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Members of the Ways and Means Committee who were sitting on the committee in 1940 will remember that this whole matter of procedure was gone into in detail by Commissioner Fox, of the Tariff Commission, in your committee hearings at that time. Commissioner Fox's testimony was an extremely able and comprehensive presentation; and I am confident that those members of your committee who knew and worked with him will agree with me when I say that his sudden and untimely death, which occurred only within the past year, has deprived our Government of one of its ablest and most valuable public servants. The detailed information submitted by Commissioner Fox is, of course, already available in the printed record of the hearings before your committee in 1940. In order, however, to refresh the minds of members who sat on your committee at that time, and for the benefit of new members, I shall point out the main features of that testimony as a preliminary to some further commei ts of my own which I desire to make at this time.
In order to carry out effectively the purpose of the act, it is obviously necessary that every step taken in the entire operation be carefully considered in the light of the most comprehensive and thorough assembly and analysis of the relevant facts that it is possible to achieve. This is indispensable, both from the standpoint of equipping our negotiators with the best possible information with which to obtain benefits under the act for our export trade, and from the standpoint of making certain that the concessions granted to other countries will not result in serious injury to the domestic producers immediately concerned. There are only two sources from which these relevant facts can come. They can come from the various governmental agencies whose business it is to keep in touch with problems of foreign trade and which therefore have available a vast fund of useful information. And they can come directly from those branches of private industry and trade whose operations are affected by the program. Hence, the central problem of organization from the beginning was to set up arrangements which would insure that both of these sources of information should be fully utilized. I here call attention to the main features of the system.
In order effectively to carry on the work and to conform to the specific requirements of section 4 of the act requiring the President toseek information and advice with respect thereto from the United States Tariff Commission, the Departments of State, Agriculture, and Commerce, and from such other sources as he may deem appropriateit was necessary to set up an interdepartmental trade agreements organization. The spearhead of this organization is the interdepartmental trade agreements committee, composed at the present time of representatives of the Departments of State, Agriculture, Commerce, and Treasury, and of the Tariff Commission and the Office of Price Administration. In general that committee directs the necessary studies, reviews the reports and recommendations of its numerous subcommittees, and approves, subject to the final concurrence of the Secretary of State and the President, all details of the agreements. Immediately in charge of the negotiations under the act is, of course, the Department of State, operating through a separate division set up for that purpose, namely, the Division of Commercial Policy and Agreements.
Among the subcommittees, the most important are the so-called country committees. For each country with which a trade agreement is contemplated or in process, such a subcommittee is organized, on which sit representatives from the various departments. This country committee proceeds at once to obtain the most complete data that can be mustered with reference to trade and other pertinent matters. Representatives of the Tariff Commission assume chief responsibility for preparing data concerning import items; representatives of the Department of Commerce, for export items. Representatives of the Department of Agriculture furnish special information on agricultural commodities; of the Treasury, on customs matters; while experts of the Department of State prepare the so-called general provisions of the proposed agreement.
It is in the country committee that the initial recommendations with reference to action to be taken on specific items, on either the export or the import side, are formulated; and similarly as regards the general provisions. In order, however, to assist it, and also the trade-agreements committee, additional subcommittees have been set up. Thus, there are commodity subcommittees, composed of technical experts from the various departments, set up to study on an over-all basis the effects which proposed changes in duties in the various agreements might have upon particular industries. Similarly, there are special subcommittees appointed from time to time to deal with complicated and difficult technical problems which arise in connection with such subjects as quotas, foreign exchange, tariff reclassifications, and various other problems calling for special study.
Each country committee submits its report with reference to a proposed agreement to the interdepartmental trade-agreements committee, where the report is subjected to most thoroughgoing and detailed scrutiny. Into that report will have gone, as I have stated, the results of the country committee's canvass of all of the pertinent materials submitted by the various departments; and into it, also, will have gone the information and views submitted by representatives of private industry and trade through a process which I shall presently describe.
