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As I have said, the Preparatory Committee set up by the Economic and Social Council of the United Nations has set next month for its second meeting in Geneva. At that meeting the Committee will do two things: First, it will conclude its preparations for an International Conference on World Trade and Employment and its drafting of a charter for an International Trade Organization, along the lines proposed by the United States Government in November 1945; second, the nations represented on the Committee will undertake to negotiate among themselves trade agreements providing for the reduction of tariffs and other trade carriers and for the substantial elimination of trade discriminations. This, too, is along the lines planned by the United States when in 1945 and 1946 it invited these same nations to negotiate such a trade agreement.
The United States Government has already carried through the preliminary steps under the Trade Agreements Act in preparation for the negotiations at Geneva. Public notice of intention to negotiate was given last November and a list of the products on which we would consider offering tariff concessions in the negotiations was made public at the same time.
Public hearings on the proposed agreement were opened by the Committee for Reciprocity Information on January 13 and continued through February 6. More than 1,000 interested groups and individuals filed written statements and more than 500 appearances were registered at the public hearings. Every interested person was given full opportunity to give information and views as to the provisions of the proposed agreements, including concessions which should be sought from foreign countries in the interest of American exports, whether any reductions should be made in United States tariffs, and what reductions might be made.
These views and information, together with the material assembled by the representatives of seven Government agencies which make up the interdepartmental trade ogreements organization, are being analyzed and thoroughly studied by that organization in preparing its recommendations to the President, through the Secretary of State, on the terms which the United States, in its own economic interest, should seek to have incorporated in the agreements.
The trade agreement negotiations at Geneva are an essential and integral part of the rest of the job to be undertaken there, to conclude the preparatory work for the establishment of an International Trade Organization and the writing of a charter or code of principles and rules for the conduct of international trade. Unless arbitrary, excessive, and uneconomic barriers to trade are reduced and unless discrimination and inequality of trade treatment are abolished, there will not be much use in trying to go ahead with the rest of the plan.
The charter covers other matters as well. It proposes commitments that member countries will try to increase and maintain domestic employment and buying power by means which will not adversely affect other countries. It provides for limitation of the use of trade quotas and exchange restrictions. It establishes principles for the operation of intergovernmental arrangements dealing with emergency situations in regard to the primary products. It provides for both joint and individual action by governments in curbing re. strictive cartel practices in international trade.
Agreement on all of these things must be reached if American traders are to gain the maximum advantages for their individual enterprises and competitive efficiency. If agreement is reached we cannot only maintain but raise the levels of employment, production, and buying power in this country. These things will be done-can be done-only if this country continues to exercise its leadership in international economic affairs.
I might add here that, contrary to some misunderstandings, the International Trade Organization will not be an international supergovernment in the economic field, with power to fix tariffs of member countries or control either their foreign or domestic trade. Tariff adjustments under the charter, the matter of most interest to the United States, will be made by negotiation and only in return for comparable advantages, just as the United States has been doing for 13 years under the trade agreements program.
Member nations will voluntarily agree to refrain from imposing quotas and certain other trade restrictions and discriminations. The International Trade Organization will impose no new international controls or regulations on trade. Under its charter only one“penalty” can be incurred by any country which violates its commitments. Member countries may, with the concurrence of the Organization, withhold from such a country the trade benefits which they have agreed to extend to each other.
The whole aim and purpose of the International Trade Organization and of the suggested charter is to reduce and minimize, not to increase, governmental interference with foreign trade carried on by private traders, and to guide that trace on economic, not political, principles.
That is what we are going to Geneva for, to bargain for a chance for American private enterprise to continue and to benefit the American economy through expanded foreign trade.
Actually, we are to bargain for more than business profits and economic advancement. The relationship between political and economic questions in the international field is so close that it should hardly need_emphasis. It has been forcefully illustrated by the situation in Turkey and Greece, which was the subject of the President's recent message to the Congress.
