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covered by these agreements averaged 62.8 percent greater than in 1934-35, when only one agreement was in effect for a year or more.

Your second question involves the same basic fallacy as the first. It ignores the established fact that when foreign countries reduced their tariff and other barriers against our trade, our exports to them increased and accounted for a real "dollar gain by the nationals of the United States." It also ignores the fact that prices, per unit, received by United States exporters do not necessarily or even probably increase by the exact amount of a reduction in a foreign tariff. The significant fact here is that United States exporters were able to sell a greater volume of their goods abroad than they had been able to sell before the foreign tariffs were reduced.

Another fact which detracts from the significance of hypothetical increases or reductions in customs receipts as a result of changes in tariffs is that only a very small proportion of United States Government revenue is derived from these receipts. In 1939 customs receipts accounted for only 7 percent of the total revenue of the United States Government. Compared either with other sources of revenue or with the increases in income to United States producers from greater foreign trade, customs receipts are relatively unimportant.

In response to your third question I am enclosing lists of the countries with which the United States has treaties providing for unconditional most-favorednation treatment and of countries with which we have international undertakings other than treaties that provide for most-favored-nation treatment.

The United States extends most-favored-nation treatment to countries other than those shown on these lists as a matter of law and policy, based on sound self-interest. That policy was embodied by the Congress in the Reciprocal Trade Agreements Act and directs the President to apply trade-agreement rates of duty to all countries, but authorizes him to suspend such application in the case of any county he finds to be discriminating against American commerce. This is a congressional policy, not simply an executive policy, as implied in your statement that

in the administration of the Trade Agreements Act, the President, acting through the Treasury and State Departments, has extended most-favored-nation treatment to every nation," et cetera.

In 1923, upon the recommendation of Charles Evans Hughes, then Secretary of State, and with the approval of President Harding, the unconditional mostfavored-nation principle was adopted by the United States as the basis of our international commercial policy.

The economic and other results obtained through adherence to the unconditional most-favored-nation policy have amply justified its adoption and the reciprocal-trade-agreements program has been a most effective means of implementing it.

You inquire whether other nations which enter into trade agreements among themselves extend to the United States the benefits provided for in such agreements. The technical answer is that, with certain limited exceptions generally recognized in connection with most-favored-nation treaties or agreements, all major trading nations of the world other than the Axis Powers, and most of the less-important trading countries, do extend to like products of the United States the treatment provided for on specified products in their trade agreements with other countries. Many of these specified products are of interest to American producers and exporters and the assurances thus afforded them of being . able to continue to sell in foreign markets without the handicap of tariff preferences in favor of competitors is of inestimable value.

The broader, practical answer--and the reciprocal-trade-agreements program is based on practical considerations—is that in authorizing the President to suspend the application of trade-agreement concessions with respect to imports from countries found to be discriminating against American trade, Congress had a practical object in view. This object is to bring about the greatest possible expansion of the commerce of the United States. In administering this provision the executive branch is not dealing with questions of abstract theory. It must concern itself with the practical question of the extent to which the use of the suspension power will serve the practical end in view.

During the highly unsettled conditions which have existed in the field of international trade and finance, there have been instances in which countries have discriminated against our trade because of factors largely beyond their control. For example, a country unable to acquire sufficient dollars through sales of its products in the United States market and unable to convert its

holdings in the currencies of other countries into dollars because these other countries require such holdings to be spent for their goods, may be forced to utilize such blocked funds for purchases in the blocking countries while maintaining restrictions on imports from the United States in order to make the most of its limited supply of dollars.

In such cases the object that Congress had in view would not be served by denying the benefits of our trade-agreement rates to a country that finds itself in the unfortunate position I have indicated. Indeed, to do so would tend to reduce that country's supply of dollars still further and thus actually impair its ability to grant our commerce more favorable treatment. I take it that you would not advocate the application of the suspension power where circumstances are such that it would impair rather than promote the practical end in view.

The trade-agreements program, based on the most-favored-nation principle, coupled with a sensible and practical use of the suspension power has, without any question whatever, afforded us immunity from discriminatory treatment abroad, and promoted the commerce of the United States, to a degree not conceivably attainable if we ourselves had adopted a discriminatory policy.

