As provided under section (c), however, the President may not increase a duty to a rate more than 50 percent ad valorem (or ad valorem equivalent) or more than 50 percent above the Column 2 rate, whichever is greater. For example, the trade agreement rate of duty currently applied to automobiles is 3 percent and the Column 2 rate is 10 percent. If the United States withdrew its obligations to apply the 3 percent rate, the President could increase the rate to any level up to 50 percent ad valorem.

If, for example, the United States withdraws a tariff concession made to a particular country under GATT Article XXVIII, the President could effect a corresponding increase in a United States rate of duty. This authority might also be used in cases where the United States is owed compensatory reductions as a result of a foreign country imposing import restrictions on United States goods for valid reasons, e.g., balance-of-payments needs (Article XII), to remedy domestic injury (Article XIX), or under its renegotiation rights (Article XXVIII). If this compensation is not forthcoming or is judged inadequate, the President is authorized to increase duties or other import restrictions to restrike the balance of concessions.

2. Maintaining Rates After Termination of a Trade Agreement

Subsection (b) provides the President authority to maintain existing levels of duties or other import restrictions even after a trade agreement is terminated. The issue of maintaining existing rates when a trade agreement is terminated became a potential problem, for example, in the case of tariffs on petroleum when Venezuela announced its intention to terminate its bilateral trade agreement with the United States. Had this happened, the tariff to be applied arguably could have been the much higher, pre-agreement rate. Existing domestic law (section 251 of the Trade Expansion Act) would have required this rate to be applied on a most-favored-nation basis. In that type of situation, administrative control over United States tariff rates could be lost, with foreign actions potentially determining United States rates of duty.

SECTION 403. RENEGOTIATION OF IMPORT DUTIES

The section provides permanent authority to negotiate and implement supplemental agreements with foreign countries of a limited scope for the purpose of making adjustments to deal with changed circumstances while maintaining an overall balance of concessions under existing agreements. The authority permits the President to negotiate agreements of a limited nature even after expiration of his basic negotiating authority provided under section 101.

Subsection (a) provides the President authority to enter into agreements with foreign countries at any time to modify or continue any existing duty, to continue existing duty-free or excise treatment, or to impose additional duties. This authority could be used to eliminate tariff discrepancies and anomalies that exist on certain products with Canada, for example.

Luder subsection (b) duty reduction or the continuation of duty-free treatment under such agreements cannot affect more than two percent of the total value of United States imports during the most recent twelve-month period. Moreover, the same articles cannot be subjected to a second agreement under this section within a five-year period. The subsection envisions the staged implementation of duty reductions, for example, over a five-year period, if appropriate.

Subsection (c) limits duty reductions under this authority to a cut of 20 percent from existing duty levels. (Authority for duty reductions granted as compensation for increases in United States import restrictions is contained in scetion 404.) Subsection (c) also sets a ceiling on duty increases under this authority to not more than 50 percent above the Column 2 rate or 50 percent ad valorem, whichever is greater.

SECTION 404. COMPENSATION AUTHORITY

The purpose of this section is to provide the President with permanent authority to compensate foreign countries for increases in United States tariffs or other import restrictions, in order to maintain the level of reciprocal and mutually advantageous concessions. Domestic authority to reduce duties for purposes of compensation under section 201 of the Trade Expansion Act expired on June 30, 1967.

Section 404 requires the President to afford an opportunity, to the extent required by international obligations, for foreign countries affected by import

restrictions imposed by the United States to consult with the United States with respect to concessions as compensation. This provision confirms the President's existing authority. This section also grants the President discretionary authority to enter agreements with such countries to grant new concessions in the form of modification or continuation of any duty or continuation of existing duty-free or excise treatment to the extent he determines necessary or appropriate to maintain a general level of reciprocal and mutually advantageous concessions.

Subsection (c) limits duty reductions to not more than 50 percent below the existing rate. This limitation does not apply to duties of 5 percent ad valorem (or ad valorem equivalent) or below. The President could stage such duty reductions if appropriate.

