From time to time, other nations have imposed, and still impose, impediments to exports of raw materials to the United States, in order to encourage the processing of such materials internally. The problem of obtaining adequate supplies of raw materials on the part of the United States will increase in importance as time passes. Accordingly, this problem merits the most careful consideration and appropriate action if such impediments are continued.
Our policy of nondiscrimination in trade matters, as reflected in our unconditional most-favored-nation policy, should not be changed.
The United States should continue its traditional policy of nondiscrimination in its trade relations with other free nations. Only the unconditional most-favored-nation doctrine is consistent with this policy. If the United States were to give preferential trade treatment to certain countries, such action would itself constitute discrimination and be inconsistent with the position of the United States in the free world. Our present unconditional policy has been in effect for 30 years. Its reversal now would probably defeat our efforts to induce other countries to eliminate preferential arrangements that discriminate against us.
The organizational provisions of the General Agreement on Tariffs and Trade should be renegotiated with a view to confining the functions of the contracting parties to sponsoring multilateral trade negotiations, recommending broad trade policies for individual consideration by the legislative or other appropriate authorities in the various countries, and providing a forum for consultation regarding trade disputes. The organizational provisions renegotiated in accordance with this recommendation should be submitted to the Congress for approval either as a treaty or by joint resolution.
The General Agreement on Tariffs and Trade has never been reviewed and approved by the Congress. Indeed, questions concerning the constitutionality of some aspects of the United States participation in the General Agreement have been raised in the Congress. This has created uncertainty about the future role of the United States in the General Agreement. It would be appropriate if the organizational provisions of the Agreement were submitted to the Congress, after renegotiation in accordance with the principles stated above.
The President's power to negotiate trade agreements under the Trade Agreements Act and to place them in force should be extended for not less than 3 years, with appropriate safeguards. Such a period should give time
for considering the effects of the recommendations for action here and of the actions taken abroad to restore multilateral trade and payments as in the past, and for Congress to give adequate consideration to the renegotiated organizational provisions of the General Agreement on Tariffs and Trade, as recommended above. Consideration should then be given to extending the Trade Agreements Act for a longer period than 3 years, with safeguards as experience then indicates to be necessary.
In the past, the repeated short-term renewals of the President's powers to negotiate trade agreements have created an aura of instability in our trade policy which it would be desirable to avoid for the future. However, any permanent or long-term delegation of tariff-changing power by the Congress, while including limitations on maximum permissible changes, must also be accompanied by adequate standards, more specific than those which have accompanied the earlier delegations of such power for limited periods of time.
In the course of tariff negotiations, great care should be exercised in the determination of the principal supplier or suppliers of particular articles subject to negotiation as well as in identifying the lowest cost source of prospective foreign competition. Also, there should be closer consultation with domestic producers on technical problems without permitting them to participate in actual negotiations. Multilateral techniques of negotiation, such as those developed under the General Agreement on Tariffs and Trade, provide a better means of dealing with these questions than bilateral negotiations, and should be retained.
The President should be delegated broad powers under the Trade Agreements Act to enter into multilateral negotiations looking toward a reduction of tariff rates on a gradual basis. The President's power to increase rates should not thereby be curtailed. The President should be authorized for the 3 years following the renewal of the Act to reduce tariff rates to the following extent: a. Pursuant to multilateral trade agreement negotiation, the President should be authorized to reduce existing tariff rates by not more than 5 percent of present rates in each of the first 3 years of the new act.