Presidential Papers, Doc#908 To John Foster Dulles, 1 June 1954. In The Papers of Dwight David Eisenhower
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Doc #909

Document #908; June 1, 1954
To John Foster Dulles
Series: EM, AWF, Dulles-Herter Series
The Papers of Dwight David Eisenhower, Volume XV - The Presidency: The Middle Way
Part V: Maintaining "a united defense"; April 1954 to August 1954
Chapter 11: The "men in the Kremlin are not to be trusted"

 

Memorandum for the Secretary of State: I am glad that you are meeting on Wednesday with the Republican members of the Ways and Means Committee on the subject of interim extension of the Trade Agreements Act due to expire June twelfth.1

As you know, I believe that in the field of foreign economic policy the Congress, in addition to enacting a simple one-year extension of the Act, should this year provide tax incentives for foreign investment, increase the tourist allowance, improve the basis for customs valuation, authorize a simplification of commodity definitions and rate structures as well as a better method of classifying articles not enumerated in the tariff schedules, improve the statutes governing the administration of customs procedures and make changes in the anti-dumping law and procedures to speed up its administration.2

The further extension and strengthening of the Trade Agreements Act as a means to expand trade within the free world should, I believe, be a matter of the highest priority in Congress next year. But there are two matters which will not wait until next year, making an interim extension essential. First we should proceed immediately with the renegotiation of the organizational provisions of the General Agreement on Tariffs and Trade in accordance with the recommendation of the Commission on Foreign Economic Policy.3 Second, and of absolutely vital importance, we must undertake new negotiations looking toward the admission of Japan as a full trading partner in the free world.4

I hope you will emphasize in your conference how indispensable a strengthened Japan is to our entire position in the Far East. Japan is the key to the future political complexion of large areas in that part of the world. The policies that we adopt in respect to Japanese trade may well dictate whether these areas remain in the free world or fall within the Communist orbit. If it should be the latter, the consequences for the United States would be dire.5

The responsibility that we, as Republicans, have in this matter is an awesome one. I am confident we will meet it.6

1 The Trade Agreements Extension Act of 1953, signed on August 7, 1953, had extended presidential powers in international trade for one year. The President had notified Congress on May 20 that he would accept a second one-year extension of the act and had agreed to defer action on his liberalization program until 1955. (For background see nos. 860, 884; State, Foreign Relations, 1952-1954, vol. I, General: Economic and Political Matters, pt. 1, p. 199; and New York Times, May 21, 1954.)

Eisenhower had asked Dulles to meet with Daniel A. Reed (Rep., N.Y.), Chairman of the House Ways and Means Committee, to emphasize the consequences of a failure to extend the act, thereby limiting the President's authority to lower tariffs in response to trade-stimulating efforts by other countries and to raise tariffs to protect domestic industries from imports (Telephone conversation, Dulles and Reed, May 27, 1954, Dulles Papers, Telephone Conversations). Dulles had reported to Eisenhower (May 28) that he had found Reed willing to support the extension but unable to control the opinions of his committee (State, Foreign Relations, 1952-1954, vol. I, General: Economic and Political Matters, pt. 1, pp. 199-200; see also Telephone conversation, Dulles and Reed, June 8, 1954, Dulles Papers, Telephone Conversations).

2 Eisenhower--acting in accordance with recommendations of the (Randall) Commission on Foreign Economic Policy--had presented these proposals to Congress on March 30 (see Public Papers of the Presidents: Eisenhower, 1954, pp. 352-64; and nos. 860 and 884 in these volumes). As it developed, consideration of these measures would be deferred until 1955 (see n. 6 below).

3 The General Agreement on Tariffs and Trade (GATT), in existence since 1948, was designed to provide a multilateral code of trade practices as a means of encouraging freer trade. Under the Randall Commission provisions, the GATT countries would (1) sponsor multilateral trade negotiations, (2) recommend broad trade policies to the individual countries, and (3) provide a forum for consultation on trade disputes ("Report of the Commission on Foreign Economic Policy to the President and the Congress," U.S. Department of State Bulletin 30, no. 763 [February 8, 1954], 187-94).

Congress would neither approve nor disapprove the Randall Commission recommendations regarding renegotiation of the international General Agreement on Tariffs and Trade (see Congressional Quarterly Almanac, vol. X, 1954, pp. 265-67; and n. 6 below). For background on the commission see no. 170. The State Department would set September 13 to 17 for public hearings on revisions of the GATT, and the ninth session of the contracting parties would be held in Geneva from October 28 until March 7, 1955. The delegates would deal primarily with renegotiation of the agreement (U.S. Department of State Bulletin 31, no. 802 [November 8, 1954], 711, and no. 804 [November 22, 1954], 772-76; Kaufman, Trade and Aid, pp. 43-44).

4 Japan's application for provisional membership in the GATT, first proposed in July 1952, had been placed on the agenda at the annual meeting of the contracting parties held in Geneva in September and October 1953. The members had agreed to a two-stage proposal allowing Japan to participate in the organization without formal voting power until June 1955. During this period the rules of the General Agreement could be applied to trade between Japan and the contracting countries. (See Corse to Eisenhower, Aug. 20, 1954, and other documents in WHCF/CF Trade Agreements-Japan; State, Foreign Relations, 1952-1954, vol. I, General: Economic and Political Matters, pt. 1, pp. 171-73, 203-5, 213-14; Kaufman, Trade and Aid, pp. 39-41; and New York Times, June 24, July 4, 1954. See also Schaller, "Securing the Great Crescent," 392-414; and McMahon, "The Cold War in Asia," 320-23.)

5 On June 8 Dulles would report to Eisenhower that "he had been making reasonable progress" with Reed (Telephone conversation, Dulles Papers, Telephone Conversations). On June 10, before the Ways and Means Committee, Reed would urge favorable action on the extension, emphasizing the importance of an agreement with Japan (New York Times, June 11, 1954).

6 The House would pass the Reciprocal Trade Agreements Act (H.R. 9474) on June 11, and the Senate on June 24; the President would sign the one-year extension on July 1 (PL 464). For further developments see nos. 1019, 1123, 1142, 1307; Congressional Quarterly Almanac, vol. XI, 1955, pp. 289-301; and New York Times, June 22, 1955.

Bibliographic reference to this document:
Eisenhower, Dwight D. To John Foster Dulles, 1 June 1954. In The Papers of Dwight David Eisenhower, ed. L. Galambos and D. van Ee, doc. 908. World Wide Web facsimile by The Dwight D. Eisenhower Memorial Commission of the print edition; Baltimore, MD: The Johns Hopkins University Press, 1996, http://www.eisenhowermemorial.org/presidential-papers/first-term/documents/908.cfm

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