You refer also, in your letter, to agreements between certain of the other American republics and inquire whether the benefits of those agreements are extended to United States trade. The memorandum I am enclosing gives full details with regard to the agreements about which you inquire. You will note that, with the exception of two agreements between Central American republics, none of the tariff concessions in the agreements which you cite are withheld from like imports (if any) of United States origin, and even in these two cases, which are long-standing and generally recognized exceptions to mostfavored-nation treatment, specifically provided for in our agreements with the countries themselves, the effect on United States exports is about as near zero as it is possible to come.

As regards the effects of agreements between other countries in either hemisphere--you may wish to refer to the findings of the Ways and Means Committee of the House of Representatives when, in 1940, it was considering renewal of authority to negotiate reciprocal trade agreements. These findings are set forth on pages 40 and 41 of Way and Means Committee Report No. 1594 of February 14, 1940.

I take it that your question regarding “any theory or policy underlying discriminations against the United States in the face of our policy of nondiscrimination" means: "What reasons or excuses do foreign countries give for discriminating against our trade when we do not discriminate against them?” This question has been answered, in part, above. In addition, I may point out that much of the discrimination against United States trade has been in retaliation for our own Hawley-Smoot embargo-tariff policy, which was injurious to prac-. tically all countries with which we trade, even if, technically, it did not discriminate among them. The British Empire preferential-tariff system, as worked out at Ottawa in 1932, was one result of this policy of ours which had serious effects on our export trade. To a considerable extent, that preferential system has been modified through the reciprocal-trade-agreements program and many discriminations have been eliminated entirely as a result of that program.

You state that you have been told that the Venezuelan Government, after conclusion of the reciprocal trade agreement with that country, "immediately placed an export tariff on the same items, thereby translating American customs receipts into Venezuelan custom receipts,” and you ask whether this is true. It is not.

You say you have been advised that although Japan refused to enter into any trade arrangement with the United States, she did “avail herself of the benefits we granted others.” Perhaps you recall that you raised that point during the Wavs and Means Committee hearings on January 15, 1940, at which time you said: “The statement has been made to me by people who are entitled to consideration, that Japan is by and large the greatest beneficiary under the tradeagreements program of any nation on the face of the earth."

In response, A. Manuel Fox, then a member of the United States Tarife Commission, who has since died while on duty in Chungking, China, placed in the record of the hearings data showing that in 1938, United States imports from Japan of products on which duties had been reduced or bound by reciprocal trade agreements, and of which such imports were valued at $2,000 or more, had a total value of $3,230,000, or less than 212 percent of the total value of

imports from Japan in that year. Mr. Fox also stated that notwithstanding an increase in the number of trade-agreement items during the first 11 months of 1939, it was likely that less than 3 percent of our imports from Japan benefited by reciprocal-trade-agreement duty reductions.

The reliability of the source from which you derived the remarkable information with regard to the trade agreement with Italy proposed in 1935, which was never signed, and the agreement concluded subsequently with Turkey, appears to be somewhat doubtful, because that information simply does not accord with the facts.

Public notice of intention to negotiate an agreement with Italy was issued January 16, 1935, and in December 1936 it was announced that negotiations were inactive and would not be resumed without a new announcement and new public hearings. It was not "shortly thereafter," but 3 years and 4 months later, on May 5, 1939, that the agreement with Turkey went into effect.

Benefits in the Turkish agreement of which Italy might have availed herself were insignificant, since the only products on which concessions were granted in the agreement with Turkey of which the United States imports appreciable quantities from Italy are: Licorice root and licorice extract, pistachio nuts, shelled filberts, and cigarette leaf tobacco. None of these items was important in pre-war trade between the United States and Italy. In 1939 they accounted together, by value, for less than 2 percent (1.649 percent, to be exact) of our total imports from Italy, and Italy supplied only 2.4 percent of our total imports of these products. Turkey has been a far more important supplier of imports of these products into the United States than has Italy. In any event, the latter country's enjoyment of any benefits from our agreement with Turkey was short lived. Little more than a year after the agreement with Turkey went into effect, trade between the United States and Italy ceased entirely.

The foregoing replies to your questions have been made as full as possible in the short time at my command. I hope that you will find them responsive. Sincerely yours,

CORDELL HULI. (Enclosures with Secretary Hull's letter follow :)

LIST I.--Treaties of the United States providing unconditional most-favored

nation treatment on a reciprocal basis 1

Effective date

Effective date Austria -

May 27, 1931.