The principal use of this authority is likely to be in cases where the President has provided import relief pursuant to section 203. In such cases, the United States is required by GATT Article XIX to consult with foreign countries having an interest as exporters of the products concerned. If a satisfactory arrangement is not made, i.e., if compensation is not forthcoming, countries adversely affected have the right under GATT to restrike the balance of concessions by increasing or imposing equivalent new barriers on United States exports. If, on the other hand, the President can offer corresponding or offsetting tariff reductions on other articles, the balance of concessions can be restored without damaging United States exports.

This authority is also required for actions taken pursuant to section 402, for example, if the United States unilaterally withdraws tariff concessions under GATT Article XXVIII. The authority could also be used in cases where the President has retaliated on a most-favored-nation basis against unfair trade practices under section 301 and compensation is owed to those countries which have suffered the incidental effects of retaliation aimed at a single country. This compensation authority may also be used in connection with actions taken under section 403 to increase United States tariffs or other restrictions. One example, would be where the United States and another country agreed that some United States tariffs would be lowered and others raised (as part of a package in which that country makes reciprocal concessions or rate increases), third countries adversely affected by the duty increases would have a right to demand compensation and, in lieu thereof, to retaliate against United States exports.

SECTION 405. AUTHORITY TO SUSPEND IMPORT BARRIERS TO RESTRAIN INFLATION

Section 405 provides the President authority to temporarily reduce import barriers as a means to restrain inflation.

1. President's Authority

Subsection (a) authorizes the President, during a period of sustained or rapid price increases, to reduce or suspend duties and increase the level of imports which may enter under other import restrictions on any article or group of articles on a temporary basis, if he determines that supplies of such articles are inadequate to meet domestic demand at reasonable prices. There is no limitation on the amount of the decrease in duty or increase in quota levels which the President may authorize. Subsection (c) provides that the President may modify or terminate, in whole or in part, any action taken under subsection (a), to the extent consistent with the purposes and limitations of this section.

Subsection (d) requires the President within 30 days after the taking of any action under this section to notify both Houses of Congress of the nature and reason for such action.

2. Limitations on Authority

Subsection (b) stipulates that the President shall not exercise the authority under subsection (a) with respect to an article if, in his judgment, such action would cause or contribute to material injury to firms or workers in any domestic industry, impair the national security, or otherwise be contrary to the national interest.

Subsection (b) further provides that actions taken under subsection (a) shall not affect more than 30 percent of the estimated total value of United States imports of all articles during the time the actions are in effect. Subsecion (e) limits the duration of any action taken under this section to one year, unless a longer period is specifically authorized by law.

SECTION 406. RESERVATION OF ARTICLES FOR NATIONAL SECURITY OR OTHER REASONS Subsection 406 (a) directs the President to exclude any article from any action under this Act which would involve the reduction or elimination of any duty or other import restriction if he determines such action would threaten to impair the national security. This subsection parallels section 232(a) of the Trade Expansion Act which authorizes the President to exclude for reasons of national security any articles from actions taken pursuant to section 201 (a) of the Trade Expansion Act or section 350 of the Tariff Act of 1930. Section 232 of the Trade Expansion Act is not repealed by this Act.

Subsection (b) requires the President to reserve any article from negotiations or actions contemplating the reduction or elimination of a duty or other import restriction under Title I or under sections 403, 404, and 405 on which there is in effect any import relief measures under section 203 of this Act or section 351 of the Trade Expansion Act, or any national security action under section 232 of the Trade Expansion Act. This portion of subsection (b) is identical to section 225 (a) of the Trade Expansion Act, except that the principles apply to actions under Title IV as well as to five-year trade agreements authority.

Subsection (b) also permits the President, as under section 225 (c) of the Trade Expansion Act, to reserve any other article from such negotiations under Title I and IV as he determines appropriate. In making such determinations the President shall take into consideration the information and advice provided by the Tariff Commission under section 111(b) where available, advice from Departments under section 112, and the summary of public hearings provided under section 113.

SECTION 407. MOST-FAVORED-NATION PRINCIPLE

This section is identical in substance to section 251 of the Trade Expansion Act. Except as otherwise provided in this or any other Act, any duty or other import restriction or duty-free treatment applied in carrying out any action or trade agreement under this or previous Acts shall be applied to direct or indirect imports from all foreign countries. However, certain sections in this Act and prior Acts permit deviations from the most-favored-nation principle. For example, certain nontariff barrier agreements authorized under section 103 could apply only to signatories, and generalized tariff preferences granted under Title VI apply only to beneficiary developing countries.

