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Department of State bulletin (Volume v. 46, Jan- Mar 1962) online

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of the counties of Champaign, Coles, DeWitt,
Douglas, Logan, Macon, Moultrie, and Piatt.

Exports of manufactured goods from this dis-
trict amounted to $62,700,000 in 1960. Machinery,



electrical equipment, chemicals, fabricated metal
products, and food products were the main groups
of exports. Twenty-one companies in this district
exported goods worth more than $25,000 each.
Twelve thousand workers were employed in these
21 companies — half of the total manufacturing
workers in the 22d District. Exports per worker
in these companies amounted to $5,240 in 1960.

Agricultural exports from these eight counties
are estimated at $42,600,000 for the crop year
1960-61. That is $4,250 per farm for the 10,062
commercial farms. The most important agricul-
tural export was soybeans, as might be expected
from the "soybean capital" of the world.

These figures show what exports mean to you
directly — in terms of incomes and jobs. For Illi-
nois as a whole, exports of manufactured goods
were worth $1,407,800,000 in 1960; agriculture ex-
ports, $320 million. For the United States, manu-
facturing exports were nearly $15 billion and
agricultural exports nearly $5 billion. So you in
central Illinois are not alone in your direct inter-
est in exports.

Political Logic of Trade Expansion

Now back to the Trade Expansion Act of 1962.
If a strong Trade Expansion Act is not passed,
the President will not have the tariff bargaining
power to negotiate reductions in the external tariff
of the European Economic Community. If that
external tariff is not lowered, American manu-
facturers and farmers will not be able to export
as much as they otherwise would. If trade be-
tween the United States and Europe is restricted,
the economic basis of the North Atlantic alliance
is impaired.

This political logic is clear; so Congress is al-
most certain to pass some kind of a trade agree-
ments act. The danger is that as the act goes
through the congressional process it will be
riddled with amendments which will make it im-
possible for the President to negotiate truly large
bargains and make them stick. Congressmen are
bound to be pressured, even hounded, by a few
groups who fear import competition, but they are
rarely pressured by the many people who stand to
gain from lower tariffs.

The most likely crippling amendments are of
two types. One would severely limit the Presi-
dent's power to negotiate, in percentage terms or
by commodity groups or by procedural delays.



March 12, 1962



429



The other would make it easy or even mandatory
for the Tariff Commission, on the basis of an
appeal by adversely affected groups, to raise a
tariff or impose an import quota after a reduction
had been negotiated. These versions of the so-
called peril-point and escape-clause provisions
would nullify the act in practice. The act already
provides numerous safeguards to help firms or
workers who are adversely affected, as I stated
earlier.

You may get some assurance about the safe-
guards from the fact that the man who has been
in charge of the preparation of the bill, as a spe-
cial assistant to the President, is Howard Peter-
sen, a classmate at DePauw University of your
own Congressman, the Honorable William L.
Springer. Moreover, Mr. Petersen is a Eepubli-
can and a banker.

In fact, the Trade Agreements Act has had
fairly wide bipartisan support. In 1955 Senate
Democrats voted 37-6 for it and Senate Repub-
licans voted 38-7 for it, while House Democrats
voted 186-35 for it and House Republicans voted
109-75 for it. In 1958 Senate Democrats voted
36-6 for it and Senate Republicans 36-10 for it,
while House Democrats voted 184—39 for it and
House Republicans 133-59 for it. Senator [Paul
H.] Douglas, Senator [Everett M.] Dirksen, and
Congressman Springer all voted with the major-
ity. These were the final votes. On earlier key
votes, Senator Douglas and Congressman Springer
supported President Eisenhower's request for
authority, but Senator Dirksen opposed it. Dem-
ocrats were more inclined to support the President
than Republicans. President Kennedy is asking
for more bargaining power than President Eisen-
hower did ; so the issue is wide open again.

