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The introduction of import controls by the U.S. or the acceptance of voluntary restraints by other countries under threat of import controls by the U.S. could be a major threat to the expansion of world trade. It would be likely to drive other countries into tighter controls on their own imports, so as to safeguard themselves against imports diverted from the American market, and it would strengthen the forces of protectionism, and weaken the defences of its opponents, throughout the world. The U.S. line is likely to be that textiles is a special case and if the Administration can deal with it by special measures (as in the case of steel) it will be able to resist other demands for protection within the U.S.A. But the effects will not be limited to the U.S.A.
It is not yet clear whether President Nixon's proposals are intended realistically or are a device for gaining time and running the discussions into the sands. However this may · be, it is most important that he should realise how serious are the issues involved and that he should not commit himself to ill-considered action.
Other Issues
10.
Other specific issues with the U.S. include
(a) Wine Gallon Assessment
Under Current U.S. legislation, duty is levied on imported spirits below proof on a wine gallon basis. All domestic spirits and bulk spirits imported over-proof are taxed at the lower proof gallon rate. This results in discrimination against imported spirits in bottle and the resulting shift to bulk whisky shipments is causing a substantial reduction in dollar earnings. The case is currently being challenged in the U.S. Courts.
(b) Buy American Policies
Preferences are given to domestic supply sources where procurements are made by Federal agencies. These preferences range from 65% or 12% in the civil field to 50% in the important defence field or where the goods are to be used outside the U.S.A. In addition to Federal preferences some states and municipalities have their own Buy American legislation.
International Standards
11.
Another area where American actior although not in itself discriminatory, can result in considerable disruption of trade is in the arbitrary introduction of standards, as was evidenced in the 1966 Automobile Safety Legislation.
A great deal of work is in progress to establish international standards on this and similar problems, but the Americans tend to jump the gun and introduce their own domestic standards which may or may not comply with the international proposals. As an example, in spite of current tripartite discussions between the U.S., the U.K., and the French on the problem of aircraft noise, the Americans have announced their intention of prematurely introducing their own controls.
North Atlantic Free Trade Area
12.
Current U.S. thinking is liberal towards the establish- ment of regional or preferential trading blocs, provided they
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