The Negotiating Process and Ad Hoc Trade Agreements 1

EXECUTIVE BRANCH STATEMENT

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With few exceptions, the President has negotiated and implemented agreements modifying rates of duty pursuant to prior authority delegated to him by the Congress. This has been the practice since 1934 and has established a traditional relationship between the Congress and the President in this field.

This tradition has, however, tended to obscure the fact that the President has the constitutional authority to negotiate any agreement which is related to international trade. This was acknowledged by the Senate Finance Committee in its report on Senate Concurrent Resolution 100, in which it said:

The Committee recognizes that our Constitution empowers the President alone to enter into international agreements and treaties. We do not question the legality of an agreement involving a trade matter for which no prior authority has been delegated. (S. Rept. 1341, 89th Cong., second sess. (1966), p. 3.)

It should be noted, however, that the authority to negotiate an agreement is not the same as the authority to implement an agreement. Any agreement, for example, which the President negotiated for the modification of duties could not be carried out until the Congress has provided for its implementation, as by a subsequent delegation of authority to the President. Such a delegation need not necessarily be made before the agreement is concluded and can just as appropriately be made after that time.

This raises a question of when and under what circumstances the Congress may, in fact, appropriately be requested to take such action after an executive agreement has been concluded. In considering this question, much has been made of the fear that if the President concludes an agreement first, the Congress will have no choice but to enact the necessary subsequent implementing legislation. In other words, will the Congress be able to consider the agreement on its merits and decide whether or not to enact the implementing legislation?

This question is not an unreasonable one, but the basis for such concern must be closely scrutinized in any given case. Essentially, the concern seems to be that, in some circumstances, the freedom of the Congress to refrain from enacting legislation to implement an ad referendum agreement might appear to be prejudiced. But this concern should not immediately result in opposition to the negotiation of any particular ad referendum agreement. The important considerations are the manner in which the agreement is negotiated and the manner in which it is presented to the Congress.

In short, having regard to the relationship between the executive branch and the Congress, the exceptional way of negotiating executive agreements in the trade field should not necessarily be viewed as an inappropriate way. Instead, the reasons for a given exception and the circumstances in which the Congress is asked to consider a particular ad referendum agreement should determine whether the appropriate relationship between the two branches has been respected."

For a complete list of all papers dealing with this or other subjects see the table of

Contents.

STATEMENT OF WILLIAM S. CHRISTOPHER, DIRECTOR OF Marketing, HOOKER CHEMICAL CORP., ON BEHALF OF THE TARIFF COMMITTEE OF THE SOCIETY OF THE PLASTICS INDUSTRY, INC.

Mr. Chairman and members of the committee, on behalf of the tariff committee of the Society of the Plastics Industry, Inc., I am pleased to have the opportunity to submit this statement for consideration by the Senate Committee on Finance in connection with its study of U.S. foreign trade policies and practices. At the outset, we wish to commend the committee for undertaking a broad review of those matters which are of such vital importance to the continued health and welfare of our Nation.

By way of introduction, the Society of the Plastics Industry, Inc. (SPI) is a corporation organized under the membership corporation laws of the State of New York. This society is formed for the purpose of assembling and disseminating scientific, engineering, and general information data on plastics; to cooperate with the military and allied departments of the U.S. Government in the furtherance of its plastics projects; to act as an authoritative central forum for its member companies, and to promote actively and advance the application and use of plastics through greater public acceptance and favorable recognition of plastics products. SPI is composed of approximately 2,500 member companies and individuals who supply raw materials, process or manufacture plastics or plastics products; engineer or construct molds or similar accessory equipment for the plastics industry; and engage in the manufacture of machinery used to make plastics products or materials of all types. The society is the major national trade association of the plastics industry, its membership being responsible for an estimated 85 to 90 percent of the total dollar volume of sales of plastics in this country. For your information, I am herewith enclosing two copies of the SPI directory which contains a great deal of information concerning the functions and activities of the society and includes a full listing of its membership.

(Note: The directory referred to was made a part of the official files of the committee.)

