The Eisenhower administration and the demise of GATT: dancing with Pandora

American Journal of Economics and Sociology, The,  July, 1994  by H. Richard Friman

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The shift partially reflected the onset of hearings held by the Committee for Reciprocity Information (CRI) on pending tariff negotiations with Japan. Acting under provisions of the 1934 Reciprocal Trade Act, as amended, representatives from the Tariff Commission, and Departments of State, Commerce, Agriculture and Treasury, held public hearings on planned tariff cuts in trade with Japan as part of the latter's ascension to GATT. Yet, despite expressions of concern by members of the textile alliance, not the least being the fact that the forthcoming negotiations with Japan would be conducted in secret, the President was not bound to take into account either the demands voiced under the auspices of the hearings or the recommendations of the CRI.

In early 1955, the Eisenhower administration faced the combination of a moderately strong textile alliance and a Congress that appeared willing and able to hold presidential initiatives hostage. Eisenhower's request that Congress approve a three-year extension of the president's authority to negotiate 15 percent tariff reductions under the Reciprocal Trade Act (HR 1), for example, led to an extensive congressional debate between national lobby organizations, affiliated business groups, concerned congressmen and administration spokesmen on the nature and scope of presidential authority over trade. Pressure from the textile alliance and its supporters in Congress also played a role in this debate by leading to two amendments in the final version of the bill (the Trade Expansion Act of 1955). The first, demanded by ACMI, shifted the starting point from June to January 1955 for the reduction in tariffs allowed under HR 1, and thereby prevented the ongoing secret negotiations with Japan from potentially establishing a lower starting point for future tariff reductions. The second amendment, demanded by the Northern Textile Association, allowed portions of an industry, rather than the industry as a whole, to file for escape-clause relief.(5)

Following the conclusion of the HR 1 hearings and passage of the Trade Expansion Act, the textile alliance continued its campaign for import relief by turning to demands for legislated, unilateral import quotas. Although ACMI representatives had made such demands as early as April 1955, the absence of clear congressional support for such a move prompted Secretary of State Dulles on June 6 to reject quotas. He stated they were threatening to a strategically. Moreover, on June 9 the State Department announced the results of the secret tariff negotiations with Japan, including reductions on textile tariffs in some cases by up to 48 percent. This announcement prompted ACMI representatives to push in earnest for congressional action against imports.

Concern over the threat of renewed congressional activity on the alliance's behalf was reflected in actions by the Japanese textile industry and government, and the Eisenhower administration. In August, ACMI representatives rejected a proposal by the Japanese textile industry officials for self-restraint in textile exports. In the fall, Dulles "personally advised" the Japanese government to restrain its textile exports. Heeding the Secretary of State's advice, the Japan's Ministry of International Trade and Industry imposed a ban on all textile exports in November and proposed unilateral restraints on selected textile products in December. As in August, ACMI representatives rejected the Japanese offer of self-restraint and continued to press for import relief at home.