June 19, 1940.
China ----
June 20, 1929. Latvia.

July 25, 1928. Danzig (Free City of)- Mar. 24, 1934. Liberia

Nov. 21, 1939. El Salvador--.

Sept. 5, 1930.

Sept. 13, 1932.
May 22, 1926. Poland_

July 9, 1933. Finland. Aug. 10, 1934. Thailand.

Oct. 1, 1938. Honduras July 19, 1928. Turkey--

April 22, 1930. Hungary Oct. 4, 1926. Yugoslavia--

Nov. 15, 1882. 1 No attempt has been made to indicate the effect which the war may have had on some of these treaties.

List II.-Erecutive agreements (other than reciprocal trade agreements) of the

United States providing unconditional most-favored-nation treatment on a

Effective date

Effective date Albania July 28, 1922. Italy

Dec. 15, 1937. Bulgaria Aug. 18, 1932. Lithuania

July 10, 1926. Chile---Feb. 1, 1938. Rumania

Sept. 1, 1930. Dominican Republic - Sept. 25, 1924. Saudi Arabia.

Nov. 7, 1933. Egypt-May 24, 1930. Spain

Nov. 27, 1927. Greece..

Jan. 1, 1939. Union of Soviet SocialIran--

May 10, 1928. ist Republics ------ Aug. 6, 1937. 1 No attempt has been made to indicate the effect which the war may have had on some of these agreements.

2 This agreement, which extended a previous regime, is interpreted by Spain as not applicable to concessions made after it came into force.

List III.—Reciprocal trade agreements of the United States containing the un

oonditional most-favored-nation clause 2

Effective date

Effective date Arentina

Nov. 15, 1941. Liechtenstein (see Belgium (in force also

with Luxembourg)-- May 1, 1935. Luxembourg (see Bel-

Jan. 1, 1936. gium).
Jan. 1, 1939. Mexico

Jan. 30, 1943. Colombia

May 20, 1936. Monaco (see France).
Costa Rica -
Aug. 2, 1937. Netherlands..

Feb. 1, 1:36. Czechoslovakia ?. Apr. 16, 1938. Nicaragua

Oct. 1, 1936. EcuadorOct. 23, 1938 Peru--

July 29, 1942. El Salvador -May 31, 1937. Sweden.

Aug. 5, 1935. Finland

Nov. 2, 1936. Switzerland (also in France (in force also

force with Liechtenwith Monaco)-- June 15, 1936. stein).

Feb. 15, 1936. Guatemala. June 15, 1936. Turkey

May 5, 1939. Haiti--

June 3, 1935. United Kingdom---- Jan. 1, 1939. Honduras. Mar. 2, 1936. Uruguay

Jan, 1, 1943. Iran ---


Dec. 16, 1939. 1 The trade agreement with Cuba, effective Sept. 3, 1934, provides for exclusive tariff preferences in accordance with express provisions of the law; it is the only agreement negotiated under the Trade Agreements Act which does not contain the unconditional mostfavored-nation clause.

: The operation of this agreement was suspended as of Apr. 22, 1939. 3 Agreement signed Apr. 8, 1943; not yet effective.

• Some provisions of this agreement were terminated on March 10, 1938; most-favorednation provisions remain in force.



Mr. Gearhart's letter refers to trade agreements between certain other American republics, and inquires with regard to the extension of concessions obtained in these agreements to imports from the United States. The facts about these agreements are, in detail, as follows:

(1) Argentina-Brazil. -A commercial treaty between Argentina and Brazil became effective in December 1941. The tariff concessions granted in the treaty by each country to the other also apply to imports of like articles from the United States into the respective countries. The products on which tariff concessions are granted by Argentina under the treaty are of negligible interest to United States exporters. They include Brazil nuts, cashew nuts, bananas, cocoa, coffee, vegetable ivory, coconuts, palmetto, cassava flour, tropical fruits, black peas, yerba maté, tobacco, Paraña pine, Brazilian hardwoods, nitro-cellulose, crude rubber, coconut milk, books, and bauxite. The products on which concessions are granted by Brazil under the treaty are of more interest to United States exporters. They include apples, pears, plums, other Temperate Zone fruits, dried fruits in general, cereal poultry feeds, beans, tomato paste, wheat, canned asparagus, wheat flour, food pastes, garlic, seed potatoes, food potatoes, and onions.

