the fuU brunt of the im-
pact. Rather, the burden of economic adjustment
should be borne in part by the Federal Govern-
ment.

Under existing law, the only alternatives avail-
able to the President are the imposition or re-
fusal of tariff relief. These alternatives should
continue to be available.

The legislation I am proposing, however, pro-
vides an additional alternative called trade adjust-
ment assistance. This alternative will permit the
executive branch to make extensive use of its fa-
cilities, programs, and resources to provide special
assistance to farmers, finns, and their employees



february 72, ?962



237



in making the pconomic readjustments necessitated
by the imports resulting from tariff concessions.
Any worker or group of workers unemployed
or underemployed as a result of increased imports
would, mider this bill, be eligible for the following
forms of assistance :

1. Readjustment allowances providing as much
as 65 percent of the individual's average weekly
wage for up to 52 weeks for all workers, and for
as many as 13 additional weeks for workers over
60, with imemployment insurance benefits de-
ducted from such allowances to the extent
available;

2. Vocational education and training assistance
to develop liigher and different skills ;

3. Financial assistance for those who cannot
find work in their present community to relocate
to a different place in the United States where
suitable employment is available.

For a businessman or farmer adversely affected
by imports, there should be available :

1. Technical information, advice, and consulta-
tion to help plan and implement an attack on the
problem ;

2. Tax benefits to encourage modernization and
diversification ;

3. Loan guarantees and loans otherwise not
commercially available to aid modernization and
diversification.

Just as the Federal Government has assisted in
personal readjustments made necessary by mili-
tary service, just as the Federal Government met
its obligation to assist industry in adjusting to
war production and again to return to peacetime
production, so there is an obligation to render as-
sistance to those wlio suffer as a re,sult of national
trade policy. Sucli a iirogram will supplement
and work in coordination with, not duplicate,
what we are already doing or pro]:)osing (o do for
dei)re.ssed areas, for small business, for investment
incentives, and for the retraining and compensa-
tion of our unemployed workers.

This cannot lx» and will not be a subsidy pro-
gram of Government paternalism. It is instead
a program to afford time for American initiative,
American adaptability, and American resiliency
to assert themselves. It is consistent with that
part of the proposed law which would stage tariff
reductions over a 5-year period. Accordingly,



trade adjustment assistance, like the other provi-
sions of the Trade Expansion Act of 1962, is de-
signed to strengthen the efficiency of our economy,
not to protect inefficiencies.

Authority to grant temporary tariff relief will
remain available to assist those industries injured
by a sudden influx of goods under revised tariffs.
But the accent is on "adjustment" more than "as-
sistance." Through trade adjustment prompt
and effective help can be given to those suffering
genuine hardship in adjusting to import competi-
tion, moving men and resources out of uneconomic
production into efficient production and competi-
tive positions, and in the process preserving the
employment relationships between firms and
workers wherever possible. Unlike tariff relief,
this assistance can be tailored to their individual
needs without disrupting other policies. Experi-
ence with a similar kind of program in the Com-
mon Market, and in the face of more extensive
tariff reductions than we propose here, testifies to
the effective but relatively inexpensive nature of
this approach. For most affected firms will find
that the adjustment involved is no more than the
adjustment they face every year or few years as
the result of changes in the economy, consumer
taste, or domestic competition.



The purpose of this message has been to describe
the challenge we face and th& tools we need. The
decision rests with the Congress. Tliat decision
will either mark the beginning of a new chapter
in the alliance of free nations — or a threat to the
growth of We-stem unity. The two great At-
lantic markets will either grow together or they
will grow apart. The meaning and range of free
economic choice will either be widened for the
benefit of free men everywhere — or confused and
constricted by new barriers and delays.

Last year, in enacting a long-term foreign aid
program, the Congress made possible a funda-
mental change in our relations with the develop-
ing nations. This bill will make possible a
fundamental, far-reaching, and unique change in
our relations with the other industrialized na-
tions — particularly with the other members of the
Atlantic community. As NATO was unprece-
dented in military history, this measure is un-
precedented in economic history. Rut its passage
will be long remembered and its l)enefits widely
distributed among those who work for freedom.



238



Department of State Bulletin



At rare moments in the life of this nation an
opportunity comes along to fashion out of the
confusion of current events a clear and bold ac-
tion to show the world what it is we stand for.
Such an opportunity is before us now. This bill,
by enabling us to strike a bargain with the Com-
mon Market, will "strike a blow" for freedom.



