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Mr. REED. Do you recall just what position the United States took in the original charter prepared here with reference to imperial preferences?
Mr. CLAYTON. Yes. The position we took was the position that we had come to the agreement with the United Kingdom on at the time of the negotiation of the Anglo-United States financial agreement in December 1945, and that was that in these negotiations of bilateral trade agreements which we expect to start here in Geneva on the 10th of April, that we would negotiate for the elimination of all discriminations, including preferences, of course, and for the reduction of barriers to international trade.
Mr. REED. Would you mind putting a list in at this point of every trade barrier that you are proposing to eliminate?
Mr. CLAYTON. I just think that would be almost impossible to do that, Mr. Reed. We can give it to you now. I can give it to you now, the general details, but to give you a list of every specific application of its terms, I am afraid, would be impossible, but I can give it to you now in general terms.
Mr. REED. Well, suppose you give me the general terms and then we will prepare something or perhaps ask further questions.
Mr. CLAYTON. You have asked for a list of every trade barrier, I, believe, that we propose to eliminate; is that right?
Mr. REED. That is right.
Mr. CLAYTON. Now, what we are trying to do is to eliminate the discriminatory practices in international trade between nations and to reduce the trade barriers.
An example of a discriminatory practice would be a nation having quotas, for example, on imports, having exchange control on imports, and using that system of quotas and exchange controls as a means of discriminating against different suppliers of the articles or commodities involved.
That is an example of the use of discriminatory devices in trade.
Of course, an example of trade barriers would be very extensive. It includes quotas, foreign exchange controls, tariffs, and all kinds of devices that are set up to reduce the volume of international trade.
Mr. REED. Well, I assume-and I may be wrong about it-but I assume that after all this preliminary study with reference to barriers, that you must have in your files a long list of those so-called trade barriers or discriminations which you feel should be eliminated as between nations.
Mr. CLAYTON. Well, the most fruitful form of barrier in use today by foreign countries is the import quota system; and our principal object in the London meeting, in connection with this charter for an International Trade Organization, was to provide for the elimination of the quota system.
You understand, Mr. Reed, that in this country, our principal means of controlling our foreign trade, or, at any rate, imports, has been by the tariff. That is traditionally true.
In foreign countries, that used to be true. After the First World War it was much less true than it was before the First World War, because, during that war, nations learned to use a much more effective and destructive device to control international trade than tariffs.
If you have got a tariff on an import, why, you can always continue to import as long as the tariff is paid. If you have got an import
quota, say, of 2 percent of your domestic production of a certain commodity, when you reach that 2 percent, you cannot bring in any
Now, nations abroad, after the First World War, and particularly in the Second World War and after the Second World War, used this device of import quotas almost to the exclusion of tariffs. Not quite. They still have tariffs, of course, but they depend more upon the import quota system to limit their imports than they do upon the tariff.
Now, that is very destructive of American exports; and if it is continued, it will not only be used as a trade barrier against all countries but it will be used as, indeed, it is used to a considerable extent now, as a trade discrimination, so that we feel that in the interests of our export trade which is now so big that we must try to get the nations of the world to abandon this quota system as far as possible and go back to the tariff system as a means of limiting their imports.
Mr. REED. Now, tell me this: Do we set up quotas in this country?
Mr. CLAYTON. We have a few; a very few. We have, of course, by act of Congress, the sugar quota system. But we have not used in this country, and I hope we never will use, the quota system to any considerable extent. We have relied much more upon the tariff.
Mr. REED. Have we any quota, for instance, on tobacco or tobacco seed?
Mr. CLAYTON. I am not familiar with that. I do not know that we have. We have adopted quotas in connection with imports of certain ́agricultural products, and I am informed that tobacco is one where the Government has provided for a support program-priceprotective devices and control of production. We used the quota system in connection with that program.
Mr. REED. Now, if there are any other quotas, I would like to have you insert them in the record; because inasmuch as you are dealing with quotas, you must know not only what countries are using quotas and discriminating against us, but also whether we are using quotas to keep tobacco seed and things like that out, pecause it is practically an embargo.
If you have a list of those United States quotas, I would like to have them in the record, so that we may study the situation.
Will you please put those in the record? Mr. CLAYTON. Yes, sir; we will do that. They are relatively few. (The information referred to above is as follows:)
UNITED STATES IMPORT Quotas 1
ABSOLUTE IMPORT QUOTAS
(These quotas restrict total imports of the commodities in question to fixed quantitative amounts per quota period. Once such a quota is filled, no more imports may enter until the beginning of the following period:)
Cotton, less than 1%-inch staple, other than rough or harsh cotton.
whether or not manufactured or otherwise advanced in value. Routh or harsh cotton, under 34-inch staple length. Wheat and wheat flour.
Silver or black foxes, furs and skins.2 So far as tobacco seed is concerned, the United States maintains no quota on imports of the product; the United States does, however, maintain a prohibition on commercial exports of tobacco seed. . It was announced on March 20 that the President has signed a proclamation terminating the absolute quota on silver or black fox furs and certain silver or black foxes, effective May 1, 1947,
UNITED STATES IMPORT QUotas-Continued
ABSOLUTE IMPORT QUOTAS—continued
Sugar, refined and unrefined.