Ijet me conclude by putting the proposed Trade
Expansion Act of 1962 in the broad perspective
of our international relations. We are faced with
a strong, determined, clever antagonist in the form
of the Soviet Union and international commu-
nism. This antagonist is probing all the time,
looking for soft spots, in Latin America, Europe,
Africa, Asia, and the Far East. Do we push these
coimtries into the hands of the Communists, re-
stricting their access to our markets? Or do wo
give them increased opportunities to sell — and
buy — in the United States and thus strengthen
their bonds with this country and other countries
of (ho free world ? The answer should be clear.



GATT Members Conclude Long-Term
Cotton Textile Arrangement



White House press release dated February 15, for release Febru-
ary 16

WHITE HOUSE ANNOUNCEMENT

The President on February 16 released the text
of the long-term cotton textile arrangement con-
cluded at a meeting of the Cotton Textiles Com-
mittee of the General Agreement on Tariffs and
Trade held at Geneva, Switzerland, January 29-
February 9, 1962. Ninet«en nations, representing
the principal cotton textile exporting and import-
ing nations of the free world, participated in
drafting the arrangement.

The arrangement is for a period of 5 years be-
gmning October 1, 1962. It is similar to an
earlier agreement covering a period between Oc-
tober 1, 1961, and October 1, 1962,i which has
enabled importing countries threatened by or sub-
jected to market disruption in any of 64 cate-
gories of cotton textiles to restrain imports to the
level of fiscal year 1961.

Under the terms of the new arrangement, an
importing nation threatened by or subjected to
market disruption on any item or category of cot-
ton textiles may freeze imports for 1 year to the
level of the first 12 of the preceding 15 months.
If tliis market condition persists the freeze may be
extended for yet another year. Following that, in-
creases may be limited to 5 percent a year. In
all cases the decision is made unilaterally by the
importing nation.

Accompanying the agreement will be an under-
taking by those nations which have maintained
quantitative restraints on cotton textile imports
to expand access to their markets in order to
relieve pressures elsewhere.

The 6 years during which the current agree-
ment and the proposed agreement will be in force
will permit the American cotton textile industiy
to plan their production and to sharpen their com-
petitive position with the confidence that foreign
imports will not disrupt their activities. It marks
the conclusion of another step in the seven-step
program announced by the President on May 2,
1961, for assistance to the American textile
industry.^

' For text, see Bulletin of Aug. 21, 19C1, p. 337.
' lUd., Mny 20, 19C1, p. 825.



430



Department of State Bulletin



Both industry and labor advisers to the U.S.
delegation at Geneva expressed satisfaction with
the terms of the agreement.



TEXT OF AGREEMENT^

Long-Term Cotton Textile Arrangement

Recognizing the need to take co-operative and con-
structive action viith a view to the development of world
trade;

Recognizing further that such action should be designed
to facilitate economic expansion and promote the devel-
opment of less-developed countries possessing the neces-
sary resources, such as raw materials and technical
skills, by providing larger opportunities for increasing
their exchange earnings from the sale in world markets
of products which they can efficiently manufacture ;

Noting, however, that in some countries situations have
arisen which, in the view of these countries, cause or
threaten to cause "disruption" of the market for cotton
textiles ;

Desiring to deal with these problems in such a way
as to provide growing opportunities for exports of these
products, provided that the development of this trade
proceeds in a reasonable and orderly manner so as to
avoid disruptive effects in individual markets and on
individual lines of production in both importing and
exporting countries ;

Determined, in carrying out these objectives, to have
regard to the Declaration on Promotion of the Trade of
Less-developed Countries adopted by Ministers at their
meeting during the nineteenth session of the Contracting
Parties in November 1961 ; *

The Participating Countries have agreed as follows :

Article 1

In order to assist in the solution of the problems re-
ferred to in the Preamble to this Arrangement, the par-
ticipating countries are of the opinion that it may be
desirable to apply, during the next few years, special
practical measures of international co-operation which
will assist in any adjustment that may be required by
changes in the pattern of world trade in cotton textiles.
They recognize, however, that the measures referred to
above do not affect their rights and obligations under the
General Agreement on Tariffs and Trade (hereinafter



' The negotiation of this arrangement was concluded
in Geneva on an ad referendum basis on February 9, 1962
by representatives of the following governments : Aus-
tralia, Austria, Canada, Denmark, India, Japan, Norway,
Pakistan, Portugal, Spain, Sweden, United Kingdom
(also representing Hong Kong), United States, and the
member states of the European Economic Community
(Belgium, France, Federal Republic of Germany, Italy,
Luxembourg, and Netherlands).