Balance of Payments

Excerpt From President's Economic Report ^

The program launched last year to reduce our
payments deficit and maintain confidence in the
dollar will, I am sure, show further results in
1962. I am hopeful that the target of reasonable
equilibrium in our international payments can be
achieved within the next two years; but this will
require a determined effort on the part of all of
us — government, business and labor. This effort
must proceed on a nimiber of fronts.



Export Expansion

An increase in the U.S. trade surplus is of the
first importance. If we are to meet our inter-
national responsibilities, we must increase exports
more rapidly than the increase in imports which
accompanies our economic growth.

Our efforts to raise exports urgently require
that we negotiate a reduction in the tariff of the
European Common Market. I shall shortly
transmit to the Congress a special message''
elaborating the details of the proposed Trade
Expansion Act of 1962 and explaining why I be-
lieve that a new trade policy initiative is impera-
tive this year.

To encourage American businessmen to become
more export-minded, we have inaugurated a new
export insurance program imder the leadership
of the Export-Import Bank,^ and we have stepped



' Economic Report of the President Transmitted to the
Congress January 1962, Together With the Annual Report
o1 the Council of Economic Advisers, pp. 13-16. The
report was presented to the Congress on Jan. 20; it is
for sale by the Superintendent of Documents, U.S. Gov-
ernment Printing Office, Washington 25, D.C., price $1.25.
The President's report alone is also available as H. Doc.
278, 87th Cong., 2d sess.

' For text, see p. 231.

* For background, see Bijixetin of Nov. 20, 1961, p. 837.



up our export promotion drive by improving the
commercial services abroad of the U.S. Govern-
ment, establishing trade centers abroad, planning
trade fairs, improving the trade mission program,
and working with business firms on export oppor-
tunities through field offices of the Department of
Commerce and the Small Business Administra-
tion. Foreign travel to the United States, which
returns dollars to our shores, is now being pro-
moted through the first Federal agency ever
created for this purpose.



Prices and Productivity

Our export drive will founder if we cannot
keep our prices competitive in world markets.
Though our recent price performance has been ex-
cellent, the improving economic climate of 1962
will test anew the statesmanship of our business
and labor leaders. I believe that they will pass the
test ; our Nation today possesses a new vmderstand-
ing of the vital link between our level of prices
and our balance of payments.

In the long run, the competitive position of U.S.
industry depends on a sustained and rapid advance
in productivity. In this, the interests of economic
recovery, long-run growth, and the strength of the
dollar coincide. Modernization and expansion of
our industrial plant will accelerate the advance
of productivity.



Foreign Investment

To place controls over the flow of private
American capital abroad would be contrary to
our traditions and our economic interests. But
neither is there justification for special tax incen-
tives which stimulate the flow of U.S. investment
to countries now strong and economically devel-
oped, and I again urge the elimination of these
special incentives.

The new foreign trade program which I am
proposing to the Congress will help to reduce an-
other artificial incentive to U.S. firms to invest
abroad. The European Common Market has at-
tracted American capital, partly because Ameri-
can businessmen fear that they will be imable to
compete in the growing European market tmless
they build plants behind the common tariff wall.
We must negotiate down the ban-iers to trade be-
tween the two great continental markets, so that



February 12, 1962



239



the exports of our industry and agriculture can
have full opportunity to compete in Europe.

Governmental Expenditures Abroad

Military expenditures form by far the greater
part of our governmental outlays abroad. We are
discussing with certain of our European allies the
extent to which they can increase their own mili-
tary procurement from the United States to offset
our dollar expenditures there. As a result, the
net cost to our balance of payments is expected to
be reduced during the coming year, in spite of
increased deployment of forces abroad because of
the Berlin situation.

To curtail our foreign aid programs in order to
strengthen our balance of payments would be to
sacrifice more than we gain. But we can cut back
on the foreign currency costs of our aid programs,
and thus reduce the burden on our balance of pay-
ments. A large percentage of our foreign aid is
already spent for procurement in the United
States; this proportion will rise as our tightened
procurement procedures become increasingly ef-
fective.

We have sought to induce other advanced coun-
tries to undertake a larger share of the foreigii
aid effort. We will continue our efforts through
the Development Assistance Committee of the
Organization for Economic Cooperation and
Development to obtain a higher level of economic
assistance by other industrial nations to the less
developed countries.



Short-Term Capital Movements

Outflows of volatile short-term funds added to
the pressures on the dollar in 1960. Our policies in
1961 have diminished the dangers of disruptive
movements of short-term capital. For the first
time in a generation, the Treasury is helping to
stabilize the dollar by operations in the interna-
tional exchange markets. The Federal Reserve
and the Treasury, in administering their monetary
policy and debt management responsibilities, have
sought to meet the needs of domestic recovery in
ways which would not lead to outflows of short-
term capital.