The tariff committee is a standing committee of the Society whose function is to consider, investigate, make recommendations, and take action on the industry's behalf with regard to tariff matters generally. One of the primary activities of the committee has been to represent the industry on matters involving plastics before appropriate governmental agencies such as the U.S. Tariff Commission, Office of the Special Representative for Trade Negotiations (STR), Department of Commerce, and the Trade Information Committee. In addition to being chairman of the SPI Tariff Committee, I am director of marketing for Hooker Chemical Corp., a major American producer of plastics and related commodities.

One of the significant shortcomings in U.S. trade policy has been the existence of a serious information gap between those in Government responsible for implementing our trade programs and those in the private sector who have such vital interests at stake, most notably domestic industry. This was evident in the recently concluded Kennedy round. Due to the lack of any really manageable system, it was difficult-often impossible-to establish a meaningful dialog between industry and those officials responsible for the conduct of our nego

tiations in Geneva. As a consequence, in many instances, our negotiators were deprived of the indepth knowledge needed to make fully informed and truly enlightened decisions.

This was true even though real effort was made by the STR to assemble, and organize industry data, and make it available to the negotiators. As one of the technical specialists for industry, I was involved in the preparation of many studies and reports. and on many occasions responded to questions from the STR. Near the end of the negotiations, I spent several days in Geneva. At all times, the officials contacted in STR and in other Government agencies, showed a sincere interest in the information provided. Yet, there remained the very real problem of making use of this information in the course of the negotiations, and especially at the point of decision.

The problem stems primarily from the fact that the industry technical specialist system, as presently conceived, is basically unworkable. To begin with, there are far too many technical specialists. Moreover, they are not organized in any rational way nor do they have the kind of official status needed to make them effective in their contacts with Government, and in their dealings with industry itself. Added to this, the technical specialists are not utilized by our Government to the degree possible with the result that their talents are left untapped in many areas.

In an effort to make any industry-advisory program effective and helpful to our Government in formulating and carrying out its trade policies, we would make the following recommendations:

1. The title technical specialist should be abandoned, and a more meaningful title such as industry adviser should be established.

2. The number of advisers should be substantially reduced, from the present 250 or so technical specialists to no more than 50 industry advisers.

3. The industry advisers should be organized on a "sector" concept, with a minimum number of industry representatives for each industry sector. In turn, the industry advisers would organize contacts within their industries so that prompt and reliable data would be readily available.

4. The appointment of the industry advisers should be made official instead of unofficial and off the record. Among other things, this would give rise to obligations which would substantially solve problems of confidentiality. Moreover, those appointed would be senior, experienced individuals accustomed to handling confidential information and they could be relied upon to do so. This would result in far greater access to reliable and pertinent economic data.

5. The industry advisers should be called upon to participate in discussions and conferences, and in continuing two-way dialog on all aspects of trade negotiations. This would include counseling conferences with the Office of the Special Representative for Trade Negotiations, advisory participation in GATT negotiations, attendance at OECD Industry Committee and other committee meetings, participation in or an advisory relationship to participants at UNCTAD conferences, and participation in or advisory service for regional trade organization conferences.

In our judgment, the above recommendations, if adopted and implemented, would provide an answer to the major problem of trade

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negotiations getting depth of knowledge at the point of decision at the time decisions are being made.

A second important consideration for future trade policy is a better coordination or "orchestration" of the various Government information sources, such as the Tariff Commission, the Department of Commerce, the Bureau of Customs, and many other agencies and departments involved. Under present procedures, each agency gathers and disseminates its information and views within the limited context of its own particular functions. Clearly, their horizons must be expanded to encompass the worldwide competitive and trade situation. Undoubtedly, this will require some redefinition of responsibilities and functions for each agency source.

We trust that the views expressed in this statement will be helpful to the Senate Committee on Finance in its review of U.S. foreign trade policies and practices. This statement is brief and is intended only to summarize the important conclusions drawn from 6 years' involvement with the issues of the Trade Expansion Act and the Kennedy round negotiations. We would welcome the invitation of the Finance Committee to amplify further any of the points made. Again, on behalf of the SPI Tariff Committee, I wish to express my thanks for having been given the opportunity to submit this statement.