PROCLAMATION

BY PRESIDENT

DEPOSITED BY THE

UNITED STATES OF AMERICA

How a Trade Agreement Is Made

by Honoré M. Catudal

THE TRADE AGREEMENTS LEGISLATION

The Trade Agreements Act, initially enacted in 1934 and since renewed 11 times by Congress, gives the President limited authority to enter into trade agreements with foreign countries. In such agreements the United States reduces or agrees not to increase tariff rates applying to specified imports from abroad in exchange for similar concessions by other countries on products exported by the United States. Trade agreements also include mutual general obligations such as granting most-favored-nation treatment with regard to tariff matters.

The President's authority is limited both as to the time in which agreements may be concluded and as to the extent of reductions or increases in rates. Moreover, the law prescribes three things which must be done before a trade agreement is concluded: (1) reasonable notice must be given of intention to negotiate an agreement in order that interested persons (e. g., domestic producers, exporters, importers, the general public, etc.) may have an opportunity to present their views; (2) the President must seek information and advice from the Departments of State, Agriculture, Commerce, and Defense and from other appropriate sources; and (3), since 1951, the President must seek "peril point" recommendations from the U.S. Tariff Commission with respect to the products which are to be considered for the granting of tariff concessions by the United States in the proposed negotiations. (The "peril points" are the

Mr. Catudal, author of the above article, is an adviser in the Trade Agreements Division.

rates below which the Tariff Commission finds that U.S. duties may not be reduced without causing or threatening serious injury to the domestic industry producing like or competitive products.)

The trade-agreements authority having been granted by Congress specifically to the President, he is responsible for final decisions at each stage of the negotiations. Thus, it is the President who makes the decisions (1) as to whether to enter into trade agreement negotiations with a particular country or countries; (2) as to the items included in the list of imported commodities with regard to which peril-point recommendations are requested from the Tariff Commission and public views sought; and (3) as to the products on which concessions are to be offered and sought during negotiations. He also approves the content of the agreements before proclaiming them.

INTERDEPARTMENTAL ORGANIZATION

In carrying out his responsibilities under the Trade Agreements Act, the President is assisted by an extensive network of interdepartmental committees, so organized as to make available to him information and advice from all departments and agencies of the Government concerned with foreign trade-from the technical level up to the Cabinet-and from the general public.

The President has established, by Executive orders, three principal interdepartmental committees to assist him in the administration of the trade agreements program. These are the Interdepartmental Committee on Trade Agreements, the Committee for Reciprocity Information, and the Cabinet-level Trade Policy Committee.

The Interdepartmental Committee on Trade. Agreements, originally established in 1934, is re