TNAG-0143-FCO40-179-Exports-of-textiles-to-United-States-of-America-1969 — Page 158

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General Principles of U.S./U.K. Trade Policy

2. Since the war, the underlying batts of U.S. trade policy like that of the U.K. has been to increase prosperity and raise the standard of living by strengthening world trade, in the words of the U.S. 1962 Trade Development Act, "through the development of open and non-discriminatory trading". The Kennedy Round marked an important milestone in this process and world-wide reductions in tariff barriers were achieved satisfactorily by multinational negotiations. The success of the Kennedy Round is in no small part due to the Americans; it has three more years to run before its full benefits will be felt. The critical question now is whether the new Administration will continue the policies of its predecessors. Both the U.K. and the U.S. face serious balance of payments problems and in solving them should have regard to the impact of their policies on one another and on world prosperity.

Attitude of Previous Administration

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3. Despite the striking gains likely to arise from the Kennedy Round, which will benefit the Americans as much as anybody, there was an adverse reaction in the U.S. when the negotiations were completed. At the end of 1967, the U.S.A. found herself with a serious adverse balance of payments, various steps were taken to remedy this situation. Consideration was given to the introduction of trade measures, in the form of an import surcharge and an export rebate, and the position encouraged the protectionist lobbies in Washington. A large number of protectionist bills were laid before Congress in 1967 and 1968, covering one third of all dutiable imports. That none of these bills were passed by Congress was largely due to the determination of the Johnson Administration. President Johnson came down firmly against protectionism and announced his intention of vetoing any such bills that were put before him. The Administration, particularly the Office of the Special Representative for Trade Negotiations (Ambassador Roth), which was responsible for conducting the Kennedy Round negotiations, were untiring in their efforts to damp down protectionist pressures at home and to ensure equitable trade policies abroad. Together with other leading trading nations, the U.K. assisted these efforts by offering to accelerate the phased tariff reductions negotiated in the Kennedy Round.

4. In the last days of the Johnson Administration there were two concessions to protectionist pressures (a) the State Department sponsored a "voluntary" agreement by Japan and the Common Market countries to limit their exports of steel to the U.S.A. (see paragraph 8 below) and (b) the growing imports of certain milk products (including chocolate crumb from the U.K.) were drastically cut back. Imports of textiles were under threat throughout 1968.

Likely Attitude of Nixon Administration

5. In an attempt to impart to his successors some of the spirit which had guided the Kennedy and Johnson Administrations in maintaining liberal trade policies, President Johnson commissioned a study by the Roth Office of possible lines for future U.S. trade policy. Its recommendations, which were generally but not wholly liberal will not be binding on the new Administration, but it is to be hoped that President Nixon and his advisers will accept the liberal line as a basis for future trade policy. In this connection it is encouraging

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