In addition to the foregoing, Argentina and Brazil signed a commercial treaty in November 1941 providing that, with a view to ultimate establishment of a customs union between the two countries, neither Government would, for 10 years, impose import duties on the products of such industries of the other country as were not in existence on the day of signature of the treaty. The treaty also provided for possible future concessions on other products. The Department of State knows of no concessions actually granted by either Argentina or Brazil under the provisions of this treaty.

(2) Chile-Venezuelu.-A commercial agreement between Chile and Venezuela was signed in October 1941 and renewed for 1 year in October 1942. This agreement does not provide for reciprocal tariff concessions.

(3) Argentina-Cuba.-A commercial treaty between Argentina and Cuba was signed in December 1940. The treaty provides for quota concessions by Cuba to Argentina on a number of products, to the extent that Cuba's requirements for such products are not filled by imports from the United States. Concessions are


granted by Argentina on Havana tobacco and cigars. These concessions also apply to imports into Argentina of such tobacco and cigars from the United States.

(4) Argentina-Peru.--A trade agreement between Argentina and Peru was signed in January 1942. It includes only provisions of a general nature and does not provide for tariff concessions by either country. In the event such concessions should be granted in the future, the United States would be entitled to them by virtue of the provisions of its trade agreements with these two countries.

(5) Argentina-Bolivia.The Department of State knows of no trade agree ment or other commercial arrangement between Argentina and Bolivia providing for reciprocal tariff concessions.

(6) Chile-Uruguay.-The Department of State knows of no commercial treaty or agreement in effect between Chile and Uruguay providing for reciprocal tariff concessions.

(7) Brazil-Paraguay.—The Department of State knows of no commercial treaty or agreement in effect between Brazil and Paraguay providing for reciprocal tariff concessions.

(8) Colombia-Uruguay.—The Department of State knows of no commercial treaty or agreement in effect between Colombia and Uruguay providing for reciprocal tariff concessions.

(9) Argentina-Chile.--A commercial treaty between Argentina and Chile was signed in June 1933, and a supplementary protocol in February 1938. The tariff concessions granted by each country to the other under the treaty and protocol also apply to imports into the respective countries of like articles from the United States. Concessions granted by Argentina apply to certain species of lumber of interest to Chile, garlic, peas, lentils, beans, nuts, dried fruit, nitrate, coal, sulfur, and iodine. Products on which concessions are granted by Chile include livestock, butter, lard, edible fats, tallow, wool, wheat, hides, cottonseed, linseed, and fine cheeses.

(10) Central-American republics.—The only commercial treaties or agreements in effect between Central-American republics are those between El Salvador and Honduras (effective April 1918) and between El Salvador and Guatemala (effective November 1941). These agreements provide for reciprocal free trade in respect of products originating in the territories of the contracting parties, with certain specified exceptions. Such concessions are not extended to the United States or other countries. As has been indicated, inter-CentralAmerican trade is extremely limited in scope and volume and exclusive tariff preferences among these countries have little or no competitive effect on imports from the United States.

(11) Mexico.—Mexico has no commercial treaties or agreements with countries other than the United States providing for reciprocal tariff concessions. The concessions granted by Mexico in the trade agreement with the United States apply to imports into Mexico of like articles from all friendly foreign countries.

Mr. GEARHART. Do you agree with me, Mr. Hull, that if the reciprocal trade-agreement program, as administered under the act, has failed utterly to attain its objectives as recited in the act itself that it should not be continued, at least in that form?

Secretary Hull. I can only remind the Congressman that I said in my statement today exactly what I thought on the necessity for renewal of the act and pointed out that every person engaged in administering this measure and every other person who claims to be familiar with it expresses the same view that I did this morning in my statement on that point.

Mr. GEARHART. Well, now, on this point of whether or not the act has failed of its objectives, let me break down the figures that I have given to you just now. They represented the figures from all countries and to all countries. Now, let's consider the imports from all countries having trade agreements with the United States. And I find by looking at this tabulation furnished me by the Tariff Commission this morning that our imports from all of the trade-agreement coun

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