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that the Agreement on Trade Relations with Romania would promote the purposes of the Act and was in the national interest.
The Congress approved the Agreement by Senate Concurrent Resolution 35 on July 28, 1975. The notices of acceptance of the Agreement were exchanged at Bucharest on August 3, 1975, in accordance with Article XII of the Agreement.
President Ford's message to Congress, dated Apr. 24, 1975, together with the text of the Agreement and his proclamation, report under Sec. 402(c)1) of the Trade Act of 1974, Executive order, and related determinations of the same date, is at H. Doc. No. 94–114, 94th Cong., 1st Sess., Apr. 24, 1975. See also Weekly Compilation of Presidential Documents, Vol. 11, No. 17, Apr. 28, 1975, pp. 435-437. For the roclamation, Executive order, and determinations, see also Fed. Reg., Vol. 40, No. 82, Apr. 28, 1975, pp. 18389–18391, and No. 92, May 12, 1975, p. 20607. The Tariff Schedules of the United States, 19 U.S.C. 1202, were amended, effective Aug. 3, 1975, by deleting Romania from the list of countries set forth in General Headnote 3(e). See Fed. Reg., Vol. 40, No. 160, Aug. 18, 1975. A Special Report on the Impact of U.S. Imports of Granting M-F-N Treatment to Romania, submitted to Congress on June 27, 1975, by the Chairman of the U.S. International Trade Commission, pursuant to Section 410 of the Trade Act of 1974, is at H. Doc. No. 94–209, 94th Cong., 1st Sess., July 8, 1975. For a partial text and summary of the provisions of Section 402 of the Trade Act of 1974, entitled “Freedom of Emigration in East-West Trade,” and Sec. 405, “Authority to Enter into Commercial Agreements," see the 1974 Digest, pp. 143-144, and 454 455.
President Ford and President Ferdinand E. Marcos of the Philippines issued a joint communique, dated December 7, 1975, on the occasion of President Ford's visit to the Philippines, in which they agreed to the negotiation of a new trade agreement between the two countries. The relevant paragraph of the communique states:
In the field of economic and commercial relations, they agreed that it was timely to conclude negotiations on a new agreement on trade, investment and related matters as a means to enhance economic cooperation between the two countries. This agreement would modernize the terms for conducting economic and commercial relations, taking account of the end of the LaurelLangley Agreement and giving due consideration to the requirements for the development of the Philippine economy. The Philippine Government stressed its urgent desires regarding United States tariff treatment for such significant Philippine products as mahogany and coconut oil. Weekly Compilation of Presidential Documents, Vol. 11, No. 50, Dec. 15, 1975, pp. 1352–1353. The Laurel-Langley Agreement concerning trade and related matters is at TIAS 3348; 6 UST 2981; entered into force Jan. 1, 1956; terminated July 3, 1974.
Deputy Secretary of State Robert S. Ingersoll made a statement on the American role in East-West trade, 1975–1980, before the Senate Commerce Committee on December 12, 1975, in which he warned against special legislative restrictions on trade and financial relations with Communist countries and urged modification of existing restrictions, including those in the 1974 Trade Act. Excerpts from his statement follow:
We should . . . not try to tie individual trade transactions to specific political concessions-for example, concessions on arms control issues. ... Even if political concessions could be extracted in this way, they would be likely to evaporate once the terms of the commercial transaction had been met. ... Trade transactions, like political and arms agreements, must be able to stand on their own merits.
... If we seek to expand trade with the Communist countries over the coming years, we will need at the same time to develop a structure of policy and legislation to support this expanded trade. Such a structure must permit steady progress toward more normal relations, on the basis of mutual benefit. Since not all problems can be foreseen, the structure must also permit the resolution of disputes and take into account the very basic differences between market and non-market systems.