TARIFF QUOTAS (These quotas place a quantitative limit upon amounts of the commodities which may be imported at a given rate of duty. Imports in excess of the quota may be entered at any time during the quota period but are dutiable at a higher rate of duty:)
Whole milk, fresh or sour.
cusk, and rosefish.
Cuban filler tobacco.
Mr. REED. Right on that point, may I ask what action would Great Britain take when you present this charter to her with reference to imperial preferences? What action did she take?
Mr. CLAYTON. The charter, with reference to that point, Mr. Reed, was merely a restatement of the provisions of the Anglo-United States financial agreement, so Great Britain, naturally, followed that course.
Mr. REED. How many trade barriers, so-called, were eliminated as the result of the adoption of the trade agreement in the first instance in 1934?
Mr. CLAYTON. Well, we obtained in, I think, 29 or 30 trade agreements concessions by the foreign country involved in that agreement in the way of reduction of tariffs and elimination of other barriers, in return for the concessions that we have given in our tariffs.
Mr. REED. Would you give me a list of the barriers that were eliminated in each of those 27 agreements?
Mr. CLAYTON. We will file copies of the agreements, Mr. Reed.
Mr. REED. Would you specifically state in there--since they are quite voluminous-would you state in each instance just a little summary of the trade barriers or discriminations which were eliminated as the result of each agreement? Mr. CLAYTON. Eliminated in this country or in foreign countries? Mr. REED. Foreign countries. Mr. CLAYTON. Foreign countries only? Mr. REED. Yes.
Mr. CLAYTON. You do not want any statement regarding reduction of tariffs in this country?
Mr. REED. That would hardly be necessary. Those, we could look up. I would like to know about the foreign countries, just in summary, so that we can see them quickly.
Mr. CLAYTON. Yes, sir; we would be glad to do that, sir. (The documents are as follows:)
MITIGATION OF TRADE BARRIERS IN TRADE AGREEMENTS
In its trade agreements with Canada, the United States obtained reductions of duties on a large number of commodities the United States exports of which were valued at $163,000,000 in 1937; it also secured the binding of duties against increase on many other commodities the exports of which were valued at $69,000,000 in 1937. In addition to these specific concessions, the United States obtained other very important general concessions including:
Duty reductions resulting from the provision that all United States goods shall enjoy the lowest rates (most-favored-nation rates) now or hereafter paid by any non-British country.
Removal of the 3 percent special import tax.
Exemption from duty on purchases valued at $100, or less made by
Advantages secured for commercial travelers and for Canadian transit trade passing through the United States (because of the most-favored
nation provision). The most-favored-nation provision.-Prior to 1936 United States goods had been subject to the highest, or "general,” Canadian tariff rates. Then, as now, Canada had a lower intermediate tariff which applied to imports from most non-British areas, and a still lower preferential tariff which applied to imports from British
Moreover, Canada had, before 1936, made special rates in agreements with a number of non-British countries which were lower than the intermediate rates. The most-favored-nation provision of the 1936 United States-Canadian agreement gave the United States the benefit of all intermediate rates and of any lower rates made by agreements with non-British third countries. As a result of the most-favored-nation provision of the 1936 agreement, the United States obtained, at the outset, lower duties on products representing United States exports in 1937 valued at about $114,000,000.
Among the many products on which reduced rates of duty are now in effect as a result of the most-favored-nation provision are a number of major importance, including crude petroleum and certain major products of petroleum, bulbs for the manufacture of electric lamps, certain classes of steel sheets, miscellaneous forgings of iron or steel, tin cans, a wide variety of parts for motor vehicles (by far the largest single item), radio apparatus, dressed furs, explosives, parts of cash registers for further manufacture, advertising and printed matter, and certain classes of gums.
Removal of the 3-percent special excise tax on imports.-On June 2, 1931, a 1-percent special excise tax was imposed by the Canadian Government on practically all imports: 2 and on April 7, 1932, this tax was increased to 3 percent. This special excise tax was originally imposed primarily for purposes of revenue and was applied to imports from British as well as from non-British countries. The tax on British goods was reduced to 1% percent on April 19, 1934, and was removed entirely on March 23, 1935, thereby increasing the preferential margins enjoyed by British countries as against the United States and other non-British countries. This tax also afforded Canadian producers protection in addition to that afforded by the regular tariff.
The second trade agreement with Canada provided that, in the case of all articles (dutiable or free) listed in schedule I of the agreement, the Canadian special excise tax of 3 percent would be removed on imports from the United States as soon as the necessary legislation could be enacted. Canadian legislation effective on April 26, 1939, removed this 3-percent tax not only on scheduled products but also on all other products imported into Canada from the United States.
1 The first agreement with Canada became effective January 1, 1936, and the second agreement, January 1, 1939. ? A few products of ininor importance were exempt from the tax.