Foreign Relations of the United States, 1951, National Security Affairs; Foreign Economic Policy, Volume I

International Trade Files, Lot 57 D 284, Box 164, “Magnuson Amendment”

Undated Memorandum Prepared in the Department of State¹

undated

Executive Authority to Impose Import Restrictions on Agricultural Products Under Section 22 as Affected by the General Agreement

A question has been raised concerning the scope of the present authority of the President to apply import restrictions on farm products pursuant to Section 22 of the Agricultural Adjustment Act of 1935, as amended, in view of the provisions of the General Agreement on Tariffs and Trade, which the United States is applying under the Protocol of Provisional Application.

Section 22 provides that whenever the President finds that imports are entering the United States so as to render or tend to render ineffective or materially interfere with any of a variety of agricultural programs, he shall, following an investigation and finding by the Tariff Commission, proclaim additional import fees or quantitative import limitations, within specified limits, necessary to prevent imports from rendering or tending to render ineffective or materially interfering with the programs in question. In July 1948 the number of programs covered by the Section was increased and at the same time a subparagraph was added providing as follows:

• “(f) No proclamation under this section shall be enforced in contravention of any treaty or other international agreement to which the United States is or hereafter becomes a party.”

The international agreements to which the United States is and was at that time a party include the General Agreement on Tariffs and Trade, which was concluded on October 30, 1947 and to which thirty-two countries are now parties. This Agreement prohibits, with certain exceptions not here material, the use of quantitative restrictions on agricultural imports (import quotas) except when necessary to the enforcement of governmental measures restricting the production or marketing of like or substitutable domestic products or when necessary to the enforcement of governmental measures for the removal of a temporary surplus of a like or substitutable domestic product by making the surplus available to certain groups of consumers free of charge or at prices below the current market level.

The General Agreement is currently being applied by the United States under a Protocol of Provisional Application signed October 30, 1947 which contains the following language:

• “1. The Governments . . . [enumeration of certain states, including the United States]² undertake . . . to apply provisionally on and after January 1, 1948:
  • “(a) Parts I and III of the General Agreement on Tariffs and Trade, and
  • “(b) Part II of that Agreement to the fullest extent not inconsistent with existing legislation.”

Since the provisions respecting limitations on the use of quotas are found in Article XI in Part II of the General Agreement, a question arises as to the extent to which the United States is bound by those provisions in its use of Section 22, which at the time of conclusion of the General Agreement was entirely mandatory and contained no provision giving precedence to international agreements, subparagraph (f) having been added to Section 22 by Act of July 3, 1948.^*

The answer is clear upon examination of the record. Paragraph 1 (b) of the Protocol of Provisional Application was adopted by the countries which negotiated the General Agreement solely to expedite the fullest possible application of the Agreement without waiting upon the modifications of domestic law which various countries would have to secure in order to give full definitive effect to the Agreement. The Protocol was not intended as a permanent modification of the obligations of those countries whose existing legislation rendered them unable to apply fully at that time the provisions of Article XI or other articles in Part II. The object was, rather, to avoid placing any party in the position of either having to take action contrary to a domestic law which antedated the Agreement or being forced to apply such an existing domestic law, contrary to the Agreement itself. Thus, the Protocol, which was not expected to be the basis for application of the Agreement for as long a period as it has been, included Paragraph 1 (b) for the purpose of placing a ceiling upon the extent to which any party subject to conflicting requirements of then-existing domestic legislation might deviate from the provisions of the Agreement. It was not intended to freeze the extent of any country’s application of the Agreement to that extent which may have been possible in the light of existing domestic laws at the time of concluding the Agreement, but to provide a transitional period during which domestic laws might be brought into full accord with the Agreement.

The amendment of Section 22 by the United States in 1948 to give precedence to international agreements to which the United States is or may become a party was precisely an action looking toward fuller application of the General Agreement on our part than was originally possible under domestic laws as they existed in 1947. It had long been realized that unless Section 22 were amended, the possibility existed that it might be applied in contravention of some international agreement and that it was therefore necessary to enact a clarifying amendment. This apprehension became more acute in 1947, when the Secretary of Agriculture sought to broaden the program-coverage of the Section, with attendant increased risk of use of the Section in contravention of international obligations. This opportunity was therefore taken to make certain that no such conflict would arise. In his letters of February 4, 1947 and June 6, 1947 in which he proposed that the Section be amended to cover additional programs, the Secretary of Agriculture specifically requested the addition to Section 22 of a provision which would prohibit “enforcement of a proclamation under Section 22 that would be in contravention of the international obligations of the United States.” In explaining the desirability of such a provision, the Secretary of Agriculture stated:

“Certain limitations on the scope of action permitted under Section 22 are involved in the agreements with foreign countries concluded under the Reciprocal Trade Agreements Act. . . . . The exercise of the authority granted under Section 22 has not in the past conflicted with any of our international undertakings, and presumably this will also be the case in the future. It would, however, be of advantage to the United States in the conduct of its foreign policy if this were to be specifically required by Section 22. Accordingly, the proposed amendment would prohibit any enforcement of a proclamation under Section 22 that would be in contravention of the international obligations of the United States.”

At the time when the Congress was considering the amendment of Section 22 to broaden the scope of the provision as well as to ensure that it would not operate inconsistently with international obligations, there was full discussion of the provisions of the agreements involved, including the provisions of the General Agreement to which the United States became a party before Section 22 was amended in July 1948. It is clear, therefore, that the inclusion of subparagraph (f) was intended, as its unequivocal language indicates, to limit the application of Section 22 to uses consistent with the substantive provisions of the General Agreement.

It should be noted that even before subparagraph (f) was added to Section 22, the Protocol itself modified the conditions under which we could impose import quotas under Section 22. For example, the President could not, consistently with the Protocol, have imposed an import quota under Section 22 without also using any available domestic authority to restrict production or marketing or to remove temporary surpluses by programs of the kind contemplated by the General Agreement; for import quotas without domestic controls would in that case contravene the Protocol requirement that we apply the Agreement to the fullest extent not inconsistent with domestic legislation.

It should also be noted that identical principles to those contained in Article XI of the General Agreement also appear in Article 20 of the Havana Charter for an International Trade Organization, the general principles of which the United States is committed by Article XXIX of the General Agreement to apply to the fullest extent of its executive authority. Article XXIX, which appears not in Part II but in Part III of the Agreement, thus also requires full adherence to the principles common to both instruments respecting use of quantitative restrictions on agricultural imports.

As a matter of policy, the decision to confine our use of Section 22 to uses consistent with international agreements was unquestionably a wise one. The provisions of the General Agreement provide adequate scope for the use of import quotas to safeguard domestic agricultural interests while at the same time offering agreement countries which are traditional foreign suppliers of agricultural products assurance that disproportionate burdens will not be placed upon imports in any effort to assist domestic farm interests. As a leading agricultural exporter, the United States also has a substantial interest in insuring that other countries are not free to restrict without limitation agricultural imports from the United States.

1. Internal evidence indicates that this memorandum was drafted in the latter half of the year 1948, and definitely after the enactment of the Agricultural Act on July 3, 1948.
2. Ellipses and brackets appear in the source text.
3. The obligations of the United States under the General Agreement respecting the use of fees are in Part I of the Agreement and consequently the language of the Protocol quoted above raises no problem concerning the extent of our obligations regarding use of fees. Clearly fees may not be imposed so as to raise duties on scheduled products above the levels agreed to under the General Agreement. [Footnote in the source text.]