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commodity to promote efficiency, growth, and stability of markets. He recommended that grains and copper be given priority.
(2) That in keeping with the Tokyo Declaration, approved September 14, 1973, by a ministerial meeting of the Contracting Parties to the General Agreement on Tariffs and Trade (GATT), rules on nontariff barriers should be adapted to provide special consideration for developing countries.
Secretary Kissinger stated the following U.S. policies on international trade:
The United States intended to sign the Tin Agreement.
The United States was participating actively in negotiations on coffee.
The United States would join in the cocoa and sugar negotiations.
The United States would support liberalization of IMF financing of buffer stocks to assure that this facility is available without encumbering other drawing rights.
The United States would put into effect its generalized tariff preferences on January 1, 1976.
The United States would undertake in the Multilateral Trade Negotiations to lower tariffs on manufactured and processed goods of developing countries.
The United States would seek early agreement in the Multilateral Trade Negotiations to reduce tariffs on tropical products.
The United States would join with others in negotiating supply access commitments as part of the reciprocal exchange of concessions.
For the full text of Secretary Kissinger's address to the Seventh Special Session of the U.N. General Assembly, see Dept. of State Bulletin, Vol. LXXIII, No. 1891, Sept. 22, 1975, pp. 425-441; Report by Congressional Advisers to the Seventh Special Session of the U.N., Joint Committee print, 94th Cong., 1st Sess., Oct. 13, 1975, pp. 35-61.
The Trade Act of 1974
The Permanent Council of the Organization of American States (OAS) met from January 20 to January 23, 1975, in extraordinary session at the request of Venezuela, Ecuador, Colombia, and Mexico to consider what they termed the “discriminatory and coercive” provisions of the Trade Act of 1974 (P.L. 93-618; 88 Stat. 1978; approved January 3, 1975). The primary concern was with the provision which, in effect barred trade preference (GSP) to members of the Organization of Petroleum Exporting Countries (OPEC).
On January 23, 1975, the Permanent Council, with the United States abstaining, adopted a resolution (CP/RES.131 (150/75)), calling for inclusion on the agenda of the Fifth Regular Session of the General Assembly of the topic “The United States Foreign Trade Act of 1974, and especially the discriminatory and coercive measures that it contains, in the light of the principles of the interAmerican system.” It cited Chapter VII of the OAS Charter, Economic Standards; Chapter IV of the Charter, Fundamental Rights and Duties of States; and the "Latin American Declaration" presented to the U.S. delegation in December 1974 protesting in advance the possible passage of the Trade Act. The resolution declared further that the Act had caused deterioration of interAmerican solidarity, distorted the GSP, and contradicted principles in the Charter of Economic Rights and Duties of States, approved by the U.N. General Assembly on December 12, 1974.
John W. Ford, Acting U.S. Representative at the Special Session of the OAS Permanent Council, made a statement in explanation of the U.S. abstention, on January 23, 1975. Excerpts from his statement follow:
My delegation has abstained on the resolution because it fails to present a balanced picture of the Trade Act in its full dimension. Regrettably the resolution focuses only on certain rigidities in the Act without mention of the many positive elements which, implemented, can contribute to a liberalized world trading system.
There are portions of the Act, as I have noted, which the Administration regards as inequitable and unwise. Nor can it accept the "judgment" implicit in the resolution that the actions of the government in this respect are in violation of the Charter or other commitments of the U.S.
my delegation ... welcomes debate of the Trade Act at the OASGA or in whatever forum you consider appropriate. We believe that the fuller the analysis of the Act in its technical aspects, and its economic and political implications, the better will be the appreciation of what can be accomplished through it for the benefit of the developing countries. The broader discussion will place the limitations of the Act in proper perspective and thereby contribute to a better understanding and facilitate obtaining of the necessary adjustments.
For the text of statements presented by Mr. Ford on Jan. 20, 21, and 23, 1975, see OEA/Ser. G, CP/INF.641/75, Jan. 31, 1975.
At the Tenth Regular Annual Meeting of the Inter-American Economic and Social Council (CIES) at the Ministerial Level, held March 10-17, 1975, the first item on the agenda was entitled “The United States Foreign Trade Act of 1974 and, especially, the discriminatory and coercive measures that it contains, in the light of the principles of the inter-American system.” Deputy Secretary of State Robert S. Ingersoll, head of the U.S. delegation to the meeting, made a statement in plenary on March 12, 1975. The following are excerpts:
we are firm in our resolve to implement the Tokyo Declaration with its special consideration for the needs of the developing countries. There is a specific mandate in the Trade Act giving special consideration to developing country interests. We do not expect full reciprocity from the developing countries for concessions we make in the course of the negotiations. We do expect, however, that all countries will contribute to building a new world trading system in proportion to their levels of development.
President Ford and Secretary Kissinger have personally expressed concern over the rigidities in our Trade Act which would exclude Venezuela and Ecuador from participation in our system of preference. ...
