C. "Tariff" Quotas. I. RESTRICTION OF IMPORTS-continued Item Seed potatoes, white... Other than seed potatoes (not from Cuba). Cigar wrapper tobacco.. Filler and scrap tobacco from Fish (cod, haddock, hake, pollock, cusk, and rosefish). Whole milk. Cream... Red-cedar shingles.... Molasses and sugar sirups, n. s. p. f., containing soluble nonsugar solids equal to more than 6% of total soluble solids. Cattle: Less than 175 lb. each.. Less than 200 lb. ea... Type of restriction Reduced Reference Canadian Trade Agreement. ment. Subject to seasonal tariff quota. Tariff quota of 22,000,000 pounds at reduced Tariff quota provides reduced rates on Tariff quota of 3,000,000 gal. per year at Tarifi quota of 1,500,000 gal. per year at (Free of duty) Right is reserved to impose a This right was exercised by Congress on Reduced rate (111⁄2 lb.) on quota of 51,933 Quantity entitled to entry at reduced rate Over 200 lb., but less than No tariff quota now applicable. Agreement 700 lbs. or more each.. Dairy cows... with Mexico provides for a tariff quota to Quantity entitled to enter at reduced rate Trade Agree I. RESTRICTIONS OF IMPORTS-continued C. "Tariff" Quotas-Continued Item Cattle-Continued 700 lbs or more each Other.. Type of restriction Quantity entitled to entry at reduced rate D. Quotas on Imports from the Philippines Reference Canadian Trade Agreem ments (1936 and 1939) and Mexican Trade Agreement (1943). "Section 13 of the Philippine Independence Act of 1934 provided that on and after the date of independence of the Philippines (July 4, 1948), all Philippine articles should be subject to full United States duties. However, this provision was repealed by the Philippine Trade Act of 1946, approved by the President on April 30, 1946 (Public Law 371, 79th Cong.). The latter Act prohibits export taxes on Philippine articles shipped to the United States and provides for the continued free entry of such articles during the period May 1, 1946, to July 3, 1954, but it limits the quantity of the most important of them which may be entered for consumption in the United States each year. The annual absolute quotas are as follows: Sugar: 952,000 short tons (850,000 long tons) of which 56,000 short tons (50,000 long tons) may be refined sugars. Cordage: 6,000,000 pounds. Rice: 1,040,000 pounds. Cigars 200,000 cigars. Scrap tobacco and filler tobacco: 6,500,000 pounds. Coconut oil: 200,000 long tons. Buttons of pearl or shell: 850,000 gross. "Effective July 4, 1954, imports of Philippine articles (other than cigars, scrap and filler tobacco, coconut oil, and buttons of pearl or shell) will be subject to duty. In the period July 4, 1954, to December 31, 1954, such duty is to be 5 percent of the lowest rate assessable by the United States on like articles produced in any other foreign country. During the calendar year 1955 the duty is to be 10 percent of such lowest duty, and thereafter an additional 5 percent of the existing lowest United States duties is added on January 1 of each year until and including January 1, 1973. From that date to July 3, 1974, 100 percent of the lowest duty is applicable. On July 4, 1974, all tariff preferences accorded Philippine products are scheduled to terminate. "Cigars, scrap and filler tobacco, coconut oil, and buttons of pearl or shell are subject, in lieu of the progressively increasing rates of duty, to progressively decreasing duty-free quotas; imports in excess of the duty-free quota (but within the absolute quota) are subject to duty, i. e., the lowest duty assessable on like products of any other foreign country. During each of the calendar years 1946 to 1951, both years inclusive, the duty-free quotas are in the same quantities as the absolute quotas on these products. Beginning January 1, 1955, the duty-free quotas are decreased by 5 percent of the original quotas, and each year thereafter by an additional 5 percent of the original quotas, until in 1974 the duty-free quotas are zero. The absolute quotas on these products, like those on the other products listed, remain throughout the period ending in 1974 as the legal ceiling on imports."1 1 Quoted from United States Import Duties, Department of State, Publication 2549, Commercial Policy Series 87, Washington, D. C., June 1946, pp. 7-8. Direct subsidies of the U. S. Department of Agriculture [NOTE. All of these subsidies are now suspended except those on raw cotton and potatoes] This expenditure was made through the Commodity Credit Corporation, and the above figure covers the period ended Dec. 31, 1946, rather than June 30, 1946. Sources: Offices of Agricultural Adjustment Administration, U. S, Department of Agriculture. 31, 868,000 1 1, 211, 000 1936-37. 69,000 60316-47-pt. 2-45 Direct subsidies of the Reconstruction Finance Corporation in effect March 19471 ! Does not include such indirect subsidy devices as the purchase and sale programs of the Reconstruction Finance Corporation. This represents actual disbursements to producers of materials. The Office of the Housing Expediter estimates that liabilities incurred during this period total $15,070,000. Source: Reconstruction Finance Corporation, Office of Housing Expediter. EXHIBIT XIX-C THE COTTON MARKETING PROGRAM OF THE UNITED STATES AND THE PROPOSED CHARTER FOR THE I. T. O. (Memorandum submitted by United States Tariff Commission) The current marketing program in the United States for cotton involves, in addition to domestic price-support measures, the use of import quotas and export subsidies. An important part of the proposed Charter for the I. T. O. is the plan for general elimination of quantitative restrictions on trade including absolute import quotas. Another important feature is the proposal for the elimination of export subsidies. Detailed examination of the cotton marketing program and the Charter provisions is necessary to determine to what extent, if any, the cotton program and the provisions of the Charter conflict. Under the price support program for cotton, prices in the United States have been maintained at levels considerably above those in foreign countries. Under such circumstances imports of cotton into the United States would be large enough to glut our markets were it not for our import quotas. At present import quotas are in effect on all cotton coming into the United States except 1116 inches or longer. On cotton 11/16 inches or longer (a class of which imports are small) the import quota has been suspended. Short-staple cotton is free of import duty in the United States; long-staple (1% inches or more) is dutiable at 31⁄2 cents per pound. Price support for cotton.