We have never said that successful international economic cooperation would in itself assure political peace, but it is clear that in the absence of satisfactory economic conditions, political problems become intensified and political peace cannot be stable or long enduring. Our kind of a system cannot fully succeed while widespread poverty and want exist. On the contrary, it is the continuation of such conditions that gives rise to the serious political problems in many parts of the world today. The more we can do, therefore, to bring about healthy economic conditions, the fewer political problems we will have. At Geneva we aim to advance further toward international agreement on the economic conditions which will strengthen the political basis for peace.
These, then, are some of the reasons why we should and we must push ahead vigorously and with the courage of real leadership in the course we have laid down. This is the hour of opportunity. I am convinced that we can now obtain international agreement which will result in a great expansion in world trade, in which the United States would certainly be the chief beneficiary. If we lose this opportunity, who knows when or whether we may ever have another?
That is the end of my prepared statement, Mr. Chairman.
The CHAIRMAN. Mr. Clayton, will Russia be represented at the conference?
Mr. CLAYTON. Russia has been invited, but we have not been advised as yet that she will attend.
The CHAIRMAN. How long ago was she invited?
Mr. CLAYTON. Months ago, when the Economic and Social Council issued the first invitation, she was invited to the London conference and was not present there. That conference, as I have said here, was started on the 15th of October and continued until the end of November The CHAIRMAN: Will any of the following
countries be represented: Poland, Finland, Rumania, Yugoslavia, or Bulgaria?
Mr. CLAYTON. No, sir.
The CHAIRMAN. In other words, then, you will have about 250,000,000 or 300,000,000 people who will not be represented at Geneva?
Mr. CLAYTON. Not directly represented, Mr. Chairman. This is a preparatory meeting to the big World Conference. All United Nations countries will be invited to the final conference and the Preparatory Committee is to consider what non-United Nations countries might also be invited. This is merely a preparatory commission getting ready for the big conference.
The CHAIRMAN. It would seem that they would want to be in on the preparatory conference.
Mr. CLAYTON. I imagine all countries felt like they would like to be, but obviously, for the purposes of a working group to get ready for the big conference, we could not have them all. The CHAIRMAN. You would not have them all? Mr. CLAYTON. Not very well; no, sir.
The CHAIRMAN. How many countries in Europe have accepted the invitation to attend the preliminary conferences?
Mr. CLAYTON. France, Belgium, Holland, Norway, Czechoslovakia, and Great Britian; six have accepted.
The CHAIRMAN. How about Sweden?
Mr. CLAYTON. Switzerland was not invited. None of the countries, Mr. Chairman, in Europe were invited except the ones I have just named--the six I have named and Russia.
The CHAIRMAN. What was the reason for not inviting them?
Mr. CLAYTON. The reason was, as I have stated, this is a preparatory meeting to the big conference, and it was felt by the Economic and Social Council that a small committee or group should be formed to make the plans for the big conference which would be called in the fall. We are not ready to hold the big conference at this time. The United Nations added 3 countries to the group of 15 that we recommended should be invited and made the total 18.
The CHAIRMAN. Was Poland invited?
The CHAIRMAN. Aside from Russia?
The CHAIRMAN. I direct your attenion to page 4 of your statement. Unfortunately, there is only one copy, unless they have been distributed. In the second paragraph there you say:
For the past 13 years we have successfully been making selective tariff cuts without injury to our own economy.. In return, we have obtained maximum value in the form of reductions in foreign barriers against our exports and foreign guaranties of nondiscrimination against us.
In that connection, it may be pertinent to ask or to assume, rather, that Britain has consented to give up the Empire preference policy that she has been following.
Mr. CLAYTON. We have an agreement with Britain, Mr. Chairman, that she is to negotiate with us on tariffs and preferences with the idea of reducing the tariffs and eliminating the preferences. We have not got the actual abolition of the preferences at this moment.
The CHAIRMAN. Would it not be the proper time to have secured such a concession from Britain, when you negotiated the trade agreement with her?
