sponsible for developing detailed information and recommendations concerning the administration of the trade agreements program. Although agency representation on this Committee has changed from time to time, at the present the Committee consists of representatives of the following agencies: Agriculture, Commerce, Defense, Interior, International Cooperation Administration (nonvoting), Labor, State, Tariff Commission, and Treasury. The representative of the Department of State serves as chairman. As special problems arise or as new trade agreement negotiations are contemplated, the Trade Agreements Committee sets up interdepartmental subcommittees to consider the particular problems or possible negotiations and to submit data and recommendations to the Trade Agreements Com

mittee.

The Committee for Reciprocity Information has at the present time the same membership as the Interdepartmental Committee on Trade Agreements, but the Tariff Commission member serves as its chairman. This Committee was established to receive the views of the public in connection with prospective trade agreement negotiations as well as with the administration of agreements already concluded.

The Trade Policy Committee, chaired by the Secretary of Commerce, was established in November 1957 by Executive order as a Cabinetlevel committee to advise and assist the President in the administration of the trade agreements program. This Committee consists, in addition to the Secretary of Commerce as its chairman, of the Secretaries of State, Treasury, Defense, Interior, Agriculture, and Labor, or of alternates designated by them. Such alternates must be officials who are required to be appointed by the President with the advice and consent of the Senate.

Under the provisions of the Executive order creating it, the Trade Policy Committee has several functions in connection with the trade agreements program. The particular function of the Trade Policy Committee in the making of new trade agreements is to receive and review all recommendations made by the Trade Agreements Committee to the President and to transmit them

1For text, see BULLETIN of Dec. 16, 1957, p. 957.

to the President together with any comments of its own resulting from that review. This Trade Policy Committee review takes place at each of the stages of Trade Agreements Committee action described below.

PREPARATORY PROCEDURE AND NEGOTIA

TIONS

There are four principal stages in a trade agreement negotiation: (1) the decision to negotiate with a particular country or countries; (2) the preparation of the U.S. offers; (3) the preparation of our requests; and (4) the actual bargaining around the conference table.

Decision To Negotiate

Trade agreement negotiations are undertaken only after the President has made a decision that it would be desirable to do so. Any recommendations that may be made by the Trade Agreements Committee for the initiation of negotiations are transmitted to the Trade Policy Committee for consideration and forwarding to the President.

Preparation of U.S. Offers

Once the President has approved the recommendation that trade agreement negotiations should be undertaken with a particular country (which we will call country X), the Trade Agreements Committee proceeds to the task, lengthy and laborious, of formulating a list of import items to be considered for possible tariff concessions by the United States in the forthcoming negotiations. Obtaining Information on Trade With Country X

The first step is for the Trade Agreements Committee to establish an interdepartmental subcommittee of experts on our trade with country X. These subcommittees are usually referred to as "country committees." The task of the X country committee at this stage is to make a comprehensive survey of our trade with country X, studying the trade statistics for both our imports and our exports to that country with a view to drawing up preliminary lists of the items which should be considered in the negotiations.

The chief criterion guiding the work of country committees at this stage is that of the principal

supplier. For bargaining purposes each side generally finds that it is most advantageous if its offer of a tariff concession on a particular product is made to the country which is the principal or important supplier. Accordingly, the country committee looks first for the items of which country X is or may become the principal supplier to the United States, and then for other items which may be important to country X, e. g., items on which requests may have been made by that country. After a detailed study of data on imports, exports, domestic production, tariff history, and other pertinent facts available from Government sources on the products concerned, the country committee submits to the Trade Agreements Committee a list of products which it feels should be considered for possible tariff concessions by the United States, together with the data which it has used in its studies.

During a careful item-by-item scrutiny of the list of products and supporting data submitted to it by the country committee, the Trade Agreements Committee makes such modifications in the list as it considers advisable. It then sends to the Trade Policy Committee, for review and transmittal with its comments to the President, the list of U.S. import items ("public list") which the Committee recommends for possible tariff concessions during the negotiations. If there are dissents by any agency on particular items, these are forwarded to the Trade Policy Committee with the list.