* For statements made by members of the U.S. dele-
gation at the meeting and text of the declaration, see
BuiiETTN of Jan. 1, 1962, p. 3.



referred to as the GATT). They al.so recognize that,
since these measures are intended to deal with the spe-
cial problems of cotton textiles, they are not to be con-
sidered as lending themselves to application in other
fields.

Article 2

1. Those participating countries still maintaining re-
strictions inconsistent with the provisions of the GATT
on imports of cotton textiles from other participating
countries agree to relax those restrictions progressively
each year with a view to their elimination as soon as
possible.

2. Without prejudice to the provisions of paragraphs
2 and 3 of Article 3, no participating country shall intro-
duce new import restrictions, or intensify existing im-
port restrictions, on cotton textiles, insofar as this would
be inconsistent with its obligations under the GATT.

3. The participating countries at present applying im-
port restrictions to cotton textiles imported from other
participating countries undertake to expand access to
their markets for such cotton textiles so as to reach, by
the end of the period of validity of the present Arrange-
ment, for the products remaining subject to restrictions
at that date, taken as a whole, a level corresiMjuding to
the quotas oi>ened in 1962, for such products, a.s increased
by the percentage mentioned in Aimex A.

Where bilateral arrangements exist, annual increases
shall be determined within the framework of bilateral
negotiations. It would, however, be desirable that each
annual increase should correspond as closely as possible
to one-flfth of the overall increase.

4. The participating countries concerned shall admin-
ister their remaining restrictions on imports of cotton
textiles from participating countries in an equitable man-
ner and with due regard to the special needs and situ-
ation of the less-developed countries.

5. Notwithstanding the provisions of paragraph 3 above,
if, during the licensing period preceding the entry into
force of this Arrangement, a specific basic quota is nil or
negligible, the quota for the succeeding licensing period
will be established at a reasonable level by the partici-
pating importing country concerned in consultation with
the participating exporting country or countries con-
cerned. Such consultation would normally take place
within the framework of the bilateral negotiations
referred to in paragraph 3 above.

6. Participating countries shall, as far as possible, elim-
inate import restrictions on the importation, under a
system of temporary importation for re-export after
processing, of cotton textiles originating in other partici-
pating countries.

7. The participating countries shall notify the Cotton
Textiles Committee as early as possible, and in any ease
not less than one month before the beginning of the
licensing period, of the details of any quota or import
restriction referred to in this Article.

Article S

1. If imports from a participating country or countries
into another participating country of certain cotton tex-
tile products not subject to import restrictions should
cause or threaten to cause disruption in the market of the



March 72, 7962



431



importing country, that country may request the partici-
pating country or countries whose exports of such prod-
ucts are, in the judgment of the importing country,
causing or threatening to cause market disruption to con-
sult with a view to removing or avoiding such disruption.
In its request the importing country will, at its discretion,
indicate the specific level at which it considers that ex-
ports of such products should be restrained, a level which
shall not be lower than the one indicated in Annex B.
The request shall be accompanied by a detailed, factual
statement of the reasons and justification for the request ;
the requesting country shall communicate the same infor-
mation to the Cotton Textiles Committee at the same time.

2. In critical circumstances, where an undue concen-
tration of imports during the period specified in paragraph
3 below would cause damage difficult to repair, the re-
questing participating country may, until the end of the
period, take the necessary temporary measures to limit
the imports referred to in paragraph 1 above from the
country or countries concerned.

3. If, within a period of sixty days after the request has
been received by the participating exporting country or
countries, there has been no agreement either on the re-
quest for export restraint or on any alternative solution,
the requesting participating country may decline to ac-
cept imports for retention from the participating country
or countries referred to in paragraph 1 above of the cotton
textile products causing or threatening to cause market
disruption, at a level higher than that specified in Annex
B, in respect of the period starting on the day when the
request was received by the participating exporting
country.