Mr. CLAYTON. We could not do that, Mr. Chairman, for this reason: These preferential arrangements which they have in the British Empire grew out of our high tariff system in the United States. They were driven to make an arrangement which channeled their trade among themselves for the reason that they could not ship to us to any considerable degree on account of our high tariff.
Britain has taken the position that those preferences will be eliminated by reductions in tariffs in the same way in which they were built up, because of increase in tariffs.
The CHAIRMAN. Have you secured specific promises from the British Government that they will remove the barriers that now exist, such as the Empire Preference Act and the sterling bloc?
Mr. CLAYTON. They have committed themselves to negotiate for the reduction of tariffs and the elimination of preferences. We have a good many of the preferences eliminated in the previous trade agreement, Mr. Chairman.
The CHAIRMAN. Would you specify some of the benefits we got in the previous agreement?
Mr. CLAYTON. Well, where import tariffs were reduced in that agreement, by Britain, the reduction applied to the tariff generally applying on a non-Empire origin of goods, so that until the point was reached where the tariff on goods coming from non-Empire origins was the same as on goods from Empire origins, any reduction that was reached by agreement applied generally to the higher tariffs, so that it had the effect of narrowing the margin of preference and in many cases of eliminating it.
The CHAIRMAN. Well, during the war, as I recall, Canada suspended the Empire Preference Act.
Mr. CLAYTON. They did during the war.
The CHAIRMAN. They resumed it about 3 weeks ago; is that not correct?
Mr. Clayton. Well, my information is that it was resumed further back than that.
The CHAIRMAN. Well, since the first of the year. I meant to bring the data with me, but did not. Then how about the sterling bloc---is that still in effect?
Mr. CLAYTON. That will be dissolved effective as of sometime in July, when, under the United States United Kingdom financial agreement, Britain is committed to make all sterling earned currently convertible into United States dollars of any other currency, beginning in July of this year.
The CHAIRMAN. We will explore that further later on. Will the executive agreements which you propose to make at Geneva require ratification by the Congress?
Mr. CLAYTON. No, sir; the Trade Agreement Act does not require it. The charter, Mr. Chairman, of the International Trade Organization would have to be ratified by Congress.
The CHAIRMAN. Then, anything that you do there in the way of further reducing tariffs, American tariffs, would virtually tie the hands of Congress, would it not, in the consideration of future tariff legislation?
Mr. CLAYTON. Well, to whatever extent the hands of Congress might be tied, would only be in accordance with an act of Congress.
Mr. CHAIRMAN. Well, anyway, the hands of Congress would be tied for 3 years at least.
Mr. CLAYTON. I do not think it is 3 years. All of the agreements provide that they can be canceled on 6 months' notice by either party, but they do generally run for 3 years, and they are continued at the end of that time, unless one party gives notice 6 months prior to the time of expiration.
The CHAIRMAN. If Congress should decide to not extend the Trade Agreements Act, will the Geneva agreements continue to be in force, and for how long?
Mr. CLAYTON. I think they will unless one party to the agreement notifies the other that they are canceled, on 6 months' notice.
The CHAIRMAN. Will the President be required to sign the Geneva agreement while the conference is in session there, or will the negotiating delegations discuss the proposed concessions with Congress, or with industry, before they are actually signed?
Mr. CLAYTON. I think the definitive agreements can be made there under the Trade Agreements Act.
The CHAIRMAN. Well, I presume that anything done at Geneva would be tentative in view of the fact that you say it is a preliminary meeting.
Mr. CLAYTON. No, sir; it is not preliminary in the sense that these trade agreements would be preliminary. They would be definitive agreements entered into with these respective countries, and agreements with other countries would have to be negotiated subsequently; but whatever agreement is definitely reached there would be an agreement of this Government, except on the charter. I would like to keep that in your mind, that the charter of the International Trade Organization does have to be referred to Congress and will be referred to Congress.
The CHAIRMAN. Under the plan of the State Department, would it be possible for this Government to impose quotas where imports are excessive, to a degree where they prove injurious to American industry and interests?
Mr. CLAYTON. There are provisions made for exceptional application of quotas; yes, sir.