During the past year, we have consulted pe-
riodically with our principal financial partners,
both bilaterally and within tlie framework of the



OECD. These consultations have led to close co-
operation among fiscal and monetary authorities in
a common effort to prevent disruptive currency
movements.



Strengthening the International Monetary System

The International Monetary Fund is playing an
increasingly important role in preserving inter-
national monetary stability. The reserve strength
behind the dollar includes our drawing rights on
the Fund, of which $1.7 billion is automatically
available imder current practices of the Fund. An
additional $4.1 billion could become available
under Fund policies, insofar as the Fund has avail-
able resources in gold and usable foreign cur-
rencies. Recently, the Fund has diversified its use
of currencies in meeting drawings by member
coimtries, relying less heavily on dollars and more
heavily on the currencies of countries with pay-
ments surpluses. However, the Fund's regular
holdings of the currencies of some important in-
dustrial countries are not adequate to meet po-
tential demands for them.

In a message to the Congress last February,* I
said: "We must now, in cooperation with other
lending comitries, begin to consider ways in wliich
international monetary institutions — especially
the International Monetaiy Fund — can be
strengthened and more effectively utilized, both
in furnishing needed increases in reserves, and in
providing the flexibility required to support a
healthy and growing world economy."

We have now taken an important step in this
direction. Agreement has been reached among ten
of the major industrial countries to lend to the
Fund specified amounts of their currencies when
necessary to cope with or forestall pressures which
may impair the international monetary sj'stem.^
These stand-by facilities of $6 billion will be a
major defense against international monetai-y
speculation and will powerfully reinfoire the ef-
fectiveness of the Fund. They will provide re-
sources to make our drawing rights in the Fund
effective, should we need to use them. Moreover,
the U.S. stand-by commitment of $2 billion will
augment the resources potentially available
through the Fund to other participants in the
agreement, when our balance of payments and re-



'Por text, see ibid.. Fob. 27, ]01, p. 2S7.
' Ibid., Jan. 29, 1962, p. 1S7.



240



Depoftmenf of Sfofe Bulletin



serve positions are strong. I shall shortly submit
a request to Congress for appropriate enabling
legislation.



Secretary Rusk Interviewed
on "Today" Show

Following is the transcript of an interview of
Secretary Rusk by John Chancellor and Martin
Affronsky, videotaped for presentation on Jan-
uary 22 on the National Broadcasting Company^
television program '■''TodayP

Press release 47 dated January 22

Q. Mr. Secretary, hath you and President
Kennedy have said repeatedly that the United
States is growing stronger, as is the free world,
that the Soviet Union and the Com7nunist coali-
tion are growing weaker, relatively. Could you
document that happy estimate, sir?

A. "Well, there are many ways, Mr. Agronsky,
in which one could get into that question. Let me
just hint at certain of them, because time doesn't
permit a full discussion.

I think myself that the very existence of a Ber-
lin problem, a Berlin crisis, results from the failure
of the Commmiists to create a tolerable situation
in East Germany. The situation in East Germany
produced very large pressures upon the Soviet
Government, which they in turn have tried to
transfer over to us by their demands for a radical
change in the situation in West Berlin.

I think also that the economic vitality of the
Western World is something which is causing
people in Moscow to think very hard about the
situation —

Q. It^s heretical as far as they''re concerned.

A. The growth of the Common Market, the
enormous capacity of the Western World to in-
crease its gross national product and to get on with
the great jobs in front of it, is something which
suggests, I think, to Moscow that their competitive
position is not strong. For example, the United
States alone has since 1920, which was approxi-
mately the date of the beginning of the Soviet
Revolution — the United States alone has added
more to our gross national product than the total



present gross national product of the Soviet Union.
I think also that they are up against the fact
that other countries, independent countries, are
much more resistant to their type of penetration
than they had supposed. It's interesting to me,
for example, to note that not one of the many na-
tions that have become independent since World
War II has moved behind the Iron Curtain, and
no single country that I know of has elected com-
munism as its way of life or its form of govern-
ment.

Q. You mean given a choice between democracy
and communism.

A. If there's any choice — there is no question
about choice, and I think myself that the events of
these last years- and the events of this past year
have shown that freedom is indeed the wave of the
future and that we can move ahead with confidence
in this situation.



Assessment of Problems of Communist World

Q. Mr. Secretary, could you give us your assess-
ment of the current troubles in the Communist
toorld with — well, let me put it this way — with
their reference to war or peace?