4. In order to avoid administrative diflSculties in en-
forcing a given level of restraint on cotton textiles sub-
ject to measures taken under this article, the participating
countries agree that there should be a reasonable degree
of flexibility in the administration of these measures.
Where restraint is exercised for more than one product
the participating countries agree that the agreed level
for any one product may be exceeded by 5 per cent pro-
vided that the total exports subject to restraint do
not exceed the aggregate level for all products so re-
strained on the basis of a common unit of measurement
to be determined by the participating countries concerned.

5. If participating countries have recour.se to the meas-
ures envisaged in this Article, they shall, in introducing
such measures, seek to avoid dairiage to the production and
marketing of the exporting country and shall co-oi)erate
with a view to agreeing on suitable procedures, particu-
larly as regards goods which have been, or which are
about to be, .shipped.

6. A participating country liaving recourse to the pro-
visions of tills Article shall keep under review the meas-
ures taken under this Article with a view to their relax-
ation and elimination as soon as possible. It will report
from time to time, and in any case once a year, to the
Cotton Textiles Committee on the progress made in the
relaxation or elimination of .such mea.sures. Any par-
ticipating country maintaining measures under tins Ar-
ticle shall afford adequate opportunity for consultation
to any participating country or countries affected by such
measures.



7. Participating importing countries may report the
groups or categories to be used for statistical purposes to
the Cotton Textiles Committee. The participating coun-
tries agree that measures envisaged in this Article .should
only be resorted to sparingly, and should be limited to
the precise products or precise groups or categories of
products causing or threatening to cause market disrup-
tion, taking full account of the agreed objectives set out
in the Preamble to this Arrangement. Participating coun-
tries shall seek to preserve a proper measure of equity
where market disruption is caused or threatened by im-
ports from more than one participating country and when
resort to the measures envisaged in this Article is
unavoidable.

Article 4

Nothing in this Arrangement shall prevent the applica-
tion of mutually acceptable arrangements on other terms
not inconsistent with the basic objectives of this Arrange-
ment. The participating countries .shall keep the Cotton
Textiles Committee fully informed on such arrangements,
or the parts thereof, which have a bearing on the opera-
tion of this Arrangement.

Article 5
The participating countries shall take steps to ensure,
by the exchange of information, including statistics on
imports and exports when requested, and by other prac-
tical means, the effective operation of this Arrangement.

Article 6
The participating countries agree to avoid circumven-
tion of this Arrangement by trans-shipment or re-routing,
substitution of directly competitive textiles and action by
non-participants. In particular, they agree on the follow-
ing measures:

(a) Trayis-shipmcnt

The participating importing and exix)rting countries
agree to collaborate with a view to preventing circum-
vention of this Arrangement by trans-shipment or re-
routing and to take aiipropriate administrative action to
avoid such circumvention. In cases where a participating
country has reason to believe that imports shipped to it
from another participating country and puriKirting to
have originated in that country did not originate there. It
may request that country to consult with it with a \iew
to assisting in the determination of the real origin of
the goods.

(b) Substitution of directly compctitire textiles

It is not the intention of the participating countries
to broaden the scope of this Arrangement beyond cotton
textiles but, when there exists a situation or threat of
market disruption in an importing country in terms of
Article 3, to prevent the circumvention of this Arrange-
ment by the deliberate substitution for cotton of directly
competitive fibers. Accordingly, if the Importing partici-
pating country concerned has reason to believe that im-
ports of products in which this substitution has taken
place have increased abnormally, that Is that this substi-
tution has taken place solely in order to circumvent the
provisions of tills Arrangement, that country may request
the exporting country concerned to investigate the mat-



432



Department of Slate BulleI'm



ter and to consult with it witli a view to reaching agree-
ment upon measures designed to prevent such circumven-
tion. Such request shall lie accompanied by a detailed,
factual statement of the reasons and justification for the
request. Failing agreement in the consultation within 60
days of such request, the importing participating country
may decline to accept imports of the products concerned
as provided for in Article 3 and, at the same time, any
of the participating countries concerned may refer the
matter to the Cotton Textiles Committee which .shall make
such recommendations to the parties concerned as may be
appropriate.