-The farm price support programs of the Government for cotton may be classified into: (1) The short term warborn program, and (2) the long term program. During the war Congress provided encouragement to producers to meet war requirements of important farm commodities with a guarantee of price support for two years subsequent to declaration of termination of hostilities. Thus, under present provisions of law for the period ended December 31, 1948, mandatory loans are made available for cotton to support prices at levels at least as high as 922 percent of parity.' The long-term program is that laid down in the Agricultural Adjustment Act of 1938 which requires that loans be made to support prices at levels from 52 to 75 percent of parity. Provision is made for acreage allotments and marketing quotas for control of production. Under both the short term and long term programs, it is likely that United States cotton prices will be maintained at levels above those in other countries. Some form of import control will be needed if domestic prices are to "Parity price" for cotton is the price which will give it a purchasing power for articles farmers buy equal to its purchasing power in the period August 1909 to July 1914 and which will reflect also current interest rates per acre on farm indebtedness secured by real estate, tax payments per acre on farm real estate, and freight rates contrasted with such interest payments, tax payments, and freight rates during the base period. (As of mid-February 1947, cotton prices were 112 percent of parity.) be maintained above world levels; some form of export subsidy will be needed if the higher-priced American cotton is to maintain its competitive position in foreign markets. Pertinent provisions of the I. T. O. Charter.-With respect to the price support programs for cotton, certain exceptions to the I. T. O. provisions against import quotas and export subsidies are important. Import quotas and export subsidies are intended to be permitted when imposed in connection with intergovernmental commodity agreements negotiated under Chapter VII of the Charter (although the Charter is not clear respecting subsidies in this particular). Quotas are permitted under Article 25 on agricultural products when imposed in conjunction with governmental measures (1) which restrict domestic production or marketing of like products or (2) which dispose of a temporary surplus by disposing of it to groups of consumers free of charge or below market prices. If a quota is imposed under this latter exception, public notice must be given of the quantity or value which may be imported during a specified period. Moreover, such quota may not be employed to reduce imports relative to domestic production below the ratio which might reasonably be expected to rule in the absence of restrictions. In determining this due regard must be paid to the ratio prevailing in a previous representative period and to any special factors affecting trade in the product concerned. In the absence of a commodity agreement, the United States could continue its import quotas on cotton in effect under the Charter only if domestic production or marketing restrictions are imposed or a special surplus removal program is in effect. At present, there are no domestic production or marketing restrictions in effect; such restrictions are authorized under the Agricultural Adjustment Act of 1938, but so far as is known no decision has yet been made whether they are to be reimposed. The United States does now have a surplus removal program for cotton, but its current operation concerns only a very small part of the cotton crop; the cotton being sold under the program is surplus in the sense that it is mostly off-grade and not readily salable in the commercial market. The Charter does not state that the surplus-removal program must be relatively important in order to supply the basis for imposing import quotas, but it may be expected that considerable friction might result if an unimportant program were used by the United States as the basis for quotas on imports. Paragraph 2 of Article 30 obligates Members to abolish export subsidies as well as any other form of subsidization which results in lower prices for exports than for domestic sales. It provides that Members shall give effect to the provisions of this paragraph at the earliest practicable date but in any event not later than three years from the day on which the Charter enters into force. Here there is no apparent conflict with the short-term support program for cotton and export subsidies can be continued at least on a temporary basis. It is provided further that if any Member is not able within the three years specified to remove the subsidy granted with respect to any commodity such Member must give three months advance notice in writing accompanied by an analysis of the practices in question, the facts justifying them, and the period for which the extension is desired. It shall then be determined whether the extension desired should be made. Paragraph 4 of Article 30 provides that if any Member considers it is being injured by any production or export subsidy granted on a primary product by another Member, or if the Member granting the subsidy finds itself unable to abolish it within the time limit prescribed in paragraph 2, the difficulty may be considered a special case to be handled, if possible, by a commodity agreement under the procedures described in Chaper VII. However, if it is determined that commodity agreement procedures do not promise within a reasonable time to succeed in removing, or preventing the developing of a burdensome world surplus of the primary product concerned, the requirements of Article 30 prohibiting export subsidies cease to apply with respect to that Article. Paragraph 4 (c) provides that even at such times as export subsidies are permitted under other provisions of Article 30, they must not be such as to have the effect of acquiring for the subsidizing Member country a share of world trade in the given product in excess of the share which it had during a previous representative period, account being taken of special factors affecting the trade. The selection of a representative period and the appraisal of special factors shall be made initially by the Member granting the subsidy, but the Member on request must consult with other interested Members or with the I. T. O. with respect to these matters. The justification for the use of subsidies on Unted States cotton exports has been that they are necessary, because of domestic conditions, to retain a fair |