The Trade Act of 1974 offers such a structure. It provides that most-favored-nation (MFN) tariff treatment can be extended to non-market economy countries only on the basis of a trade agreement. Such a trade agreement must provide safeguards against the possible disruption of our markets; it must protect industrial property rights and copyrights; it must ensure arrangements for the settlement of commercial disputes; it must facilitate trade promotion; and it must be subject to suspension or termination for reasons of national security.
To protect our security interests, the present structure of unilateral and multilateral strategic export controls must also be maintained.
Some changes in existing legislation are required, however, if we are to create a legal structure which will permit improvement in our trade relations with the non-market economy countries. For example, we favor legislation to allow for nondiscriminatory, nonconcessional financing of trade, which is essential to the maintenance of our competitive position. We also favor modification of Section 408 of the Trade Act to give us greater flexibility in our relations with Czechoslovakia. Since the Johnson Debt Default Act of 1934 no longer serves its original purpose of protecting American investors against defaulting governments, consideration might be given to its repeal. The repeal of Section 511 of the Trade Agreements Extension Act of 1951, which embargoes the importation of certain furs from the U.S.S.R. and China, would remove an obsolete impediment to trade.
In East Europe, the effect of existing legislation has varied from country to country. Poland and Yugoslavia, with which the United States has had GATT relations for a number of years, were exempt from the provisions of Section 402 of the Trade Act, and our trade and political relations with those countries have continued to progress.
Romania, continuing to pursue its independent foreign policy, negotiated a trade agreement with us under the provisions of the Trade Act, and so the general improvement in U.S.-Romanian relations noted over several years continues.
Hungary, Bulgaria, Czechoslovakia, and the German Democratic Republic, following the Soviet lead, have stated that they are not prepared to negotiate trade agreements under the emigration provisions of the Trade Act. Although U.S. trade with most of these countries has increased in recent years in the absence of MFN, the full potential of their markets cannot be enjoyed by American exporters so long as we are not in a position to extend MFN to their products coming into our country. It is not easy to quantify these losses, but we do know the extension of MFN is clearly encouraging trade expansion with Poland and Romania, where total trade turnover in each case is expected to triple between 1974 and 1977. Our inability to proceed toward normalization of trade relations with these other four countries reduces our flexibility and our capacity for developing appropriate and effective policies. It thus involves not only economic loss for both sides but also a political irritant.
The Administration fully supports the objectives of Section 402 of the Trade Act and we share the views of those who believe that the United States must work to bring about increased emigration from the U.S.S.R.
Since the passage of the Trade Act, both the United States and the U.S.S.R. have tried to sustain trade. We have, however, paid an economic and political price in opportunities lost. The rise in overall trade in 1975 points not to a continuing dynamism in our commercial relationship but to greatly increased grain sales and deliveries of industrial goods ordered before 1975. Several major orders have been diverted from American companies this year, and in some cases we have been told plainly that the switch was politically motivated. While we have cut off the flow of government-sponsored credits to the U.S.S.R., Western Europe and Japan have been competing with each other to offer more, and the total available to be drawn on is now some $10 billion. Not surprisingly, trade flows along the same lines as these credits. Since the last Ex-Im Bank Loans were extended in May of 1974 the U.S. share of new Soviet orders of machinery and equipment from Western countries has fallen from its 1973 level of about 22 percent to about 14 percent in the first ten months of 1975.
Our inability to use the facilities of the Export-Import Bank to finance our trade with the Soviet Union also has broader implications. Providing access to Ex-Im facilities is not a oneway concession. Ex-Im loans are tied to U.S. exports and to specific projects, whereas the credits that the Soviet Union can obtain commercially at only slightly higher interest rates are not. Through the Ex-Im Bank, we can also control the flow of credit in ways that we cannot in private financial markets.