When the list of U.S. import items has been approved by the President, it is published, together with a formal announcement of the intention to enter into trade agreement negotiations with country X, and dates are set by the Committee for Reciprocity Information for filing briefs and for public hearings to obtain the views of interested persons and groups concerning the proposed negotiations. Simultaneously the President transmits the list to the Tariff Commission for peril-point findings on each product, and the Commission also issues a notice of public hearings.

Every effort is made to see that the list and notices get wide public distribution through the press and otherwise-for example, through the field offices of the Department of Commerce-and many persons avail themselves of the opportunity to present information and views in writing and orally at the hearings.

All information presented by the public in briefs and orally at both hearings is made available to members of the subcommittee developing country trade information and to members of the Trade Agreements Committee and to any other persons who may have responsibilities for the preparations for the negotiations.

Aided by the information received from the public by the Committee for Reciprocity Information and the Tariff Commission, the various country committees resume their studies of the items under consideration in order to determine whether to recommend that a concession be made on a particular product and, if so, to what extent. These recommendations and the supporting data are submitted to the Trade Agreements Committee, which reviews them item by item and accepts, modifies, or rejects them.

How Recommendations Are Arrived At

The decision in each case is based upon a variety of factors. The Committee considers for each item the relation of imports to domestic production. Are imports a large or small part of the total amount consumed in the United States? Have imports been increasing or decreasing, both in total amount and relative to domestic output?

The Committee considers whether the domestic industry is on an export basis. If, for example, the domestic industry has a large export business, this would be one indication that the industry could compete in third markets with the foreign product and therefore a reduction in the tariff might be considered.

The Committee also takes into account such matters as whether the domestic industry is large and diversified or is located largely in one community and concentrated on the particular product involved in a word, anything bearing on the possible impact of imports on the domestic industry.

Among other factors the Committee must take into account national security needs for particular products and, in the case of an agricultural product, whether a concession might interfere with a price-support or other farm program.

Depending on circumstances, the Committee may also consider whether it would be possible or desirable to make a concession on only part of a tariff category or limit the effect of a tariff modification through the use of a tariff quota or other

device. For example, the Committee may recommend that a reduced duty apply only to a limited quantity or specified percentage of average U.S. production and that imports in excess of that quantity or percentage pay the higher rate.

Another important matter considered by the Committee is whether our offers as a whole are adequate to reciprocate for concessions we may reasonably expect to obtain from country X.

As soon as the peril-point findings of the Tariff Commission are reported to the President, they are made available to the Committee, which takes them into consideration, along with all the information obtained from other sources, in making recommendations to the President.

Recommendations Go to the President

These recommendations are then transmitted to the President, with dissents, if any, as to particular items, through the Cabinet-level Trade Policy Committee, which gives the President such advice with regard thereto as it deems appropriate.

The decision of the President constitutes an instruction to the U.S. negotiators. It authorizes them to make specified concessions provided they can get adequate concessions in return from the countries with which the United States negotiates. Sometimes it is found desirable, during the negotiations, to request additional authority from the President. If this involves any import product not on the public list, a new notice is issued with the approval of the President, and all the procedure (hearings, peril-point findings, etc.) described earlier must be gone through with respect to the new product.

The Preparation of U.S. Requests

The preparation of our list of requests for concessions from country X goes forward simultaneously with the preparation of offers. The country committee makes a systematic review of our export trade with country X, studying that country's tariffs, taxes, regulations, quotas, etc.

As on the import side, the principal-supplier criterion is an important guide, but studies are also made to determine whether there are some export products on which trade ought to be moving and, if not, why not. Past inquiries and complaints from American exporters to country X, received through the Committee for Reciprocity. Information or by any of the departments, are

reviewed in order to determine whether any of such items should be included in our requests.

