10. FOREIGN ECONOMIC POLICY: Recommendations of the Joint Congressional Committee on the Economic Report, January 5, 19561

1. The President must continue to coordinate the diverse interests represented in the executive branch, and bear responsibility for foreign economic policy within that arm of Government. In the nature of our constitutional practices, there is not the same opportunity in the Congress for centralized coordination of all foreign economic policy, viewed in the broad sense. This puts a special responsibility upon individual members, the party leadership, and the standing committees of the Congress to consider the impact of their legislative proposals and their speeches on both home opinion and foreign behavior. 2. We should keep in mind in greater degree the psychological impact, as well as the purely economic, of domestic decisions which affect our foreign economic relations. We should keep in mind that our day-to-day actions often speak much louder than do pronouncements of overall good intentions, with consequent effect on the attitudes and behavior of friendly nations with whom we must cooperate in our own interest.

3. The United States should continue to champion multilateral trade on a most-favored-nation basis, insisting on reciprocal reductions in tariffs as well as the removal of other trade controls even without special concessions. Our reductions of trade barriers should be the occasion for hard bargaining with other countries to ease trade throughout the free world. The instrumentalities of the General Agreement on Tariffs and Trade, the Organization for Trade Cooperation, the International Monetary Fund, and the International Bank for Reconstruction and Development offer the best immediate opportunities for multilateral negotiation to make the greatest progress possible.

4. The United States should approve the agreement calling for its membership and participation in the Organization for Trade Cooperation.2

5. The United States should continue to press for the earliest resumption of currency convertibility consistent with finding stable and maintainable rates. Our interest in such convertibility is to minimize trade discrimination and to spur international investment. It would be our hope that in particular the countries of Western Europe and the sterling area could meet the necessary conditions for de jure convertibility before too long. Although such convertibility should not be forced prematurely, neither should it be consigned to the indefinite future.

6. Tariff and trade policy of the United States should be dictated by the national interest, rather than in terms of specific industries or products. Where individual industries cannot meet foreign competition, other solutions than new trade barriers should be sought.

1 Report of the Joint Committee on the Economic Report to the Congress of the United States (S. Rept. No. 1312, 84th Cong., 2d sess.), pp. 30-32.

2 See supra, doc. 8.

7. Further cuts in United States tariffs are in the national interest. The disruptive effect of such reductions can be minimized by making these cuts gradual, selective, reciprocal, and timed to fit the condition of business. Resort to quotas should be allowed only under extreme emergency conditions when other solutions are not available. Further simplification of the customs laws and related administrative matters should be carried out at the earliest possible date to streamline their operation and minimize arbitrary elements.

8. If aid is to be given to distressed areas or industries to meet the problems caused by new imports, such policies should be part of a broader program to meet similar problems of any source, not those of foreign trade alone. Such aid should not be aimed at blanket coverage, but to meet the specific hardships of people actually in distress. Aid should be viewed as temporary, and should be designed to contribute to the permanent correction of the distress so that aid can be terminated. It should not delay the solution of uneconomic arrangements which would continue to drag down the rest of the economy indefinitely.

9. No basic change in our controls on trade with the Communist countries is required at the present time. Trade in strategic goods would not be in the interest of the free world. But peaceful trade is not excluded from the realm of possibility any time that it is in the interest of the free world. Because East-West trade policy requires the cooperation of all countries of the free world, our policies must be coordinated with theirs. If we would limit trade important to our allies with the Communist countries, this policy carries a responsibility to provide alternate markets for their trade.

10. International investment and technical aid, both public and private, need further encouragement. Each case requires individual study and the solutions should be tailored to fit the circumstances. It should be kept in mind that this aid and investment is more than purely economic in character, and this will influence the choices made. Although broader considerations are involved, such aid, whether loans or grants, represents the positive and long-term equivalent of the negative and short-term restrictions on trade with the Communist bloc. This is a time when the Communists are using our own aid devices to further their ends, and we must be prepared to meet this challenge with a coordinated program which combines all the aspects of countering the problems created by the Communists. Only thus will the free world hold its margin of strength over the Sino-Soviet bloc.

11. Further study of domestic agricultural policy should take into account in greater degree the foreign economic policy aspects of these domestic measures.

12. Further study is required of the whole concept of defense essentiality if it is not to dominate over other necessary factors in trade policy. Not only should impartial criteria be discovered, but the whole concept of the mobilization base in the light of evolving military strategy should be reviewed.

13. New criteria should be developed to restrict application of the escape clause and peril points to industries where failure to apply these provisions would result in real hardship to individuals, whether workers or businessmen.

14. The problem of interpretation of antidumping penalties is a complicated one which deserves careful study rather than precipitate action; the need for change is recognized as its interpretation threatens to negate our foreign economic policy goals, but the remedies must be sought only with thorough investigation. At the very least, the President should be given authority to override Tariff Commission decisions when the national interest requires this.

15. We should give added encouragement to the preparation of international statistics, with attention both to the breadth of coverage and the quality of the information; data on national income and its distribution are particularly needed.

16. We need more study of what makes for economic growth both at home and abroad, if we are to choose policies which promote this development in the interests of attaining our national goals.

17. The work of this subcommittee should be continued for at least another year to explore more thoroughly some of the problems raised this year which were only partially answered. This study should include more specific analyses of individual situations than was possible within the general frame of reference of the current study.

Part XVIII

FOREIGN AID-ECONOMIC, MILITARY,
TECHNOLOGICAL

A. THE LEND-LEASE PROGRAM, 1941-1955

1. STATUS OF SETTLEMENTS UNDER THE LEND-LEASE PROGRAM: Report to Congress on Lend-Lease Operations for the Year Ending December 31, 1955 (Excerpts) 1

Preamble

1

At the close of business on December 31, 1955, settlement undertakings which had been signed by most of the lend-lease governments reflected an aggregate original creditor position of the United States of $1,577,458,847.50 in principal account, exclusive of "cash reimbursement" lend-lease, silver, and miscellaneous other obligations.

Principal payments and credits already made total $409,730,250.58 or approximately 26 percent of these repayment obligations. In addition, $164,552,611.70 has been paid to the Government of the United States as interest on these debts. The combined principal and interest credits of $574,282,862.28 represent more than 36 percent of the principal amount of these settlement obligations.

As yet, settlement agreements covering lend-lease furnished prior to V-J Day have not been reached with the U.S.S.R., China, Greece, and Saudi Arabia. A settlement with Poland is nearly completed.

1 Message from the President of the United States Transmitting the Thirty-Seventh Report to Congress on Lend-Lease Operations for the Year Ending December 31, 1955 (Washington, Government Printing Office, 1956), pp. 1, 5, 16–21. (The footnotes appearing throughout this document and its accompanying tables are from the original source.)

3030

Lend-Lease Settlement Accounts Showing Total Principal Amount Owed to the United States, Aggregate Payments Made Through December 31, 1955, and Principal Amount Outstanding *

This table is printed as "Statement (b)" on page 5 of the report. [Editor's note.]

1 Refers only to postwar "pipeline agreement."

2 Port construction at Monrovia.

• Exclusive of cash reimbursement and silver accounts.