SECTION 408. AUTHORITY TO TERMINATE ACTIONS

This section authorizes the President to terminate at any time, in whole or in part, any actions taken to implement trade agreements under this or prior Acts. This is identical in substance to prior authorities contained in section 255(b) of the Trade Expansion Act and section 350(a)(6) of the Tariff Act, which are repealed by this Act. These provisions authorize the President to terminate, in whole or in part, any proclamation made to carry out a trade agreement under those Acts. These termination authorities include the lesser authorities to terminate for a limited period of time, i.e., to suspend and to terminate in part in order to restore, in whole or in part, import treatment existing prior to the implementation of trade agreements.

For example, if trade agreements reduced a tariff rate from the statutory rate of 20 percent to 10 percent, the termination or suspension of the lower rate would put into effect any rate provided by the President above 10 percent, but not exceeding 20 percent ad valorem. Similarly, if trade agreements had increased a rate, the suspension would result in a new rate being established by the President which would not be lower than a rate previously in effect.

SECTION 409. PERIOD OF TRADE AGREEMENTS

This section is identical in substance to section 255 (a) of the Trade Expansion Act. It provides that every trade agreement entered into under Title I and IV shall be subject to termination or withdrawal, upon due notice, at the end of a period specified in the agreement. This period cannot be more than three years from the date on which the agreement becomes effective for the United States. If the agreement is not terminated or withdrawn from at the end of the specified period, it shall be subject to termination or withdrawal thereafter upon not more than six months' notice.

SECTION 410. PUBLIC HEARINGS IN CONNECTION WITH AGREEMENTS UNDER TITLE IV

Section 410 requires the President to provide for a public hearing prior to the conclusion of any agreement or modification of any duty or other import restriction under section 403 (Renegotiation of Import Restrictions) or section 404 (Compensation Authority). Public hearings shall also be held after the President takes any action under section 402 (Withdrawal of Concessions and Similar Adjustments) or section 408 (Authority to Termination Actions) if requested within 90 days after the action.

Section 113 provides for public hearings in connection with trade agreements under Title I of this Act.

SECTION 411. AUTHORIZATION FOR GATT APPROPRIATIONS

Section 411 authorizes annual appropriations to finance the United States contribution to the budget of the GATT. This contribution is presently financed from the appropriation made to the Department of State entitled "International Conferences and Contingencies."

TITLE V-TRADE RELATIONS WITH COUNTRIES NOT ENJOYING

MOST-FAVORED-NATION TARIFF TREATMENT

The purpose of this title is to authorize the President to enter into bilateral commercial arrangements to extend most-favored-nation treatment to imports from countries which are currently subject to Column 2 rates of duty. The President may also extend most-favored-nation treatment to countries which become a party to a multilateral agreement to which the United States is also a party, for example, the GATT.

The bilateral agreements must be limited to an initial period of not more than three years, and may be renewable for additional periods, each not to exceed three years. The President may at any time suspend or withdraw, in whole or in part, the application of most-favored-nation treatment. This title also contains a provision designed to protect domestic industries from market disruption caused by increased imports from a country which receives most-favored-nation treatment under this title. The President may apply import relief measures outlined in section 203 to the imports from the country causing injury without taking action on imports from other countries.

In addition, section 706 of this Act repeals the embargo contained in the Trade Agreements Extension Act of 1951 on seven furs and skins the product of the Soviet Union or the People's Republic of China. The Johnson Debt Default Act, which is described under section 507, is also repealed.

SECTION 501. EXCEPTION OF THE PRODUCTS OF CERTAIN COUNTRIES OR AREAS

This section replaces section 231 of the Trade Expansion Act. Subsection (a) stipulates that except as otherwise provided in this title, the President shall continue to deny most-favored-nation treatment to products imported from any country or area which are subject to Column 2 rates on duty on the date of enactment of this Act. Headnote 3 (e), in conformity with section 231 of the Trade Expansion Act, lists the countries to which Column 2 rather than most-favored-nation rates of duty apply.1 Subsection (b) authorizes the President to withdraw mostfavored-nation treatment from any country when he deems it necessary for national security reasons.