Our inability to grant MFN treatment to the Soviet Union also involves lost opportunities. The Soviets would prefer to pay for their imports with increased exports, instead of financing them with costly credits. By discriminating against Soviet exports, we limit the expansion of our mutual trade. In doing so, we inhibit the growth of our own exports, and we forego some of the indirect political benefits that come from an expanding trade relationship. The absence of MFN also makes long term projects, in which repayment takes the form of products produced, less attractive with the United States than they are with other countries which apply a nondiscriminatory tariff.
An additional economic price has been the cessation of Soviet payments of their lend-lease obligations. The lend-lease agreement reached in 1972 provided for the payment of three installments, totalling $48 million, by July 1, 1975. These have been paid in full. The repayment of the balance of $674 million was made conditional on our granting most-favored-nation tariff treatment to the Soviet Union. This will not be paid until MFN is extended.
Finally, the Trade Agreement would have protected American industry more fully against market disruption resulting from Soviet imports. It would also have encouraged the use of procedures for the arbitration of commercial disputes. These benefits are not available to us as long as the Agreement remains in abeyance.
For the full text of Mr. Ingersoll's statement, see Dept. of State Bulletin, Vol. LXXIII, No. 1908, Jan. 19, 1976, pp. 90–95.
The Trade Agreements Program On March 27, President Ford issued Executive Order 11846 on “Administration of the Trade Agreements Program," defining that program as including all activities consisting of, or related to, the negotiation or administration of international agreements which primarily concern trade and which are concluded pursuant to the authority vested in the President by the Constitution, Section 350 of the Tariff Act of 1930, as amended (19 U.S.C. 1351), the Trade Expansion Act of 1962, as amended (19 U.S.C. 1801), or the Trade Act of 1974 (P.L. 93-618; 88 Stat. 1978).
Section 2 of the Executive order designates the Special Representative for Trade Negotiations as "chief representative of the United States for each negotiation under the trade agreements program” and specifies his responsibilities, including participation in other negotiations which may have a direct and significant impact on trade, preparation of the annual report to Congress, administration of the trade agreements program, and consultation with other Federal agencies and bodies. Section 2(g) directs the Secretary of State to advise the Special Representative and the Trade Policy Committee on the foreign policy implications of any action under the trade agreements program and to "participate in trade negotiations which have a direct and significant impact on foreign policy.”
Section 3 establishes and specifies the functions of the Trade Policy Committee, composed of the Special Representative as Chairman, the Secretaries of State, Treasury, Defense, Interior, Agriculture, Commerce, and Labor, the Attorney General, the Assistant to the President for Economic Affairs, and the Executive Director of the Council on International Economic Policy.
Section 4 delegates to the Special Representative the President's functions under Section 102 of the Trade Act of 1974 (19 U.S.C. 2112) concerning notice to, and consultation with, Congress in connection with agreements on nontariff barriers to, and other distortions of, trade, and a number of other functions under the Act.
Under Section 5, the Secretary of the Treasury, in consultation with the Secretaries of Commerce and Agriculture, is authorized to issue regulations governing the administration of any quantitative restrictions proclaimed to provide import relief, and is authorized to issue regulations governing entry or withdrawal from warehouses for consumption, of articles pursuant to any orderly marketing agreement.
Section 6 gives the Special Representative responsibility concerning unfair or unreasonable foreign trade practices and U.S. responses thereto.
Section 7 establishes the East-West Foreign Trade Board to replace the President's Committee on East-West Trade Policy, in accordance with Section 411 of the Trade Act of 1974 (19 U.S.C. 2441), and to include the Secretaries of State, Treasury, Agriculture, and Commerce, the Special Representative for Trade Negotiations, the Director of the Office of Management and Budget, the Executive Director of the Council on International Economic Policy, the President of the Export-Import Bank of the United States, and the Assistant to the President for Economic Affairs. Section 7(d) requires that:
The Secretary of State shall advise the President with respect to determinations required to be made in connection with Sections 402 and 409 of the Act [19 U.S.C. 2432, 2439) (dealing with freedom of emigration) and Section 403 [19 U.S.C. 2433]