(c) 'Son-participants
The participating countries agree that, if it proves
necessary to resort to the measures envisaged in Article 3
above, the participating importing country or countries
concerned shall take steps to ensure that the participat-
ing country's exports against which such measures are
taken shall not be restrained more severely than the
exports of any country not participating in this Arrange-
ment which are causing, or threatening to cause, market
disruption. The participating importing country or coun-
tries concerned will give sympathetic con.sideration to
any representations from participating exporting coun-
tries to the effect that this principle is not being adhered
to or that the operation of this Arrangement is frustrated
by trade with countries not party to this Arrangement.
If such trade is frustrating the operation of this Arrange-
ment, the participating countries shall consider taking
such action as may be consistent with their law to prevent
such frustration.

Article 7

1. In view of the safeguards provided for in this Ar-
rangement the participating countries shall, as far as
possible, refrain from taking measures which may have
the effect of nullifying the objectives of this Arrangement.

2. If a participating country finds that its interests are
being seriously affected by any such measure taken by
another participating country, that country may request
the country applying such measure to consult with a view
to remedying the situation.

3. If the participating country so requested fails to take
appropriate remedial action within a reasonable length
of time, the requesting participating country may refer
the matter to the Cotton Textiles Committee which shall
promptly discuss such matter and make such comments
to the participating countries as it considers appropriate.
Such comments would be taken into account should the
matter subsequently be brought before the Contractino
Parties under the procedures of Article XXIII of the
GATT.

Article 8

The Cotton Textiles Committee, as established by the
Contracting Parties at their nineteenth session, shall be
composed of representatives of the countries party to this
Arrangement and shall fulfill the responsibilities provided
for it in this Arrangement.

(a) The Committee shall meet from time to time to
discharge its functions. It will undertake studies on trade
in cotton textiles as the participating countries may de-



cide. It will collect the statistical and other information
necessary for the discharge of its functions and will he
empowered to request the participating countries to
furnish such information.

(b) Any case of divergence of view between the par-
ticipating countries as to the interpretation or application
of this Arrangement may be referred to the Committee
for discussion.

(c) The Committee shall review the operation of this
Arrangement once a year and report to the Contracting
Parties. The review during the third year shall be a
major review of the Arrangement in the light of its opera-
tion in the preceding years.

(d) The Committee .shall meet not later than one year
before the expiry of this Arrangement, in order to consider
whether the Arrangement should be extended, modified or
discontinued.

Article 9

For purposes of this Arrangement the expression "cot-
ton textiles" includes yarns, piece-goods, made-up articles,
garments, and other textile manufactured products, in
which cotton represents more than 50 per cent (by
weight) of the fiber content, with the exception of hand-
loom fabrics of the cottage industry.

Article 10
For the purposes of this Arrangement, the term "dis-
ruption" refers to situations of the kind described in the
Decision of the Contracting Parties of 19 November 1960,
the relevant extract from which is reproduced in An-
nex C.

Article 11

1. This Arrangement is open for acceptance, by signa-
ture or otherwise, to governments parties to the GATT or
having provisionally acceded to that Agreement, provided
that if any such government maintains restrictions on the
import of cotton textiles from other participating coun-
tries, that government shall, prior to its accepting this
Arrangement, agree with the Cotton Textiles Committee
on the percentage by which it will undertake to increase
the quotas other than those maintained under Article XII
or Article XVIII of the GATT.

2. Any government which is not party to the GATT or
has not acceded provisionally to the GATT may accede to
this Arrangement on terms to be agreed between that
government and the participating countries. These terms



Online LibraryUnited States. Dept. of State. Office of Public CoDepartment of State bulletin (Volume v. 46, Jan- Mar 1962) → online text (page 83 of 101)