The role which the Tariff Commission plays in connection with the furnishing of materials on import items to both the country committees and the trade-agreements committee is especially worthy of note. As you are aware, the Tariff Commission is a fact-finding and factreporting agency, set up originally in 1916 as an independent organization prepared to furnish the Congress and the President with data pertaining to the tariff and to cooperate with other Government departments or agencies in matters pertaining to foreign trade. With respect to each import item in question in a proposed trade agreement, a careful digest of trade data is prepared by the appropriate commodity and other experts of the Commission's staff. Each digest is carefully reviewed, first by the Commission's planning and reviewing committee, and then, finally, by a subcommittee of the Commissioners themselves. That digest goes into the utmost detail with reference to pertinent aspects of the case: Production; imports; consumption; nature and uses of the product; differences in quality, if any, between imports and the domestic product; tariff duties and history; prices; costs, if these are available; other competitive factors; and a host of other matters which require careful study. This material is prepared and submitted on a coldly factual basis and is as devoid of bias as it is
possible to make it. In carrying out this responsibility, the Commission's representatives proceed on the assumption that they have a particular obligation to discharge in seeing to it that every action taken with respect to an import item is carefully considered in the light of the most complete and unbiased information available.
I turn now to the special machinery set up for the purpose of obtaining information and views from producers, traders, and others directly interested in any particular trade agreement. The agency created for that purpose is the committee for reciprocity information, of which I am, myself, at present, the chairman. This committee was set up by Executive order on June 27, 1934, to carry out the provisions of section 4 of the Trade Agreements Act requiring that
Before any foreign trade agreement is concluded with any foreign government or instrumentality thereof under the provisions of this act, reasonable public notice of the intention to negotiate an agreement with such government or instrumentality shall be given in order that any interested person may have an opportunity to present his views to the President, or to such agency as the President may designate, under such rules and regulations as the President may prescribe;
On this committee at the present time sit, in addition to myself as representing the Tariff Commission, representatives from the Department of State, Department of Commerce, Department of Agriculture, and the Treasury. In order to make doubly certain that the information and views presented shall be thoroughly familiar to the trade agreements committee when action on a particular item is being considered, the actual representation on the committee for reciprocity information is made to consist almost entirely of persons who are also members of the trade agreements committee. Thus, for example, the Chief of the Division of Commercial Policy and Agreements in the State Department, who sits as chairman of the trade agreements committee, is also the State Department's representative on the committee for reciprocity information.
Following announcement that an attempt is to be made to negotiate a trade agreement with a particular country, a date for a public hearing is set, almost always at least 30 days after the announcement, and a date also for filing of briefs. At the same time there is published a list of the products on which the United States will consider the possibility of making concessions. Every possible facility is utilized to insure that interested persons are made aware of the matter and are given full opportunity to present their views, not only on items under consideration in the particular agreement, but also, if they care to do so, on any phose of the whole trade-agreement program. Not only that, but the committee holds itself in readiness at all times to grant informal conferences with interested parties to discuss either products under consideration for inclusion in an agreement or any problem that has arisen with respect to any agreement already concluded. Transcripts of the hearings and summaries, prepared by the technical experts and economists of the Tariff Commission, are made available to the country and trade agreements committees. In short, the arrangements made for getting this information fully before those responsible for recommendations regarding proposed agreements are practically holeproof.
I turn now to an account of the successive steps involved in preparing the way for, and negotiating, an agreement. First comes the exploratory stage, in which a special study is made to see whether an agreement with a particular-country might be feasible. If the answer is in the affirmative, this is followed by preliminary discussions through diplomatic channels to see whether a mutually satisfactory basis can be arrived at for undertaking the negotiation of an agreement. The next step, in case such a basis is found, is the issurance of a formal public notice of intention to negotiate and the publication of a list of items on which the United States will consider granting concessions. It is clearly stipulated that the negotiations will proceed within the scope of the items appearing on this list; but not all of the products in the list will finally be included in the trade agreement itself, should one be concluded. Domestic industries interested in any item on the list are thus given notice that action with respect to such item is under consideration; but they need not be further concerned about items in which they are interested in a business way but which do not appear on the list.