A. Well, Mr. Chancellor, the struggle between
Moscow and Peiping has now become a matter of
public record for all the world to look at and to
talk about. There seems to be a variety of issues
which are separating these two capitals — the pre-
dominance of Moscow within the Communist
world. There is rivalry now reflected in the dis-
cussions among Communist parties throughout
the world, not only in Commimist countries but
in non-Communist countries, about the question of
Moscow supremacy.

There is a fundamental debate going on about
the difference between what in Moscow is called
competitive coexistence and the perhaps more
primitive and brutal aspects of Leninism as in-
terpreted, say, 25 years ago.

We, I think, ought not to suppose that these dif-
ferences are any comfort to us at the present time,
because this argument really is about how best to
get on with the world revolution of communism as
they see it. They're committed to that in Moscow ;
they're committed to that in Peiping. Their ar-
gument is about the difference in procedures by
which they would accomplish these purposes.



Fefaroory 72, 1962



241



I would be myself reluctant to suppose that we
are, in the short run anyhow, to get any comfort
out of this particular dispute that's going on —
partly because each side in this dispute within the
Communist world is going to be under pressures
to demonstrate that its particular technique will
sliow the most important advances, the most
startling gains for the Communist world. So my
guess is that, as far as we're concerned, we must
assume that they at least agree in the underlying
notion about what the world should look like, and
that we've got to meet it in both respects — in the
notion of competitive coexistence, in the notion of
a more belligerent and militant attitude as re-
flected in Peiping.

Q. Nevertheless, sir, would you not agree that
the scope of the de-Stalinization campaign in the
Soviet Union is an event of extreme importance
to us?

A. It is, Mr. Chancellor, and, as you who've
served your time in Moscow will know that — how
important these things can be. I don't myself
pretend to know the complete ramifications of this
problem that's going on- — that is being discussed
now within the Soviet Union and between them
and Moscow.

But let me point out that, although strong ef-
forts are being made to discount and degrade the
position of Stalin, no effort has been made thus
far to withdraw from or to retract from or to
make right the damage which Stalin did to the
world outside of the Soviet Union. In other
words, they are discounting the former hero but
they're keeping the loot of his efforts.

Safeguarding the Inter-American System

Q. Mr. Secretary, there has heen one rather dra-
matic and I might also say rather conspicuous
failure in foreign policy in your administration — ■
the administration of Mr. Kennedy — and that is
the result of the abortive invasion of Cuba. The
President has said * and you liave indicated that
weh^e drawn some rather important lessons from
that particular failure. What are those lessons
and how are we applying them in Latin America?

A. Well let me say first, Mr. Agronsky, that
the story of freedom has been a very long story
and there have been many episodes along the way
in which gallant men have run into failure in



their own time. I do not believe myself that this
story is by any means finished.

But I think that it is important for us now
that the time has come for the Organization of
American States, the governments of this hemi-
sphere, to say formally and publicly and in unison
what most of them have said privately. And that
is that what has happened in Cuba is wholly in-
compatible with the basic commitments of this
hemisphere, the basic charters of the inter- Ameri-
can system, and that what has happened in Cuba
is incompatible with the safety and the dignity
and the future of this hemisphere. And further,
that the Castro solution to economic and social
development is not the solution which is necessary
or is possible in this hemisphere.

Q. Is it your intention, sir, to so urge in your
forthcoming Latin American trip?

A. Yes, I think this conference at Punta del
Este will be very important from this point of
view, and I have no doubt whatever that the basic
principles of the inter- American system, and the
rejection of the Castro approach to these problems,
will be recorded there in very effective fashion.

Forums for Settling World Problems

Q. Sir, you have said in a recent speech that
we in the United States have earnestly wished to
extend the writ of the United Nations, its influence
and its capacity to act."^ The United States has
supported a UJf. action in the Congo, and that
situation, if we can make any prediction on it at
all, seems to be headed for some kind of stability.

Yet, sir, in Berlin, Cuba, South Viet-Nam, and
Laos the United States has chosen to act outside
the United Nations, and can you tell us the reasons
for that?

A. Yes, Mr. Cliancellor, I thinlv that one should
bear in mind that in the first place the United Na-
tions lias an agenda that is just about as full as
the traffic will bear. The present session of the
General Assembly, for example, had a hundred
items on its agenda.

Now much determines upon what the circum-
stances of a particular case would be. In Berlin,
for example, if that (luestion were bi'ought before



Online LibraryUnited States. Dept. of State. Office of Public CoDepartment of State bulletin (Volume v. 46, Jan- Mar 1962) → online text (page 49 of 101)