At the time public notice is given of intention to enter into trade agreement negotiations, interested persons are invited to submit their views on export items on which concessions should be requested.

The recommendations of the country committee are carefully reviewed by the Trade Agreements Committee, which goes over them item by item and which also reviews our overall requests from country X in the light of our possible offers. The request list, like the offer recommendations, usually moves back and forth from the Trade Agreements Committee to the country committees and back again until it is finally ready to be transmitted through the Trade Policy Committee to the President for his approval, along with the recommendations on offers.

The Negotiations

If the President approves the offers and requests, the next stage is the actual bargaining or negotiation with the foreign countries involved. Under the overall direction of the Trade Agreements Committee, the negotiation with country X is conducted by a team which, as far as possible, has the same membership as the preparatory country committee and consists normally of representatives of the Departments of State, Commerce, and Agriculture, with representatives of other departments assisting in matters of interest to their agencies. In addition, each team has a member of the Tariff Commission staff assigned to it as a technical adviser, although as a matter of established policy the Tariff Commission staff members do not engage in actual negotiations.

Bilateral Negotiations

Negotiations begin with bilateral meetings of the U.S. negotiating teams with their counterparts from the foreign countries. At the initial meeting the two teams usually exchange their lists of offers, and then the actual bargaining begins and may continue for a considerable period of time.

As soon as possible the team reports to the Trade Agreements Committee its opinion as to whether an agreement is possible or not and also the most favorable terms on which it then appears that an agreement can be reached. If the proposed agreement is a balanced one and within the terms of the

team's instructions, the team may be authorized to conclude the agreement on an ad referendum basis. Often, however, reaching an agreement involves changes in the original U.S. offers. If the other country's offers are inadequate, efforts must be made to obtain additional offers or, failing that, some of our offers must be withdrawn. If additional authority is required, the Committee transmits a request for it, through the Trade Policy Committee, to the President, and, if he approves, the negotiating team proceeds to conclude an ad referendum agreement.

Bargaining With Several Countries at Once

Prior to 1947 the trade agreements entered into under the Trade Agreements Act were bilateral agreements negotiated between the United States. and individual foreign countries. Tariff concessions in each agreement were naturally based on the trade between the United States and the other country involved, although under the traditional most-favored-nation policy of the United States, embodied as a requirement of law in the Trade Agreements Act, tariff concessions made in any one agreement (except the preferential trade agreement with Cuba) were applied to products of all foreign countries.

At the end of World War II, in order to provide for a more widespread reduction of all kinds of trade barriers (not only tariffs, but quantitative restrictions, etc.), the United States took the lead in inviting other major trading nations to participate in negotiating the General Agreement on

Tariffs and Trade (GATT), a multilateral trade agreement concluded at Geneva in 1947 by 23 countries. The GATT consists of general provisions (i. e., general trade rules) as well as schedules of tariff concessions for each participating country. These provisions protect the concessions from nullification or impairment.

Since 1947 most of our trade agreement negotiations have been carried on within the framework of the GATT, to which 39 countries are now parties.

In multilateral negotiations under the GATT, tariff negotiations are conducted between several pairs of countries concurrently, but the mechanics of the negotiations are much the same as in former bilateral negotiations. However, upon completion of the negotiations, the results of all the agreements between the various pairs of countries are combined into a single agreement between all the participating countries, with each having a contractual right in the agreements reached by each pair of countries.

When all U.S. negotiations at a multilateral conference are completed, the results are reviewed by the Trade Agreements Committee and are transmitted through the Trade Policy Committee to the President with a recommendation for his approval. If the President approves, the agreement is signed and becomes a binding obligation of the United States.

The final step in the trade agreements procedure is taken when the President issues a proclamation bringing the agreement into force as regards United States domestic law.

U.S. GOVERNMENT PRINTING OFFICE: 1961 O-612213 (68)