SECTION 502. AUTHORITY TO ENTER INTO COMMERCIAL AGREEMENTS

Subsection (a) authorizes the President to enter into bilateral commercial agreements which would provide most-favored-nation treatment to imports from countries which currently receive Column 2 rates of duty, provided such agreements will promote the purposes of this Act and are in the national interest. This provision also applies to agreements which have already been entered into, such as the agreement with the Soviet Union signed in October 1972.

1 Albania, Bulgaria, the People's Republic of China. Cuba, Czechoslovakia, East Germany. Estonia, Hungary, Indochina (any part of Cambodia, Laos, or Vietnam under Communist control or domination), North Vietnam. Kurile Islands, Latvia, Lithuania, Outer Mongolia, Rumania, Southern Sakhalin, Tanne Tuva Tibet, and the USSR.

As provided under subsection (c), the President is authorized to implement a bilateral commercial agreement, or an order referred to in section 504 (a) only if the majority of the authorized membership of neither House of Congress adopts a resolution stating its disapproval of the agreement within 90 days after the President delivers a copy of the agreement or order to the Congress.

Subsection (b) enumerates three provisions which the President is required to include in a bilateral commercial agreement under this title. A bilateral agreement must be limited to an initial period of not more than three years. It must also be subject to suspension or termination at any time for national security reasons, or not limit the right to take actions to protect security interests. An agreement must also provide for consultations to review the operation of the agreement and other relevant matters.

The agreemment may be renewed for additional periods, each not to exceed three years, if there has been a satisfactory balance of trade concessions maintained, and if the President determines that any actual or foreseeable trade agreement concessions by the United States resulting from multilateral negotiations are satisfactorily reciprocated by the other party to the agreement.

SECTION 503. ADDITIONAL PROVISIONS

This section lists five provisions which might be included in a bilateral commercial agreement under this title. The list is illustrative, however, and does not inhibit the President's discretion to include these or any other commercial arrangements. However, the provisions shall not be deemed to affect existing domestic legislation. Inclusion of a provision listed in this section does not constitute separate domestic authority for any action. Although most of these provisions are contained in the trade agreement with the Soviet Union, they would not necessarily be included in agreements negotiated with other countries. The bilateral agreements may include arrangements to safeguard against domestic market disruption, to protect United States industrial rights and processes, trademarks, and copyrights, and to settle commercial disputes, such as the provision in the agreement with the Soviet Union for third country arbitration. The agreements may also provide arrangements to promote trade, for example, by establishing trade and tourist promotion offices, the sending of trade missions, and facilitating activities of commercial representatives.

SECTION 504. EXTENSION OF MOST-FAVORED-NATION TREATMENT

Subsection (a) authorizes the President to extend most-favored-nation treatment to imports from any country which has entered into a bilateral commercial agreememnt which has entered into force under section 502. The President. may also issue an order extending most-favored-nation treatment to a country which has become a party to an appropriate multilateral trade agreement to which the United States is also a party, such as the GATT, subject to the Congressional veto procedure under section 502 (c). The application of most-favorednation treatment shall be limited, however, to the duration of the bilateral agreement or to the period both countries are a party to a multilateral agreement. Subsection (b) authorizes the President at any time to suspend or withdraw the application of most-favored-nation treatmment extended under subsection (a), thereby restoring the applicable Column 2 rate of duty on all products imported from the country.

SECTION 505. MARKET DISRUPTION

The purpose of this section is to provide more easily satisfied criteria for determining whether injury to a domestic industry has occurred due to imports from countries which are granted most-favored-nation treatment under this title.

The section provides for a Tariff Commission investigation when a petition is filed or otherwise initiated under section 201 with respect to imports from countries which receive most-favored-nation treatment under this title. The Tariff Commission shall determine whether imports of the article from the country receiving most-favored-nation treatment are causing or are likely to cause material injury to a domestic industry producing like or directly competitive articles, and whether market disruption as defined in section 201 (f) (3) exists with respect to these imports.