Next come the public hearings by the committee for reciprocity information. As already indicated, at the conclusion of these hearings, the information received by this committee is then made available to both the country committee and the trade agreements committee, and is carefully considered along with the other pertinent data obtained from the various Government agencies. After the country committee has submitted its report to the trade agreements committee, and the latter committee, after full discussion and often with important changes, has approved the recommendations, a special report setting forth these recommendations is prepared for review by the Secretary of State and other high governmental officials, and for final approval by the President.
Then follow the actual negotiations with the foreign country. These negotiations are, of course, carried on exclusively by accredited officials of both governments. Members of the American negotiating group naturally include experienced negotiators from the Department of State, assisted, however, by representatives of the other Government agencies. At all times, the trade agreements committee and the country committee are kept informed of the progress of the negotiations; and any difficult problems arising in the discussions which call for further consideration are laid before them.
The final stage, once the agreement has been approved and signed, is the issuance of a proclamation by the President putting the agreement into effect and prescribing the date for its enforcement. When the agreement goes into effect, the new rates apply to all countries except those whose treatment of American commerce the President has found to be discriminatory, or as tending to defeat the purposes of the Trade Agreements Act.
So much for the different phases of the organizational and operating set-up of the program. Before concluding my remarks, however, there are a number of features of the system that I want to emphasize.
The first thing I want to stress is that the system is definitely one of balances and checks calculated to reduce to a minimum the danger of ill-advised, arbitrary, or capricious action with respect to any particular item or any other phase of an agreement. The evidence of this is contained not only in the meticulous care involved in the procedure itself, which I have just described, but in the character of the actions taken. The contents of the agreements themselves show that the whole approach has been detailed and selective. The concessions
granted by the United States vary all the way from mere bindings of existing rates to 5-, 10-, and 15-percent cuts and up through to the full 50 percent permitted by law. The greatest care is exercised in segregating for duty reduction those particular types or classes of a product the imports of which will have a minimum impact upon American production. In many cases, the duty reductions are confined to particular seasons of the year or are limited to specified quantities of imports in excess of which the full (preagreement) duty rates apply.
Second, I want to stress that the administration of the act is not the monopoly of any one department, but is something in which all of the interested departments play an important part throughout. Although, naturally, the State Department is in immediate administrative charge, mobilizing and coordinating the resources and efforts of the other Government agencies and performing its organic function of heading up the international negotiations, the actual agreement, when finally concluded, is by no means the exclusive handiwork of that Department, but is the result of the best collaborative efforts of all the Government agencies concerned.
The third point I would stress is that the procedure followed does faithfully carry into effect the intent of all of section 4 of the act, including that part which stipulates that
Before concluding such agreement the President shall seek information and advice with respect thereto from the United States Tariff Commission, the Departments of State, Agriculture, and Commerce, and from such other sources as he may deem appropriate. I call particular attention to this point, because some have felt that this provision requires that the President, after negotiating, but before signing an agreement, must formally submit the negotiated agreement to the designated agencies so that he may receive“information and advice" with respect thereto. A little reflection will indicate that unless the agencies concerned were to make it a practice to give almost pro forma approval, the result would be confusion, waste of effort, and a slowing down of the whole negotiating process. If each agency mentioned were called upon at the very last moment to pass formally upon each agreement, and if as a result the President were to insist upon important revisions in the draft agreement, it would then be necessary to reopen negotiations with the other country and retrace much of the ground already covered, with complications and uncertainties which would certainly delay, and possibly even defeat, consummation of the agreement.
From a practical point of view the method which actually has been followed is a much better one. The essence of the method is that each agency from which the President is to "seek advice and information” plays an active part in the whole process from its inception until the completion of the agreement in the form to be presented to the President for his approval. This is done through the representatives and the various experts which it designates to participate in the various committees. As a result, the "information and advice" which the President is to seek under section 4 of the act before “concluding” an agreement are integrated into the whole tradeagreement process from the very beginning and are, after careful weighing and sifting, already embodied in the instrument which is presented to him for final action.