The U.S. Delegation also presented a memorandum dated March 10, 1975, in which it examined the Trade Act in the context of U.S. trade policy and reviewed specific provisions of the Act which had met objections. The memorandum set forth the following propositions:
-The U.S. firmly believes that a liberal and nondiscriminatory world trading system is a necessary if not sufficient condition for increasing world prosperity.
- The U.S. is fully committed to the further development of an open world trading system, but it must be understood that we expect our trading partners to consider our interests as we consider theirs when we join in efforts to liberalize world trade. This mutual consideration of each other's interests or reciprocity, if you prefer, is a cornerstone of present U.S. policy. A corollary to this basic premise, however, is that the reciprocity we ask of industrialized countries is different than that which we ask of developing countries. Thus, in the Multilateral Trade Negotiations in Geneva, we will not seek concessions from a developing country that would be inconsistent with the trade, financial or development needs of that developing country as specified in the Tokyo Declaration.
-The U.S. believes that economic interdependence is a central fact of international and hemispheric relations. The position of the U.S. economy in the context of the world economy has changed drastically since the passage of our last trade legislation, the Trade Expansion Act of 1962. No longer is the U.S. economy largely independent of and insulated from the world economy; the devaluations of 1971 and 1973, as well as the economic strains posed by the oil embargo of 1973 and the fourfold increase in the cost of imported oil, are ample demonstration of this fundamental change with which U.S. trade policy must cope.
-Like all other countries, the U.S. must be able to adjust the principles of free and nondiscriminatory trade to the practical necessity of protecting its own economy from serious damage. We strive to understand the position of other countries when they take reasonable actions to protect their domestic economies and, in return, we would expect the same understanding for such actions on our part.
- The U.S. believes that if any country is to embark on a serious negotiating effort to greatly liberalize world trade, it must have safeguard authorities to deal with those few occasional instances when increased imports may have serious, adverse and unforeseen consequences on its domestic economy. Adequate safeguards thus enable the U.S. to embark on the ambitious program of expanding world trade outlined in the Tokyo Declaration.
After reviewing the lack of U.S. trade agreement legislation since the expiration in 1967 of the authority delegated to the executive branch under the Trade Expansion Act, and the rapid expansion in world trade after 1967, the accompanying balance-ofpayments problem and the ensuing oil crisis, the memorandum stated:
Without the authority established in the Trade Act, the international effort contemplated by the Tokyo Declaration to expand trade and to reform the world trading system-in which almost all Latin American countries are participating-would have been aborted. In other words, the consequences of not having the negotiating powers contained in the Trade Act, particularly in view of the current world economic conditions, would have been severe, and most adverse in fact to the very countries whose development goals depend most heavily on diversifying and expanding exports. Rather than opening new opportunities for trade, the virtually certain result of a failure to enact the new United States Trade Act would have been contraction in world trade.
another important reason for the Trade Act was that it contains authority for the U.S. to implement a system of gener
alized tariff preferences in favor of developing countries. The U.S., mindful that, inter alia, the foreign exchange constraint could be a significant bottleneck to the economic development of the developing countries, agreed at UNCTAD II to institute such a system. In this connection, the Trade Act fulfills the commitment undertaken in the Declaration of Tlatelolco that the U.S. Government would make a maximum effort to secure the passage of such legislation.
In a discussion of individual provisions of the Act, the memorandum states the following with reference to Section 502(b)(2), which, in effect, excludes members of OPEC from GSP:
The legislative history of the provision makes it clear that this provision applies only "to OPEC members or other cartel countries which cause serious disruption of the world economy.” Under present circumstances, there are no other cartel countries which fit into this category.
Although the Administration consistently opposed and continues to oppose the rigidities of the OPEC provision, it shares the concerns which precipitated the provision. Congressional inclusion of this provision despite the strong opposition of the Administration reflects the very strong adverse reaction in the United States to the oil embargo and the disruptive price increases of oil. We estimate that the embargo cost the industrialized world upwards of a million jobs; the adverse effect on developing countries has been incalculably more severe. Also, it added, by the sort of input-output calculation that perhaps best translates its effect, some five percentage points to inflation in the industrialized countries. It set the stage for a worldwide recession and it led to a financial hemorrhage from the oil importing countries to the producing countries which is continuing.
The fifth plenary session of the CIES, on Mar. 17, 1975, approved a report to the General Assembly on the Trade Act of 1974 (CIES/3089 rev. 1) in which the Council “noted with satisfaction" the following statements of the U.S. delegation:
1. That the executive branch has expressed its concern at the possible exclusion of Venezuela and Ecuador from the generalized system of preferences by application of Section 502(b)(2) of the Act, and that in consultations with Congress, particularly with the Senate Finance Committee and the House Ways and Means Committee, it is hoped that a speedy and favorable solution for the Latin American countries will be achieved before the system enters into effect.